SHARE EXCHANGE AGREEMENT
Exhibit 4.0
This Share Exchange Agreement, dated as of June 1, 2005, is made by and among BAS CONSULTING, INC., a Nevada corporation (the "Acquiror"), each of the Persons listed on Exhibit A hereto (collectively, the "Shareholders", and individually a "Shareholder"), and Earjoy Group Limited, incorporated under the laws of the British Virgin Islands (the “Company”).
The Shareholders have agreed to transfer to the Acquiror, and the Acquiror has agreed to acquire from the Shareholders, all of the shares, which shares constitute 100% of the outstanding capital of the Company, in exchange for 23,375,000 shares of the Acquiror's Common Stock to be issued on the Closing Date (the "Acquiror Shares"), which Acquiror Shares shall constitute 93.5% of the issued and outstanding shares of Acquiror's Common Stock immediately after the closing of the transactions contemplated herein, (and after giving effect to a 1 for 6.433138 reverse stock split with respect to Acquiror’s previously outstanding 10,453,850 shares which amount to 1,625,000 post-split Acquiror shares) in each case, on the terms and conditions as set forth herein.
SECTION I
Unless the context otherwise requires, the terms defined in this Section I will have the meanings herein specified for all purposes of this Agreement, applicable to both the singular and plural forms of any of the terms herein defined.
1.1
"Acquired Companies" means, collectively, the Company and the Company
Subsidiaries.
1.2
"Acquiror Balance Sheet" means the Acquiror's audited balance sheet at
December 31, 2004.
1.3
"Acquiror Board" means the Board of Directors of the Acquiror.
1.4
"Acquiror's Common Stock" means the BAS CONSULTING, INC. common stock, par value $.001 per share.
1.5
"Affiliate" means any Person that directly or indirectly controls, is controlled by or is under common control with the indicated Person.
1.6
"Agreement" means this Share Exchange Agreement, including all Schedules and Exhibits hereto, as this Share Exchange Agreement may be from time to time amended, modified or supplemented.
1.7
"Approved Plans" means a stock option or similar plan for the benefit of employees or others which has been approved by the stockholders of the Acquiror.
1
1.8
"Closing Acquiror Shares" means the aggregate number of Acquiror Shares issuable to the Shareholders at Closing.
1.9
"Closing Date" has the meaning set forth in Section 3.
1.10
"Code" means the Internal Revenue Code of 1986, as amended.
1.11
"Common Stock" means all outstanding capital of the Company.
1.12
"Commission" means the Securities and Exchange Commission or any other federal agency then administering the Securities Act or the Exchange Act.
1.13
"Company Board" means the Board of Directors of the Company.
1.14
"Company Subsidiaries" means all of the direct and indirect Subsidiaries of the Company, if any.
1.15
"Distributor" means any underwriter, dealer or other Person who participates, pursuant to a contractual arrangement, in the distribution of the securities offered or sold in reliance on Regulation S.
1.1 6
"Environmental Laws" means any Law or other requirement relating to the environment, natural resources, or public or employee health and safety.
1.1 7
"Environmental Permit" means all licenses, permits, authorizations, approvals, franchises and rights required under any applicable Environmental Law or Order.
1.1 8
"Equity Security" means any stock or similar security, including, without limitation, securities containing equity features and securities containing profit participation features, or any security convertible into or exchangeable for, with or without consideration, any stock or similar security, or any security carrying any warrant, right or option to subscribe to or purchase any shares of capital stock, or any such warrant or right.
1. 19
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.
1. 20
"Exchange Act" means the Securities Exchange Act of 1934 or any similar federal statute, and the rules and regulations of the Commission thereunder, all as the same will then be in effect.
1. 21
"Exhibits" means the several exhibits referred to and identified in this Agreement.
1. 22
"GAAP" means, with respect to any Person, United States generally accepted accounting principles applied on a consistent basis.
1.2 3
"Governmental Authority" means any federal or national, state or provincial, municipal or local government, governmental authority, regulatory or administrative agency, governmental commission, department, board, bureau, agency or instrumentality, political subdivision, commission, court, tribunal, official, arbitrator or arbitral body, in each case whether U.S. or non-U.S.
2
1.2 4
"Indebtedness" means any obligation, contingent or otherwise. Any obligation secured by a Lien on, or payable out of the proceeds of, or production from, property of the relevant party will be deemed to be Indebtedness.
1.2 5
"Laws" means, with respect to any Person, any U.S. or non-U.S. federal, national, state, provincial, local, municipal, international, multinational or other law (including common law), constitution, statute, code, ordinance, rule, regulation or treaty applicable to such Person.
1.2 6
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind, including, without limitation, any conditional sale or other title retention agreement, any lease in the nature thereof and the filing of or agreement to give any financing statement under the Uniform Commercial Code of any jurisdiction and including any lien or charge arising by Law.
1.2 7
"Material Acquiror Contract" means any and all agreements, contracts, arrangements, leases, commitments or otherwise, of the Acquiror, of the type and nature that the Acquiror is required to file with the Commission.
1.2 8
"Material Adverse Effect" means, when used with respect to the Acquiror or the Acquired Companies, as the case may be, any change, effect or circumstance which, individually or in the aggregate, would reasonably be expected to (a) have a material adverse effect on the business, assets, financial condition or results of operations of the Acquiror or the Acquired Companies, as the case may be, in each case taken as a whole or (b)materially impair the ability of the Acquiror or the Company, as the case maybe, to perform their obligations under this Agreement, excluding any change, effect or circumstance resulting from (i) the announcement, pendency or consummation of the transactions contemplated by this Agreement, (ii) changes in the United States securities markets generally, or (iii) changes in general economic, currency exchange rate, political or regulatory conditions in industries in which the Acquiror or the Acquired Companies, as the case may be, operate.
1.2 9
"Order" means any award, decision, injunction, judgment, order, ruling, subpoena, or verdict entered, issued, made, or rendered by any Governmental Authority.
1. 30
"Organizational Documents" means (a) the articles or certificate of incorporation and the by-laws or c ode of regulations of a corporation; (b) the partnership agreement and any statement of partnership of a general partnership;(c) the limited partnership agreement and the certificate of limited partnership of a limited partnership; (d) the articles or certificate of formation and operating agreement of a limited liability company; (e) any other document performing a similar function to the documents specified in clauses (a), (b),(c) and (d) adopted or filed in connection with the creation, formation or organization of a Person; and (f) any and all amendments to any of the foregoing.
3
1. 31
"Permitted Liens" means (a) Liens for Taxes not yet payable or in respect of which the validity thereof is being contested in good faith by appropriate proceedings and for the payment of which the relevant party has made adequate reserves on its financial statements; (b) Liens in respect of pledges or deposits under workmen's compensation laws or similar legislation, carriers, warehousemen, mechanics, laborers and material men and similar Liens, if the obligations secured by such Liens are not then delinquent or are being contested in good faith by appropriate proceedings conducted and for the payment of which the relevant party has made adequate reserves on its financial statements; and (c) statutory Liens incidental to the conduct of the business of the relevant party which were not incurred in connection with the borrowing of money or the obtaining of advances or credits and that do not in the aggregate materially detract from the value of its property or materially impair the use thereof in the operation of its business.
1. 32
"Person" means all natural persons, corporations, business trusts, associations, companies, partnerships, limited liability companies, joint ventures and other entities, governments, agencies and political subdivisions.
1.3 3
"Proceeding" means any action, arbitration, audit, hearing, investigation, litigation, or suit (whether civil, criminal, administrative or investigative) commenced, brought, conducted, or heard by or before, or otherwise involving, any Governmental Authority.
1.3 4
"Regulation S" means Regulation S under the Securities Act, as the same may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission.
1.3 5
"Rule 144" means Rule 144 under the Securities Act, as the same may be amended from time to time, or any successor statute.
