REORGANIZATION AND STOCK PURCHASE AGREEMENT
This REORGANIZATION AND STOCK PURCHASE AGREEMENT dated as of July 12, 2005
(this "Agreement") is by and between NetMeasure Technology, Inc., a Nevada
corporation ("NMTH"), and S-Cam Co., Ltd. a Korean corporation ("S-CAM").
RECITALS
A. WHEREAS, NMTH desires to acquire directly or indirectly approximately
78.8% of the equity of S-Cam;
B: WHEREAS, the parties hereto intend that the transaction contemplated
hereby shall be completed as a tax-free exchange of stock.
NOW, THEREFORE, the respective Boards of Directors of NMTH and S-Cam deem it
advisable and in the best interests of their corporations and the respective
shareholders of their corporations that NMTH acquire approximately 78.8% of the
securities of S-Cam, in accordance with the terms and conditions of this
Reorganization and Stock Purchase Agreement.
1. Pre-Closing Actions ofNMTH. Immediately upon execution of this Agreement
and prior to any Closing as set forth herein, NMTH shall undertake the following
actions:
(a) The Board of Directors of NMTH shall unanimously approve and deliver to
Xxxxxx Law Group (the "Escrow Agent") in escrow (the "Escrow") resolutions with
respect to (a) approving all of the transactions set forth herein; (b)
increasing or directing the size of the Board of Directors to be eight members;
(c) electing eight persons to the board of directors of NMTH, and (d) approving
a name change of the corporation to "Sorell, Inc." (the "NMTH Board
Resolutions").
(b) NMTH shall deliver or cause to be delivered to Escrow a total of
23,305,000 shares of NMTH for delivery to shareholders or other designees of
S-Cam as advised to Escrow prior to closing (the "Escrowed NMTH Shares").
(c) NMTH shall use its reasonable best efforts to prepare and complete the
documents necessary to be filed with local, state and federal authorities to
consummate the transactions contemplated hereby.
2. Pre-Closing Action ofS-Cam. Immediately upon execution of this Agreement
and prior to the Closing as set forth herein, S-Cam shall undertake the
following actions:
(a) The Board of Directors of S-Cam shall execute and deliver resolutions
unanimously approving all of the transactions set forth herein.
(b) The shareholders of S-Cam shall deliver to Xxxxxx Law Group in escrow
certificates representing 5,565,000 shares of common stock of S-Cam (the
"Escrowed S-Cam Shares"), representing approximately 78.8% of the issued and
outstanding equity of S-Cam, for delivery to NMTH at Closing.
(c) During the Due Diligence Period, S-Cam shall make available to NMTH and
NMTH's employees, attorneys, accountants, financial advisors, agents and
representatives during normal business hours all information concerning the
operation, business and prospects of S-Cam as may be reasonably requested by
NMTH. S-Cam will cooperate with NMTH for the purpose of permitting NMTH to
discuss S-Cam's business and prospects with customers, creditors, suppliers and
other persons having business dealings with such party, including without
limitation providing access to all employees, consultants, assets, properties,
books, accounts, records, tax returns, contracts and other documents of S-Cam,
provided that such access will not materially interfere with the normal business
operations of S-Cam.
3. Conditions to Closing
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The parties' obligation to close the proposed Acquisition will be subject to
specified conditions precedent including, but not limited to, the following:
(a) the representations and warranties of NMTH as set forth in Section 6
herein shall remain accurate as of the Closing Date and no material adverse
change to the financial condition of NMTH shall have occurred;
(b) the representations and warranties of S-Cam as set forth in Section 7
herein shall remain accurate as of the Closing Date and no material adverse
change in the business or financial condition of S-Cam shall have occurred;
(c) all the documents necessary to be filed with local, state and federal
authorities are prepared;
(d) NMTH shall have provided the board resolutions and any other approval
required to complete the board election; and board resolutions approving the
name change;.
(e) NMTH shall retain its good standing as a publicly traded company under
the Securities Exchange Act of 1934, trading on the over-the-counter bulletin
board under the symbol "NMTH";
(f) NMTH shall have prepared and delivered to S-Cam before Closing audited
and unaudited financial statements which if filed at the time received would be
complete and compliant with Regulation S-X, Section 310, sufficient for the
combined entities to file any and all filings required by the US Securities and
Exchange Commission (the "NMTH Financial Statements");
(g) S-Cam shall have prepared and delivered to NMTH within sixty days of
closing audited and unaudited financial statements which if filed at the time
received would be complete and compliant with Regulation S-X, Section 310,
sufficient for the combined entities to file any and all filings required by the
US Securities and Exchange Commission (the "S-Cam Financial Statements");
(h) The S-Cam Financial Statements shall reflect approximately $126,000,000
USD in revenues for the fiscal year ended December 31, 2004; and
(i) S-Cam shall have completed the procedures and received approval from the
Korean government with respect to foreign exchange and investment (the "Korean
Investment Law").
