EXHIBIT 2.1
SHARE EXCHANGE AGREEMENT
This SHARE EXCHANGE AGREEMENT, dated as of October 30, 2006, is made by
and among FLICKERING STAR FINANCIAL INC., a Nevada corporation (the "Acquiror
Company"), each of the Persons listed on Exhibit A as an Acquiror Company
Shareholder (collectively, the "ACQUIROR COMPANY SHAREHOLDERS", and individually
an "ACQUIROR COMPANY SHAREHOLDER"), PEARL CONSULTING FZ-LLC, a free zone limited
liability company organized under the laws of Dubai, UAE ("PEARL"), and XXXXXX
XXXXXXX (the "PEARL SHAREHOLDER").
BACKGROUND
The Pearl Shareholder has agreed to transfer to the Acquiror Company,
and the Acquiror Company has agreed to acquire from the Pearl Shareholder, all
of the issued and outstanding shares of Pearl (the "PEARL Shares"), in exchange
for 6,500,000 shares of the Acquiror Company's Common Stock (the "EXCHANGE
SHARES"), which Exchange Shares shall constitute 65% of the issued and
outstanding shares of Acquiror Company's Common Stock immediately after the
closing of the transactions contemplated herein, in each case, on the terms and
conditions as set forth herein.
ARTICLE I.
DEFINITIONS
Section 1.1 Unless the context otherwise requires, the terms defined in this
Section 1 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.
"ACQUIROR COMPANY BALANCE SHEET" means the Acquiror Company's balance
sheet at June 30, 2006.
"ACQUIROR COMPANY BOARD" means the Board of Directors of the Acquiror
Company.
"ACQUIROR COMPANY COMMON STOCK" means the Acquiror Company's common
stock, par value US $0.004 per share.
"AFFILIATE" means any Person that directly or indirectly controls, is
controlled by or is under common control with the indicated Person.
"AGREEMENT" means this Share Exchange Agreement, including all Exhibits
hereto, as this Share Exchange Agreement may be from time to time amended,
modified or supplemented.
"CLOSING DATE" has the meaning set forth in Section 3.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMISSION" means the United States Securities and Exchange Commission
or any other federal agency then administering the Securities Act or any
successor statute.
"COMPANY INDEMNIFIED PARTY" has the meaning set forth in Section 10.2.
"COVERED PERSONS" means all Persons, other than the Acquiror Company,
who are parties to indemnification and employment agreements with the Acquiror
Company existing on or before the Closing Date.
"DAMAGES" the actual losses, damages, liabilities, penalties, Taxes,
interest and expenses (including reasonable attorneys' fees and disbursements
and other out-of-pocket expenses and costs incurred in connection with
mitigating the Loss and investigating, preparing, settling or defending any
pending or threatened action, claim or proceeding (including those brought by
third Persons)).
"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.
"ENVIRONMENTAL LAWS" means any Law or other requirement relating to the
environment, natural resources, or public or employee health and safety.
"ENVIRONMENTAL PERMIT" means all licenses, permits, authorizations,
approvals, franchises and rights required under any applicable Environmental Law
or Order.
"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.
"ERISA" means the United States Employee Retirement Income Security Act
of 1974, as amended.
"EXCHANGE" has the meaning set forth in Section 2.1.
"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 are in effect from time to time.
"EXCHANGE SHARES" has the meaning set forth in the Recitals.
"EXHIBITS" means the several exhibits referred to and identified in
this Agreement.
"GAAP" means, with respect to any Person, United States generally
accepted accounting principles applied on a consistent basis with such Person's
past practices.
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"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 United States or
non-United States with jurisdiction over any party hereto.
"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.
"INTELLECTUAL PROPERTY" means all industrial and intellectual property,
including, without limitation, all United States and non-United States patents,
patent applications, patent rights, trademarks, trademark applications, common
law trademarks, Internet domain names, trade names, service marks, service xxxx
applications, common law service marks, and the goodwill associated therewith,
copyrights, in both published and unpublished works, whether registered or
unregistered, copyright applications, franchises, licenses, know-how, trade
secrets, technical data, designs, customer lists, confidential and proprietary
information, processes and formulae, all computer software programs or
applications, layouts, inventions, development tools and all documentation and
media constituting, describing or relating to the above, including manuals,
memoranda, and records, whether such intellectual property has been created,
applied for or obtained anywhere throughout the world.