1.3 6
"Schedule 14(f) Filing" means an information statement filed by the Acquiror on Schedule 14f-1 under the Exchange Act.
1.3 7
"Schedules" means the several schedules referred to and identified herein, setting forth certain disclosures, exceptions and other information, data and documents referred to at various places throughout this Agreement.
1.3 8
"SEC Documents" has the meaning set forth in Section 6.26.
1.3 9
"Section 4(2)" means Section 4(2) under the Securities Act, as the same may be amended from time to time, or any successor statute.
1. 40
"Securities Act" means the Securities Act of 1933, as amended, or any similar federal statute, and the rules and regulations of the Commission thereunder, all as the same will be in effect at the time.
1. 41
"Shares" means the capital stock of the Company owned by the Shareholders and exchanged pursuant to this Agreement.
4
1. 42
"Subsidiary" means, with respect to any Person, any corporation, limited liability company, joint venture or partnership of which such Person (a) beneficially owns, either directly or indirectly, more than 50% of (i) the total combined voting power of all classes of voting securities of such entity, (ii) the total combined equity interests, or (iii) the capital or profit interests, in the case of a partnership; or (b) otherwise has the power to vote or to direct the voting of sufficient securities to elect a majority of the board of directors or similar governing body.
1.4 3
"Survival Period" has the meaning set forth in Section 12.1.
1.4 4
"Taxes" means all foreign, federal, state or local taxes, charges, fees, levies, imposts, duties and other assessments, as applicable, including, but not limited to, any income, alternative minimum or add-on, estimated, gross income, gross receipts, sales, use, transfer, transactions, intangibles, ad valorem, value-added, franchise, registration, title, license, capital, paid-up capital, profits, withholding, payroll, employment, unemployment, excise, severance, stamp, occupation, premium, real property, recording, personal property, federal highway use, commercial rent, environmental (including, but not limited to, taxes under Section 59A of the Code) or windfall profit tax, custom, duty or other tax, governmental fee or other like assessment or charge of any kind whatsoever, together with any interest, penalties or additions to tax with respect to any of the foregoing; and "Tax" means any of the foregoing Taxes.
1.4 5
"Tax Group" means any federal, state, local or foreign consolidated, affiliated, combined, unitary or other similar group of which the Acquiror is now or was formerly a member.
1.4 6
"Tax Return" means any return, declaration, report, claim for refund or credit, information return, statement or other similar document filed with any Governmental Authority with respect to Taxes, including any schedule or attachment thereto, and including any amendment thereof.
1.4 7
"Transaction Documents" means, collectively, all agreements, instruments and other documents to be executed and delivered in connection with the transactions contemplated by this Agreement.
1.4 8
"U.S." means the United States of America.
1.4 9
"U.S. person" has the meaning set forth in Regulation S under the Securities Act and set forth on Exhibit C hereto.
SECTION II
EXCHANGE OF SHARES AND SHARE CONSIDERATION
2.1
Share Exchange. Each of the Shareholders desires to transfer to the Acquiror, and the Acquiror desires to acquire from each Shareholder, that number of Shares set out beside the respective names of the Shareholders in Exhibit A for the consideration and on the terms set forth in this Agreement. Subject to Section 3.2, the aggregate consideration for the Shares acquired by the Acquiror pursuant to this Agreement will be 23,375,000 shares of the Acquiror's Common Stock to be issued on a pro rata basis among the Shareholders based on the percentage of the Shares owned by such Shareholder as set forth in Exhibit A.
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2.2
Withholding. The Acquiror will not deduct or withhold from the Acquiror Shares any amounts otherwise payable pursuant to this Agreement to any holder of Shares.
2.3
Section 368 Reorganization. For U.S. federal income tax purposes, the exchange by the Shareholders of the Shares for the Acquiror's Common Stock is intended to constitute a "reorganization" within the meaning of Section 368(a)(1)(B) of the Code. The parties to this Agreement hereby adopt this Agreement as a "plan of reorganization" within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the United States Treasury Regulations and are responsible for paying their own Taxes including without limitation, any adverse Tax consequences that may result if the transaction contemplated by this Agreement is not determined to qualify as a reorganization under Section 368 of the Code.
2.4
Directors of Acquiror at Closing. Simultaneously with the Closing of the transactions contemplated by this Agreement, the current directors of the Acquiror shall appoint Xxxx Xxxxx and Xxx Xxxx as additional members of the Acquiror Board. Immediately thereafter, B. Xxxx Xxxxxxxx and Xxxxxxx Xxxxxxx shall resign as directors of the Acquiror and the remaining two directors of the Acquiror shall appoint Xxx Xxx Jun to fill one of the resulting vacancies on the Acquiror Board. The Board will be unable to enter into any agreement or make any financial commitments without the written approval of Xxxx X. Xxxxx or his designee until all shares held in escrow by Xxxxxx X. Xxxxxxxxx, P.C.. have been released or this Agreement has been terminated. If this Agreement is terminated, the members of the Board will appoint B. Xxxx Xxxxxxxx to the Board and all other members will resign concurrently with appointing B. Xxxx Xxxxxxxx to the Board.
SECTION III
3.1
Closing. The closing (the "Closing") of the share exchange will occur at the offices of Xxxx X. Xxxxx, P.C. in New York, New York, no later than June 30, 2005 or at such other date as all of the closing conditions set forth in Sections 9 and 10 have been satisfied or waived (the "Closing Date") but in no event later than July 15, 2005. At the Closing, each Shareholder will deliver to the Acquiror certificate(s) evidencing the number of Shares held by such Shareholder (as set forth in Exhibit A), along with executed stock powers transferring such Shares to the Acquiror, against delivery to each Shareholder by the Acquiror of a certificate evidencing such Shareholder's pro rata share of the Acquiror Shares (as set forth in Exhibit A).
3.2
The shares of the Company and the Acquiror that are exchanged pursuant to this Agreement will be deposited in escrow at the offices of Xxxxxx X. Xxxxxxxxx, P.C., Suite 520, 0000 XXX Xxxxxxx (Xxxxxxxxx Xxxxxxx), Xxxxxx, Xxxxxxxx 00000 at the execution of this Agreement by all parties hereto. Such shares will be released upon confirmation that the Acquiror has received a trading symbol for its securities and such securities The Acquiror agrees to act as expeditiously as possible to obtain such symbol so that the Acquiror’s securities are eligible for trading.
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3.3
The Company shall provide the Acquiror with all audited financial information necessary for Acquiror to file a report on Form 8K and/or Form 10KSB and/or any Registration Statement with the SEC. Such information will be audited by an accounting firm that is qualified to practice before the SEC and contain no qualifications as to compliance with US GAAP.
SECTION IV
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS
4.1
4.1.1
4.1.2
4.1.3
such Shareholder is a party or by which such Shareholder or such Shareholder's Shares are bound with respect to the issuance, sale, transfer, voting or registration of such Shareholder's Shares. At the Closing, the Acquiror will acquire good, valid and marketable title to such Shareholder's Shares free and clear of any and all Liens.
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4.1.4
4.1.5
4.2
4.2.1
4.2.2
Each Shareholder severally understands that the Acquiror Shares are being offered to and exchanged with such Shareholder in reliance upon the truth and accuracy of the representations, warranties, agreements, acknowledgments and understandings of such Shareholder set forth in this Agreement, in order that the Acquiror may determine the applicability and availability of the exemptions from registration of the Acquiror Shares on which the Acquiror is relying.
4.2.3
Additional Representations and Warranties of Non-U.S. Persons.Each Shareholder indicating that it is not a U.S. person on its signature page to this Agreement, severally and not jointly, further makes the representations and warranties to the Acquiror set forth on Exhibit C.
