Exhibit 10.11
Stock Purchase Agreement
This Stock Purchase Agreement (Agreement) is entered into this 25th day of
February, 1998, by and between Nostrad Telecommunications Inc., a Nevada
corporation hereinafter referred to as "Purchaser", and Nostrad
Telecommunications Pte, Ltd., a Singapore corporation, appearing herein through
its duly authorized representative by virtue of a corporate resolution attached
hereto as Exhibit A, hereinafter referred to as "Seller".
WHEREAS, Seller presently owns one hundred percent (100%) of the
outstanding shares of common stock of Nostrad Media Pte. Ltd., a Singapore
corporation, and OmniVision Africa Ltd., a British Virgin Island corporation,
hereinafter referred to as "Targets"; and
WHEREAS, said shares are the only issued and outstanding capital stock of
Targets; and
WHEREAS, Purchaser desires to purchase from Seller and Seller desires to
sell to Purchaser all of the shares of Targets owned by Seller on the terms and
subject to the conditions set forth herein; and
WHEREAS, contemporaneously with the Closing and as a condition precedent to
the closing (as hereinafter defined) Seller will enter into an enforceable
non-competition agreement with Purchaser.
NOW, THEREFORE, in consideration of the mutual representations, warranties
and covenants herein contained, the parties hereto agree as follows:
I. Purchase of Shares
1.1 Purchase of Shares. Subject to the terms and conditions set forth
herein, at the Closing (as defined below), Seller will sell all of the shares of
Targets owned by Seller, said shares constituting one hundred percent (100%) of
all of the issued and outstanding capital stock of Targets as of the Closing.
More specifically, Seller will sell, assign, transfer and deliver, and Purchaser
will purchase, free and clear of any and all security interests, liens, pledges,
encumbrances and adverse claims, one hundred percent (100%) of the outstanding
capital stock of Targets. This Agreement is predicated upon Purchaser acquiring
one hundred percent (100%) of the outstanding capital stock of Targets, and the
inability of either Seller to transfer all of its shares of Targets, or the
inability of Purchaser to acquire all outstanding shares of Targets shall, at
the option of Purchaser, render its obligation to purchase hereunder null and
void.
1.2 Purchase Price. Purchaser shall pay to Seller the sum of One Hundred
and Fifty Thousand Dollars ($300,000) or up to 461,538 shares pursuant to a
Private Placement Agreement
Offering Memorandum (dated November 27, 1997) at the option of the Seller and
3,700,000 number of share in Nostrad Telecommunications Inc. for the shares of
capital stock in Targets (hereinafter referred to as the "Purchase Price").
Purchase Price shall be subject to Post-Closing Adjustments.
1.3 Closing
1.3.1 At the Closing, Seller shall deliver the shares to Purchaser,
and Purchaser shall delver the Amount to Seller, pursuant to the
terms of this Agreement and subject to any post-closing
adjustments.
1.3.2 In the event that Purchaser's acquisition of the shares pusuant
to this Agreement is terminated in accordance with Seciton 10 of
this Agrement, Seller shall deliver the shares to the Seller and
Purchaser puruant to the terms of the Escrow Agreement, within
five (5) days of the termination.
1.3.3 Payment of Purchase Price. The Purchase Price shall be paid to
Seller as follows: at Closing the Purchaser shall pay the Seller
the sum of One Hundred and Fifty Thousand Dollars ($300,000),
which shall exclude any pro-rata portion of the Escrow Amount
distributed to Seller at or after Closing. In addition the
Seller will receive 3,700,000 of restricted share in Nostrad
Telecommunications Inc. The Purchase Price shall be paid by wire
transfers to accounts designated by Sellers.
Performance Shares. The Purchaser agrees to compensate the Seller by way of
performance shares in NTCI, for additional licenses that are currently
in negotiation but that have not been issued under the following
conditions;
1.3.4 Performance Shares. The Purchaser agrees to compensate
the Seller by way of shares in NTCI, for additional
licenses that are currently in negotiation but that have
not been issued under the following conditions.
1.3.4.1 Thtat the licenses be issued within two (2) years from
the date of closing.
1.3.4.2 That the Seller transfers any and all rights obligations
or prorietary intersts in these licenses at closing.
1.3.4.3 That the performance stock be issued within sever (7)
days on issuance of frequency and the necessary
operation permits required to carry out the business of
the Company or its designated subsidiary.
1.3.4.4 Issuance of the Performance Shares shall be upon
approval of the Board of Directors.
1.3.4.5 The stock will be allocated as follows:
Country Performance
------- Stock
-----------
Indonesia 1,500,000
Cambodia 500,000
Vietnam 500,000
Philippines 800,000
Bangladesh 1,500,000
Myanmar 800,000
Ghana 1,500,000
Tanzania 1,500,000
Morocco 2,000,000
Democratic Congo Republic 400,000
Rwanda 250,000
Tunisia 800,000
Zimbabwe 1,000,000
Kenya 800,000
----------
13,850,000
==========
II. Representations and Warranties of the Seller
Except for the specific representations and warranties of Seller made by
Seller or to the best of Seller's knowledge set forth in this Section 2, Seller
represents and warrants that:
2.1 Organization and Corporate Power
2.1.1 Targets: (a) are corporations duly incorporated and validly existing
and in good standing under the laws of their respective durisdictions; (b) has
all the requisite corporate power and authority and all material licenses,
permits and authorizations necessary to own and operate its properties and to
carry on its business as now conducted; and (C) the copies of Targets's Articles
of Incorporation and Bylaws have been furnished to Purchaser's counsel, reflect
all amendments made thereto at any time prior to the date of this Agreement and
are correct and complete.
2.1.2 Seller represents and warrants that: (a) Seller is a corporation duly
incorporated and validly existing and in good standing under the laws of
Singapore; (b) Seller has all requisite corporate power and authority and all
material licenses, permits, and authorizations necessary to own and operate its
properties and to carry on its business as now conducted; and (C) all
authorizations necessary by Targets to sell its shares as proposed in this
Agreement have been obtained.
2.2 Capital Stock and Related Matters. To the best of Seller's knowledge,
no shares owned at any time by Seller have been sold or otherwise transferred to
any person or entity. Targets do not have other outstanding and have not agreed,
orally or in writing, to issue any stock or securities convertible or
exchangeable for any shares of its stock, nor do the Targets have anyoutstanding
nor has it agreed, orally or in writing , to issue any options or rights to
purchase or wotherwise acquire its stock. Targets are not subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of its stock. All of the outstanding shares of Targets capital
stock are validly issued, fully paid and non-assessable. Seller represent it
has, and upon puchase thereof pursuant to the terms of this Agreement, Purchase
will have good and marketable title to the shares, free and clear of all
security interest, liens encumbrances, or other restrictions or claims, subject
only to restricitons as to marketability imposed by securities laws. Assuming
that the representations in Section 3.6 are true and correct, neither Seller nor
Targets have violated or will violate any applicable securities laws in
connection with the offer or sale of the shares to Purchaser hereunder.
2.3 Subsidiaries. Targets represents and warrants, and Seller represents
and warrants to the best of Seller's knowledge, that Targets does not own or
hold any rights to acquire any shares of stock or any other security in any
interest in any other corporation or entity.
2.4 Conduct of Business; Liabilities. Except as set forth in Exhibit F, to
the best of Seller's knowledge, Targets is not in default under, and no
condition exists that with notice or lapse of time would constitute a default of
Targets under (i) any mortgage, loan agreement, evidence of indebtedness, or
other instrument evidencing borrowed money to which Targets is a party or by
which Targets or the properties of Targets are bound or (ii) any judgment,
order, or injunction of any court, arbitrator, or governmental agency that would
reasonably be expected to affect materially and adversely the business,
financial condition, or results of operations of Targets taken as a whole.
2.5 Financial Statements. Targets represents and warrants, and Seller
represents and warrants to the best of Seller's knowledge, that Targets has
delivered to Purchaser prior to the date hereof (a) the balance sheets of
Targets as of September 30, 1997 and the related statements of operations,
reported on without qualification by Xxx Xxxxxxx, CPA, independent Certified
Public accountants, attached hereto as Exhibit B, C, D.
2.6 No Undisclosed Liabilities. Except for (i) liabilities and obligations
incurred in the ordinary course of business since September 30, 1997, and (ii)
liabilities or obligations described in Exhibit I, neither Targets nor any of
the property of Targets is subject to any material liability or obligation that
was required to be included and adequately reserved against in the September 30,
1997 balance sheet or described in the notes thereto and was not so included,
reserved against and described.