"LAWS" means, with respect to any Person, any United States or
non-United States 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.
"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.
"MATERIAL ACQUIROR COMPANY CONTRACT" means any and all agreements,
contracts, arrangements, leases, commitments or otherwise, of the Acquiror
Company, of the type and nature that the Acquiror Company is required to file
with the Commission.
"MATERIAL ADVERSE EFFECT" means, when used with respect to the Acquiror
Company or Pearl, 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 Company or Pearl, as the case may be, in each case
taken as a whole or (b) materially impair the ability of the Acquiror Company
(or the Acquiror Company Shareholders) or Pearl (or the Pearl Shareholder), as
the case may be, to perform its 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
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economic, currency exchange rate, political or regulatory conditions in
industries in which the Acquiror Company or Pearl, as the case may be, operate.
"ORDER" means any award, decision, injunction, judgment, order, ruling,
subpoena, or verdict entered, issued, made, or rendered by any Governmental
Authority.
"ORGANIZATIONAL DOCUMENTS" means (a) the articles or certificate of
incorporation, memorandum and articles of association and/or the by-laws or code
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.
"PEARL" means, collectively, Pearl individually and, as the context
requires, the Pearl Subsidiaries.
"PEARL BOARD" means the Board of Directors of Pearl.
"PEARL PAKISTAN" means Pearl Consulting (Private) Limited, a private
limited company organized under the laws of Pakistan.
"PEARL SHARES" means the 250 issued and outstanding ordinary shares of
Pearl.
"PEARL SUBSIDIARIES" means all of the direct and indirect Subsidiaries
of Pearl, including, without limitation, Pearl Pakistan.
"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 Person has
made adequate reserves; (b) Liens in respect of pledges or deposits under
workmen's compensation laws or similar Laws, carriers, warehousemen, mechanics,
laborers and materialmen 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
Person has made adequate reserves; (c) statutory Liens incidental to the conduct
of the business of the relevant Person 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; and (d)
Liens that would not have a Material Adverse Effect.
"PERSON" means all natural persons, corporations, business trusts,
associations, companies, general partnerships, limited partnerships, limited
liability companies, joint ventures and other entities, governments, agencies
and political subdivisions.
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"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.
"REGULATION S" means Regulation S under the Securities Act, as the same
may be amended from time to time, or any similar or successor rule or regulation
hereafter adopted by the Commission.
"RULE 144" means Rule 144 under the Securities Act, as the same may be
amended from time to time, or any similar or successor rule or regulation
hereafter adopted by the Commission.
"SCHEDULE 14(F) FILING" means an information statement filed by the
Acquiror Company on Schedule 14f-1 under the Exchange Act.
"SEC DOCUMENTS" has the meaning set forth in Section 6.26.
"SECTION 4(2)" means Section 4(2) of the Securities Act, as the same
may be amended from time to time, or any successor statute.
"SECURITIES ACT" means the Securities Act of 1933, as amended, or any
similar or successor federal statute, and the rules and regulations of the
Commission thereunder, all as the same will be in effect at the time.
"SUBSIDIARY" means, with respect to any Person, any other Person 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 Person, (ii) the total combined equity interests, or (iii)
the capital or profit interests of such Person; or (b) otherwise has the power
to Control such Person.
"SURVIVAL PERIOD" has the meaning set forth in Section 10.1.
"TAX" or "TAXES" means all United States and non-United States 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.
"TAX GROUP" means any United States and non-United States federal,
state, local or foreign consolidated, affiliated, combined, unitary or other
similar group of which the Acquiror Company is now or was formerly a member.
"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.
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"TRANSACTION DOCUMENTS" means, collectively, all agreements,
instruments and other documents to be executed and delivered in connection with
the transactions contemplated by this Agreement.
"UNITED STATES" means the United States of America.
"UNITED STATES DOLLARS" or "US $" or "$" means the currency of the
United States of America.
"U.S. PERSON" has the meaning set forth in Regulation S under the
Securities Act and set forth on Exhibit B hereto.
ARTICLE II.
EXCHANGE OF PEARL SHARES AND SHARE CONSIDERATION
Section 2.1 SHARE EXCHANGE. At the Closing, the Pearl Shareholder shall
transfer to the Acquiror Company all of the Pearl Shares and, in consideration
therefor, the Acquiror Company shall issue to the Pearl Shareholder the Exchange
Shares (the "EXCHANGE").