(j) MNTH will deliver a cancellation acceptable to S-Cam canceling the
management contract with NMTH's President.
4. At the Closing.
(a) At the Closing, Xxxxxx Law Group shall release from escrow the NMTH
Board Resolutions effectuating the election of eight new members of the Board of
Directors. The members of the Board of Directors of NMTH prior to Closing shall
submit resignations at Closing.
(b) At the Closing, Xxxxxx Law Group shall release the Escrowed NMTH Shares
to the shareholders or designees of S-Cam.
(c) At the Closing, Xxxxxx Law Group shall release the Escrowed S-Cam Shares
to NMTH.
(d) At the Closing, the existing officers of NMTH shall resign and be
replaced by those officers appointed by the new Board of Directors.
5. Timing of Closing. The Closing shall occur upon the satisfaction of the
conditions set forth in this Agreement, including without limitation compliance
with the Korean Investment Law, and upon instructions from the parties hereto to
the Escrow Agent. The Closing Date shall occur on July 31, 2005 in the event
such conditions are met, unless the Escrow Agent receives instructions otherwise
from the parties or notice from a party that the conditions set forth herein
have not occurred. Unless otherwise advised in writing by the parties, in the
event the Closing does not occur on or before August 30, 2005, (i) the Escrow
Agent shall return the Escrowed NMTH Shares and the NMTH Board Resolutions to
NMTH; and (ii) the Escrow Agent shall return the Escrowed S-Cam Shares to the
shareholders of S-Cam.
6. Representations ofNMTH. NMTH represents and warrants as follows:
(a) Ownership of Shares. As of the Closing Date, the shareholders of S-Cam
will become the owners of the Escrowed NMTH Shares. The Escrowed NMTH Shares
will be free from claims, liens or other encumbrances, except as provided under
applicable federal and state securities laws;
(b) Fully paid and Nonassessable. The Escrowed NMTH Shares constitute duly
and validly issued shares of NMTH, and are fully paid and nonassessable, and
NMTH further represents that it has the power and the authority to execute this
Agreement and to perform the obligations contemplated hereby;
(c) Organization of NMTH; Authorization. NMTH is a corporation duly
organized, validly existing and in good standing under the laws of Nevada with
full corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder. The execution, delivery and performance of
this Agreement have been duly authorized by all necessary corporate action of
NMTH and this Agreement constitutes a valid and binding obligation of NMTH;
enforceable against it in accordance with its terms. NMTH has no subsidiaries.
(d) Capitalization. The authorized capital stock of NMTH consists of
100,000,000 shares of common stock, par value $0.001 per share, and no shares of
preferred stock. As of the Closing Date, NMTH has a total of 6,195,000 shares
of common stock issued and outstanding and no shares of preferred stock issued
and outstanding. No shares have otherwise been registered under state or
federal securities laws. As of the Closing Date, all of the issued and
outstanding shares of common stock of NMTH are validly issued, fully paid and
non-assessable and there is not and as of the Closing Date, there will not be
outstanding any warrants, options or other agreements on the part of NMTH
obligating NMTH to issue any additional shares of common or preferred stock or
any of its securities of any kind. NMTH will not issue any shares of capital
stock from the date of this Agreement through the Closing Date. The Common
Stock of NMTH is presently trading on the over-the-counter bulletin board
maintained by Nasdaq under the symbol "NMTH".
Ownership of NMTH Shares. The delivery of certificates provided herein for
the Escrowed NMTH Shares will result in the shareholders of S-Cam immediate
acquisition of record and beneficial ownership of the Escrowed NMTH Shares, free
and clear of all encumbrances.
(e) No Conflict as to NMTH and Subsidiaries. Neither the execution and
delivery of this Agreement nor the consummation of the exchange of the NMTH
Shares will (a) violate any provision of the certificate of incorporation or
by-laws (or other governing instrument) of NMTH or (b) violate, or be in
conflict with, or constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under, or result in the termination
of, or accelerate the performance required by, or excuse performance by any
Person of any of its obligations under, or cause the acceleration of the
maturity of any debt or obligation pursuant to, or result in the creation or
imposition of any encumbrance upon any property or assets of NMTH under, any
material agreement or commitment to which NMTH is a party or by which its
property or assets is bound, or to which any of the property or assets of NMTH
is subject, or (c) violate any statute or law or any judgment, decree, order,
regulation or rule of any court or other governmental body applicable to NMTH
except, in the case of violations, conflicts, defaults, terminations,
accelerations or encumbrances described in clause (b) of this Section for such
matters which are not likely to have a material adverse effect on the business
or financial condition of NMTH.