2.7 Absence of Certain Changes. Except as contemplated or permitted by this
Agreement or as described in Exhibit J, since September 30, 1997 there has not
been :
2.7.1 Any material adverse change in the business, financial
condition, operations, or assets of Targets; or
2.7.2 Any damage, destruction or loss, whether covered by insurance or
not, materially adversely affecting the properties or business of the
corporation; or
2.7.3 Any sale or transfer by Targets of any tangible or intangible
asset other than in the ordinary course of business, any mortgage or pledge
or the creation of any security interest, lien or encumbrance on any such
asset, or any lease of property, including equipment, other than tax liens
with respect to taxes not yet due and contract rights of customers in
inventory; or
2.7.4 Any material transaction not in the ordinary course of business
of Targets; or
2.7.5 The grant of any material increase in the compensation of
officers or contractors (including any such increase pursuant to any bonus,
pension, profit-sharing, or other plan) other than customary increases on a
periodic basis or required by agreement or understanding in the ordinary
course of business and in accordance with past practice; or
2.7.6 The discharge or satisfaction of any material lien or
encumbrance or the payment of any material liability other than current
liabilities in the ordinary course of business; or
2.7.7 The making of any material loan, advance, or guaranty to or for
the benefit of any person except the creation of accounts receivable in the
ordinary course of business; or
2.7.8 Targets represents and warrants, and Seller represents and
warrants to the best of Seller's knowledge, that since September 30
__________, 1997 there has not been any declaration or payment of any
dividends, payment or distribution of any kind to Sellers in their capacity
as shareholders of Targets, or purchase or redemption of any shares; or
2.7.9 Targets represents and warrants, and Seller represents and
warrants to the best of Seller's knowledge, that since September
30__________, 1997 there has not been any change in Targets's outstanding
stock, or in Targets's Articles of Incorporation or Bylaws; or
2.7.10 Any labor problems materially and adversely affecting Targets's
business, financial condition or properties; or
2.7.11 Waiver of any rights of material value; or
2.7.12 Any other event or condition of any character which may
materially and adversely affect Targets's business, financial condition or
properties; or
2.7.13 An agreement to do any of the foregoing.
2.8 Title and Related Matters. Except as set forth in Exhibit K, Targets
has good and marketable title to all of its property, real and personal, and
other assets reflected in the September 30, 1997, Balance Sheet (except
properties and assets sold or otherwise disposed of subsequent to September 30
1997, in the ordinary course of business or as contemplated in this
Agreement), free and clear of all security interests, mortgages, liens, pledges,
charges, claims or encumbrances of any kind or character, except (i) statutory
liens for property taxes not yet delinquent or payable subsequent to the date of
this Agreement and statutory or common law liens securing the payment or
performance of any obligation of Targets, the payment or performance of which is
not delinquent, or that is payable without interest or penalty subsequent to the
date on which this representation is given, or the validity of which is being
contested in good faith by Targets; (ii) the rights of customers of Targets with
respect to inventory under orders or contracts entered into by Targets in the
ordinary course of business; (iii) claims, easements, liens and other
encumbrances of record pursuant to filings under real property recording
statutes; and (iv) as described in the Unaudited Financial or the notes thereto.
2.9 Litigation. Except as set forth in Exhibit L, there are no material
actions, suits, proceedings, orders, investigations, or claims pending or, to
the best of the knowledge of Targets and Seller, assertable or overtly
threatened against Targets or any property of Targets, at law or in equity, or
before or by any governmental department, commission, board, bureau, agency or
instrumentality; Targets is not the subject to any arbitration proceedings under
collective bargaining agreements or otherwise or, to the best of the knowledge
of Targets or Seller, any governmental investigations or inquiries; and to the
best of the knowledge of Targets and Seller, there is no basis for any of the
foregoing.
2.10 Taxes, Tax Returns and Reports. With respect to Targets, (a) all
reports, returns, statements (including, without limitation, estimated reports,
returns or statements), and other similar filings required to be filed on or
before Closing by Targets (the "Tax Returns") with respect to any Taxes (as
defined in this Section) have been timely filed with the appropriate
governmental agencies in all jurisdictions in which such Tax Returns are
required to be filed, and all such Tax Returns correctly reflect the liability
of Targets for Taxes for the periods, properties or events covered thereby, (b)
all Taxes payable with respect to the Tax Returns, and all Taxes accruable with
respect to events occurring prior to September 30, 1997, whether disputed or
not, and whether or not shown on any Tax Return, will have been paid in full
prior to Closing, or an adequate accrual in accordance with generally accepted
accounting principles is provided with respect thereto on the September 30, 1997
Balance Sheet, no deficiency in respect of any Taxes which has been assessed
against Targets remains unpaid and neither Targets nor Seller has knowledge of
any un-assessed Tax deficiencies or of any audits or investigations pending or
threatened against Targets with respect to any Taxes, (d) there is in effect no
extension for filing of any Tax Return and Targets has not extended or waived
the application of any statute of limitations or any jurisdiction regarding the
assessment or collection of any Tax, (e) no claim has ever been made by a Tax
authority in a jurisdiction in which Targets does not file Tax Returns that it
is or may be subject to taxation by that jurisdiction, (f) there are no liens
for Taxes upon any asset of Targets except for liens for current Taxes not yet
due, (g) no issues have been raised in any examination by any Tax authority with
respect to Targets, by which application of similar principles, reasonably could
be expected to result in a proposed deficiency for any other period not so
examined, (h) Targets is not a party to any Tax allocation or sharing agreement
or otherwise under any obligation to indemnify any person with respect to any
Taxes, (i) Targets is not a party to any joint venture, partnership or other
arrangement that is treated as a partnership for income tax purposes, (j) there
are no accounting method changes or proposed accounting
method changes of Targets that could give rise to an adjustment under Section
481 of the Internal Revenue Code of 1986, as amended (the "Code"), or any
similar rule or regulation under the Tax laws of any foreign jurisdiction, for
periods after the Closing, (k) there are no requests for rulings in respect of
any Tax pending between Targets and any Taxing authority, and (l) Targets has
timely made all deposits required by law to be made with respect to contractors'
withholding and other employment taxes.
For purposes of this Agreement, "Taxes" means any taxes, duties,
assessments, fees, levies or similar governmental charges, together with any
interest, penalties and additions to tax, imposed by any taxing authority,
wherever located (i.e. whether federal, state, local, municipal or foreign),
including, without limitation, all net income, gross income, gross receipts, net
receipts, sales, transfer, franchise, privilege, profits, social security,
disability, withholding, payroll, unemployment, employment, excise, severance,
property, windfall profits, value added, ad valorem, occupation or any other
similar governmental charge or imposition. Seller's liability for any and all
breaches of this Section (except for a breach which results from a deliberate or
intentional act or omission) shall be limited to that which exceeds the
aggregate sum of Ten Thousand Dollars ($10,000).
2.11 Compliance with Laws. To the best of the knowledge of Targets and
Seller, the Corporation is, in the conduct of its business, in substantial
compliance with all laws, statutes, ordinances, regulations, orders, judgments
or decrees applicable to them, the enforcement of which, if Targets was not in
compliance therewith, would have a materially adverse effect on the business of
Targets, taken as a whole. Neither Seller nor Targets have received any notice
of any asserted present or past failure by Targets to comply with such laws,
statutes, ordinances, regulations, orders, judgments or decrees.
2.12 No Brokers. There are no claims for brokerage commissions, finders'
fees, or similar compensation in connection with the purchase based on any
arrangement or agreement binding upon any of the parties hereto.
2.13 Insurance. No insurance policies have been taken out by any of the
Targets.
2.14 Contractors and Labor Relations Matters. as provided in this
Agreement:
2.14.1 Neither Seller nor Targets is aware that any executive or key
contractor of Targets or any group of contractors of Targets has any plans
to terminate employment with Targets;
2.14.2 To the best of the knowledge of Seller, Targets has
substantially complied in all material respects with all labor and
employment laws, including provisions thereof relating to wages, hours,
equal opportunity, collective bargaining, Americans With Disabilities Act,
and the payment of social security and other taxes;
2.14.3 There is no unfair labor practice charge, complaint or other
action against Targets pending or, to the best of the knowledge of Seller,
threatened before the National Labor
Relations Board or any corresponding body in any foreign jurisdiction, and
Targets is not subject to any order to bargain by the National Labor
Relations Board or any corresponding body in any foreign jurisdiction;
2.14.4 No questions concerning representation have been raised or, to
the best of the knowledge of Seller, are threatened with respect to
contractors of Targets;
2.14.5 No grievance that might have a material adverse effect on
Targets and no arbitration proceeding arising out of or under any
collective bargaining agreement is pending and, to the best of the
knowledge of Seller, no basis exists for any such grievance or arbitration
proceeding; and
2.14.6 To the best of the knowledge of Seller, no contractor of
Targets is subject to any non-competition, nondisclosure, confidentiality,
employment, consulting or similar agreements with persons other than
Targets relating to the present business activities of Targets.