4.2.4
Stock Legends. Each Shareholder hereby agrees with the Acquiror as follows:
(a). The certificates evidencing the Acquiror Shares issued to those Shareholders who are not U.S. persons, will bear the following legend:
8
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS AND NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED EXCEPT (1) IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S PROMULGATED UNDER THE SECURITIES ACT, AND BASED ON AN OPINION OF COUNSEL, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT THE PROVISIONS OF REGULATION S HAVE BEEN SATISFIED OR (2) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR (3) PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, IN WHICH CASE THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE COMPANY AN OPINION OF COUNSEL, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED IN THE MANNER CONTEMPLATED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS.
SECTION V
REPRESENTATIONS AND WARRANTIES BY THE COMPANY
The Company represents and warrants to the Acquiror as follows:
9
5.1
5.2
5.3
5.4
5.5
10
5.6
5.7
Capitalization and Related Matters.
5.7.1
5.7.2
5.7.3
5.8
11
5.9
5.10
Certain Proceedings. There is no pending Proceeding that has been commenced against the Company and that challenges, or may have the effect of preventing, delaying, making illegal, or otherwise interfering with, any of the transactions contemplated in this Agreement. To the Company's knowledge, no such Proceeding has been threatened.
5.11
5.12
Title to and Condition of Properties. The Company owns or holds under valid leases or other rights to use all real property, plants, machinery and equipment necessary for the conduct of the business of the Company as presently conducted, except where the failure to own or hold such property, plants, machinery and equipment would not have a Material Adverse Effect on the Company. The material buildings, plants, machinery and equipment necessary for the conduct of the business of the Company as presently conducted are structurally sound, are in good operating condition and repair and are adequate for the uses to which they are being put, in each case, taken as a whole, and none of such buildings, plants, machinery or equipment is in need of maintenance or repairs, except for ordinary, routine maintenance and repairs that are not material in nature or cost.
5.13
12
SECTION VI
REPRESENTATIONS AND WARRANTIES OF THE ACQUIROR
The Acquiror represents and warrants to the Shareholders and the Company as follows:
6.1
6.2
6.3
6.4
13
6.5
6.6
Binding Obligations. Assuming this Agreement and the Transaction Documents have been duly and validly authorized, executed and delivered by the parties thereto other than the Acquiror, this Agreement has been, and as of the Closing each of the Transaction Documents to which the Acquiror is a party will be, duly authorized, executed and delivered by the Acquiror and constitutes or will constitute, as the case may be, the legal, valid and binding obligations of the Acquiror, enforceable against the Acquiror in accordance with their respective terms, except as such enforcement is limited by general equitable principles, or by bankruptcy, insolvency and other similar Laws affecting the enforcement of creditors rights generally.
6.7
Securities Laws. Assuming the accuracy of the representations and warranties of the Shareholders contained in Section 4, the issuance of the Acquiror Shares pursuant to this Agreement are and will be (a) exempt from the registration and prospectus delivery requirements of the Securities Act, (b) have been registered or qualified (or are exempt from registration and qualification) under the registration permit or qualification requirements of all applicable state securities laws, and (c) accomplished in conformity with all other applicable federal and state securities laws.
6.8 Capitalization and Related Matters.
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6.8.1
Capitalization. The authorized capital stock of the Acquiror consists of 24,000,000 shares of the Acquiror's Common Stock, of which 10,453,850 shares are issued and outstanding, which number will be reduced to 1,625,000 as a result of a 1 for 6.433138 reverse stock split which will be effective prior to closing and 1,000,000 shares of preferred stock, none of which is issued and outstanding. All issued and outstanding shares of the Acquiror's Common Stock are duly authorized, validly issued, fully paid and non-assessable, and have not been issued in violation of any preemptive or similar rights, or any Federal or state securities laws or regulations. On the Closing Date, the Acquiror will have sufficient authorized and un-issued Acquiror's Common Stock to consummate the transactions contemplated hereby. There are no outstanding options, warrants, purchase agreements, participation agreements, subscription rights, conversion rights, exchange rights or other securities or contracts that could require the Acquiror to issue, sell or otherwise cause to become outstanding any of its authorized but un-issued shares of capital stock or any securities convertible into, exchangeable for or carrying a right or option to purchase shares of capital stock or to create, authorize, issue, sell or otherwise cause to become outstanding any new class of capital stock. Pursuant to the 2002 Non-Statutory Stock Option Plan of the Acquiror, the Acquiror has the authority to issue stock options exercisable for up to 1,500,000 shares of the Acquiror's Common Stock. A total of 1,397,850 shares have been issued pursuant to option exercise, leaving 102,150 unissued options. The Acquiror agrees not to issue any of the 102,150 unissued options and to terminate the Stock Option Plan effective as of the Closing Date. There are no outstanding stockholders' agreements, voting trusts or arrangements, registration rights agreements, rights of first refusal or other contracts pertaining to the capital stock of the Acquiror. The issuance of all of the shares of Acquiror's Common Stock described in this Section 6.8.1 have been in compliance with U.S. federal and state securities laws.
6.8.2
No Redemption Requirements. There are no outstanding contractual obligations (contingent or otherwise) of the Acquiror to retire, repurchase, redeem or otherwise acquire any outstanding shares of capital stock of, or other ownership interests in, the Acquiror or to provide funds to or make any investment (in the form of a loan, capital contribution or otherwise) in any other Person.
6.8.3
Duly Authorized. The issuance of the Acquiror Shares has been duly authorized and, upon delivery to the Shareholders of certificates therefore in accordance with the terms of this Agreement, the Acquiror Shares will have been validly issued and fully paid, and will be nonassessable, have the rights, preferences and privileges specified, will be free of preemptive rights and will be free and clear of all Liens and restrictions, other than Liens created by the Shareholders and restrictions on transfer imposed by this Agreement and the Securities Act.
6.9
15
6.10
Certain Proceedings. There is no pending Proceeding that has been commenced against the Acquiror and that challenges, or may have the effect of preventing, delaying, making illegal, or otherwise interfering with, any of the transactions contemplated by this Agreement. To the knowledge of the Acquiror, no such Proceeding has been threatened.
6.11
6.12
Absence of Undisclosed Liabilities. The Acquiror does not have any debt, obligation or liability (whether accrued, absolute, contingent, liquidated or otherwise, whether due or to become due, whether or not known to the Acquiror) arising out of any transaction entered into at or prior to the Closing or any act or omission at or prior to the Closing, except to the extent set forth on or reserved against on the Acquiror Balance Sheet. The Acquiror has not incurred any liabilities or obligations under agreements entered into since December 31, 2004.
6.13
Changes. The Acquiror has not, since December 31, 2004:
6.13.1
Ordinary Course of Business. Conducted its business or entered into any transaction other than in the usual and ordinary course of business, except for this Agreement.
6.13.2
Adverse Changes. Suffered or experienced any change in, or affecting, its condition (financial or otherwise), properties, assets, liabilities, business, operations, results of operations or prospects.
6.13.3
Loans. Made any loans or advances to any Person other than travel advances and reimbursement of expenses made to employees, officers and directors in the ordinary course of business.
6.13.4
Liens. Created or permitted to exist any Lien on any material property or asset of the Acquiror.
6.13.5
Capital Stock. Issued, sold, disposed of or encumbered, or authorized the issuance, sale, disposition or encumbrance of, or granted or issued any option to acquire any shares of its capital stock or any other of its securities or any Equity Security, or altered the term of any of its outstanding securities or made any change in its outstanding shares of capital stock or its capitalization, whether by reason of reclassification, recapitalization, stock split, combination, exchange or readjustment of shares, stock dividend or otherwise other than as contemplated by this Agreement.
6.13.6
Dividends. Declared, set aside, made or paid any dividend or other distribution to any of its stockholders.
6.13.7
Material Acquiror Contracts. Entered into or terminated or modified any Material Acquiror Contract, except for termination upon expiration in accordance with the terms thereof.