Section 2.2 TAX WITHHOLDING. The Acquiror Company shall be entitled to
deduct and withhold from the Exchange Shares otherwise deliverable to the Pearl
Shareholder pursuant to this Agreement such amounts as the Acquiror Company is
required to deduct and withhold with respect to the making of such payment under
the Code or any provision of state, local, provincial or foreign Tax Law. To the
extent that amounts are so withheld, such withheld amounts shall be treated for
all purposes of this Agreement as having been paid to the Pearl Shareholder in
respect of which such deduction and withholding was made.
Section 2.3 SECTION 368 REORGANIZATION. For United States federal
income tax purposes, the Exchange 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. Notwithstanding the foregoing or anything else to the contrary
contained in this Agreement, the parties acknowledge and agree that no party is
making any representation or warranty as to the qualification of the Exchange as
a reorganization under Section 368 of the Code or as to the effect, if any, that
any transaction consummated prior to the Closing Date has or may have on any
such reorganization status. The parties acknowledge and agree that each (i) has
had the opportunity to obtain independent legal and tax advice with respect to
the transaction contemplated by this Agreement, and (ii) is responsible for
paying its 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.
Section 2.4 DIRECTORS OF THE ACQUIROR COMPANY AT THE CLOSING DATE.
Effective as of the Closing Date the current directors of the Acquiror Company
shall appoint Xxxxxx Xxxxxxx, and Xxxx Xxxxx as additional members of the
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Acquiror Company Board. Immediately thereafter, all current directors of the
Acquiror Company shall resign as directors of the Acquiror Board.
ARTICLE III.
CLOSING DATE
The closing of the Exchange will occur on or before November 14, 2006
or at such later date as all of the closing conditions set forth in Articles 8
and 9 have been satisfied or waived (the "CLOSING DATE").
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE PEARL SHAREHOLDERS
The Pearl Shareholder hereby represents and warrants to the Acquiror
Company:
Section 4.1 AUTHORITY. The Pearl Shareholder has the right, power,
authority and capacity to execute and deliver this Agreement and each of the
Transaction Documents to which the Pearl Shareholder is a party, to consummate
the transactions contemplated by this Agreement and each of the Transaction
Documents to which the Pearl Shareholder is a party, and to perform the Pearl
Shareholder's obligations under this Agreement and each of the Transaction
Documents to which the Pearl Shareholder is a party. This Agreement has been,
and each of the Transaction Documents to which the Pearl Shareholder is a party
will be, duly and validly authorized and approved, executed and delivered by the
Pearl Shareholder. Assuming this Agreement and the Transaction Documents have
been duly and validly authorized, executed and delivered by the parties thereto
other than the Pearl Shareholder, this Agreement is, and each of the Transaction
Documents to which the Pearl Shareholder is a party have been, duly authorized,
executed and delivered by the Pearl Shareholder and constitutes the legal, valid
and binding obligation of the Pearl Shareholder, enforceable against the Pearl
Shareholder 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.
Section 4.2 NO CONFLICT. Neither the execution or delivery by the Pearl
Shareholder of this Agreement or any Transaction Document to which the Pearl
Shareholder is a party, nor the consummation or performance by the Pearl
Shareholder of the transactions contemplated hereby or thereby will, directly or
indirectly, (a) contravene, conflict with, constitute a default (or an event or
condition which, with notice or lapse of time or both, would constitute a
default) under, or result in the termination or acceleration of, any agreement
or instrument to which the Pearl Shareholder is a party or by which the
properties or assets of the Pearl Shareholder are bound; or (b) contravene,
conflict with, or result in a violation of, any Law or Order to which the Pearl
Shareholder, or any of the properties or assets of the Pearl Shareholder, may be
subject.
Section 4.3 OWNERSHIP OF PEARL SHARES. The Pearl Shareholder owns, of
record and beneficially, and has good, valid and indefeasible title to and the
right to transfer to the Acquiror Company pursuant to this Agreement, the Pearl
Shareholder's Pearl Shares free and clear of any and all Liens. There are no
options, rights, voting trusts, stockholder agreements or any other contracts or
understandings to which the Pearl Shareholder is a party or by which the Pearl
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Shareholder or the Pearl Shareholder's Pearl Shares are bound with respect to
the issuance, sale, transfer, voting or registration of the Pearl Shareholder's
Pearl Shares. At the Closing Date, the Acquiror Company will acquire good, valid
and marketable title to the Pearl Shareholder's Pearl Shares free and clear of
any and all Liens.