2.15 Disclosure. To the best of the knowledge of Seller, neither this
Agreement nor any of the exhibits, schedules, attachments, written statements,
documents, certificates, or other items prepared or supplied to Purchaser by or
on behalf of Targets or Seller with respect to this purchase contain any untrue
statement of a material fact or omit a material fact necessary to make each
statement contained herein or therein not misleading.
2.16 Power of Attorney. Except as set forth in Exhibit P, no material power
of attorney or similar authorization given by Targets is presently in effect.
2.17 Accounts Receivable. All accounts receivable of Targets reflected in
the September 30, 1997 Balance Sheet represent bona fide sales actually made in
the ordinary course of business. To the best of the knowledge of Seller, all
such accounts receivable are collectible in the amounts shown thereon, except
for the allowance for doubtful accounts reflected thereon.
2.18 Agreements and Commitments. There are no agreements, contracts,
instruments and commitments (including license agreements) outside the ordinary
course of business to which Targets is a party that provides for payments by
Targets in excess of Ten Thousand Dollars ($10,000) per year or whose term is in
excess of one year and is not able to be canceled upon thirty (30) or fewer
days' notice by Targets without any liability, penalty or premium, other than a
nominal cancellation fee or charge (Third Party Agreements).
2.18.1 Targets has no collective bargaining or union contracts
agreement in effect or being negotiated;
2.18.2 There is no labor strike, dispute, request for representation,
slowdown, or stoppage pending or, to the best of the knowledge of Seller,
threatened against Targets;
2.18.3 Targets is not in material default under any Third Party
Agreement, nor, to the best of the knowledge of Seller, does there exist
any event that, with notice or the passage of time or both, would
constitute a material default by Targets under any Third Party Agreement.
2.18.4 Except for the relationship Targets has with HomeVision,
Mongolia Ltd., OmniVision Uganda Ltd., ESN Ghana, PCI Morocco, Open
Learning Agency, Information Systems Management, Sask Tel International
Ltd., Xxxxxxxxx LLC, Finline Technologies, Lte., Orbitronics Ltd., IGWT
Ltd., Xxxxxxxx Xx Xxxxxxx-Xxxxxx, Kelani Ndo and Genco Ltd. which Seller
has fully disclosed to Purchaser, Targets has no agreements with affiliated
companies, nor ar the Targets in partnership with or in joint venture with
any other person or entity.
2.18.5 Attached hereto as Exhibit R1 and made a part hereof for all
purposes is a true and complete list, as of the date hereof and certified
by the President of Targets, showing the name of each bank in which Targets
has an account or relationship. Included with this Exhibit R1 is a list
showing the names of all persons authorized to draw on any such accounts.
2.18.6 Targets represents and warrants, and Seller represents and
warrants to the best of Seller's knowledge, that as set forth in the letter
dated September 30 ,1997 from Nostrad Telecommunications Pte Ltd. to
Nostrad Telecommunications Inc., the sale contemplated hereunder does not
conflict with any buy-sell agreement or such other similar agreement
executed by the parties.
2.19 Personal Property. Exhibit H contains lists of all material tangible
personal property and assets owned or held by Targets and used or useful in the
conduct of the business of Targets. Targets owns and has good title to such
properties and none of such properties is subject to any security interest,
mortgage, pledge, conditional sales agreement or other lien or encumbrance
(except for liens for current taxes, assessments, charges or other governmental
levies not yet due and payable). To the best of the knowledge of Seller, all
such tangible personal property is in compliance in all material respects with
all applicable statutes, ordinances, rules and regulations. The properties
listed in Exhibit S include all material properties necessary to conduct the
business and operations of Targets as now conducted.
2.20 Real Property. The Targets currently do not own any real property,
Nostrad Media Pte. Ltd., has entered into a rental agreement for premises
located at 00 Xxxxxxxx Xxxx #00-00 Xxxxxxxxxx Building for a montly rent of
SD4,000 on a month to month basis.
2.21 Personnel. Exhibit I sets forth a true and complete list of:
2.21.1 The names, titles and current salaries of all officers of
Targets;
2.21.2 The names of all directors of Targets;
2.21.3 The wage rates (or ranges, if applicable) for each class of
exempt and nonexempt, salaried and hourly contractors of Targets;
2.21.4 All scheduled or contemplated increases in compensation or
bonuses; and
2.21.5 All scheduled or contemplated contractor promotions.
2.22 Patents, Trademarks, Trade Names, etc. Exhibit J contains an accurate
and complete list of all patents, trademarks, trade names, service marks, and
copyrights, and all applications therefor, presently owned or held subject to
license by Targets and, to the best of the knowledge of Seller, the use thereof
by Targets does not materially infringe on any patents, trademarks, or
copyrights or of any other rights of any person. To the best of the knowledge of
Seller, Targets has not operated and is not operating its business in a manner
that infringes the proprietary rights of any other person in any patents,
trademarks, trade names, service marks, copyrights or confidential information.
III. Representations and Warranties of Purchaser
As a material inducement to Seller to enter into this Agreement and sell
the shares of Targets, Purchaser hereby represents and warrants to Seller as
follows:
3.1 Organization; Power. Purchaser is a corporation duly incorporated and
validly existing under the laws of the State of Nevada, and has all requisite
corporate power and authority to enter into this Agreement and perform its
obligations hereunder.
3.2 Authorization. The execution, delivery, and performance by Purchaser of
this Agreement and all other agreements contemplated hereby to which Purchaser
is a party have been duly and validly authorized by all necessary corporate
action of Purchaser, and this Agreement and each other agreement, when executed
and delivered by the parties thereto, will constitute the legal, valid and
binding obligation of Purchaser enforceable against it in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency and similar statutes affecting creditors' rights generally and
judicial limits on equitable remedies.
3.3 No Conflict with Other Instruments or Agreements. The execution,
delivery and performance by Purchaser of this Agreement and all other agreements
contemplated hereby to which Purchaser is a party will not result in a breach or
violation of, or constitute a default under, its Articles of Incorporation or
Bylaws or any material agreement to which Purchaser is a party or by which
Purchaser is bound.
3.4 Governmental Authorities. (i), Purchaser is not required to submit any
notice, report, or other filing with any governmental or regulatory authority in
connection with the execution and delivery by Purchaser of this Agreement and
the consummation of the purchase and (ii) no consent, approval or authorization
of any governmental or regulatory authority is required to be obtained by
Purchaser or any affiliate in connection with Purchaser's execution, delivery
and performance of this Agreement and the consummation of this purchase.
3.5 Litigation. There are no actions, suits, proceedings or governmental
investigations or inquiries pending or, to the knowledge of Purchaser,
threatened against Purchaser or its
properties, assets, operations or businesses that might delay, prevent or hinder
the consummation of this purchase.
3.6 Investment Representations.
3.6.1 Purchaser is acquiring the shares of Targets for its own account for
purposes of investment and without expectation, desire or need for resale and
not with the view toward distribution, resale, subdivision or fractionalization
of the shares.
3.6.2 During the course of the negotiation of this Agreement, Purchaser has
reviewed all information provided to it by Targets and has had the opportunity
to ask questions of and receive answers from representatives of Targets
concerning Targets, the securities offered and sold hereby, and this purchase
and to obtain certain additional information requested by Purchaser. Purchaser
has had access to all of the books and records of Targets, to audited and
unaudited statements, to personnel of Targets familiar with its financial and
operational issues and to bankers and accountant familiar with Targets and its
operations.
3.6.3 Purchaser understands that the shares to be purchased have not been
registered under Securities Act of 1933 (1933 Act) or under any state securities
law.
3.6.4 Purchaser understands that the shares cannot be resold in a
transaction to which the 1933 Act and state securities laws apply unless (i)
subsequently registered under the 1933 Act and applicable state securities laws
or (ii) exemptions from such registrations are available. Purchaser is aware of
the provisions of Rule 144 promulgated under the 1933 Act which permit limited
resale of shares purchased in a private transaction subject to the satisfaction
of certain conditions.
3.6.5 Purchaser understands that no public market now exists for the shares
and that it is uncertain that a public market will ever exist for the shares.
3.7 Brokerage. There are no claims for brokerage commissions, finders'
fees, or similar compensation in connection with this purchase based on any
arrangement or agreement entered into by Purchaser and binding upon any of the
parties hereto.
IV. Conduct of Targets's Business Pending the Closing
From the date hereof until the Closing, and except as otherwise consented
to or approved by Purchaser in writing, Seller covenants and agrees with
Purchaser as follows and covenants and agrees with Purchaser that Targets will
not take any action (or cause any action to be taken) which will create a
conflict with any of the following:
4.1 Regular Course of Business. Targets will operate its business in
accordance with the reasonable judgment of its management, diligently and in
good faith, consistent with past management practices, and Targets will continue
to use its reasonable efforts to keep available
the services of present officers and contractors (other than planned
retirements) and to preserve its present relationships with persons having
business dealings with it.