(g) Consents and Approvals of Governmental Authorities. No consent, approval
or authorization of, or declaration, filing or registration with, any
Governmental Body is required to be made or obtained by NMTH in connection with
the execution, delivery and performance of this Agreement by NMTH or the
consummation of the sale of the Escrowed NMTH Shares.
(h) Other Consents. Except for consents from the holders of the Escrowed
NMTH Shares, no consent of any Person is required to be obtained by NMTH to the
execution, delivery and performance of this Agreement or the consummation of the
sale of the NMTH Shares, including, but not limited to, consents from parties to
leases or other agreements or commitments, except for any consent which the
failure to obtain would not be likely to have a material adverse effect on the
business and financial condition of NMTH.
(i) Litigation. There is no action, suit, inquiry, proceeding or
investigation by or before any Court or Governmental body pending or threatened
in writing against or involving NMTH which is likely to have a material adverse
effect on the business or financial condition of NMTH, or which questions or
challenges the validity of this Agreement. NMTH is not subject to any judgment,
order or decree that is likely to have a material adverse effect on the business
or financial condition of NMTH.
(j) Absence of Certain Changes. From December 31, 2004, to the date hereof,
NMTH has not :
1. suffered damage or destruction of any of its properties or assets
(whether or not covered by insurance) which is materially adverse to the
financial condition of NMTH, or made any disposition of any of its material
properties or assets other than in the ordinary course of business;
2. made any change or amendment in its certificate of incorporation or
by-laws, or other governing instruments, except as contemplated hereby or
required to effect the transactions set forth herein;
3. other than the NMTH Escrowed Shares, issued or sold any Equity Securities
or other securities, acquired, directly or indirectly, by redemption or
otherwise, any such Equity Securities, reclassified, split-up or otherwise
changed any such Equity Security, or granted or entered into any options,
warrants, calls or commitments of any kind with respect thereto;
4. organized any new Subsidiary or acquired any Equity Securities of any
Person or any equity or ownership interest in any business;
5. borrowed any funds or incurred, or assumed or become subject to, whether
directly or by way of guarantee or otherwise, any obligation or liability with
respect to any such indebtedness for borrowed money;
6. paid, discharged or satisfied any material claim, liability or obligation
(absolute, accrued, contingent or otherwise), other than in the ordinary course
of business;
7. prepaid any material obligation having a maturity of more than 90 days
from the date such obligation was issued or incurred;
8. except as set forth on Schedule 6(j), cancelled any material debts or
waived any material claims or rights, except in the ordinary course of business;
98. disposed of or permitted to lapse any rights to the use of any material
patent or registered trademark or copyright or other intellectual property owned
or used by it;
9. granted any general increase in the compensation of officers or employees
(including any such increase pursuant to any employee benefit plan);
10. purchased or entered into any contract or commitment to purchase any
material quantity of raw materials or supplies, or sold or entered into any
contract or commitment to sell any material quantity of property or assets;
11. made any capital expenditures or additions to property, plant or
equipment or acquired any other property or assets;
12. written off or been required to write off any notes or accounts
receivable;
13. written down or been required to write down any inventory; or
14. entered into any collective bargaining or union contract or agreement.
15. incurred any liability in excess of $2,000.00.
(k) Contracts and Commitments. NMTH is not a party to any:
1. Contract or agreement involving any liability on the part of NMTH.
2. Lease of personal property;
3. Employee bonus, stock option or stock purchase, performance unit,
profit-sharing, pension, savings, retirement, health, deferred or incentive
compensation, insurance or other material employee benefit plan (as defined in
Section 2(3) of ERISA) or program for any of the employees, former employees or
retired employees of NMTH;
4. Commitment, contract or agreement that is currently expected by the
management of NMTH to result in any material loss upon completion or performance
thereof;
5. Contract, agreement or commitment with any officer, employee, agent,
consultant, advisor, salesman, sales representative, value added reseller,
distributor or dealer, except for a management contract with NMTH's president;
or
6. Employment agreement or other similar agreement.
(l) Compliance with Law. The operations of NMTH have been conducted in
accordance with all applicable laws and regulations of all Governmental Bodies
having jurisdiction over them, except for violations thereof which are not
likely to have a material adverse effect on the business or financial condition
of NMTH. NMTH has not received any notification of any asserted present or past
failure by it to comply with any such applicable laws or regulations. NMTH has
all material licenses, permits, orders or approvals from the Governmental Bodies
required for the conduct of its business, and is not in material violation of
any such licenses, permits, orders and approvals. All such licenses, permits,
orders and approvals are in full force and effect, and no suspension or
cancellation of any thereof has been threatened.