Section 4.4 LITIGATION. There is no pending Proceeding against the
Pearl Shareholder that challenges, or may have the effect of preventing,
delaying or making illegal, or otherwise interfering with, any of the
transactions contemplated by this Agreement and, to the knowledge of the Pearl
Shareholder, no such Proceeding has been threatened, and no event or
circumstance exists that is reasonably likely to give rise to or serve as a
basis for the commencement of any such Proceeding.
Section 4.5 NO BROKERS OR FINDERS. No Person has, or as a result of the
transactions contemplated herein will have, any right or valid claim against the
Pearl Shareholder for any commission, fee or other compensation as a finder or
broker, or in any similar capacity.
Section 4.6 INVESTMENT REPRESENTATIONS. The Pearl Shareholder hereby
represents and warrants to the Acquiror Company:
(a) UNREGISTERED SHARES. The Pearl Shareholder understands and agrees
that the Exchange Shares to be issued pursuant to has not been registered under
the Securities Act or the securities laws of any state of the United States or
any foreign country and that the issuance of the Exchange Shares is being
effected in reliance upon an exemption from registration afforded either under
Section 4(2) of the Securities Act for transactions by an issuer not involving a
public offering or Regulation S for offers and sales of securities outside the
United States.
(b) STATUS. The Pearl Shareholder is not a U.S. Person. The Pearl
Shareholder understands that the Exchange Shares are being offered and sold to
the Pearl Shareholder in reliance upon the truth and accuracy of the
representations, warranties, agreements, acknowledgments and understandings of
the Pearl Shareholder set forth in this Agreement, in order that the Acquiror
Company may determine the applicability and availability of the exemptions from
registration of the Exchange Shares on which the Acquiror Company is relying.
(c) REPRESENTATIONS OF NON-U.S. PERSON. The Pearl Shareholder is
acknowledging that the Pearl Shareholder not a U.S. Person on the signature page
hereto and further makes the representations and warranties to the Acquiror
Company set forth on Exhibit D.
(d) STOCK LEGENDS. The Pearl Shareholder hereby agrees with the
Acquiror Company to the inclusion, as applicable of the following legends, or
legends substantially similar, on the certificates for the Exchange Shares and
any other legend required under any applicable Law, including, without
limitation, any United States state corporate and state securities law, or
contract:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE
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SECURITIES LAWS AND NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN
MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED EXCEPT
(1) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND
APPLICABLE STATE SECURITIES LAWS OR (2) PURSUANT TO AN AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND APPLICABLE
STATE SECURITIES LAWS, IN WHICH CASE THE HOLDER MUST, PRIOR TO SUCH
TRANSFER, FURNISH TO THE ISSUER AN OPINION OF COUNSEL, WHICH COUNSEL
AND OPINION ARE REASONABLY SATISFACTORY TO THE ISSUER, 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 ACT AND APPLICABLE
STATE SECURITIES LAWS.
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 ACT, AND BASED ON AN OPINION OF COUNSEL, WHICH COUNSEL AND OPINION
ARE REASONABLY SATISFACTORY TO THE ISSUER, THAT THE PROVISIONS OF
REGULATION S HAVE BEEN SATISFIED (2) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT AND APPLICABLE STATE SECURITIES
LAWS OR (3) PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE ACT AND APPLICABLE STATE SECURITIES LAWS, IN WHICH
CASE THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE ISSUER AN
OPINION OF COUNSEL, WHICH COUNSEL AND OPINION ARE REASONABLY
SATISFACTORY TO THE ISSUER, 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 ACT AND APPLICABLE STATE SECURITIES LAWS. HEDGING TRANSACTIONS
INVOLVING THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE
CONDUCTED UNLESS IN COMPLIANCE WITH THE ACT.
(e) OPINION. The Pearl Shareholder will not transfer any or all of the
Exchange Shares pursuant to Regulation S or absent an effective registration
statement under the Securities Act and applicable state securities law covering
the disposition of the Pearl Shareholder's Exchange Shares, without first
providing the Acquiror Company with an opinion of counsel (which counsel and
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opinion are reasonably satisfactory to the Acquiror Company) to the effect that
such transfer will be made in compliance with Regulation S or will be exempt
from the registration and the prospectus delivery requirements of the Securities
Act and the registration or qualification requirements of any applicable United
States state securities laws.
