SECURITIES EXCHANGE AGREEMENT
This
SECURITIES EXCHANGE AGREEMENT is made this 23rd
day of
April 2007, by and among SUNCAST NETWORK, INC., a Delaware corporation having
its principal place of business at 0000 X. Xxxxxx Xxxxxx, Xxxxx X-00, Xxxxxxxxx
Xxxxxxx, XX 00000 ("Suncast"), SUNCAST NETWORK, LLC, a Delaware limited
liability company having its principal place of business at 0000 X. Xxxxxx
Xxxxxx, Xxxxx X-00, Xxxxxxxxx Xxxxxxx, XX 00000 ("SNLLC") and the members of
SNLLC listed on Annex A hereto (the "SNLLC Members").
WHEREAS,
SNLLC has issued and outstanding an aggregate of 377,500 limited liability
company membership interests ("SNLLC Interests"); and
WHEREAS,
Suncast is authorized to issue 30,000,000 shares of common stock, par value
$.01
per share (the "Suncast Common Stock") of which no shares are issued or
outstanding; and
WHEREAS,
Suncast, SNLLC and the SNLLC Members desire to effect the exchange of all of
the
SNLLC Interests for shares of authorized, but unissued Suncast Common Stock
(the
"Suncast Exchange Shares"), upon the terms and subject to the conditions set
forth in this Agreement (the "Security Exchange"); and
WHEREAS,
upon the issuance thereof, the Suncast Exchange Shares will constitute not
less
than 80% of the issued and outstanding capital stock of Suncast;
and
WHEREAS,
it is contemplated that SNLLC will become a subsidiary of Suncast;
and
WHEREAS,
the parties to this Agreement intend and desire that the Security Exchange
shall
constitute a tax-free reorganization within the meaning of Section 351 of the
Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS,
none of the parties to this Agreement has either requested or obtained, nor
will
they request, a private letter ruling from the Internal Revenue Service or
any
opinion of counsel to the effect that the Security Exchange will constitute
a
tax-free reorganization within the meaning of Section 351 of the Code;
and
WHEREAS,
the SNLLC Members recognize and acknowledge that, in light of the foregoing,
there can be no assurance from Suncast or SNLLC, nor is any assurance intended,
that the Security Exchange will constitute a tax-free reorganization under
Section 351 of the Code and that they must consult with and rely upon their
own
advisors for advice regarding the tax consequences of the Security Exchange;
and
WHEREAS,
the Board of Directors of Suncast and the members of SNLLC (together with
Suncast, the "Companies") deem it advisable and generally to the advantage
and
welfare of each of the respective Companies, and their respective shareholders
and members, that the Security Exchange be effected under the terms and
conditions hereinafter set forth.
NOW,
THEREFORE, in consideration of the premises, covenants and conditions hereof,
the parties hereto do mutually agree as follows:
1.
Votes
on Security Exchange and Related Matters. SNLLC shall, as soon as practicable
but prior to Closing (as defined below) (i) cause a special meeting of its
members to be called to consider and vote upon the Security Exchange on the
terms and conditions hereinafter set forth, or (ii) obtain written consent
of
such members as is necessary to approve the Security Exchange. If the Security
Exchange is approved in accordance with applicable law, subject to the further
conditions and provisions of this Agreement, a closing of this Agreement shall
be held (the "Closing") and all documents or instruments deemed necessary or
appropriate by the parties hereto to effect the Security Exchange, shall be
executed as promptly as possible thereafter. The time when the Security Exchange
becomes effective is referred to herein as the "Effective Time."
2.
Representations, Warranties and Covenants of SNLLC.
SNLLC
represents, warrants and covenants as follows, except to the extent set forth
on
the schedule of exceptions in the form of Schedule A annexed hereto and made
a
part hereof, with such exceptions to apply solely to the representation as
to
which they are scheduled, except to the extent otherwise specifically
cross-referenced:
2.1
Organization; Capitalization. SNLLC is, and on the effective date of the
Security Exchange (the "Effective Date") will be, a duly organized and a validly
existing limited liability company in good standing under the laws of its state
of formation, and has all requisite corporate power and authority to own its
properties and operate its business as presently conducted. There are issued
and
outstanding, and on the Effective Date there will be issued and outstanding,
only the SNLLC Interests, all of which are, and on the Effective Date will
be,
duly authorized and validly issued. There are, and on the Effective Date there
will be, no outstanding rights, options or warrants to purchase any equity
interest in SNLLC, including but not limited to any membership interests of
SNLLC, and there will be no other or any other issued or outstanding securities
of any nature convertible into or exercisable or exchangeable for membership
interests of SNLLC. The SNLLC Interests have been issued pursuant to an
appropriate exemption from the registration requirements of the Securities
Act
and from any applicable registration requirements of the various
states.