(m) Tax Matters.
1. NMTH (1) has filed or shall file prior to Closing all nonconsolidated and
noncombined Tax Returns and all consolidated or combined Tax Returns that
include only NMTH and not S-Cam or its other Affiliates (for the purposes of
this Section, such tax Returns shall be considered nonconsolidated and
noncombined Tax Returns) required to be filed through the date hereof and will
have paid any Tax due through the date hereof with respect to the time periods
covered by such nonconsolidated and noncombined Tax Returns and shall timely pay
any such Taxes required to be paid by it after the date hereof with respect to
such Tax Returns and (2) shall prepare and timely file all such nonconsolidated
and noncombined Tax Returns required to be filed after the date hereof and
through the Closing Date and pay all Taxes required to be paid by it with
respect to the periods covered by such Tax Returns; (B) all such Tax Returns
filed pursuant to clause (A) after the date hereof shall, in each case, be
prepared and filed in a manner consistent in all material respects (including
elections and accounting methods and conventions) with such Tax Return most
recently filed in the relevant jurisdiction prior to the date hereof, except as
otherwise required by law or regulation. Any such Tax Return filed or required
to be filed after the date hereof shall not reflect any new elections or the
adoption of any new accounting methods or conventions or other similar items,
except to the extent such particular reflection or adoption is required to
comply with any law or regulation.
2. NMTH represents that prior to Closing, all consolidated or combined Tax
Returns (except those described in subparagraph (1) above) required to be filed
by any person through the date hereof that are required or permitted to include
the income, or reflect the Activities, operations and Transactions, of NMTH for
any taxable period shall have been timely filed, and the income, activities,
operations and Transactions of NMTH shall have been properly included and
reflected thereon. NMTH shall prepare and file, or cause to be prepared and
filed, all such consolidated or combined Tax Returns that are required or
permitted to include the income, or reflect the activities, operations and
Transactions, of NMTH, with respect to any taxable year or the portion thereof
ending on or prior to the Closing Date, including, without limitation, NMTH's
consolidated federal income tax return for such taxable years. Prior to Closing,
NMTH will timely file a consolidated federal income tax return for the taxable
year ended December 31, 2004 and such return shall include and reflect the
income, activities, operations and Transactions of NMTH for the taxable period
then ended, and hereby expressly covenants and agrees to file a consolidated
federal income tax return, and to include and reflect thereon the income,
activities, operations and Transactions of NMTH for the taxable period through
the Closing Date. All Tax Returns filed pursuant to this subparagraph (2) after
the date hereof shall, in each case, to the extent that such Tax Returns
specifically relate to NMTH and do not generally relate to matters affecting
other members of NMTH's consolidated group, be prepared and filed in a manner
consistent in all material respects (including elections and accounting methods
and conventions) with the Tax Return most recently filed in the relevant
jurisdictions prior to the date hereof, except as otherwise required by law or
regulation. NMTH has paid or will pay all Taxes that may now or hereafter be
due with respect to the taxable periods covered by such consolidated or combined
Tax Returns.
3. There is no (nor has there been any request for an) agreement, waiver or
consent providing for an extension of time with respect to the assessment of any
Taxes attributable to NMTH, or its assets or operations and no power of attorney
granted by NMTH with respect to any Tax matter is currently in force.
4. There is no action, suit, proceeding, investigation, audit, claim,
demand, deficiency or additional assessment in progress, pending or threatened
against or with respect to any Tax attributable to NMTH or its assets or
operations.
5. All amounts required to be withheld as of the Closing Date for Taxes or
otherwise have been withheld and paid when due to the appropriate agency or
authority.
(n) Borrowing and Guarantees. Except as reflected on its audited financial
statements for the period ended December 31, 2004, NMTH (a) does not have any
indebtedness for borrowed money, (b) are not lending or committed to lend any
money (except for advances to employees in the ordinary course of business), and
(c) are not guarantors or sureties with respect to the obligations of any
Person.
7. Representations ofS-Cam. S-Cam for their respective rights and interests
represent and warrant as follows:
(a) Organization; Authorization. S-Cam is a corporation duly organized,
validly existing and in good standing under the laws of its country of
organization with full corporate power and authority to execute and deliver this
Agreement and to perform its obligations hereunder. The execution, delivery and
performance of this Agreement have been duly authorized by all necessary
corporate action of S-Cam and this Agreement constitutes a valid and binding
obligation; enforceable against in accordance with its terms. Except as set
forth in Schedule 7(a), S-Cam has no subsidiaries.