(f) CONSENT. The Pearl Shareholder understands and acknowledges that
the Acquiror Company may refuse to transfer the Exchange Shares, unless the
Pearl Shareholder complies with this Section 4.2 and any other restrictions on
transferability set forth in Exhibit D. The Pearl Shareholder consents to the
Acquiror Company making a notation on its records or giving instructions to any
transfer agent of the Acquiror Company's Common Stock in order to implement the
restrictions on transfer of the Exchange Shares.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF PEARL
Pearl represents and warrants to the Acquiror Company as follows:
Section 5.1 ORGANIZATION AND QUALIFICATION. Pearl is duly organized and
validly existing under the laws of Dubai, UAE, has all requisite authority and
power (corporate and other), governmental licenses, authorizations, consents and
approvals to carry on its business as presently conducted and as contemplated to
be conducted, to own, hold and operate its properties and assets as now owned,
held and operated by it, to enter into this Agreement, to carry out the
provisions hereof except where the failure to be so organized, existing and in
good standing or to have such authority or power will not, in the aggregate,
either (i) have a Material Adverse Effect on Pearl, or (ii) materially impair
the ability of Pearl and the Pearl Shareholder each to perform their material
obligations under this Agreement. Pearl is duly qualified, licensed or
domesticated as a foreign corporation in good standing in each jurisdiction
wherein the nature of its activities or its properties owned or leased makes
such qualification, licensing or domestication necessary, except where the
failure to be so qualified, licensed or domesticated will not have a Material
Adverse Effect. Pakistan and the UAE are the only jurisdictions in which Pearl
presently conducts its business or owns, holds and operates its properties and
assets. Section
5.2 SUBSIDIARIES. Except for Pearl Pakistan, Pearl does not own
directly or indirectly, any equity or other ownership interest in any Person.
Such Pearl Subsidiary is duly organized and validly existing under the laws of
Pakistan, has all requisite authority and power (corporate and other),
governmental licenses, authorizations, consents and approvals to carry on its
business as presently conducted and as contemplated to be conducted, to own,
hold and operate its properties and assets as now owned, held and operated by
it, except where the failure to be so organized, existing and in good standing
or to have such authority or power will not, in the aggregate, have a Material
Adverse Effect. Each Pearl Subsidiary is duly qualified, licensed or
domesticated as a foreign corporation in good standing in each jurisdiction
wherein the nature of its activities or its properties owned or leased makes
such qualification, licensing or domestication necessary, except where the
failure to be so qualified, licensed or domesticated will not have a Material
Adverse Effect. Pakistan is the sole jurisdictions in which any Pearl Subsidiary
presently conducts its business or owns, holds and operates its properties and
assets.
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Section 5.3 ARTICLES OF ASSOCIATION AND GOVERNING RULES. True, correct
and complete copies of the Organizational Documents of Pearl have been delivered
to the Acquiror Company prior to the execution of this Agreement, and no action
has been taken to amend or repeal such Organizational Documents. Pearl Company
is not in violation or breach of any of the provisions of its Organizational
Documents, except for such violations or breaches as would not have a Material
Adverse Effect.
Section 5.4 AUTHORIZATION AND VALIDITY OF THIS AGREEMENT AND THE
TRANSACTION DOCUMENTS. The recording of the transfer of the Pearl Shares and the
delivery of new certificates representing the Pearl Shares registered in the
name of Acquiror Company are within Pearl's corporate powers, have been duly
authorized by all necessary corporate action, do not require from the Board of
Pearl or Pearl Shareholder any consent or approval that has not been validly and
lawfully obtained, and require no authorization, consent, approval, license,
exemption of or filing or registration with any Governmental Authority, as the
case may be, except for those that, if not obtained or made would not have a
Material Adverse Effect.
Section 5.5 NO VIOLATIONS. None of the execution, delivery or
performance by Pearl of this Agreement or any Transaction Document to which
Pearl is a party, nor the consummation by Pearl of the transactions contemplated
hereby violates any provision of its Organizational Documents, or violates or
conflicts with, or constitute a default (or an event or condition which, with
notice or lapse of time or both, would constitute a default) under, or result in
the termination or acceleration of, or result in the creation of imposition of
any Lien under, any agreement or instrument to which Pearl is a party or by
which Pearl is or will be bound or subject, or violate any Laws.