6.13.8
Claims. Released, waived or cancelled any claims or rights relating to or affecting the Acquiror or settled any Proceeding .
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6.13.9
Discharged Liabilities. Paid, discharged or satisfied any claim, obligation or liability, except for liabilities incurred prior to the date of this Agreement in the ordinary course of business.
6.13.10 Indebtedness. Created, incurred, assumed or otherwise become liable for any Indebtedness, other than professional fees not exceeding $10,000.
6.13.11 Guarantees. Guaranteed or endorsed any obligation or net worth of any Person.
6.13.12 Acquisitions. Acquired the capital stock or other securities or any ownership interest in, or substantially all of the assets of, any other Person.
6.13.13 Accounting. Changed its method of accounting or the accounting principles or practices utilized in the preparation of its financial statements, other than as required by GAAP;
6.13.14 Agreements. Entered into any agreement, or otherwise obligated itself, to do any of the foregoing, other than as contemplated by this Agreement.
6.14
6.15
6.15.1
The Acquiror has no employees, independent contractors or other Persons providing research or other services to them. The Acquiror is in full compliance with all Laws regarding employment, wages, hours, benefits, equal opportunity, collective bargaining, the payment of Social Security and other taxes, occupational safety and health and plant closing. The Acquiror is not liable for the payment of any compensation, damages, taxes, fines, penalties or other amounts, however designated, for failure to comply with any of the foregoing Laws.
6.15.2
No director, officer or employee of the Acquiror is a party to, or is otherwise bound by, any contract (including any confidentiality, noncompetition or proprietary rights agreement) with any other Person that in any way adversely affects or will materially affect (a) the performance of his or her duties as a director, officer or employee of the Acquiror or (b) the ability of the Acquiror to conduct its business.
6.16
6.16.1
6.16.2
17
6.16.3
6.16.4
6.16.5
No Tax Allocation, Sharing. The Acquiror is not a party to any Tax allocation or sharing agreement.
6.16.6
6.17
6.18
18
6.19
Litigation; Orders. There is no Proceeding (whether federal, state, local or foreign) pending or, to the knowledge of the Acquiror, threatened against or affecting the Acquiror or any of its properties, assets, business or employees. To the knowledge of the Acquiror, there is no fact that might result in or form the basis for any such Proceeding. The Acquiror is not subject to any Orders.
6.20
6.21
6.22
6.23
Bank Accounts and Safe Deposit Boxes. Schedule 6.23 discloses the title and number of each bank or other deposit or financial account, and each lock box and safety deposit box used by the Acquiror, the financial institution at which that account or box is maintained and the names of the persons authorized to draw against the account or otherwise have access to the account or box, as the case may be.
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6.24
6.25
SEC Documents; Financial Statements. The Acquiror has filed all reports required to be filed by it under the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the five years preceding the date hereof (or such shorter period as the Acquiror was required by law to file such material) (the foregoing materials being collectively referred to herein as the "SEC Documents") and, while not having filed all such SEC Documents prior to the expiration of any extension(s), is nevertheless current with respect to its Exchange Act filing requirements. As of their respective dates, the SEC Documents complied in all material respects with the requirements of the Securities Act and the Exchange Act and the rules and regulations of the Commission promulgated thereunder, and none of the SEC Documents, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statement therein, in light of the circumstances under which they were made, not misleading. All material agreements to which the Acquiror is a party or to which the property or assets of the Acquiror are subject have been appropriately filed as exhibits to the SEC Documents as and to the extent required under the Exchange Act. The financial statements of the Acquiror included in the SEC Documents comply in all material respects with applicable accounting requirement and the rules and regulations of the Commission with respect thereto as in effect at the time of filing, were prepared in accordance with GAAP applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto, or, in the case of unaudited statements as permitted by Form 10-Q of the Commission), and fairly present in all material respects (subject in the case of unaudited statements, to normal, recurring audit adjustments) the financial position of the Acquiror as at the dates thereof and the results of its operations and cash flows for the periods then ended. The Acquiror's Common Stock will be quoted on the OTC Bulletin Board prior to the closing date, and the Acquiror is not aware of any facts which would make the Acquiror's Common Stock ineligible for quotation on the OTC Bulletin Board.
6.26
Stock Option Plans; Employee Benefits.
6.26.1
Set forth on Schedule 6.27.1 is a complete list of all stock option plans providing for the grant by the Acquiror of stock options to directors, officers or employees. All such stock option plans are Approved Plans.
6.26.2
The Acquiror does not have any employee benefit plans or arrangements covering its present and former employees or providing benefits to such persons in respect of services provided to the Acquiror.
20
6.26.3
Neither the consummation of the transactions contemplated hereby alone, nor in combination with another event, with respect to each director, officer, employee and consultant of the Acquiror, will result in (a) any payment (including, without limitation, severance, unemployment compensation or bonus payments) becoming due from the Acquiror, (b) any increase in the amount of compensation or benefits payable to any such individual or (c) any acceleration of the vesting or timing of payment of compensation payable to any such individual. No agreement, arrangement or other contract of the Acquiror provides benefits or payments contingent upon, triggered by, or increased as a result of a change in the ownership or effective control of the Acquiror.
6.27
Environmental and Safety Matters.
6.27.1
The Acquiror has at all times been and is in compliance with all Environmental Laws applicable to the Acquiror.
6.27.2
There are no Proceedings pending or threatened against the Acquiror alleging the violation of any Environmental Law or Environmental Permit applicable to the Acquiror or alleging that the Acquiror is a potentially responsible party for any environmental site contamination.
6.27.3
Neither this Agreement nor the consummation of the transactions contemplated by this Agreement shall impose any obligations to notify or obtain the consent of any Governmental Authority or third Persons under any Environmental Laws applicable to the Acquiror.
6.28
6.29
SECTION VII
COVENANTS OF THE COMPANY AND THE SHAREHOLDERS
7.1
Access and Investigation. Between the date of this Agreement and the Closing Date, the Company will, and will cause each Company Subsidiary to, (a) afford the Acquiror and its agents, advisors and attorneys during normal business hours, full and free access to each Acquired Company's personnel, properties, contracts, books and records, and other documents and data, (b) furnish the Acquiror and its agents, advisors and attorneys with copies of all such contracts, books and records, and other existing documents and data as the Acquiror may reasonably request, and (c) furnish the Acquiror and its agents, advisors and attorneys with such additional financial, operating, and other data and information as the Acquiror may reasonably request.
21
7.2
Operation of the Business of the Company.
7.2.1
Between the date of this Agreement and the Closing Date, the Company will, and will cause each Company Subsidiary to:
(a) conduct its business only in the ordinary course of business;
(b) use its best efforts to preserve intact its current business organization and business relationships, including, without limitation, relationships with suppliers, customers, landlords, creditors, officers, employees and agents; and
(c) otherwise report periodically to the Acquiror concerning the status of its business, operations, and finances.
7.3
No Transfers of Capital Stock.
7.3.1
Between the date of this Agreement and the Closing Date, the Shareholders shall not assign, transfer, mortgage, pledge or otherwise dispose of any or all of the Shares (or any interest therein) or grant any Person the option or right to acquire such Shares (or any interest therein).
7.3.2
Between the date of this Agreement and the Closing Date, the Company shall not, and shall cause each Company Subsidiary not to, assign, transfer, mortgage, pledge or otherwise dispose of any or all of the capital stock of any Acquired Company (or any interest therein) or grant any Person the option or right to acquire the capital stock of any Acquired Company (or any interest therein).
7.4
Required Filings and Approvals.
7.4.1
As promptly as practicable after the date of this Agreement, the Company will, and will cause each Company Subsidiary to, make all filings required to be made by it in order to consummate the transactions contemplated by this Agreement, if applicable. Between the date of this Agreement and the Closing Date, the Company will, and will cause each Company Subsidiary to, (a) cooperate with the Acquiror with respect to all filings that the Acquiror elects to make or is required to make in connection with the transactions contemplated by this Agreement, and (b) cooperate with the Acquiror in obtaining any consents or approvals required to be obtained by the Acquiror in connection herewith.