2.2
Authority. SNLLC and the SNLLC Members each has, and on the Effective Date
will
have, full power and authority to enter into this Agreement and, subject to
any
required member or other third party approval in accordance with the laws of
the
State of Delaware or such other state as to which SNLLC may be subject as a
result of any agreement pursuant to which third party approval is required,
to
consummate the transactions contemplated hereby. This Agreement and the
transactions contemplated hereby have been duly approved by all requisite
corporate action on the part of SNLLC and, prior to the Closing, by the other
SNLLC Members whose consent is required under applicable law and the Operating
Agreement of SNLLC, dated as of June 29, 2006 (the "Operating
Agreement").
2.3
Binding Agreement. This Agreement has been duly executed and delivered by SNLLC
and constitutes the legal, valid and binding obligation of SNLLC and the SNLLC
Members, enforceable against them in accordance with the terms hereof, except
as
may be limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws of general application relating to or affecting the enforcement of rights
hereunder or general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
2.4
No
Conflicts. The execution and delivery by SNLLC and the SNLLC Members of this
Agreement, the consummation and performance of the transactions herein
contemplated, and compliance with the terms of this Agreement by SNLLC and
the
SNLLC Members will not conflict with, result in a breach of or constitute or
give rise to a default under (i) any indenture, mortgage, deed of trust or
other
agreement, instrument or contract to which SNLLC or any SNLLC Member is now
a
party or by which it or any of its assets or properties are bound; (ii) SNLLC's
Certificate of Formation or Operating Agreement; or (iii) any law, order, rule,
regulation, writ, injunction, judgment or decree of any government, governmental
instrumentality or court, domestic or foreign, having jurisdiction over SNLLC,
any of the SNLLC Members or any of SNLLC's business or properties wherein such
breach could have a material adverse effect on SNLLC or any of its business
or
properties.
2.5
Subsidiaries. SNLLC does not have, and on the Effective Date will not have,
any
subsidiaries, nor does it own any direct or indirect interest in any other
business entity.
2.6
Foreign Qualifications. SNLLC is, and on the Effective Date will be, qualified
or licensed as a foreign limited partnership in all jurisdictions where its
business or ownership of assets so requires, except where the failure to be
qualified or licensed would not be reasonably expected to have a material
adverse effect on the business of SNLLC The business of SNLLC does not require
it to be registered as an investment company or investment adviser, as such
terms are defined under the Investment Company Act of 1940 and the Investment
Advisers Act of 1940, each as amended.
2.7
Financial Statements. All financial statements of SNLLC previously delivered
to
Suncast (the "Financial Statements") fairly present in all material respects
the
financial position, results of operations and other information purported to
be
shown therein of SNLLC, at the dates and for the respective periods to which
they apply. All such Financial Statements have been prepared in conformity
with
generally accepted accounting principles consistently applied throughout the
periods involved, and have been adjusted for all normal and recurring accruals
and are incorporated herein by reference.
2.9
Ordinary Course of Business. Except for transactions occurring in the ordinary
course of business, there has not been, and on the Effective Date there will
not
have been, any single transaction involving SNLLC since March 31, 2007 in an
amount in excess of $100,000.
2.10
Liabilities; Claims. There are, and on the Effective Date will be, no
liabilities (including, but not limited to, tax liabilities) or claims against
SNLLC (whether such liabilities or claims are contingent or absolute, direct
or
indirect, matured or unmatured) not appearing on the Financial Statements,
other
than (i) liabilities incurred in the ordinary course of business since Xxxxx
00,
0000, (xx) taxes accrued on earnings since June 22, 2006 which are not yet
due
or payable, or (iii) liabilities which in the aggregate do not exceed
$50,000.
2
2.11
Tax
Returns. All federal, state, county and local income, excise, property and
other
tax returns required to be filed by SNLLC have been filed, and all required
taxes, fees or assessments have been paid or an adequate reserve therefore
has
been established in the Financial Statements. The federal income tax returns
and
state and foreign income tax returns of SNLLC have not been audited by the
Internal Revenue Service ("IRS") or any other taxing authority. Neither the
IRS
nor any state, local or other taxing authority has proposed any additional
taxes, interest or penalties with respect to SNLLC or any of its operations
or
businesses. There are no pending, or to the knowledge of SNLLC, threatened,
tax
claims or assessments, and there are no pending, or to the knowledge of SNLLC,
threatened, tax examinations by any taxing authorities. SNLLC has not given
any
waivers of rights (which are currently in effect) under applicable statutes
of
limitations with respect to the federal income tax returns of SNLLC for any
year.
2.12
Title to Assets. Except as provided for in the Financial Statements, SNLLC,
has,
and on the Effective Date will have, good and marketable title to all of its
furniture, fixtures, equipment and other assets owned by SNLLC, and such assets
are owned free and clear of all security interests, pledges, liens, restrictions
and encumbrances of every kind and nature. SNLLC is the owner of its inventory
as set forth in the Financial Statements and has good and marketable title
thereto.