Section 5.6 BINDING OBLIGATIONS. Assuming this Agreement has been duly
and validly authorized, executed and delivered by the Acquiror Company, the
Acquiror Company Shareholders and the Pearl Shareholder, this Agreement is and
all agreements or instruments contemplated hereby to which Pearl is a party,
will be, duly authorized, executed and delivered by Pearl and are the legal,
valid and binding Agreement of Pearl and is enforceable against Pearl 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.
Section 5.7 CAPITALIZATION AND RELATED MATTERS.
(a) CAPITALIZATION. The authorized capital stock of Pearl consists of
AED 25,000 divided into 250 shares of AED 100, all of which have been designated
ordinary shares. There are no outstanding or authorized options, warrants,
calls, subscriptions, rights (including any preemptive rights or rights of first
refusal), agreements or commitments of any character obligating Pearl to issue
any ordinary shares or any other Equity Securities of Pearl. All issued and
outstanding shares of Pearl's capital stock are duly authorized, validly issued,
fully paid and nonassessable and have not been issued in violation of any
preemptive or similar rights.
(b) NO REDEMPTION REQUIREMENTS. There are no outstanding contractual
obligations (contingent or otherwise) of Pearl to retire, repurchase, redeem or
otherwise acquire any outstanding shares of capital stock of, or other Equity
Securities in, Pearl or to provide funds to or make any investment (in the form
of a loan, capital contribution or otherwise) in any other Person.
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(c) DUE AUTHORIZATION. The exchange of the Pearl Shares has been duly
authorized, and the Pearl Shares have been validly issued and are fully paid and
nonassessable.
(d) SHAREHOLDERS. The Pearl Shareholder is the sole record and
beneficial holders of all of the outstanding capital stock of Pearl and each
Subsidiary of Pearl. Except as expressly provided in this Agreement, no holder
of Pearl Shares or any other Equity Security of Pearl or any other Person is
entitled to any preemptive right, right of first refusal or similar right as a
result of the issuance of the Pearl Shares, the transactions contemplated hereby
or otherwise. There is no voting trust, agreement or arrangement among the Pearl
Shareholder of any capital stock of Pearl affecting the exercise of the voting
rights of any such capital stock. Section
5.8 COMPLIANCE WITH LAWS; NO DEFAULTS. Except as would not have a
Material Adverse Effect, the business and operations of Pearl have been and are
being conducted in accordance with all applicable Laws and all applicable Orders
of all Governmental Authorities. Except as would not have a Material Adverse
Effect, Pearl is not, and is not alleged to be, in violation of, or (with or
without notice or lapse of time or both) in default under, or in breach of, any
term or provision of its Organizational Documents or of any indenture, loan or
credit agreement, note, deed of trust, mortgage, security agreement or other
material agreement, lease, license or other instrument, commitment, obligation
or arrangement to which Pearl is a party or by which any of Pearl's properties,
assets or rights are bound or affected. To the knowledge of Pearl, no other
party to any material contract, agreement, lease, license, commitment,
instrument or other obligation to which Pearl is a party is (with or without
notice or lapse of time or both) in default thereunder or in breach of any term
thereof. Pearl is not subject to any obligation or restriction of any kind or
character, nor is there, to the knowledge of Pearl, any event or circumstance
relating to Pearl that materially and adversely affects in any way its business,
properties, assets or prospects or that would prevent or make burdensome its
performance of or compliance with all or any part of this Agreement or the
consummation of the transactions contemplated hereby or thereby.
Section 5.9 CERTAIN PROCEEDINGS. There is no pending Proceeding that
has been commenced against Pearl 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 Pearl's knowledge, no such
Proceeding has been threatened.
Section 5.10 NO BROKERS OR FINDERS. No Person has, or as a result of
the transactions contemplated hereby will have, any right or valid claim against
Pearl for any commission, fee or other compensation as a finder or broker, or in
any similar capacity.
Section 5.11 TITLE TO AND CONDITION OF PROPERTIES. Pearl 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 Pearl as presently
conducted, except where the failure to own or hold such property, plants,
machinery and equipment would not have a Material Adverse Effect.
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Section 5.12 BOARD RECOMMENDATION. The Board has, by unanimous written
consent, determined that this Agreement and the transactions contemplated by
this Agreement, are advisable and in the best interests of the Pearl
Shareholder.