22
7.4.2
Without limiting the foregoing, the Company and the Shareholders shall promptly furnish to the Acquiror any information reasonably requested by the Acquiror in connection with the preparation, filing and mailing of the Schedule 14(f) Filing, including, without limitation, information concerning the Acquired Companies and the Shareholders. The Company and each Shareholder, severally and not jointly, represent and warrant to the Acquiror that the information supplied by the Company and each Shareholder for inclusion in the Schedule 14(f) Filing will not, on the date the Schedule 14(f) Filing is filed with the Commission or first mailed to the stockholders of the Acquiror, contain any statement which, at such time and in light of the circumstances under which it shall be made, is false or misleading with respect to any material fact, or omit to state any material fact required to be stated therein or necessary in order to make the statements therein not false or misleading. If, at any time prior to the Closing Date, any information should be discovered by the Company or any Shareholder which should be set forth in an amendment to the Schedule 14(f) Filing so that such Schedule 14(f) Filing would not include any misstatement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, the Company or such Shareholder, as the case may be, shall promptly notify the Acquiror.
7.5
7.6
23
SECTION VIII
8.1
8.2
Operation of the Business of the Acquiror. Between the date of this Agreement and the Closing Date, the Acquiror will:
8.2.1
Conduct its business only in the ordinary course of business;
8.2.2
Use its best efforts to preserve intact the current business organization and business relationships, including, without limitation, relationships with suppliers, customers, landlords, creditors, officers, employees and agents;
8.2.3
Obtain the prior written consent of the Company prior to taking any action of the type specified in Section 6.13 or entering into any Material Acquiror Contract;
8.2.4
Confer with the Company concerning operational matters of a material nature; and
8.2.5
Otherwise report periodically to the Company concerning the
status of its business, operations, and finances.
8.3
Required Filings and Approvals.
8.3.1
As promptly as practicable after the date of this Agreement, the Acquiror will make all filings legally required to be made by it to consummate the transactions contemplated by this Agreement. Between the date of this Agreement and the Closing Date, the Acquiror will cooperate with the Company with respect to all filings that the Company is legally required to make in connection with the transactions contemplated hereby.
8.3.2
Without limiting the foregoing, as promptly as practicable before or after the execution of this Agreement, the Acquiror shall prepare and file the Schedule 14(f) Filing with the Commission. The Acquiror will advise the Company and its counsel in writing, promptly after it receives notice thereof, of any request by the Commission for the amendment of the Schedule 14(f) Filing or comments thereon and responses thereto or requests by the Commission for additional information. The Acquiror shall mail the Schedule 14(f) Filing to its stockholders as promptly as practicable pursuant to the Securities Act, the Exchange Act and the rules and regulations of the Commission related thereto.
24
8.4
8.5
8.6
8.6.1
Make and keep public information available, as those terms are understood and defined in Rule 144; and
8.6.2
File with the Commission, in a timely manner, all reports and other documents required of the Acquiror under the Exchange Act.
SECTION IX
CONDITIONS PRECEDENT TO THE ACQUIROR'S OBLIGATION TO CLOSE
The Acquiror's obligation to acquire the Shares and to take the other actions required to be taken by the Acquiror at the Closing is subject to the satisfaction, at or prior to the Closing, of each of the following conditions (any of which may be waived by the Acquiror, in writing, in whole or in part):
25
9.1
Accuracy of Representations. The representations and warranties of the Company and the Shareholders set forth in this Agreement or in any Schedule or certificate delivered pursuant hereto that are not qualified as to materiality shall be true and correct in all material respects as of the date of this Agreement, and shall be deemed repeated as of the Closing Date and shall then be true and correct in all material respects, except to the extent a representation or warranty is expressly limited by its terms to another date and without giving effect to any supplemental Schedule. The representations and warranties of the Company and the Shareholders set forth in this Agreement or in any Schedule or certificate delivered pursuant hereto that are qualified as to materiality shall be true and correct in all respects as of the date of this Agreement, and shall be deemed repeated as of the Closing Date and shall then be true and correct in all respects, except to the extent a representation or warranty is expressly limited by its terms to another date and without giving effect to any supplemental Schedule.
9.2
Performance by the Company and Shareholders.
9.2.1
All of the covenants and obligations that the Company and Shareholders are required to perform or to comply with pursuant to this Agreement at or prior to the Closing (considered collectively), and each of these covenants and obligations (considered individually), must have been duly performed and complied with in all material respects.
9.2.2
Each document required to be delivered by the Company and the Shareholders pursuant to this Agreement at or prior to Closing must have been delivered.
9.3
No Force Majeur Event. Since December 31, 2004, there shall not have been any delay, error, failure or interruption in the conduct of the business of any Acquired Company, or any loss, injury, delay, damage, distress, or other casualty, due to force majeur including but not limited to (a) acts of God; (b) fire or explosion; (c) war, acts of terrorism or other civil unrest; or (d) national emergency.
9.4
Certificate of Officer. The Company will have delivered to the Acquiror a certificate, dated the Closing Date, executed by an officer of the Company, certifying the satisfaction of the conditions specified in Sections 9.1, 9.2 and 9.3.
9.5
Certificate of Shareholders. Each Shareholder will have delivered to the Acquiror a certificate, dated the Closing Date, executed by such Shareholder, if a natural person, or an authorized officer of the Shareholder, if an entity, certifying the satisfaction of the conditions specified in Sections 9.1 and 9.2.
9.6
Consents.
9.6.1
All material consents, waivers, approvals, authorizations or orders required to be obtained, and all filings required to be made, by the Company and/or the Shareholders for the authorization, execution and delivery of this Agreement and the consummation by them of the transactions contemplated by this Agreement, shall have been obtained and made by the Company or the Shareholders, as the case may be, except where the failure to receive such consents, waivers, approvals, authorizations or orders or to make such filings would not have a Material Adverse Effect on the Company or the Acquiror.
9.6.2
Without limiting the foregoing, the Schedule 14(f) Filing shall have been mailed to the stockholders of the Acquiror not less than 10 days prior to the Closing Date. No Proceeding occasioned by the Section 14(f) Filing shall have been initiated or threatened by the Commission (which Proceeding remains unresolved as of the Closing Date).
9.7
9.7.1
Share certificates evidencing the number of Shares held by each Shareholder (as set forth in Exhibit A), along with executed stock powers transferring such Shares to the Acquiror;
9.7.2
A Secretary's Certificate of the Company, dated the Closing Date, certifying attached copies of (A) the Organizational Documents of the Company and each Company Subsidiary, (B) the resolutions of the Company Board and the Shareholders approving this Agreement and the transactions contemplated hereby; and (C) the incumbency of each authorized officer of the Company signing this Agreement and any other agreement or instrument contemplated hereby to which the Company is a party;
9.7.3
A certified certificate of good standing, or equivalent thereof, of the Company;
9.7.4
Each of the Transaction Documents to which the Company and/or the Shareholders is a party, duly executed; and
9.7.5
Such other documents as the Acquiror may reasonably request for the purpose of (i) evidencing the accuracy of any of the representations and warranties of the Company and the Shareholders pursuant to Section 9.1, (ii) evidencing the performance of, or compliance by the Company and the Shareholders with, any covenant or obligation required to be performed or complied with by the Company or the Shareholders, as the case may be, (iii) evidencing the satisfaction of any condition referred to in this Section 9, or (iv) otherwise facilitating the consummation or performance of any of the transactions contemplated by this Agreement.