4.2 Distributions. Targets will not declare, pay or set aside for payment
any dividend or other distribution in respect of its capital stock.
4.3 Capital Changes. Targets will not issue any shares of its stock, or
issue or sell any securities convertible into or exchangeable for its stock, or
options, warrants to purchase, or rights to subscribe to any shares of its
stock, or subdivide or in any way reclassify any shares of its capital stock, or
repurchase, reacquire, cancel or redeem any such shares, except as may be
required by the terms of this Agreement.
4.4 Assets. The assets, property and rights now owned by Targets will be
used, preserved and maintained, as far as practicable, in the ordinary course of
business, to the same extent and in the same condition as said assets, property
and rights are on the date of this Agreement, ordinary wear and tear excepted,
and no unusual or novel methods of manufacture, purchase, sale, management or
operation of said properties or business or accumulation or valuation of
inventory will be made or instituted.
4.5 Insurance. Targets will keep or cause to be kept in effect and
undiminished the insurance now in effect on its various properties and assets.
4.6 Contractors. Targets will not grant to any contractor any promotion,
any increase in compensation or any bonus or other award other than promotions,
increases or awards that are regularly scheduled in the ordinary course of
business or contemplated on the date of this Agreement.
4.7 No Violations. Targets will comply in all material respects with all
statutes, laws, ordinances, rules and regulations applicable to it in the
ordinary course of business.
4.8 Public Announcements. No press release or other announcement to the
contractors, customers or suppliers of Targets related to this Agreement or this
purchase will be issued without the joint approval of the parties, unless
required by law, in which case Purchaser and Seller will consult with each other
regarding the announcement.
V. Covenants of Targets and Seller
Targets and Seller covenant and agree with Purchaser as follows:
5.1 Satisfaction of Conditions. Targets will use reasonable efforts to
obtain as promptly as practicable the satisfaction of the conditions to Closing
set forth in Section 7 and any necessary consents or waivers under or amendments
to agreements by which Targets is bound.
5.2 Supplements to Exhibits. From time to time prior to Closing, Seller and
Targets will promptly supplement or amend the Exhibits with respect to any
matter hereafter arising that, if
existing or occurring at the date of this Agreement, would have been required to
be set forth or described in any Exhibit and will promptly notify Purchaser of
any breach by either of them that either of them discovers of any
representation, warranty or covenant contained in this Agreement. No supplement
or amendment of any Exhibit made pursuant to this section will be deemed to cure
any breach of any representation or warranty made in this Agreement unless
Purchaser specifically agrees thereto in writing; provided, however, that if
this purchase is closed, Purchaser will be deemed to have waived its rights with
respect to any breach of a representation, warranty, or covenant or any
supplement to any Exhibit of which it shall have been notified pursuant to this
Section.
5.3 No Solicitation. Until the Closing or termination pursuant to Section
10 of this Agreement, Seller shall not, directly or indirectly, encourage,
solicit, initiate or enter into any discussions or negotiations concerning any
disposition of any of the capital stock or all or substantially all of the
assets of Targets (other than pursuant to this Agreement), or any proposal
therefor, or furnish or cause to be furnished any information concerning Targets
to any party in connection with any transaction involving the acquisition of the
capital stock or assets of Targets by any person other than Purchaser. Seller or
Targets will promptly inform Purchaser of any inquiry (including the terms
thereof and the person making such inquiry) received by any responsible officer
or director of Targets or Seller after the date hereof and believed by such
person to be a bona fide, serious inquiry relating to any such proposal.
5.4 Action After the Closing. Upon the reasonable request of any party
hereto after Closing, any other party will take all action and will execute all
documents and instruments necessary or desirable to consummate and give effect
to this purchase. These include, by way of illustration and not by way of
limitation, the following:
5.4.1 Various conditions relating to filing, payment and collecting of
refunds relating to taxes;
5.4.2 Resignations of each of the officers and directors of Targets;
5.4.3 Provisions relating to the delivery of corporate books and
records;
5.4.4 Provisions relating to treatment of confidential, proprietary
information obtained in the acquisition process; and
5.4.5 Non-interference by Seller regarding the post-closing
relationships between Purchaser and its vendors, suppliers, customers and
contractors.
VI. Covenants of Purchaser
6.1 Consummation of Agreement. Purchaser agrees to use its best efforts to
cause the consummation of the transactions contemplated by this Agreement in
accordance with their terms and conditions.
6.2 Retention of Records. Purchaser shall retain all books and records of
Targets which Purchaser receives from Targets for a period of seven (7) years
from the date of generation thereof or for a period of seven (7) years after
Closing, whichever occurs earlier. After the Closing, Seller and its
representatives shall have reasonable access to all such books and records
during normal business hours for the following purposes: (i) tax or other
regulatory purposes; or (ii) for the purpose of identifying and photocopying
documents related to litigation or administrative matters to which Seller must
respond, either formally or informally.
VII. Conditions Precedent to the Obligations of Purchaser
Each and every obligation of Purchaser under this Agreement is subject to
the satisfaction, at or before the Closing, of each of the following conditions:
7.1 Representations and Warranties; Performance.
7.1.1 Each of the Representations and warranties made by Seller will be
true and correct in all material respects as of the Closing with the same effect
as though made at that time except for changes contemplated, permitted or
required by this Agreement; Seller and Targets will have performed and complied
with all agreements, covenants, and conditions required by this Agreement to be
performed and complied with by them prior to Closing; and Purchaser will have
received, at the Closing, a certificate of Targets and Seller, signed by the
President of Targets and of Seller, stating that each of the representations and
warranties made by Targets herein is true and correct in all material respects
as of the Closing, except for changes contemplated, permitted or required by
this Agreement, and that Seller and Targets have performed and complied with all
agreements, covenants and conditions required by this Agreement to be performed
and complied with by them prior to the Closing.
7.1.2 On or before delivery of the Escrow Amount to the Escrow Agent,
Seller will take all necessary steps and proceedings to enable them to
effectuate at the Closing a valid, indefeasible sale and transfer of the shares
to Purchaser. Among other things, Seller will have obtained all consents,
releases and permissions which may be necessary for the sale of the shares to
Purchaser.
7.2 Litigation. No material action, suit or proceeding before any court,
governmental or regulatory authority will have been threatened or commenced and
be continuing, and no investigation by any governmental or regulatory authority
will have been commenced and be continuing, and no action, investigation, suit
or proceeding will be threatened at the time of Closing against Seller, Targets
or Purchaser or any of their affiliates, associates, officers or directors,
seeking to restrain, prevent or change this purchase, questioning the validity
or legality of this purchase, or seeking damages in connection with this
purchase.
7.3 Material Change. From the date of this Agreement to the Closing,
Targets shall not have suffered any material adverse change (whether or not such
change is referred to or described in any supplement to any Exhibit or Schedule
to this Agreement) in its business prospects,
financial condition, working capital, assets, liabilities (absolute, accrued,
contingent, or otherwise) or operations.
7.4 Corporate Action. Seller will have furnished to Purchaser:
7.4.1 The Articles of Incorporation and all amendments thereto and
restatements thereof of Targets certified by the official having custody over
corporate records in the jurisdiction of incorporation of the corporation in
question;
7.4.2 The current Bylaws and minutes of all meetings and consents of
shareholders and directors of Targets;
7.4.3 Each certificate of qualification to do business as a foreign
corporation of Targets;
7.4.4 All known existing stock transaction records of Targets; and
7.4.5 A certificate of the Secretary or Assistant Secretary of Targets,
attached hereto as Exhibit X, as to the accuracy, currency and completeness of
each of the above documents, the incumbency and signatures of officers of
Targets, the absence of any amendment to the Articles of Incorporation of
Targets, and the absence of any proceeding for dissolution or liquidation of
Targets.
VIII. Conditions Precedent to the Obligations of Sellers
Each and every obligation of Seller under this Agreement is subject to the
satisfaction, at or before Closing, of each of the following conditions:
8.1 Representations and Warranties; Performance. Each of the
Representations and warranties made by Purchaser will be true and correct in all
material respects as of the Closing with the same effect as though made at that
time except for changes contemplated, permitted or required by this Agreement;
Purchaser will have performed and complied with all agreements, covenants, and
conditions required by this Agreement to be performed and complied with by them
prior to Closing; and Seller will have received, at the Closing, a certificate
of Purchaser, signed by the President of Purchaser, stating that each of the
representations and warranties made by Purchaser herein is true and correct in
all material respects as of the Closing, except for changes contemplated,
permitted or required by this Agreement, and that Purchaser has performed and
complied with all agreements, covenants and conditions required by this
Agreement to be performed and complied with by them prior to the Closing.