2.13
Accounts Receivable. The accounts receivable as set forth in the Financial
Statements represent amounts due for goods sold or services rendered by SNLLC
in
the ordinary course of business and, except as reserved for in the Financial
Statements, SNLLC believes are collectable in the ordinary course of
business.
2.14
Material Contracts. A copy (or summary if oral) of all agreements, contracts,
arrangements, understandings and commitments, whether written or oral, to which
SNLLC is or on the Effective Date will be, a party, or from which SNLLC will
receive substantial benefits and which are material to SNLLC (collectively,
"SNLLC Contracts"), have been or will be delivered to Suncast or its counsel.
Any SNLLC Contracts entered into between the date hereof
and the Effective Date will be delivered to Suncast or its counsel prior to
Closing. SNLLC is not now, nor will it be on the Effective Date, in material
default under any SNLLC Contract and to the knowledge of SNLLC no other party
to
any SNLLC Contract is in material default thereunder. Each SNLLC Contract is
a
legal, valid and binding obligation of SNLLC, enforceable against it in
accordance with their respective terms. The validity and enforceability of,
and
rights of SNLLC contained in, each such SNLLC Contract shall not be adversely
effected by the Security Exchange or the transactions contemplated hereby or
any
actions taken in furtherance hereof.
2.15
Legal Proceedings. There are, and on the Effective Date there will be, no legal,
administrative, arbitral or other proceedings, claims, actions or governmental
investigations of any nature pending, or to SNLLC's knowledge, threatened,
involving SNLLC, individually or in the aggregate, in which an unfavorable
determination could result in suspension or termination of SNLLC's business
or
authority to conduct such business in any jurisdiction or could result in the
payment by SNLLC of more than $100,000, or challenging the validity or propriety
of the transactions contemplated by this Agreement. SNLLC is not a party to
any
order, judgment or decree which will, or might reasonably be expected to,
materially adversely affect the business, operations, properties, assets or
financial condition of SNLLC
2.16
Certain Transactions. Since March 31, 2007 there have been, and through the
Effective Date there will be: (i) no bonuses or extraordinary compensation
paid
to any of the officers or members of SNLLC, (ii) no loans made to or any other
transactions with any of the officers or members of SNLLC or their families
and
(iii) no dividends or other distributions declared or paid by SNLLC, except
those distributions made to members for federal income tax
purposes.
2.17
Insurance. SNLLC has, and on the Effective Date will have, maintained casualty
and liability policies and other insurance policies with respect to its business
which are appropriate and customary for businesses similar in size, industry
and
risk profile. Copies of all of the policies of insurance and bonds presently
in
force with respect to SNLLC, including without limitation those covering
properties, buildings, machinery, equipment, worker's compensation, officers
and
directors and public liability, have been made available to Suncast. All such
insurance is outstanding and in full force and effect, with all premiums thereon
duly paid, and SNLLC has not received any notice of cancellation of any such
policies.
2.18
Intellectual Property. SNLLC has, and on the Effective Date will have, no
patents, patent applications, trademarks, trademark registrations or
applications, trade names, copyrights, copyright registrations or applications,
or other intellectual property. SNLLC does not have knowledge of any
infringements by it of any third party's intellectual property.
2.19
Compliance with Laws. Since its formation in June, 2006, SNLLC has, and on
the
Effective Date will have, in all material respects operated its business and
conducted its affairs in compliance with all applicable laws, rules and
regulations, except where the failure to so comply did not have and would not
be
expected to have a material adverse effect on its business or
property.
3
2.20
Related Party Contracts. There are, and on the Effective Date there will be,
no
loans, leases or other SNLLC Contracts outstanding between SNLLC and any of
its
officers, members, any holders of more than five percent (5%) or more of the
SNLLC Interests or any person related to or affiliated with any such officers
or
directors or holders of more than five percent (5%) or more of the SNLLC
Interests.