9.8
26
SECTION X
CONDITIONS PRECEDENT TO THE OBLIGATION OF THE COMPANY AND THE SHAREHOLDERS TO THE CLOSING
The Shareholders’ obligation to transfer the Shares and the obligations of the Company to take the other actions required to be taken by the company at the closing are subject to the satisfaction, at or prior to the Closing, of each of the following conditions (any of which may be waived by the Company and the Shareholders in writing in whole or in part):
10.1
10.2
Performance by the Acquiror.
10.2.1
All of the covenants and obligations that the Acquiror is required to perform or to comply with pursuant to this Agreement at or prior to the Closing (considered collectively), and each of these covenants and obligations (considered individually),including but not limited to (i) information indicating that the Acquiror’s securities are eligible for quotation on the OTCBB, (ii) the 1 for 6.433138 reverse split of the Acquirer’s common stock, and (iii) the amendment of the Articles of Incorporation of the Acquiror to increase its authorized number of shares of common stock from 24,000,000 to 75,000,000, must have been performed and complied with in all respects.
10.2.2
Each document required to be delivered by the Acquiror and Acquiror Shareholders pursuant to this Agreement must have been delivered.
10.3
No Force Majeur Event. Since December 31, 2004, there shall not have been any delay, error, failure or interruption in the conduct of the business of the Acquiror, or any loss, injury, delay, damage, distress, or other casualty, due to force majeur including but not limited to (a) acts of God; (b) fire or explosion; (c) war, acts of terrorism or other civil unrest; or (d) national emergency.
10.4
10.5
Consents.
27
10.5.1
All material consents, waivers, approvals, authorizations or orders required to be obtained, and all filings required to be made, by the Acquiror for the authorization, execution and delivery of this Agreement and the consummation by it of the transactions contemplated by this Agreement, shall have been obtained and made by the Acquiror, except where the failure to receive such consents, waivers, approvals, authorizations or orders or to make such filings would not have a Material Adverse Effect on the Company or the Acquiror.
10.5.2
Without limiting the foregoing, the Schedule 14(f) Filing shall have been mailed to the stockholders of the Acquiror not less than 10 days prior to the Closing Date. No Proceeding occasioned by the Section 14(f) Filing shall have been initiated or threatened by the Commission (which Proceeding remains unresolved as of the Closing Date).
10.6
10.6.1
Share certificates evidencing each Shareholder's pro rata share of the Closing Acquiror Shares (as set forth in Exhibit A);
10.6.2
A Secretary's Certificate, dated the Closing Date certifying attached copies of (A) the Organizational Documents of the Acquiror and each Acquiror Subsidiary, (B) the resolutions of the Acquiror Board approving this Agreement and the transactions contemplated hereby; and (C) the incumbency of each authorized officer of the Acquiror signing this Agreement and any other agreement or instrument contemplated hereby to which the Acquiror is a party;
10.6.3
A Certificate of Good Standing of the Acquiror;
10.6.4
Each of the Transaction Documents to which the Acquiror is a party, duly executed;
10.6.5
The executed legal opinion of Xxxx X. Xxxxx, P.C.
10.6.6
The executed letter of the Auditors of the Acquiror indicating that nothing has come to their attention that would cause them to change or modify their opinion on the Acquiror’s most recent audited financial statements;
10.6.7
Confirmation that all assets and liabilities of the Acquiror prior to the date of the agreement have been distributed or otherwise eliminated from the Acquiror;
10.6.8
The signed certifications from all of the directors of the Acquiror confirming the absence of any hidden or contingent liabilities other than those as disclosed in the Form 10-KSB of the Acquiror for the fiscal year ended December 31, 2004; and
28
10.6.9
Such other documents as the Company may reasonably request for the purpose of (i) evidencing the accuracy of any representation or warranty of the Acquiror pursuant to Section 10.1, (ii) evidencing the performance by the Acquiror of, or the compliance by the Acquiror with, any covenant or obligation required to be performed or complied with by the Acquiror, (iii) evidencing the satisfaction of any condition referred to in this Section 10, or (iv) otherwise facilitating the consummation of any of the transactions contemplated by this Agreement.
10.7
SECTION XI
11.1
11.1.1
By mutual consent of the Acquiror and the Shareholders (acting jointly);
11.1.2
By the Acquiror, if any of the conditions in Section 9 has not been satisfied as of the Closing Date or if satisfaction of such a condition is or becomes impossible (other than through the failure of the Acquiror to comply with its obligations under this Agreement) and the Acquiror has not waived such condition on or before the Closing Date; or (ii) by the Shareholders (acting jointly), if any of the conditions in Section 10 has not been satisfied as of the Closing Date or if satisfaction of such a condition is or becomes impossible (other than through the failure of any Shareholder to comply with its obligations under this Agreement) and the Shareholders (acting jointly) have not waived such condition on or before the Closing Date;
11.1.3
By either the Acquiror or the Shareholders (acting jointly), if there shall have been entered a final, nonappealable order or injunction of any Governmental Authority restraining or prohibiting the consummation of the transactions contemplated hereby;
11.1.4
By the Acquiror, if, prior to the Closing Date, the Company or any Shareholder is in material breach of any representation, warranty, covenant or agreement herein contained and such breach shall not be cured within 10 days of the date of notice of default served by the Acquiror claiming such breach; provided, however, that the right to terminate this Agreement pursuant to this Section 11.1.5 shall not be available to the Acquiror if the Acquiror is in material breach of this Agreement at the time notice of termination is delivered;
29
11.1.5
By the Shareholders (acting jointly), if, prior to the Closing Date, the Acquiror is in material breach of any representation, warranty, covenant or agreement herein contained and such breach shall not be cured within 10 days of the date of notice of default served by the Shareholders claiming such breach; provided, however, that the right to terminate this Agreement pursuant to this Section 11.1.6 shall not be available to the Shareholders (acting jointly) if any Shareholder is in material breach of this Agreement at the time notice of termination is delivered.
11.2
11.2.1 Each party's right of termination under Section 11.1 is in addition to any other rights it may have under this Agreement or otherwise, and the exercise of a right of termination will not be an election of remedies. If this Agreement is terminated pursuant to Section 11.1, all further obligations of the parties under this Agreement will terminate, except that the obligations in Sections 5.12, 6.11, 11.2, and 13 will survive; provided, however, that if this Agreement is terminated by a party because of the breach of the Agreement by another party or because one or more of the conditions to the terminating party's obligations under this Agreement is not satisfied as a result of another party's failure to comply with its obligations under this Agreement, the terminating party's right to pursue all legal remedies will survive such termination unimpaired.
SECTION XII
12.1
Survival. All representations, warranties, covenants, and obligations in this Agreement shall survive the Closing and expire on the third anniversary of the Closing (the "Survival Period"). The right to indemnification, payment of Damages or other remedy based on such representations, warranties, covenants, and obligations will not be affected by any investigation conducted with respect to, or any knowledge acquired (or capable of being acquired) at any time, whether before or after the execution and delivery of this Agreement or the Closing Date, with respect to the accuracy or inaccuracy of or compliance with, any such representation, warranty, covenant, or obligation. The waiver of any condition based on the accuracy of any representation or warranty, or on the performance of or compliance with any covenant or obligation, will not affect the right to indemnification, payment of Damages, or other remedy based on such representations, warranties, covenants, and obligations.
SECTION XIII
13.1
Expenses. Except as otherwise expressly provided in this Agreement, each party to this Agreement will bear its respective expenses incurred in connection with the preparation, execution, and performance of this Agreement and the transactions contemplated by this Agreement, including all fees and expenses of agents, representatives, counsel, and accountants.