8.2 Litigation. No material action, suit or proceeding before any court
(other than suits seeking monetary damages only and in the aggregate sum of less
than $10,000), governmental or regulatory authority will have been threatened or
commenced and be continuing, and no investigation by any governmental or
regulatory authority will have been commenced and be continuing, and no action,
investigation, suit or proceeding will be threatened at the time of
Closing against Seller, Targets or Purchaser or any of their affiliates,
associates, officers or directors, seeking to restrain, prevent or change this
purchase, questioning the validity or legality of this purchase, or seeking
damages in connection with this purchase.
8.3 Corporate Action. Purchaser will have furnished to Seller a copy,
certified by the Secretary or Assistant Secretary of Purchaser, attached hereto
as Exhibit Y, of the resolutions of Purchaser authorizing the execution,
delivery and performance of this Agreement, together with a certificate of the
Secretary or Assistant Secretary of Purchaser, attached hereto as Exhibit Y1, as
to the accuracy, currency and completeness of such resolutions, the incumbency
and signatures of officers of Purchaser, and the absence of any proceeding for
dissolution or liquidation of Purchaser.
IX. Closing
9.1 Time, Place and Manner of Closing. Unless this Agreement has been
terminated and this purchase has been abandoned pursuant to the provisions of
Section 10, the Closing will be held in _________________________, at the
offices of ___________, whose address is _____________________________, or such
other place as the parties may agree on _________, 1997 or as soon as
practicable after the satisfaction of the various conditions precedent to the
Closing set forth herein, but in no event later than ____________, 199_. At the
Closing, the parties to this Agreement will exchange certificates, notes,
guaranties, and other instruments and documents in order to determine whether
the terms and conditions of this Agreement have been satisfied. Upon the
determination of each party that its conditions to consummate this purchase have
been satisfied or waived, Seller shall deliver to Purchaser the certificate(s)
evidencing the shares, duly endorsed for transfer or with Stock Powers attached,
and Purchaser shall deliver to Seller the consideration set forth in Section
1.2, in a manner to be agreed upon by the parties. After the Closing, Seller, at
Purchaser's cost, will execute, deliver, and acknowledge all such further
instruments of transfer and conveyance and will perform all such other acts as
Purchaser may reasonably request to effectively transfer the shares.
9.2 Consummation of Closing. All acts, deliveries and confirmations
comprising the Closing regardless of chronological sequence shall be deemed to
occur contemporaneously and simultaneously upon the occurrence of the last act,
delivery or confirmation of the Closing and none of such acts, deliveries or
confirmations shall be effective unless and until the last of the same shall
have occurred. The time of the Closing has been scheduled to correspond with the
close of business at the principal office of Targets and, regardless of when the
last act, delivery or confirmation of the Closing shall take place, the transfer
of the shares shall be deemed to occur as of the close of business at the
principal office of Targets on the date of Closing.
9.3 Transfer of Assets at Closing. At Closing, Seller shall cause full
possession and control of all outstanding stock and of all of the assets and
properties of every kind and nature, tangible and intangible, of Targets and of
all other things and matters pertaining to the operation of the business of
Targets to be transferred and delivered to Purchaser; provided, however, that
Seller shall retain, without limitation, any and all correspondence,
communications, drafts of documents, billing memoranda, statements and other
documents or materials of any kind
whatsoever between Seller, Targets, and their legal counsel related in any way
whatsoever, either directly or indirectly, to the transactions contemplated by
this Agreement.
X. Termination
10.1 Termination for Cause. If, pursuant to the provisions of Sections 7 or
8 of this Agreement, Seller or Purchaser is not obligated at the Closing to
consummate this Agreement, then the party who is not so obligated may terminate
this Agreement.
10.2 Termination Without Cause. Anything herein or elsewhere to the
contrary notwithstanding, this Agreement may be terminated and abandoned at any
time without further obligation or liability on the part of any party in favor
of any other by mutual consent of Purchaser and Seller.
10.3 Termination Procedure. Any party having the right to terminate this
Agreement due to a failure of a condition precedent contained in Sections 7 and
8 hereto may terminate this Agreement prior to Closing by delivering to the
other party written notice of termination, and thereupon, this Agreement will be
terminated without obligation or liability of any party, except as set forth in
the Escrow Agreement.
XI. Indemnification
11.1 Seller's Indemnity. Subject to the terms of this Section, Seller
hereby agrees to indemnify, defend and hold harmless Purchaser and its officers,
directors, agents, attorneys, accountants and affiliates from and against any
and all losses, claims, obligations, demands, assessments, penalties,
liabilities, costs, damages, reasonable attorneys' fees and expenses (Damages)
asserted against or incurred by Purchaser by reason of or resulting from a
breach by Seller or Targets of any representation, warranty or covenant
contained herein, or in any agreement executed pursuant thereto.
11.2 Limitations on Seller's Indemnification Obligations.
11.2.1 Purchaser and its successors and permitted assigns shall not be
entitled to indemnification under this Section unless a claim has been asserted
by written notice delivered to Seller on or prior to the twenty four (24) month
anniversary of the Closing, specifying the details of such alleged breach.
11.2.2 Seller shall have no indemnification obligation under this Section
unless and until the aggregate amount recoverable against Seller exceeds $5,000,
in which event Seller shall be responsible for all amounts recoverable in excess
of said $5,000 aggregate amount up to the individual limits provided for in
Section 11.2.3 below.
11.3 Purchaser's Indemnity. Subject to the terms of this Section, Purchaser
hereby agrees to indemnify, defend and hold harmless Seller and its officers,
directors, agents, attorneys, accountants and affiliates from and against any
and all losses, claims, obligations,
demands, assessments, penalties, liabilities, costs, damages, reasonable
attorneys' fees and expenses (Damages) asserted against or incurred by Seller by
reason of or resulting from a breach by Purchaser of any representation,
warranty or covenant contained herein, or in any agreement executed pursuant
thereto.
11.4 Conditions of Indemnification. The respective obligations and
liabilities of Seller, Targets and Purchaser (Indemnifying Party) to the other
(Party to be Indemnified) under Sections 11.1, 11.2 and 11.3 hereof, with
respect to claims resulting from the assertion of liability by third parties,
shall be subject to the following terms and conditions:
11.4.1 Within Sixty (60) days (or such earlier time as might be
required to avoid prejudicing the Indemnifying Party's position) after
receipt of notice of commencement of any legal action evidenced by service
of process or other legal pleading, the Party To Be Indemnified shall give
the Indemnifying Party written notice thereof together with a copy of such
claim, process or other legal pleading, and the Indemnifying Party shall
have the right to undertake the defense thereof by representatives of its
own choosing and at its own expense; provided, however, that the Party To
Be Indemnified may participate in the defense with counsel of its own
choice and at its own expense. For all other claims or demands not the
subject of court or regulatory authority or process, the Party To Be
Indemnified shall give the Indemnifying Party written notice thereof
together with a copy of any claim or demand within (10) days after receipt
of the claim or demand. The Indemnifying Party shall then have the right to
respond and undertake the defense thereof by representatives of its own
choosing and at its own expense; provided, however, that the Party To Be
Indemnified may participate in the response and the defense of the claim or
demand with counsel of its own choice and at its own expense.
11.4.2 In the event that the Indemnifying Party, by the Seventh (7th)
day after receipt of notice of any legal action (or, if an answer or other
pleading must be served in order to prevent judgment by default in favor of
the person asserting such claim), does not elect to defend against such
legal action, the Party To Be Indemnified will (upon further notice to the
Indemnifying Party) have the right to undertake the defense, compromise or
settlement of such legal action on behalf of and for the account to the
right of the Indemnifying Party to assume the defense of such claims at any
time prior to settlement, compromise or final determination thereof. For
all other claims not the subject of court or regulatory authority or
process, if the Indemnifying Party, by the Tenth (10th) day after receipt
of notice of the claim or demand does not elect to defend against such
claim or demand, or within Ten (10) days and not prejudiced by lack of
notice of entry of default judgment, the Party To Be Indemnified will (upon
further notice to the Indemnifying Party) have the right to undertake the
defense, compromise or settlement of such legal action on behalf of and for
the account to the right of the Indemnifying Party to assume the defense of
such claims at any time prior to settlement, compromise or final
determination thereof.
11.4.3 Anything in this Section to the contrary notwithstanding, the
Indemnifying Party shall not settle any claim without the consent of the
Party To Be Indemnified unless such settlement involves only the payment of
money and the claimant provides to the Party To Be Indemnified a release,
in a form acceptable to the Party To Be Indemnified, from all liability in
respect of such claim. If the settlement of the claim involves more than
the payment of money, the Indemnifying Party shall not settle the claim
without the prior consent of the Party To Be Indemnified, which consent
shall not be unreasonably withheld.
11.4.4 The Party To Be Indemnified and the Indemnifying Party will
each cooperate with all reasonable requests of the other.