2.21
Officer and Director Information. Since its formation in June, 2006, neither
SNLLC nor any of its officers or members, nor any person intended upon
consummation of the Security Exchange to be nominated by SNLLC to become an
officer or director of Suncast or any successor entity or subsidiary, has been
the subject of:
(a)
a
petition under the Federal bankruptcy laws or any other insolvency or moratorium
law or has a receiver, fiscal agent or similar officer been appointed by a
court
for the business or property of SNLLC or such person, or any membership in
which
SNLLC or any such person was a general member at or within two years before
the
time of such filing, or any corporation or business association of which SNLLC
or any such person was an executive officer at or within two years before the
time of such filing;
(b)
a
conviction in a criminal proceeding or a named subject of a pending criminal
proceeding (excluding traffic violations which do not relate to driving while
intoxicated or driving under the influence);
(c)
any
order, judgment or decree, not subsequently reversed, suspended or vacated,
of
any court of competent jurisdiction, permanently or temporarily enjoining SNLLC
or any such person from, or otherwise limiting, the following
activities:
(i)
Acting as a futures commission merchant, introducing broker, commodity trading
advisor, commodity pool operator, floor broker, leverage transaction merchant,
any other person regulated by the Interested States Commodity Futures Trading
Commission or an associated person of any of the foregoing, or as an investment
adviser, underwriter, broker or dealer in securities, or as an affiliated
person, director or employee of any investment company, bank, savings and loan
association or insurance company, or engaging in or continuing any conduct
or
practice in connection with such activity;
(ii)
Engaging in any type of business practice; or
(iii)
Engaging in any activity in connection with the purchase or sale of any security
or commodity or in connection with any violation of Federal, state or other
securities laws or commodities laws;
(d)
any
order, judgment or decree, not subsequently reversed, suspended or vacated,
of
any Federal, state or local authority barring, suspending or otherwise limiting
for more than 60 days the right of SNLLC or any such person to engage in any
activity described in the preceding sub-paragraph, or to be associated with
persons engaged in any such activity;
(e)
a
finding by a court of competent jurisdiction in a civil action or by the
Securities and Exchange Commission (the "Commission") to have violated any
securities law, regulation or decree and the judgment in such civil action
or
finding by the Commission has not been subsequently reversed, suspended or
vacated; or
(f)
a
finding by a court of competent jurisdiction in a civil action or by the
Commodity Futures Trading Commission to have violated any federal commodities
law, and the judgment in such civil action or finding has not been subsequently
reversed, suspended or vacated. All items described in clauses (a) through
(f)
above are collectively referred to herein as "Bad Events."
2.22
Benefit Plans. SNLLC does not have any pension plan, profit sharing or similar
employee benefit plan.
2.23
Consents and Approvals. Except for the consent and approval of the members
of
SNLLC, no consents or approvals of, or filings or registrations with, any third
party or any public body or authority are necessary in connection with (i)
the
execution and delivery by SNLLC of this Agreement and (ii) the consummation
by
SNLLC of the Security Exchange and of all other transactions contemplated
hereby.
2.24
Finder's Fees. SNLLC knows of no person who rendered any service in connection
with the introduction of the Companies to any of the other Companies, for a
"finder's fee" or similar type of fee in connection with the Security Exchange
and the other transactions contemplated hereby.
2.25
Employee Matters. No employees of SNLLC are on strike or to the best of SNLLC's
knowledge threatening any strike or work stoppage. SNLLC does not have any
obligations under any collective bargaining or labor union agreements, nor
is
SNLLC involved in any material controversy with any of its employees or any
organization representing any of its employees. SNLLC believes its relationships
with its employees are good.
4
2.26
Disclosure. None of the information supplied or to be supplied by or about
SNLLC
herein or for inclusion or incorporation by reference in any information to
be
supplied to holders of Suncast Common Stock concerning the Security Exchange
contains any untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading.
2.27
Actions Prior to Closing. From the date hereof through the Closing, SNLLC shall
not, other than in the ordinary course of business, consistent with past
practice, without due consent of Suncast:
(a)
sell,
lease, assign, transfer or otherwise dispose of any material assets, including
cash;
(b)
incur
or agree to assume or assume, guarantee, endorse or otherwise in any way be
or
become responsible or liable for, directly or indirectly, any material
contingent obligation;
(c)
make
any material capital expenditure;
(d)
participate or engage in any discussions or negotiations with any person
regarding, or enter into any transaction concerning, a merger, stock exchange
or
consolidation, other than with the other parties hereto, or liquidate or
dissolve itself (or suffer any liquidation or dissolution) or convey, sell,
lease, transfer or otherwise dispose of, in one transaction or a series of
related transactions, all or a substantial part of its property, business,
assets or interests, or other securities convertible into equity, or make any
material change in the present method of conducting business;
(e)
declare or pay any dividends or make any other distribution (whether in cash
or
property) on any of its membership interests (except that SNLLC shall be
entitled to make distributions to its members sufficient to allow them to pay
income taxes on SNLLC's taxable income passed through to them, consistent with
past practices).
(f)
make
or suffer to exist any advances or loans to, or investments in any person,
firm,
corporation or other business entity not a party to this letter of
intent;
(g)
make
any amendment to its Operating Agreement;
(h)
enter
into or amend any employment agreements or increase the salary or bonus of
any
existing employee;
(i)
enter
into any new material agreement or be or become liable under any new material
agreement for the lease, hire or use of any real or personal
property;
(j)
create, incur, assume or suffer to exist, any mortgage, pledge, lien, charge,
security interest or encumbrance of any kind upon any of its property, assets,
income or profits, whether now owned or hereafter acquired; or
(k)
enter
into any commitment with respect to any of the foregoing.
3.