30
13.2
Public Announcements. The Acquiror shall promptly, but no later than three days following the effective date of this Agreement, issue a press release and file a Report on Form 8-K with the Commission disclosing the transactions contemplated hereby. Between the date of this Agreement and the Closing Date, the Company and the Acquiror shall consult with each other in issuing any other press releases or otherwise making public statements or filings and other communications with the Commission or any regulatory agency or stock market or trading facility with respect to the transactions contemplated hereby and neither party shall issue any such press release or otherwise make any such public statement, filings or other communications without the prior written consent of the other, which consent shall not be unreasonably withheld or delayed, except that no prior consent shall be required if such disclosure is required by law, in which case the disclosing party shall provide the other party with prior notice of such public statement, filing or other communication and shall incorporate into such public statement, filing or other communication the reasonable comments of the other party.
13.3
13.3.1
Subsequent to the date of this Agreement, the Acquiror, the Shareholders, and the Company will maintain in confidence, and will cause their respective directors, officers, employees, agents, and advisors to maintain in confidence, any written, oral, or other information obtained in confidence from another party in connection with this Agreement or the transactions contemplated by this Agreement, unless (a) such information is already known to such party or to others not bound by a duty of confidentiality or such information becomes publicly available through no fault of such party, (b) the use of such information is necessary or appropriate in making any required filing with the Commission, or obtaining any consent or approval required for the consummation of the transactions contemplated by this Agreement, or (c) the furnishing or use of such information is required by or necessary or appropriate in connection with legal proceedings.
13.3.2
In the event that any party is required to disclose any information of another party pursuant to clause (b) or (c) of Section 13.3.1, the party requested or required to make the disclosure (the "disclosing party") shall provide the party that provided such information (the "providing party") with prompt notice of any such requirement so that the providing party may seek a protective order or other appropriate remedy and/or waive compliance with the provisions of this Section 13.3. If, in the absence of a protective order or other remedy or the receipt of a waiver by the providing party, the disclosing party is nonetheless, in the opinion of counsel, legally compelled to disclose the information of the providing party, the disclosing party may, without liability hereunder, disclose only that portion of the providing party's information which such counsel advises is legally required to be disclosed, provided that the disclosing party exercises its reasonable efforts to preserve the confidentiality of the providing party's information, including, without limitation, by cooperating with the providing party to obtain an appropriate protective order or other relief assurance that confidential treatment will be accorded the providing party's information.
13.3.3
If the transactions contemplated by this Agreement are not consummated, each party will return or destroy all copies of as much of such written information as the other party may reasonably request.
31
13.4
If to Acquiror:
Xxxxxxxx, XX 00000 770-378-4180 | with a copy to:
|
Attention: B. Xxxx Xxxxxxxx, President, Chief Executive Officer and Chief Financial Officer | Attention: Xxxx X. Xxxxx, Esq. |
If to Company: Earjoy Group Limited Xx. 0 Xxxxxxxx 0000 Xxxxxx Xx. (X.) Xxxxxxxx, XXX 000000 | with a copy to: 0000 XXX Xxxxxxx, Xxxxx 000 Xxxxxxxxx Xxxxxxxx, Xxxxxxxx, 00000 |
Attention: Xx. Xxxx Xxxxx Telephone No.: 00-00-0000-0000 | Attention: Xxxxxx X. Xxxxxxxxx, Esq. |
13.5
Arbitration. Any dispute or controversy under this Agreement shall be settled exclusively by arbitration in the City of New York, County of New York in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitration award in any court having jurisdiction.
13.6
32
13.7
13.8
13.9
13.10
13.11
limit the preceding words or terms.
13.12
Governing Law. This Agreement will be governed by the laws of the State of New York without regard to conflicts of laws principles.
13.13
33
COUNTERPART SIGNATURE PAGE
IN WITNESS WHEREOF, the parties have executed and delivered this Share Exchange Agreement as of the date first written above.
Acquiror: BAS CONSULTING, INC. Signed:______________________________ Print Name: B. Xxxx Xxxxxxxx Title: President, Chief Executive Officer and Chief Financial Officer | |
Company: Earjoy Group Limited Signed:______________________________ Print Name: Title: | |
34
COUNTERPART SIGNATURE PAGE
(FOR ISSUANCES PURSUANT TO REGULATION S)
IN WITNESS WHEREOF, the parties have executed and delivered this Share Exchange Agreement as of the date first written above.
UNION ZONE MANAGEMENT LIMITED |
Signed:______________________________ Print Name: Title: |
OFFSHORE DELIVERY INSTRUCTIONS
PRINT EXACT NAME IN WHICH YOU WANT
THE SECURITIES TO BE REGISTERED
Attention: | |
Address: | |
Telephone No.: | |
Facsimile No.: |
35
COUNTERPART SIGNATURE PAGE
(FOR ISSUANCES PURSUANT TO REGULATION S)
IN WITNESS WHEREOF, the parties have executed and delivered this Share Exchange Agreement as of the date first written above.
PANASIA STRATEGY INVESTMENT CO. LTD. Signed:______________________________ Print Name: Title: |
OFFSHORE DELIVERY INSTRUCTIONS
PRINT EXACT NAME IN WHICH YOU WANT
THE SECURITIES TO BE REGISTERED
Attention: | |
Address: | |
Telephone No.: | |
Facsimile No.: |
36
COUNTERPART SIGNATURE PAGE
(FOR ISSUANCES PURSUANT TO REGULATION S)
IN WITNESS WHEREOF, the parties have executed and delivered this Share Exchange Agreement as of the date first written above.
WINSUMMIT CHINA GROWING HOLDINGS, LTD |
Signed:______________________________ Print Name: Title: |
OFFSHORE DELIVERY INSTRUCTIONS
PRINT EXACT NAME IN WHICH YOU WANT
THE SECURITIES TO BE REGISTERED
Attention: | |
Address: | |
Telephone No.: | |
Facsimile No.: |
37
COUNTERPART SIGNATURE PAGE
(FOR ISSUANCES PURSUANT TO REGULATION S)
IN WITNESS WHEREOF, the parties have executed and delivered this Share Exchange Agreement as of the date first written above.
XXXXX XXX XXX XXXXX |
Signed:______________________________ Print Name: Title: |
OFFSHORE DELIVERY INSTRUCTIONS
PRINT EXACT NAME IN WHICH YOU WANT
THE SECURITIES TO BE REGISTERED
Attention: | |
Address: | |
Telephone No.: | |
Facsimile No.: |
38
COUNTERPART SIGNATURE PAGE
(FOR ISSUANCES PURSUANT TO REGULATION S)
IN WITNESS WHEREOF, the parties have executed and delivered this Share Exchange Agreement as of the date first written above.
CHAN XXXX XXXX |
Signed:______________________________ Print Name: Title: |
OFFSHORE DELIVERY INSTRUCTIONS
PRINT EXACT NAME IN WHICH YOU WANT
THE SECURITIES TO BE REGISTERED
Attention: | |
Address: | |
Telephone No.: | |
Facsimile No.: |
39
COUNTERPART SIGNATURE PAGE
(FOR ISSUANCES PURSUANT TO REGULATION S)
XXXX XXXX |
Signed:______________________________ Print Name: Title: |
OFFSHORE DELIVERY INSTRUCTIONS
PRINT EXACT NAME IN WHICH YOU WANT
THE SECURITIES TO BE REGISTERED
Attention: | |
Address: | |
Telephone No.: | |
Facsimile No.: |
40
COUNTERPART SIGNATURE PAGE
(FOR ISSUANCES PURSUANT TO REGULATION S)
XXXX MAN XXXX XXXXXXXX |
Signed:______________________________ Print Name: Title: |
OFFSHORE DELIVERY INSTRUCTIONS
PRINT EXACT NAME IN WHICH YOU WANT
THE SECURITIES TO BE REGISTERED
Attention: | |
Address: | |
Telephone No.: | |
Facsimile No.: |
41
EXHIBIT A
SHARES AND ACQUIROR SHARES TO BE EXCHANGED
Total Shares to be delivered by the Shareholders to Acquiror: | _____________ | ||||||
Total Acquiror Shares to be delivered by the Acquiror to the Shareholders: | 23,375,000 | ||||||
Name and Address of Each Shareholder | Number of Shares Owned | Percentage of Total Shares Owned | Pro Rata Share of Acquiror Shares | Percentage of Total Acquiror Shares Issuable at Closing Issuable % Total Outstanding | |||
Union Zone Management Ltd. Xxxxxxx Strategy Investment Co. Ltd. Winsummit China Growing Holdings, Ltd.