(b) Capitalization. The authorized capital stock of S-Cam consists of
20,000,000 shares of common stock, par value KRW500 per share, and no shares of
preferred stock. As of the date of this Agreement, S-Cam has 7,065,000 shares
of common stock issued and outstanding and no shares of preferred stock issued
and outstanding. No shares have otherwise been registered under state or
federal securities laws. As of the Closing Date, all of the issued and
outstanding shares of common stock of S-Cam are validly issued, fully paid and
non-assessable and there is not and as of the Closing Date there will not be
outstanding any warrants, options or other agreements on the part of S-Cam
obligating any of S-Cam to issue any additional shares of common or preferred
stock or any of its securities of any kind. S-Cam will not issue any shares of
capital stock from the date of this Agreement through the Closing Date. The
Escrowed S-Cam Shares will be free from claims, liens or other encumbrances,
except as provided under applicable federal and state securities laws;
(c) No Conflict as to S-Cam and Subsidiaries. Neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
herein will (a) violate any provision of the articles of incorporation or
organization of S-Cam or any of its Subsidiaries or (b) violate, or be in
conflict with, or constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under, or result in the termination
of, or accelerate the performance required by, or excuse performance by any
Person of any of its obligations under, or cause the acceleration of the
maturity of any debt or obligation pursuant to, or result in the creation or
imposition of any Encumbrance upon any property or assets of any of S-Cam or any
of its Subsidiaries under, any material agreement or commitment to which any of
S-Cam, any of its Subsidiaries is a party or by which any of their respective
property or assets is bound, or to which any of the property or assets of any of
S-Cam or any of its Subsidiaries is subject, or (c) violate any statute or law
or any judgment, decree, order, regulation or rule of any court or other
Governmental Body applicable to S-Cam or any of its Subsidiaries except, in the
case of violations, conflicts, defaults, terminations, accelerations or
Encumbrances described in clause (b) of this Section for such matters which are
not likely to have a material adverse effect on the business or financial
condition of S-Cam and its subsidiaries, taken as a whole.
(d) Consents and Approvals of Governmental Authorities. Except as set forth
on Schedule 7(d), no consent, approval or authorization of, or declaration,
filing or registration with, any Governmental Body is required to be made or
obtained by S-Cam or any of either of its Subsidiaries in connection with the
execution, delivery and performance of this Agreement by S-Cam or the
consummation of the transactions contemplated herein.
(e) Other Consents. No consent of any Person is required to be obtained by
S-Cam to the execution, delivery and performance of this Agreement or the
consummation of the transactions contemplated herein, including, but not limited
to, consents from parties to leases or other agreements or commitments, except
for any consent which the failure to obtain would not be likely to have a
material adverse effect on the business and financial condition of S-Cam.
(f) Buildings, Plants and Equipment. The buildings, plants, structures and
material items of equipment and other personal property owned or leased by S-Cam
or its Subsidiaries are, in all respects material to the business or financial
condition of S-Cam and its Subsidiaries, taken as a whole, in good operating
condition and repair (ordinary wear and tear excepted) and are adequate in all
such respects for the purposes for which they are being used. S-Cam has not
received notification that it is in violation of any applicable building,
zoning, anti-pollution, health, safety or other law, ordinance or regulation in
respect of its buildings, plants or structures or their operations, which
violation is likely to have a material adverse effect on the business or
financial condition of S-Cam and its Subsidiaries, taken as a whole or which
would require a payment by S-Cam or any of its subsidiaries in excess of
$10,000 in the aggregate, and which has not been cured.
(g) No Condemnation or Expropriation. Neither the whole nor any portion of
the property or leaseholds owned or held by S-Cam or any of its Subsidiaries is
subject to any governmental decree or order to be sold or is being condemned,
expropriated or otherwise taken by any Governmental Body or other Person with or
without payment of compensation therefore, which action is likely to have a
material adverse effect on the business or financial condition of S-Cam and its
Subsidiaries, taken as a whole.
(h) Litigation. There is no action, suit, inquiry, proceeding or
investigation by or before any court or Governmental Body pending or threatened
in writing against or involving S-Cam or any of its Subsidiaries which is likely
to have a material adverse effect on the business or financial condition of
S-Cam and any of its Subsidiaries, taken as whole, or which would require a
payment by S-Cam or its subsidiaries in excess of $10,000 in the aggregate or
which questions or challenges the validity of this Agreement. Neither S-Cam nor
any or its Subsidiaries is subject to any judgment, order or decree that is
likely to have a material adverse effect on the business or financial condition
of S-Cam or any of its Subsidiaries, taken as a whole, or which would require a
payment by S-Cam or its Subsidiaries in excess of $10,000 in the aggregate.