11.4.5 Anything in this Section to the contrary notwithstanding, the
failure of the Party To Be Indemnified to give notice as required shall not
void the right if indemnity unless the failure to notify materially
prejudices the Indemnifying Party. For the purposes of this Section, the
entry of a default judgment constitutes material prejudice.
11.5 Remedies Not Exclusive. The remedies provided for in this Section
shall not be exclusive of any other rights or remedies available by one party
against the other, either at law or in equity.
XII. Miscellaneous Provisions
12.1 Amendment and Modification. Subject to applicable law, this Agreement
may be amended, modified or supplemented only by a written agreement signed by
Purchaser and Seller.
12.2 Waiver of Compliance; Consents.
12.2.1 Any failure of any party to comply with any obligation, covenant,
agreement or condition herein may be waived by the party entitled to the
performance of such obligation, covenant or agreement or who has the benefit of
such condition, but such waiver or failure to insist upon strict compliance with
such obligation, covenant, or agreement or condition will not operate as a
waiver of, or estoppel with respect to, any subsequent or other failure.
12.2.2 Whenever this Agreement requires or permits consent by or on behalf
of any party hereto, such consent will be given in a manner consistent with the
requirements for a waiver of compliance as set forth above.
12.3 Notices. All Notices, requests, demands and other communications
required or permitted hereunder will be in writing and will be deemed to have
been duly given when delivered by (i) hand; (ii) reliable overnight delivery
service; or (iii) facsimile transmission.
If to Purchaser, to: Suite #0000 - 0000 Xxxxxx Xxxxxx, Xxxxxxxxx, XX
Xxxxxx, X0X 0X0, Fax 000-000-0000
If to Targets, to: 00 Xxxxxxxx Xxxx, #000-00 Xxxxxxxxxx Xxxxxxxx, Xxxxxxxxx
000000 Fax: 00-000-0000
If to Seller, to: 00 Xxxxxxxx Xxxx, #000-00 Xxxxxxxxxx Xxxxxxxx, Xxxxxxxxx
000000 Fax: 00-000-0000
12.4 Titles and Captions. All section titles or captions contained in this
Agreement are for convenience only and shall not be deemed part of the context
nor effect the interpretation of this Agreement.
12.5 Entire Agreement. This Agreement contains the entire understanding
between and among the parties and supersedes any prior understandings and
agreements among them respecting the subject matter of this Agreement.
12.6 Agreement Binding. This Agreement shall be binding upon the heirs,
executors, administrators, successors and assigns of the parties hereto.
12.7 Attorneys' Fees. In the event an arbitration, suit or action is
brought by any party under this Agreement to enforce any of its terms, or in any
appeal therefrom, it is agreed that the prevailing party shall be entitled to
reasonable attorneys fees to be fixed by the arbitrator, trial court, and/or
appellate court.
12.8 Computation of Time. In computing any period of time pursuant to this
Agreement, the day of the act, event or default from which the designated period
of time begins to run shall be included, unless it is a Saturday, Sunday or a
legal holiday, in which event the period shall begin to run on the next day that
is not a Saturday, Sunday or legal holiday.
12.9 Pronouns and Plurals. All pronouns and any variations thereof shall be
deemed to refer to the masculine, feminine, neuter, singular or plural as the
identity of the person or persons may require.
12.10 Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HERETO SHALL BE GOVERNED, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEVADA. THE PARTIES AGREE THAT ANY LITIGATION RELATING
DIRECTLY OR INDIRECTLY TO THIS AGREEMENT MUST BE BROUGHT BEFORE AND DETERMINED
BY A COURT OF COMPETENT JURISDICTION WITHIN THE STATE OF NEVADA.
12.11 Arbitration. If at any time during the term of this Agreement any
dispute, difference, or disagreement shall arise upon or in respect of this
Agreement, and the meaning and construction hereof, every such dispute,
difference, and disagreement shall be referred to a single arbiter agreed upon
by the parties, or if no single arbiter can be agreed upon, an arbiter or
arbiters shall be selected in accordance with the rules of the American
Arbitration Association and such dispute, difference or disagreement shall be
settled by arbitration in accordance with the then prevailing commercial rules
of the American Arbitration Association, and judgment upon the award rendered by
the arbiter may be entered in any court having jurisdiction thereof.
12.12 Presumption. This Agreement or any Section thereof shall not be
construed against any party due to the fact that said Agreement or any section
thereof was drafted by said party.
12.13 Further Action. The parties hereto shall execute and deliver all
documents, provide all information and take or forbear from all such action as
may be necessary or appropriate to achieve the purposes of the Agreement.
12.14 Parties in Interest. Nothing herein shall be construed to be to the
benefit of any third party, nor is it intended that any provision shall be for
the benefit of any third party.
12.15 Savings Clause. If any provision of this Agreement, or the
application of such provision to any person or circumstance, shall be held
invalid, the remainder of this Agreement, or the application of such provision
to persons or circumstances other than those as to which it is held invalid,
shall not be affected hereby.
12.16 Confidentiality. The parties shall keep this Agreement and its terms
confidential, but any party may make such disclosures as it reasonably considers
are required by law or necessary to obtain financing. In the event that the
transactions contemplated by this Agreement are not consummated for any reason
whatsoever, the parties hereto agree not to disclose or use any confidential
information they may have concerning the affairs of other parties, except for
information which is required by law to be disclosed. Confidential information
includes, but is not limited to, financial records, surveys, reports, plans,
proposals, financial information, information relating to personnel contracts,
stock ownership, liabilities and litigation.
12.17 Costs, Expenses and Legal Fees. Whether or not the transactions
contemplated hereby are consummated, each party hereto shall bear its own costs
and expenses (including attorneys' fees), except as set forth in the Escrow
Agreement.
12.18 Severability. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future laws effecting during
the term hereof, such provision shall be fully severable and this Agreement
shall be construed and enforced as if such illegal, invalid or unenforceable
provision never comprised a part hereof; and the remaining provisions hereof
shall remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance herefrom. Furthermore, in
lieu of such illegal, invalid and unenforceable provision, there shall be added
automatically as part of this Agreement a provision as similar in nature in its
terms to such illegal, invalid or unenforceable provision as may be possible and
be legal, valid and enforceable.
12.19 Counterparts and Facsimile Signatures. This Agreement may be executed
in one or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument. For purposes of
this Agreement, facsimile signatures shall be treated as originals until such
time that applicable pages bearing non-facsimile signatures are obtained from
the relevant party or parties.
12.20 Continuing Nature. All representations and warranties contained in
this Agreement shall survive the Closing for a period of two (2) years and, if
applicable, all covenants, which, according to their terms are to be performed
after the execution of this Agreement, shall survive
the Closing for a period of two (2) years. Said two year survival period shall
not apply to any breach by Seller of the representations and warranties in
Section 2.2 hereof; instead, any such breach by Seller shall be limited to
applicable periods provided by law.
IN WITNESS WHEREOF, the parties hereto have set their hands this 25th day
of February, 1998.
NOSTRAD TELECOMMUNICATIONS, INC.
A Nevada Corporation (Purchaser)
by: __________________________________ by:___________________________
NOSTRAD TELECOMMUNICATIONS PTE. LTD.
A Singapore Corporation(Seller)
by: __________________________________ by:___________________________
Exhibit "A"
Directors Resolutions in Writing Pursuant to
Article 98 of the Company's Articles of Association
RESOLVED: That the officers of the Company are hereby authorized Xxxxxxxx Xxx Lo
Xxx, be the Company's representative in all matters relating to the sale of
Nostrad Media Pte. Ltd. and OmniVision Africa Ltd. to Nostrad Telecommunications
Inc.
There being no further business, this meeting was adjourned.
---------------------------------------
Xxxxxxxx Xxx, Secretary
ATTEST:
---------------------------------- ---------------------------------------
S.S. Teo, Director Xxxxx Xxxxxxxxx, Director
Dated: December 1, 1997
Exhibit "B"
Default
Targets is not in default under, and no condition exists that with notice or
lapse of time would constitute a default of Targets under (i) any mortgage, loan
agreement, evidence of indebtedness, or other instrument evidencing borrowed
money to which Targets is a party or by which Targets or the properties of
Targets are bound or (ii) any judgment, order, or injunction of any court,
arbitrator, or governmental agency that would reasonably be expected to affect
materially and adversely the business, financial condition, or results of
operations of Targets taken as a whole.
Certified by:
)
Xxxxxxxx Xxx Lo Lim ) _____________________ Dated __________ 1998
)
Exhibit "G:
Audited Financial Statements
Exhibit "H"
Audited Financial Statement
Nostrad Telecommunications Inc.
Consolidated Financial Statements
September 30, 1997
XXX X. XXXXXXX, C.P.A.
A PROFESSIONAL CORPORATION
00000 Xxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Tel: (000) 000-0000 Fax: (000) 000-0000
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors of
Nostrad Telecommunications, Inc.