Xxxx Xxxx Xxxx Man Xxxx Xxxxxxxx | 30,000 10,000
1,500 1,500 | 60% 20%
3.5%
3% 3% | 14,025,000 4,675,000
818,125
701,250 701,250 | 60% 20%
3.5%
3% 3% | 56.1% 18.7%
2.805% 2.805% |
42
EXHIBIT B
DEFINITION OF "U.S. PERSON"
1.
"U.S. person" (as defined in Regulation S) means:
i.
Any natural person resident in the United States;
ii.
Any partnership or corporation organized or incorporated under the laws of the United States;
iii.
Any estate of which any executor or administrator is a U.S. person;
iv.
Any trust of which any trustee is a U.S. person;
v.
Any agency or branch of a foreign entity located in the United States;
vi.
Any non-discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary for the benefit or account of a U.S. person;
vii.
Any discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary organized, incorporated, or (if an individual) resident in the United States; and
viii.
Any partnership or corporation if: (A) organized or incorporated under the laws of any foreign jurisdiction; and (B) formed by a U.S. person principally for the purpose of investing in securities not registered under the Securities Act, unless it is organized or incorporated, and owned, by accredited investors (as defined in Rule 501(a)) who are not natural persons, estates or trusts.
2.
Notwithstanding paragraph (1) above, any discretionary account or similar account (other than an estate or trust) held for the benefit or account of a non-U.S. person by a dealer or other professional fiduciary organized, incorporated, or (if an individual) resident in the United States shall not be deemed a "U.S. person."
3.
Notwithstanding paragraph (1), any estate of which any professional fiduciary acting as executor or administrator is a U.S. person shall not be deemed a U.S. person if:
i.
An executor or administrator of the estate who is not a U.S. person has sole or shared investment discretion with respect to the assets of the estate; and
ii.
The estate is governed by foreign law.
4.
Notwithstanding paragraph (1), any trust of which any professional fiduciary acting as trustee is a U.S. person shall not be deemed a U.S. person if a trustee who is not a U.S. person has sole or shared investment discretion with respect to the trust assets, and no beneficiary of the trust (and no settlor if the trust is revocable) is a U.S. person.
5.
Notwithstanding paragraph (1), an employee benefit plan established and administered in accordance with the law of a country other than the United States and customary practices and documentation of such country shall not be deemed a U.S. person.
6.
Notwithstanding paragraph (1), any agency or branch of a U.S. person located outside the United States shall not be deemed a "U.S. person" if:
i.
The agency or branch operates for valid business reasons; and
ii.
The agency or branch is engaged in the business of insurance or banking and is subject to substantive insurance or banking regulation, respectively, in the jurisdiction where located.
7.
The International Monetary Fund, the International Bank for Reconstruction and Development, the Inter-American Development Bank, the Asian Development Bank, the African Development Bank, the United Nations, and their agencies, affiliates and pension plans, and any other similar international organizations, their agencies, affiliates and pension plans shall not be deemed "U.S. persons."
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EXHIBIT C
NON U.S. PERSON REPRESENTATIONS
Each Shareholder indicating that it is not a U.S. person, severally and not jointly, further represents and warrants to the Acquiror as follows:
1.
At the time of (a) the offer by the Acquiror and (b) the acceptance of the offer by such Shareholder, of the Acquiror Shares, such Shareholder was outside the United States.
2.
No offer to acquire the Acquiror Shares or otherwise to participate in the transactions contemplated by this Agreement was made to such Shareholder or its representatives inside the United States.
3.
Such Shareholder is not purchasing the Acquiror Shares for the account or benefit of any U.S. person, or with a view towards distribution to any U.S. person, in violation of the registration requirements of the Securities Act.
4.
Such Shareholder will make all subsequent offers and sales of the Acquiror Shares either (x) outside of the United States in compliance with Regulation S; (y) pursuant to a registration under the Securities Act; or (z) pursuant to an available exemption from registration under the Securities Act. Specifically, such Shareholder will not resell the Acquiror Shares to any U.S. person or within the United States prior to the expiration of a period commencing on the Closing Date and ending on the date that is one year thereafter (the "Distribution Compliance Period"), except pursuant to registration under the Securities Act or an exemption from registration under the Securities Act.
5.
Such Shareholder is acquiring the Acquiror Shares for such Shareholder's own account, for investment and not for distribution or resale to others.
6.
Such Shareholder has no present plan or intention to sell the Acquiror Shares in the United States or to a U.S. person at any predetermined time, has made no predetermined arrangements to sell the Acquiror Shares and is not acting as a Distributor of such securities.
7.
Neither such Shareholder, its Affiliates nor any Person acting on such Shareholder's behalf, has entered into, has the intention of entering into, or will enter into any put option, short position or other similar instrument or position in the U.S. with respect to the Acquiror Shares at any time after the Closing Date through the Distribution Compliance Period except in compliance with the Securities Act.
8.
Such Shareholder consents to the placement of a legend on any certificate or other document evidencing the Acquiror Shares substantially in the form set forth in Section 4.2.5(a).
9.
Such Shareholder is not acquiring the Acquiror Shares in a transaction (or an element of a series of transactions) that is part of any plan or scheme to evade the registration provisions of the Securities Act.
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10.
Such Shareholder has sufficient knowledge and experience in finance, securities, investments and other business matters to be able to protect such Shareholder's interests in connection with the transactions contemplated by this Agreement.
11.
Such Shareholder has consulted, to the extent that it has deemed necessary, with its tax, legal, accounting and financial advisors concerning its investment in the Acquiror Shares.
12.
Such Shareholder understands the various risks of an investment in the Acquiror Shares and can afford to bear such risks for an indefinite period of time, including, without limitation, the risk of losing its entire investment in the Acquiror Shares.
13.
Such Shareholder has had access to the Acquiror's publicly filed reports with the SEC.
14.
Such Shareholder has been furnished during the course of the transactions contemplated by this Agreement with all other public information regarding the Acquiror that such Shareholder has requested and all such public information is sufficient for such Shareholder to evaluate the risks of investing in the Acquiror Shares.
15.
Such Shareholder has been afforded the opportunity to ask questions of and receive answers concerning the Acquiror and the terms and conditions of the issuance of the Acquiror Shares.
16.
Such Shareholder is not relying on any representations and warranties concerning the Acquiror made by the Acquiror or any officer, employee or agent of the Acquiror, other than those contained in this Agreement.
17.
Such Shareholder will not sell or otherwise transfer the Acquiror Shares, unless either (A) the transfer of such securities is registered under the Securities Act or (B) an exemption from registration of such securities is available.
18.
Such Shareholder understands and acknowledges that the Acquiror is under no obligation to register the Acquiror Shares for sale under the Securities Act.
19.
Such Shareholder represents that the address furnished by such Shareholder on its signature page to this Agreement and in Exhibit A is such Shareholder's principal residence if he is an individual or its principal business address if it is a corporation or other entity.
20.
Such Shareholder understands and acknowledges that the Acquiror Shares have not been recommended by any federal or state securities commission or regulatory authority, that the foregoing authorities have not confirmed the accuracy or determined the adequacy of any information concerning the Acquiror that has been supplied to such Shareholder and that any representation to the contrary is a criminal offense.
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21.
Such Shareholder acknowledges that the representations, warranties and agreements made by such Shareholder herein shall survive the execution and delivery of this Agreement and the purchase of the Acquiror Shares.
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