Representations, Warranties and Covenants of Suncast. Suncast represents,
warrants and covenants as follows, except to the extent set forth in the
Schedule of Exceptions in the form of Schedule B annexed hereto and made part
hereof ("Suncast Schedule of Exceptions"):
3.1
Organization; Capitalization. Suncast is a duly organized and validly existing
corporation in good standing under the laws of the State of Delaware, authorized
to issue an aggregate of 30,000,000 shares of Suncast Common Stock, par value
$.01 per share. On the Effective Date, there will be issued and outstanding
no
shares
of
Suncast Common Stock. Except as contemplated by this Agreement, on the Effective
Date there will be no issued or outstanding securities and no issued or
outstanding options, warrants or other rights, or commitments or agreements
of
any kind, contingent or otherwise, to purchase or otherwise acquire Suncast
Common Stock or any issued or outstanding securities of any nature convertible
into Suncast Common Stock . There is no proxy or any other agreement,
arrangement or understanding of any kind authorized, effective or outstanding
which restricts limits or otherwise affects the right to vote any Suncast
Shares.
3.2
Binding Agreement. This Agreement and the transactions contemplated hereby
have
been duly approved by the Board of Directors of Suncast. This Agreement has
been
duly executed and delivered by Suncast and constitutes the legal, valid and
binding obligation of Suncast enforceable against it in accordance with the
terms hereof, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws of general application relating
to or
affecting the enforcement of rights hereunder or general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
5
3.3
Recent Business Operations. The business of Suncast since its incorporation,
has
been limited to the search for an acquisition or merger partner.
3.4
Foreign Qualifications. Suncast is, and on the Effective Date will be, duly
authorized, qualified and licensed under any and all applicable laws,
regulations, ordinances or orders of public authorities to carry on its business
in the places and in the manner as presently conducted. The business of Suncast
does not require it to be registered as an investment company or investment
advisor, as such terms are defined under the Investment Company Act and the
Investment Advisors Act of 1940.
3.5
Subsidiaries. Suncast has, and on the Effective Date will have, no
subsidiaries.
3.6
Liabilities. There are, and on the Effective Date will be, no liabilities
(including, but not limited to, tax liabilities) of, or claims against, Suncast
(whether such liabilities or claims are contingent or absolute, direct or
indirect, accrued or unaccrued and matured or unmatured), except for (i)
liabilities for expenses incurred relating to this Agreement and the
consummation of the transactions contemplated hereby and (ii) liabilities and
commitments incurred or made in the ordinary course of Suncast's
business.
3.7Assets.
Suncast has, and on the Effective Date will have, no fixtures, furniture,
equipment, inventory, accounts receivable or other assets.
3.8
Material Contracts. Suncast has and on the Effective Date will have, no material
contracts to which it is, or on the Effective Date will be, a
party.
3.9
No
Conflicts. The execution and delivery by Suncast of this Agreement, the
consummation and performance of the transactions herein contemplated and
compliance with the terms of this Agreement by Suncast will not conflict with,
result in a breach of or constitute a default under (i) any indenture, mortgage,
deed of trust or other agreement, instrument or contract to which Suncast is
now
a party or by which it or any of its assets or properties is bound; (ii) the
Certificate of Incorporation or the bylaws of Suncast, in each case as amended;
or (iii) any law, order, rule, regulation, writ, injunction, judgment or decree
of any government, governmental instrumentality or court, domestic or foreign,
having jurisdiction over Suncast or any of its business or
properties.
3.10
Legal Proceedings. There are, and on the Effective Date there will be, no legal,
administrative, arbitral or other proceedings, claims, actions or governmental
investigations of any nature pending or to Suncast's knowledge threatened,
against Suncast, including, but not limited to any shareholder claims or
derivative actions, or challenging the validity or propriety of the transactions
contemplated by this Agreement, and, to Suncast's best knowledge, there is
no
reasonable basis for any proceeding, claim, action or governmental investigation
against Suncast. Suncast is not a party to any order, judgment or decree which
will, or might reasonably be expected to, materially adversely affect the
business, operations, properties, assets or financial condition of
Suncast.
3.11
Certain Transactions. Other than as disclosed in the SEC Filings, there have
been, and to the Effective Date there will be (i) no salaried or otherwise
compensated employees and no bonuses paid to any officer or director of Suncast;
(ii) no loans made to or transactions with any officer or director of Suncast;
(iii) no dividends or other distributions declared or paid by Suncast; and
(iv)
no purchase by Suncast or any third party of any of the Suncast
Shares.
3.12
Issuances of Securities. Suncast has not, issued or committed itself to issue,
and to the Effective Date will not issue or commit itself to issue, any Suncast
Common Stock or
any
options, rights, warrants, or other securities convertible into Suncast Common
Stock , except as contemplated by this Agreement.
3.13
Intellectual Property. Suncast has no patents, patent applications, trademarks,
trademark registrations, trade names, copyrights, copyright registrations or
applications therefor. Suncast has no knowledge of any infringements by Suncast
of any third party's intellectual property.