(i) Absence of Certain Changes. Neither S-Cam nor any of its Subsidiaries
has:
1. suffered the damage or destruction of any of its properties or assets
(whether or not covered by insurance) which is materially adverse to the
business or financial condition of S-Cam and its Subsidiaries, taken as a
whole, or made any disposition of any of its material properties or assets other
than in the ordinary course of business;
2. made any change or amendment in its certificate of incorporation or
by-laws, or other governing instruments;
3. paid, discharged or satisfied any material claim, liability or obligation
(absolute, accrued, contingent or otherwise), other than in the ordinary course
of business;
4. prepaid any material obligation having a maturity of more than 90 days
from the date such obligation was issued or incurred;
5. cancelled any material debts or waived any material claims or rights,
except in the ordinary course of business;
6. disposed of or permitted to lapse any rights to the use of any material
patent or registered trademark or copyright or other intellectual property owned
or used by it;
7. granted any general increase in the compensation of officers or employees
(including any such increase pursuant to any employee benefit plan);
8. purchased or entered into any contract or commitment to purchase any
material quantity of raw materials or supplies, or sold or entered into any
contract or commitment to sell any material quantity of property or assets,
except (i) normal contracts or commitments for the purchase of, and normal
purchases of, raw materials or supplies, made in the ordinary course business,
(ii) normal contracts or commitments for the sale of, and normal sales of,
inventory in the ordinary course of business, and (iii) other contracts,
commitments, purchases or sales in the ordinary course of business;
9. made any capital expenditures or additions to property, plant or
equipment or acquired any other property or assets (other than raw materials and
supplies) at a cost in excess of $10,000 in the aggregate;
10. written off or been required to write off any notes or accounts
receivable in an aggregate amount in excess of $10,000;
11. written down or been required to write down any inventory in an
aggregate amount in excess of $10,000;
12. entered into any collective bargaining or union contract or agreement;
or
13. other than the ordinary course of business, incurred any liability
required by generally accepted accounting principles to be reflected on a
balance sheet and material to the business or financial condition of S-Cam and
their subsidiaries taken as a whole.
(j) Labor Relations. Neither S-Cam nor any of its Subsidiaries is a party to
any collective bargaining agreement. Except for any matter which is not likely
to have a material adverse effect on the business or financial condition of
S-Cam and its Subsidiaries, taken as a whole, (a) S-Cam and its Subsidiaries are
in compliance with all applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours, and is not
engaged in any unfair labor practice, (b) there is no labor strike, dispute,
slowdown or stoppage actually pending or threatened against S-Cam or any of its
Subsidiaries, (c) no representation question exists respecting the employees of
S-Cam or any of its Subsidiaries, (d) neither S-Cam nor any of its Subsidiaries
has experienced any strike, work stoppage or other labor difficulty, and (e) no
collective bargaining agreement relating to employees of S-Cam or any of its
Subsidiaries is currently being negotiated.
(k) Compliance with Law. The operations of S-Cam and its Subsidiaries have
been conducted in accordance with all applicable laws and regulations of all
Governmental Bodies having jurisdiction over them, except for violations thereof
which are not likely to have a material adverse effect on the business or
financial condition of S-Cam and its Subsidiaries, taken as a whole, or which
would not require a payment by S-Cam or its Subsidiaries in excess of $10,000 in
the aggregate, or which have been cured. Neither S-Cam nor any of its
Subsidiaries has received any notification of any asserted present or past
failure by it to comply with any such applicable laws or regulations. S-Cam and
its Subsidiaries have all material licenses, permits, orders or approvals from
the Governmental Bodies required for the conduct of their businesses, and are
not in material violation of any such licenses, permits, orders and approvals.
All such licenses, permits, orders and approvals are in full force and effect,
and no suspension or cancellation of any thereof has been threatened.
(l) Tax Matters.
1. Each of S-Cam and its Subsidiaires (1) has filed or shall file prior to
Closing all nonconsolidated and noncombined Tax Returns and all consolidated or
combined Tax Returns that include only S-Cam and not NMTH or its other
Affiliates (for the purposes of this Section, such tax Returns shall be
considered nonconsolidated and noncombined Tax Returns) required to be filed
through the date hereof and will have paid any Tax due through the date hereof
with respect to the time periods covered by such nonconsolidated and noncombined
Tax Returns and shall timely pay any such Taxes required to be paid by it after
the date hereof with respect to such Tax Returns and (2) shall prepare and
timely file all such nonconsolidated and noncombined Tax Returns required to be
filed after the date hereof and through the Closing Date and pay all Taxes
required to be paid by it with respect to the periods covered by such Tax
Returns; (B) all such Tax Returns filed pursuant to clause (A) after the date
hereof shall, in each case, be prepared and filed in a manner consistent in all
material respects (including elections and accounting methods and conventions)
with such Tax Return most recently filed in the relevant jurisdiction prior to
the date hereof, except as otherwise required by law or regulation. Any such
Tax Return filed or required to be filed after the date hereof shall not reflect
any new elections or the adoption of any new accounting methods or conventions
or other similar items, except to the extent such particular reflection or
adoption is required to comply with any law or regulation.