I have audited the accompanying consolidated balance sheet of Nostrad
Telecommunications, Inc. (the "Company"), as of September 30, 1997 and the
related consolidated statements of operations and deficit, shareholders' equity,
and cash flows for the nine-month period from January 1, 1997 (commencement of
principal business operations) to September 30, 1997. These financial statements
are the responsibility of the Company's management. My responsibility is to
express an opinion on these financial statements based on my audits.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
the Company as of September 30, 1997, and the results of its operations and its
cash flows for the nine-month period ended September 30, 1997, in conformity
with generally accepted accounting principles.
The Company is economically dependent on its present shareholders and their
affilites for the financing of its operations. (See Note 1).
February 17, 1998
XXX X. XXXXXXX, C.P.A.
a professional corporation
Nostrad Telecommunications Inc.
Consolidated Financial Statements
CONSOLIDATED BALANCE SHEET
--------------------------------------------------------------------------------
Assets September 30, 1997
-------------------
Current Assets
Cash $ 5,381
Trade receivables 8,163
Due from related parties 11,681
Inventory 6,940
-------------------------------------------------------------------------------
32,165
Licenses and Development Costs (note 4)
Licenses, net 152,662
Deferred development costs 153,341
-------------------------------------------------------------------------------
306,003
Fixed Assets (note 5)
Fixed Assets 193,374
less Accumulated Depreciation (44,373)
-------------------------------------------------------------------------------
149,001
-------------------------------------------------------------------------------
$ 487,169
================================================================================
Liabilities
Current Liabilities
Accounts payable $ 33,602
Other 2,110
-------------------------------------------------------------------------------
35,712
-------------------------------------------------------------------------------
Commitments (note 7)
Shareholders' Equity
Share Capital (note 6)
Authorized
25,000,000 common shares, par value $0.01
Issued & outstanding - 6,700,000 common shares 6,700
Additional Paid-in Capital 367,640
Share subscriptions received 300,000
Accumulated Deficit (222,883)
-------------------------------------------------------------------------------
451,457
-------------------------------------------------------------------------------
$ 487,169
================================================================================
The notes to consolidated financial statements are an integral part thereof
Consolidated Financial Statements
CONSOLIDATED STATEMENT OF OPERATIONS AND DEFICIT
--------------------------------------------------------------------------------
Nine month
period ended
September 30, 1997
Revenues
Sales & Service Revenues $ 7,775
Other income 165
-------------------------------------------------------------------------------
7,940
Cost of Sales
Materials 13,105
Direct Marketing 1,532
-------------------------------------------------------------------------------
14,637
-------------------------------------------------------------------------------
Gross Profit (6,697)
Expenses
Office costs 20,365
Salary and benefits 9,448
Depreciation & amortization 54,374
-------------------------------------------------------------------------------
74,187
-------------------------------------------------------------------------------
Operating Loss (90,884)
Other
Abandoned development costs (132,000)
-------------------------------------------------------------------------------
Net loss $ (222,883)
================================================================================
Average Number of outstanding shares 3,000,000
-------------------------------------------------------------------------------
Net income (loss) per share $ (0.07)
================================================================================
The notes to consolidated financial statements are an integral part thereof
Consolidated Financial Statements
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
--------------------------------------------------------------------------------
September 30, 1997
Subscribed Common Stock Additional
-------------------- -------------------- Paid-in Accumulated
Shares Amount Shares Amount Capital Deficit Total
------------------------------------------------------------------------------------------------------------------------
Common stock
split after
January 1, 1997
3,000,000 $3,000 $ -- $ -- $3,000
Reverse
Acquisition by
Nostrad 461,568 300,000 3,700,000 3,700 367,640 -- 671,340
Net loss for
period (222,883) (222,883)
------------------------------------------------------------------------------------------------------------------------
Balance
September 30, 1997
461,568 $300,000 6,700,000 $6,700 $367,640 $(222,883) $451,457
========================================================================================================================
The notes to the consolidated financial statements are an integral part thereof
Consolidated Financial Statements
CONSOLIDATED STATEMENT OF CHANGES IN CASH POSITION
--------------------------------------------------------------------------------
Nine month
period ended
September 30, 1997
OPERATING ACTIVITIES
Net income (loss) for period $(222,883)
Add expense items not involving cash
Depreciation 54,374
Abandoned development costs 132,000
-------------------------------------------------------------------------------
(36,509)
Add changes in non-cash working capital items:
Accounts receivable (19,844)
Inventory (6,940)
Accounts Payable 35,712
-------------------------------------------------------------------------------
Net funds provided (used) by operating activities (27,581)
INVESTING ACTIVITIES
Licenses and deferred development costs (448,003)
Fixed asset purchases (193,375)
-------------------------------------------------------------------------------
Net funds provided (used) by investing activities (641,378)
FINANCING ACTIVITIES
Shares issued in reverse acquisition 374,340
Share subscriptions received 300,000
-------------------------------------------------------------------------------
Net funds provided by financing activities 674,340
-------------------------------------------------------------------------------
NET INCREASE IN CASH 5,381
Cash at January 1, 1997 --
-------------------------------------------------------------------------------
CASH AT END OF PERIOD $ 5,381
===============================================================================
The notes to consolidated financial statements are an integral part thereof
Supplemental information:
Interest paid $ --
----------
Taxes paid $ --
----------
Consolidated Financial Statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
September 30, 1997
1. ORGANIZATION AND BASIS OF PRESENTATION
Nostrad Telecommunications Inc. ("Nostrad" or the "Company") was incorporated in
Nevada on September 24, 1993. On September 29, 1997, the Company's name was
changed from Cave Productions, Inc. to Nostrad. Effective September 30, 1997,
Nostrad Telecommunications Pte. Ltd., a private Singapore company ("Nostrad
Singapore") sold its wholly owned subsidiary companies Nostrad Media Pte. Ltd.,
a Singapore company which holds the Company's Asian licenses; and OmniVision
Africa Ltd., a British Virgin Island company, which holds the Company's African
licenses; (collectively as "Nostrad Subsidiaries") to the Company for 3,700,000
common shares and $300,000 cash. Nostrad Singapore has agreed to convert the
$300,000 cash owed to shares of the company at $0.65 per share or 461,538
shares. Nostrad Singapore may also be compensated up to 13,850,000 shares of
common stock for successful performance relative to license issuance in fourteen
emerging countries.
Nostrad Subsidiaries hold the Company's interest in its Asian and African
licenses for providing telecommunication services including providing wireless
PAY-TV (MMDS), paging, telephony and Internet services.
As of this date the Company, through its Nostrad Subsidiaries has entered into
long term exclusive use of specified frequency spectrum and has commenced
alphanumeric and numeric paging operations in Mongolia. The Nostrad Subsidiaries
has also entered into similar licensing agreements in Uganda.
The accompanying financial statements have been prepared on a basis of
accounting as a reverse acquisition by Nostrad and reflect all transactions on a
historical cost basis since inception. Nostrad Singapore or its affiliates owns
98% of the Company.
All references to the "Company" within the accompanying financial statements and
notes include transactions related to foreign license interests originally
entered into by the Nostrad Subsidiaries, as all such interests previously owned
by Nostrad Singapore have been legally transferred to the Company. The following
chart presents a summary of the Company's significant investments in companies
that hold the licenses required providing telecommunication services.
[GRAPHIC OMITTED]
Consolidated Financial Statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
September 30, 1997
1. ORGANIZATION AND BASIS OF PRESENTATION (Continued)
The Company holds its licenses in Mongolia through its 80% owned subsidiary
company, Mongolia Home Vision Corporation HH. A Mongolia corporation, Genco
Company Limited, holds the remaining 20%. Since May 1996 the Company has been
granted several license including the following:
May 16, 1996 Certificate of Enterprise with Foreign Investment
--------------------------------------------------------------
May 17, 1996 Communications Service License (10 years)
------------------------------------------------------
May 17, 1996 License to Employ the Radio Frequency
August 26, 1996 Mongolia State Radio, TV & Communications License
November 7, 1996 Permission to use channels to broadcast TV
January 28, 1997 Special License for the provision of Paging Service
February 20, 1997 Foreign Investment Chief Order
March 28, 1997 Mongolia State Registration Certificate
The Company has subsequently commenced paging operations, has obtained a package
of channels suitable for the Mongolian market, and has completed plans for
implementation of Multi-point, Multi-channel Distribution System ("MMDS") pay
television and paging services. Principal business operations commenced in
January 1997 and sales operations generated the Company's $7,775 in net revenues
for the period.