3.14
Compliance with Laws. Suncast has, and on the Effective Date will have, in
all
material respects operated its business and conducted its affairs in compliance
with all applicable laws, rules and regulations, except where the failure to
so
comply did not have and would not be expected to have a material adverse effect
on its business or property. To the best of its knowledge, Suncast is not in
violation of any Federal, state or local environmental law or
regulation.
6
3.15
Related Party Transactions. On the Effective Date there will be no loans,
leases, commitments, arrangements or other contracts of any kind or nature
outstanding between (i) Suncast or (ii) any officer or director of Suncast
or
any person related to or affiliated with any officer or director of
Suncast.
3.16
Officers and Directors. During the past five year period, no current officer
or
director of Suncast has been the subject of any Bad Event.
3.17
Employee Benefit Plans. Suncast has no pension plan, profit sharing or similar
employee benefit plan.
3.18
Consents. Except for the consent and approval of the Board of Directors of
Suncast, no consents or approvals of, or filings or registrations with, any
third party or any public body or authority are necessary in connection with
(i)
the
execution and delivery by Suncast of this Agreement or (ii) the consummation
by
Suncast of the Security Exchange and the other transactions contemplated hereby.
Suncast has, and on the Effective Date will have, full power and authority
to
enter into this Agreement and to consummate the transactions contemplated
hereby.
3.19
Finder's Fees. Suncast knows of no person who rendered any service in connection
with the introduction of the Companies to any of the other Companies, for a
"finder's fee" or similar type of fee in connection with the Security Exchange
and the other transactions contemplated hereby.
3.20
Employees. Suncast has no employees.
3.21
Disclosure. None of the information supplied or to be supplied by or about
Suncast to SNLLC concerning the Security Exchange contains any untrue statement
of a material fact or omits to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
4.
Representations to Survive Closing. All of the representations, covenants and
warranties contained in this Agreement (including all statements contained
in
any certificate or other instrument delivered by or on behalf of Suncast or
SNLLC pursuant hereto or in connection with the transactions contemplated
hereby) shall survive the Closing for a period of one (1) year from the
Effective Date.
5.
Exchange of Securities.
5.1
SNLLC
Members' Exchange of Interests. Upon the terms and subject to the conditions
contained herein, and in reliance upon the representations, warranties,
covenants and indemnifications contained herein, the SNLLC Members hereby agree
to convey, transfer, assign and deliver to Suncast, and Suncast hereby agrees
to
acquire from the SNLLC Members, on the Closing Date, all of the rights, title
and interest of the SNLLC Members in and to the SNLLC Interests. The number
of
SNLLC Interests to be delivered by each SNLLC Member is set forth opposite
such
SNLLC Member's name on Annex A hereto.
5.2
Suncast Exchange of Shares. Upon the terms and subject to the conditions
contained herein, and in reliance upon the representations, warranties,
covenants and indemnifications contained herein, Suncast hereby agrees to issue
the Suncast Exchange Shares to the SNLLC Members on the Closing Date and the
SNLLC Members hereby agree to so acquire the Suncast Exchange Shares from
Suncast. The Suncast Exchange Shares shall be delivered to the SNLLC Members
on
a pro rata basis as set forth on Annex A, in accordance with the formula set
forth below in Section 6.
6.
Treatment of Securities of in the Security Exchange. The terms and conditions
of
the Security Exchange, the mode of carrying the same into effect, and the manner
and basis of exchanging the securities of each of SNLLC and Suncast are as
follows:
6.1
Treatment of Interests. The SNLLC Interests shall be converted by virtue of
the
Security Exchange, and at the Effective Date, into an aggregate of 11,473,126
shares of Suncast Common Stock, on the basis of the amount of shares of Suncast
Common Stock set forth opposite each members name on Annex A, without any action
on the part of the holders thereof. After the Effective Date, each holder of
SNLLC Interests prior to the Security Exchange shall be entitled, upon
surrender, to receive from Suncast a certificate representing the number of
shares of Suncast Common Stock to which such holder shall be entitled, which
certificate shall contain any appropriate restrictive legend concerning the
resale of such Suncast Common Stock. Until so surrendered, any outstanding
certificates or other documentation which, prior to the Effective Date,
represented SNLLC Interests, shall be deemed for all corporate purposes to
evidence ownership of Suncast Common Stock into which such SNLLC Interests
shall
have been exchanged. Upon exchange, any fractional Suncast Common Stock
resulting from exchange shall be rounded up to the next highest whole
number.
7
7.
Conditions of Obligations of Suncast. The obligation of Suncast to consummate
the Security Exchange is subject to the following conditions prior to the
Effective Date:
7.1
Compliance with Representations and Warranties. SNLLC shall be in compliance
with its representations, warranties and covenants contained herein in all
material respects, and Suncast shall receive from SNLLC certificates to such
effect from the President of SNLLC as of the Effective Date.
7.2
Losses. SNLLC shall not have suffered a loss on account of fire, flood, accident
or other calamity of such a character as to interfere materially with the
continuous operation of its business or materially affect adversely its
condition, financial or otherwise, regardless of whether or not such loss shall
have been insured.