2. Each of S-Cam and its Subsidiaries represents that prior to Closing, all
consolidated or combined Tax Returns (except those described in subparagraph (1)
above) required to be filed by any person through the date hereof that are
required or permitted to include the income, or reflect the Activities,
operations and Transactions, of S-Cam and its Subsidiaries for any taxable
period shall have been timely filed, and the income, activities, operations and
Transactions of S-Cam and its Subsidiaries shall have been properly included and
reflected thereon. S-Cam and its Subsidiaries shall prepare and file, or cause
to be prepared and filed, all such consolidated or combined Tax Returns that are
required or permitted to include the income, or reflect the activities,
operations and transactions, of S-Cam and its Subsidiaries, with respect to any
taxable year or the portion thereof ending on or prior to the Closing Date,
including, without limitation, S-Cam' and Subsidiaries' consolidated federal
income tax return for such taxable years. Prior to Closing, S-Cam and its
Subsidiaries will timely file a consolidated federal income tax return for the
taxable year ended December 31, 2004 and such return shall include and reflect
the income, activities, operations and transactions of S-Cam and its
Subsidiaries for the taxable period then ended, and hereby expressly covenants
and agrees to file a consolidated federal income tax return, and to include and
reflect thereon the income, activities, operations and Transactions of S-Cam and
its Subsidiaries for the taxable period through the Closing Date. All Tax
Returns filed pursuant to this subparagraph (2) after the date hereof shall, in
each case, to the extent that such Tax Returns specifically relate to S-Cam and
its Subsidiaries, be prepared and filed in a manner consistent in all material
respects (including elections and accounting methods and conventions) with the
Tax Return most recently filed in the relevant jurisdictions prior to the date
hereof, except as otherwise required by law or regulation. Each of S-Cam and
its Subsidiaries has paid or will pay all Taxes that may now or hereafter be due
with respect to the taxable periods covered by such consolidated or combined Tax
Returns.
3. All amounts required to be withheld as of the Closing Date for Taxes or
otherwise have been withheld and paid when due to the appropriate agency or
authority.
4. There shall be delivered or made available to NMTH at or prior to Closing
true and complete copies of all income Tax Returns (or with respect to
consolidated or combined returns, the portion thereof) and any other Tax Returns
requested by NMTH as may be relevant to S-Cam, its Subsidiaries, or their assets
or operations for any and all periods ending after December 31, 1998, or for any
Tax years which are subject to audit or investigation by any taxing authority or
entity.
(m) Environmental Matters.
1. At all times prior to the date hereof, S-Cam and its Subsidiaries have
complied in all material respects with applicable environmental laws, orders,
regulations, rules and ordinances relating to the Properties (as hereinafter
defined), the violation of which would have a material adverse effect on the
business or financial condition of S-Cam and its Subsidiaries, taken as a
whole, or which would require a payment by S-Cam or its Subsidiaries in excess
of $10,000 in the aggregate, and which have been duly adopted, imposed or
promulgated by any legislative, executive, administrative or judicial body or
officer of any Governmental Body.
2. The environmental licenses, permits and authorizations that are material
to the operations of S-Cam and its Subsidiaries, taken as a whole, are in full
force and effect.
8. Stock Market Application.
NMTH is a Nevada public corporation that currently trades on the
over-the-counter bulletin board. Upon completion of the Closing, S-Cam agrees
to engage Xxxxxx Law Group to assist with seeking to list the securities of the
combined entities on the Nasdaq National Market System or on the American Stock
Exchange. S-Cam will be responsible for any and all costs associated with such
filing including applicable audit costs.
9.Notices.
Any notice which any of the parties hereto may desire to serve upon any of
the other parties hereto shall be in writing and shall be conclusively deemed to
have been received by the party at its address, if mailed, postage prepaid,
United States mail, registered, return receipt requested, to the following
addresses:
If to NMTH NetMeasure Technology, Inc.
000 Xxxx Xxxxxx
Xxxxxxxx, XX X0X 0X0
Xxxxxx
Facsimile No.: (250) ____-________
Attention: Xxxxx Lapnieks, President
If to S-Cam: S-Cam Co., Ltd.