The Company holds its licenses in Uganda through its 80% owned subsidiary
company, OmniVision (U) Limited. Since April 1997, the Company has been granted
the necessary licenses to provide exclusive use of frequency spectrum required
for implementation of a MMDS pay television and paging operations:
April 23, 1997 Permission to establish wireless cable system
------------------------------------------------------------
May 21, 1997 Permission to simulcast Uganda TV
May 27, 1997 Permission to establish paging system
June 6, 1997 Investment license from Uganda Investment Authority
December 16, 1997 Assignment of MMDS frequency
January 15, 1998 Assignment of Paging frequency
As of September 30, 1997, the Company issued 2,000,000 common shares and agreed
to pay $150,000 for 100 per cent of the issued and outstanding common shares of
Nostrad Media Pte. Ltd., and 1,700,000 common shares and agreed to pay $150,000
for 100 per cent of the issued and outstanding common shares of OmniVision
Africa Ltd. The Company has also agreed to issue performance shares to be issued
within 24 months of September 30, 1997 as outlined on the following table.
Consolidated Financial Statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
September 30, 1997
1. ORGANIZATION AND BASIS OF PRESENTATION (Continued)
Country Performance Stock
-------------------------------------------------------------------------
Ghana 1,500,000
Tanzania 1,500,000
Morocco 2,000,000
Democratic Congo Republic 400,000
Rwanda 250,000
Tunisia 800,000
Zimbabwe 1,000,000
Kenya 800,000
Indonesia 1,500,000
Cambodia 500,000
Vietnam 500,000
Philippines 800,000
Bangladesh 1,500,000
Myanmar 800,000
------------
13,850,000
============
The Company is in the process of establishing an international telecommunication
operation, which includes providing wire cable, paging, telephone and Internet
services. The recoverability of the amounts shown for licenses and deferred
development costs is dependent upon the ability of the Company to obtain
necessary financing to complete the infrastructure required to provide these
services, and to operate on a profitable basis.
The Company is contemplating a common stock offering of 1.1 million common
shares and anticipates $529,000 in net proceeds. To date $90,000 has been
raised. However, there is no assurance that such financing will be successful.
Management has been dependent on financing from related parties which has
invested approximately $675,000 as of September 30, 1997. There is no assurance
that related parties will continue such funding. These financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.
2. SUMMARY OFSIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the
Company and of acquired subsidiary companies: Nostrad Media Pte. Ltd. (100%
owned), Mongolia Home Vision Corporation HH (80% owned by Nostrad Media Pte.
Ltd.), OmniVision Africa Ltd. (100% owned), and OmniVision (U) Ltd. (100% owned
by OmniVision Africa Ltd.). All significant inter-company accounts and
transactions have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires the Company's management to make estimates and
assumptions that affect the amounts reported in the consolidated financial
statements and related notes to the financial statements.
Consolidated Financial Statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
September 30, 1997
2. SUMMARY O SIGNIFICANT ACCOUNTING POLICIES (continued)
Cash Equivalents
The Company defines cash equivalents as highly liquid financial instruments
purchased with a maturity of ninety days or less.
Inventory
The Company records inventory at the lower of cost or market.
Licenses and Deferred Development Costs
The Company capitalizes the costs related to obtaining rights to provide paging,
cable television, telephone, and Internet services in specific countries, and
for the rights to broadcast specific channels. Costs incurred are initially
capitalized as Deferred Development Costs. If after a twelve-month period,
rights have not been fully obtained, the Deferred Development Costs will be
expensed. There is no assurance that revenues exceeding these costs will be
realized by the Company.
Fixed Assets
Fixed assets are recorded at cost and are depreciated on a straight line basis
over their estimated useful life as follows:
Years
-----
o Office equipment, furniture & fixtures 3
o Automotive & transportation equipment 3
o Leasehold improvements 3
o Operating Equipment & tools 3
o Transmission Station & Tower 5
Foreign Currency Translation
Transactions recorded are translated into United States dollars, its functional
currency, as follows:
o Monetary assets and liabilities at the rate prevailing at the balance sheet
date.
o Non-monetary assets and liabilities at historic rates
o Income and expenses at the average rate in effect during the year.
Any gain or loss is reflected on the consolidated statement of operations &
deficit.
Consolidated Financial Statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
September 30, 1997
3. LICENSES AND DEFERRED DEVELOPMENT COSTS
Accumulated costs incurred in obtaining license agreements and deferred
development costs incurred are as follows:
Licenses
Country Amount
------------------------------------------------------------------
Mongolia (a) $ 106,268
Uganda (b) 56,394
---------
162,662
Amortization (10,000)
$ 152,662
=========
Deferred Development Costs
Country Amount
-----------------------------------------------------------------
Philippines $ 42,500
Myanmar 31,400
Knowledge Network (d) 22,600
Indonesia 17,500
Poland 12,000
Malaysia 8,600
Cambodia 7,800
Vietnam 6,800
Bangladesh 4,300
---------
$ 153,500
=========
(a) Mongolia
The Company has entered into several agreements in Mongolia (see note 1), which
grant the Company exclusive rights to broadcast under certain frequency
spectrum. During January 1998, the paging system was upgraded to offer voice
paging, answering services, remote message retrieval, and storage in
Ulaanbaator, Mongolia's capital. The Company has also entered into exclusive
agreements to broadcast certain channels in Mongolia. The License granted
expires May 17, 2006. In order to keep the Licenses granted, the Company must
invest an additional $750,000 in its Mongolian subsidiary. This is approximately
the cost of installing wireless cable equipment in Mongolia. There is no
assurance that such monies can be raised.
(b) Uganda
The licenses granted to the Company by the Government of Uganda (see note 1)
gives the Company exclusive rights to certain frequency spectrum. The Company
has also entered into exclusive agreements to broadcast certain channels in
Uganda. Subsequent to September 30, 1997, the Company's interest in its Uganda
subsidiary has increased from 80% to 100%. (See Note 4 (c), Share Capital)
Consolidated Financial Statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
September 30, 1997
3. LICENSES AND DEFERRED DEVELOPMENT COSTS (continued)
(c) Knowledge Network
In order to provide a substantial educational component to the Company's
broadcasting system, the Company is currently reviewing a proposed joint venture
with the Open Learning Agency.
4. FIXED ASSETS
Fixed assets of the Company consist of the following:
Cost
-------------------------------------------------------------------------------
Office equipment, furniture & fixtures $ 15,761
Transportation equipment 25,624
Leasehold improvements 47,447
Transmission station & tower 80,072
Operating equipment & tools 24,470
---------
193,374
(44,373)
---------
$ 149,001
=========
5. SHARE CAPITAL
a) Common shares issued and outstanding since inception are as follows:
Additional
Fiscal period and consideration received Number of Par value paid-in
shares amount capital
--------------------------------------------------------------------------------
March 1, 1993 - cash 3,000,000 $ 3,000 $ --
September 30, 1997
Purchase of Nostrad Media Pte. Ltd.
and OmniVision Africa Ltd. 3,700,000 3,700 367,640
-----------------------------------
6,700,000 $ 6,700 $ 367,640
===================================
a) On October 15, 1997, the Company entered into an agreement to purchase the
remaining 20% interest in OmniVision (U) Ltd. (see note1) for consideration
of 500,000 shares of the Company.
b) The Company has entered into a Private Placement Offering dated November
27, 1997. Under the terms of this agreement, the Company may issue up to
1,500,000 shares for total proceeds of $$975,000. Nostrad Singapore has
agreed to convert the $300,000 owed to shares by participating in the
Private Placement Offering. The $300,000 has been disclosed as Share
Subscriptions Received.
c) The Company has reserved 13,850,000 shares of common stock for successful
performance by Nostrad Singapore in obtaining licenses in fourteen
countries.
Consolidated Financial Statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
September 30, 1997
6. INCOME TAXES
The Company has incurred losses totaling approximately $222,000 that may be
carried forward to reduce taxable income in future years. No deferred asset has
been recognized due to the uncertainty of future realization of any tax benefit.
7. COMMITMENTS
The Company has an agreement with its officers to provide international
management of its operations. The terms of the contract are for a period of two
years at an annual cost of $180,000.
8. SUBSEQUENT EVENTS
A Memorandum and Contract of Understanding between OmniVision Africa Ltd. and
ESN Satellite Cable TV Network ("ESN") of Accra, Ghana was entered into January
15, 1998. Under this Agreement, the Company will own 80% of the subsidiary
company that has been granted licenses for exclusive use of spectrum frequencies
in Ghana wireless pay television services. No cash investment has been made to
date.
The Company has entered into a 90 per cent joint venture for wireless television
in the Democratic Republic of the Congo. No cash investment has been made to
date.
The Company has entered into a Memorandum of Understanding in February 1998 to
provide wireless television in the country of Morocco. The Company will earn a
two-thirds interest in PCI, a Company holding Exclusive License and Frequency
with capability of providing at least 24 channels for a minimum period of ten
years to operate a wireless Cable Pay TV Distribution System. The Company is
obligated to pay US$100,000 over a one-year period for this interest, and will
also grant an option to purchase 20,000 of the Company's shares.