7.3
No
Material Transactions. No material transaction shall have been entered into
by
SNLLC other than transactions in the ordinary course of business between March
31, 2007 and the Effective Date, other than as referred to in this Agreement
or
in Schedule A annexed hereto, except with the prior written consent of
Suncast.
7.4
No
Material Adverse Change; Due Diligence. Except as disclosed in this Agreement
or
in the schedules annexed hereto, no material adverse change in the aggregate
shall have occurred in the financial condition, business, properties, assets,
liabilities, results of operations or prospects of SNLLC since March 31, 2007.
Additionally, Suncast shall be satisfied in all material respects with the
results of its due diligence investigation of SNLLC.
7.5
Disposition of Assets. None of the properties or assets of SNLLC shall have
been
sold or otherwise disposed of other than in the ordinary course of business
in
accordance with past practice during such period, except with the prior written
consent of Suncast.
7.6
Conditions. SNLLC shall have performed and complied with the provisions and
conditions of this Agreement on its part to be performed and complied
with.
7.7
Filings and Approvals. All applicable filings and regulatory approvals required
to be made or obtained by SNLLC have been made or obtained.
7.8
Member and Manager Approvals. This Agreement and the transactions contemplated
hereby shall have been approved by appropriate action of the Members and
Manager(s), as required, of SNLLC and resolutions to that effect in form and
substance reasonably satisfactory to Suncast and its counsel, shall have been
delivered to Suncast.
7.9
Compliance with Securities Laws. There shall have been full compliance with
the
applicable securities or "blue sky" laws and regulations of any state or other
governmental body having jurisdiction over the Security Exchange.
7.10
Opinions of Counsel. Suncast shall have received an opinion from counsel to
SNLLC in form and substance reasonably satisfactory to Suncast's
counsel.
7.11
Investment Representation. SNLLC shall have obtained an instrument, in the
form
annexed hereto as Exhibit A, from the SNLLC Members, including a representation
that the shares of Suncast Common Stock being acquired as a result of the
transactions contemplated by this Agreement are being acquired for investment
purposes only and not with a view to, or sale in connection with, any
distribution within the meaning of the Securities Act of 1933, as
amended.
8.
Conditions of Obligations of SNLLC and the SNLLC Members. The obligations of
SNLLC and the SNLLC Members to consummate the Security Exchange are subject
to
the following conditions prior to the Effective Date:
8.1
Compliance with Representations and Warranties. Suncast shall be in compliance
with its representations, warranties and covenants contained herein, and SNLLC
shall have received from Suncast a certificate to such effect from its President
as of the Effective Date.
8.2
Losses. Suncast shall not have suffered any loss on account of fire, flood,
accident or other calamity of such a character as to interfere materially with
the continuous operation of its business or materially adversely affect its
condition, financial or otherwise, regardless of whether or not such loss shall
have been insured.
8.3
No
Material Adverse Change; Due Diligence. No material adverse change shall have
occurred in the financial condition, business, properties, assets, liabilities,
results of operations or prospects of Suncast since its incorporation in April
2007, other than as referred to in this Agreement. Additionally, SNLLC shall
be
satisfied in all material respects with the results of its due diligence
investigation of Suncast.
8
8.4
Compliance with Conditions. Suncast shall have performed and complied with
the
provisions and conditions of this Agreement on its part to be performed and
complied with.
8.5
Filings and Approvals. All applicable filings required to be made and regulatory
approvals, as well as any other third party approvals, obtained by Suncast
have
been made or obtained.
8.6
Opinions. SNLLC shall have received opinions from counsel to Suncast in form
and
substance reasonably satisfactory to SNLLC's counsel.
9.
Abandonment. This Agreement and the Security Exchange may be abandoned (a)
by
any of the Companies, acting by its Board of Directors or general member, as
applicable, by written notice to the other parties hereto, at any time in the
event of the failure of any condition in favor of such entity as to which the
consummation of the Security Exchange is subject, or (b) by the consent of
all
the Companies, acting each by its Board of Directors or Manager(s), as
applicable, at any time prior to the Effective Date. In the event of abandonment
of this Agreement, the same shall become wholly void and of no effect, and
there
shall be no further liability or obligation hereunder on the part of any of
the
Companies, their respective Boards of Directors or Manager(s) or any other
party
to this Agreement.
10.
Closing or Termination. In the event the Closing of this Agreement shall not
take place due to failure of any condition of Closing required herein, then
any
party shall have the right to terminate this Agreement, in which event no party
shall have any further right or obligation as against any other.
11.
Delivery of Corporate Proceedings of Suncast. At the Closing, Suncast shall
deliver to counsel for SNLLC the originals of all of the corporate proceedings
of Suncast, duly certified by its Secretary, relating to this
Agreement.
12.