Buk-ri 35
Nama-Myun
YonginCity, Korea
Facsimile No.:
Attn: Bon-Xxxx Xxx, Chief Executive Officer
10. Successors.
This Agreement shall be binding upon and inure to the benefit of the heirs,
personal representatives and successors and assigns of the parties.
11. Choice of Law.
This Agreement shall be construed and enforced in accordance with the laws
of the State of Nevada, and the parties submit to the exclusive jurisdiction of
the courts of Nevada in respect of all disputes arising hereunder.
12. Counterparts.
This Agreement may be signed in one or more counterparts, all of which
taken together shall constitute an entire agreement.
13. Confidential Information.
Each of NMTH and S-Cam hereby acknowledges and agrees that all information
disclosed to each other whether written or oral, relating to the other's
business activities, its customer names, addresses, all operating plans,
information relating to its existing services, new or envisioned products or
services and the development thereof, scientific, engineering, or technical
information relating to the others business, marketing or product promotional
material, including brochures, product literature, plan sheets, and any and all
reports generated to customers, with regard to customers, unpublished list of
names, and all information relating to order processing, pricing, cost and
quotations, and any and all information relating to relationships with
customers, is considered confidential information, and is proprietary to, and is
considered the invaluable trade secret of such party (collectively "Confidential
Information"). Any disclosure of any Confidential Information by any party
hereto, its employees, or representatives shall cause immediate, substantial,
and irreparable harm and loss to the other. Each party understands that the
other desires to keep such Confidential Information in the strictest confidence,
and that such party's agreement to do so is a continuing condition of the
receipt and possession of Confidential Information, and a material provision of
this agreement, and a condition that shall survive the termination of this
Agreement. Consequently, each party shall use Confidential Information for the
sole purpose of performing its obligations as provided herein.
14. Public Announcement.
The parties shall make no public announcement concerning this agreement,
their discussions or any other letters, memos or agreements between the parties
relating to this agreement until such time as they agree to the contents of a
mutually satisfactory press release which they intend to release on the date of
execution of this Agreement. Either of the parties, but only after reasonable
consultation with the other, may make disclosure if required under applicable
law.
15. Entire Agreement.
This Agreement sets forth the entire agreement and understanding of the
Parties hereto with respect to the transactions contemplated hereby, and
supersedes all prior agreements, arrangements and understandings related to the
subject matter hereof. No understanding, promise, inducement, statement of
intention, representation, warranty, covenant or condition, written or oral,
express or implied, whether by statute or otherwise, has been made by any Party
hereto which is not embodied in this Agreement or the written statements,
certificates, or other documents delivered pursuant hereto or in connection with
the transactions contemplated hereby, and no party hereto shall be bound by or
liable for any alleged understanding, promise, inducement, statement,
representation, warranty, covenant or condition not so set forth.
16. Costs and Expenses.
Except as otherwise specifically set forth herein, each party will bear its
own attorneys, brokers, investment bankers, agents, and finders employed by,
such party. The parties will indemnify each other against any claims, costs,
losses, expenses or liabilities arising from any claim for commissions, finder's
fees or other compensation in connection with the transactions contemplated
herein which may be asserted by any person based on any agreement or arrangement
for payment by the other party.
17. Attorney's Fees.
Should any action be commenced between the parties to this Agreement
concerning the matters set forth in this Agreement or the right and duties of
either in relation thereto, the prevailing party in such Action shall be
entitled, in addition to such other relief as may be granted, to a reasonable
sum as and for its Attorney's Fees and Costs.
18. Finders.
NMTH represents and warrants that there are no finders or other parties
which have represented NMTH in connection with this transaction which have not
been previously provided with appropriate compensation. In the event any such
finders make a claim for any fee, share issuance of other compensation in
connection with the transactions contemplated hereby, they shall be the sole
responsibility of NMTH. S-Cam represents and warrants that there are no finders
or other parties which have represented S-Cam in connection with this
transaction. In the event any such finders make a claim for any fee, share
issuance of other compensation in connection with the transactions contemplated
hereby, they shall be the sole responsibility of S-Cam.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
For and on behalf of: NetMeasure Technology, Inc.
a Nevada corporation
By: /s/ Xxxxx Lapnieks
Xxxxx Lapnieks
President
For and on behalf of: S-Cam Co., Ltd.
By: /s/ Bon-Xxxx Xxx
Bon-Xxxx Xxx
Chief Executive Officer
SCHEDULE
Schedule 7(a)
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S-Cam has a 15% interest in a cell phone module company, with a total investment
of KRW780mil.
Schedule 7(d)
--------------
The transaction is subject to approval of the Korean Government under the
foreign exchange and investment regulations.