Delivery of Proceedings of SNLLC. At the Closing, SNLLC shall deliver to counsel
for Suncast the originals of all of the LLC proceedings of SNLLC, duly certified
by its Manager, relating to this Agreement.
13.
Limitation of Liability. The representations and warranties made by any party
to
this Agreement are intended to be relied upon only by the other parties to
this
Agreement and by no other person. Nothing contained in this Agreement shall
be
deemed to confer upon any person not a party to this Agreement any third party
beneficiary rights or any other rights of any nature whatsoever.
14.
Further Instruments and Actions. Each party shall deliver such further
instruments and take such further action as may be reasonably requested by
any
other in order to carry out the intent and purposes of this
Agreement.
15.
Governing Law. This Agreement is being delivered and is intended to be performed
in the State of Delaware, and shall be construed and enforced in accordance
with
the laws of such state, without regard to conflicts of laws
thereof.
16.
Notices. All notices or other communications to be sent by any party to this
Agreement to any other party to this Agreement shall be sent by certified mail,
personal delivery or nationwide overnight courier to the addresses hereinbefore
designated, or such other addresses as may hereafter be designated in writing
by
a party. Notice shall be deemed given and received on the date of actual
delivery to the address specified thereon.
17.
Binding Agreement. This Agreement represents the entire agreement among the
parties hereto with respect to the matters described herein and is binding
upon
and shall inure to the benefit of the parties hereto and their legal
representatives, successors and permitted assigns. This Agreement may not be
assigned and, except as stated herein, may not be altered or amended except
in
writing executed by the party to be charged.
18.
Counterparts. This Agreement may be executed in counterparts, all of which,
when
taken together, shall constitute the entire Agreement.
19.
Severability. The provisions of this Agreement shall be severable, so that
the
unenforceability, validity or legality of any one provision shall not affect
the
enforceability, validity or legality of the remaining provisions
hereof.
20.
Joint
Drafting. This Agreement shall be deemed to have been drafted jointly by the
parties hereto, and no inference or interpretation against any party shall
be
made solely by virtue of such party allegedly having been the draftsperson
of
this Agreement.
9
21.
Reliance on Certificates. In rendering any opinion referred to herein, counsel
for the parties hereto may rely, as to any factual matters involved in their
respective opinions, on certificates of public officials and of corporate and
company officers, and on such other evidence as such counsel may reasonably
deem
appropriate and, as to the matters governed by the laws of jurisdictions other
than the Interested States or the States of Delaware and Delaware, an opinion
of
local counsel in such other jurisdiction(s), which counsel shall be satisfactory
to the other parties in the exercise of their reasonable
discretion.
22.
Consent. Whenever consent is required to be given by any of the Companies to
any
of the other Companies hereunder in connection with any matter contemplated
hereby, such consent shall not be unreasonably withheld, delayed or
conditioned.
23.
Assignment. Neither this Agreement nor any right or obligation hereunder is
assignable in whole or in part, whether by operation of law or otherwise, by
any
party without the express written consent of the other party hereto and any
such
attempted assignment shall be void and unenforceable.
IN
WITNESS WHEREOF, the parties hereto have made and executed this Agreement as
of
the day and year first above written.
a
Delaware corporation
|
By:
|
/s/
Xxxxx Xxxx
|
Xxxxx
Xxxx, President
SUNCAST
NETWORK, LLC,
a
Delaware limited liability company
|
By:
|
/s/
Xxxxx Xxxx
|
Xxxxx
Xxxx, Managing Member
THE
SNLLC MEMBERS:
|
/s/
Wing S. Xxxx
|
|
Xxxx
X. Xxxx
|
|
/s/
Kit Xxx Xx
|
|
Kit
Xxx Xx
|
|
/s/
Xxxxx Xxxxxxxx
|
|
Xxxxx
Xxxxxxxx
|
|
/s/
Yam X. Xxxx
|
|
Yam
X. Xxxx
|
|
/s/
Kit Har Xxx
|
|
Kit
Har Xxx
|
10
|
SNLLC Schedule of Exceptions
|
|
|
Schedule B
|
Suncast Schedule of Exceptions
|
|
Annex A
|
SNLLC Members
|
|
Exhibit A
|
Investment Representation
|
11
SCHEDULE
A
12
SCHEDULE
B
None.
13
ANNEX
A
|
Member
|
Membership
Interests
|
Shares of Suncast
Common Stock to be
Received at Closing
|
|||||
|
Wing
X. Xxxx
|
115,000
|
4,351,633
|
|||||
|
Kitty
Lo
|
100,000
|
4,217,550
|
|||||
|
Xxxxx
Xxxxxxxx
|
62,500
|
1,116,901
|
|||||
|
Yam
X. Xxxx
|
50,000
|
893,521
|
|||||
|
Kit
Har Xxx
|
50,000
|
893,521
|
|||||
|
Totals
|
377,500
|
11,473,126
|
|||||
14
EXHIBIT
A
[to
come]
25
15