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES OF THE ACQUIROR COMPANY AND THE
ACQUIROR COMPANY SHAREHOLDERS
The Acquiror Company and the Acquiror Company Shareholders, jointly and
severally, represent and warrant to the Pearl Shareholder and Pearl as follows:
Section 6.1 ORGANIZATION AND QUALIFICATION. The Acquiror Company is
duly organized, validly existing and in good standing under the laws of the
State of Nevada, has all requisite authority and power (corporate and other),
governmental licenses, authorizations, consents and approvals to carry on its
business as presently conducted and to own, hold and operate its properties and
assets as now owned, held and operated by it, except where the failure to be so
organized, existing and in good standing, or to have such authority and power,
governmental licenses, authorizations, consents or approvals would not have a
Material Adverse Effect. The Acquiror Company is duly qualified, licensed or
domesticated as a foreign corporation in good standing in each jurisdiction
wherein the nature of its activities or its properties owned, held or operated
makes such qualification, licensing or domestication necessary, except where the
failure to be so duly qualified, licensed or domesticated and in good standing
would not have a Material Adverse Effect.
Section 6.2 SUBSIDIARIES. The Acquiror Company does not own, directly
or indirectly, any Equity Securities or other ownership interest in any Person.
Section 6.3 ORGANIZATIONAL DOCUMENTS. True, correct and complete copies
of the Organizational Documents of the Acquiror Company have been delivered to
Pearl prior to the execution of this Agreement, and no action has been taken to
amend or repeal such Organizational Documents. The Acquiror Company is not in
violation or breach of any of the provisions of its Organizational Documents,
except for such violations or breaches as would not have a Material Adverse
Effect.
Section 6.4 AUTHORIZATION. The Acquiror Company has all requisite
authority and power (corporate and other), governmental licenses,
authorizations, consents and approvals to enter into this Agreement and each of
the Transaction Documents to which the Acquiror Company is a party, to
consummate the transactions contemplated by this Agreement and each of the
Transaction Documents to which the Acquiror Company is a party and to perform
its obligations under this Agreement and each of the Transaction Documents to
which the Acquiror Company is a party. The execution, delivery and performance
by the Acquiror Company of this Agreement and each of the Transaction Documents
to which the Acquiror Company is a party have been duly authorized by all
necessary corporate action and do not require from the Acquiror Company Board or
the stockholders of the Acquiror Company any consent or approval that has not
been validly and lawfully obtained. The execution, delivery and performance by
the Acquiror Company of this Agreement and each of the Transaction Documents to
which the Acquiror Company is a party requires no authorization, consent,
approval, license, exemption of, or filing or registration with, any
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Governmental Authority or other Person other than (a) the Schedule 14(f) Filing,
and (b) such other customary filings with the Commission for transactions of the
type contemplated by this Agreement.
Section 6.5 NO VIOLATION. Neither the execution nor the delivery by the
Acquiror Company of this Agreement or any Transaction Document to which the
Acquiror Company is a party, nor the consummation or performance by the Acquiror
Company of the transactions contemplated hereby or thereby will, directly or
indirectly, (a) contravene, conflict with, or result in a violation of any
provision of the Organizational Documents of the Acquiror Company; (b)
contravene, conflict with, constitute a default (or an event or condition which,
with notice or lapse of time or both, would constitute a default) under, or
result in the termination or acceleration of, or result in the imposition or
creation of any Lien under, any agreement or instrument to which the Acquiror
Company is a party or by which the properties or assets of the Acquiror Company
are bound; (c) contravene, conflict with, or result in a violation of, any Law
or Order to which the Acquiror Company, or any of the properties or assets owned
or used by the Acquiror Company, may be subject; or (d) contravene, conflict
with, or result in a violation of, the terms or requirements of, or give any
Governmental Authority the right to revoke, withdraw, suspend, cancel, terminate
or modify, any licenses, permits, authorizations, approvals, franchises or other
rights held by the Acquiror Company or that otherwise relate to the business of,
or any of the properties or assets owned or used by, the Acquiror Company,
except, in the case of clause (b), (c), or (d), for any such contraventions,
conflicts, violations, or other occurrences as would not have a Material Adverse
Effect.
Section 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 Company, this Agreement
and each of the Transaction Documents to which the Acquiror Company is a party
are duly authorized, executed and delivered by the Acquiror Company and
constitutes or will constitute the legal, valid and binding obligations of the
Acquiror Company, enforceable against the Acquiror Company in accordance with
its 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.
Section 6.7 SECURITIES LAWS. Assuming the accuracy of the
representations and warranties of the Pearl Shareholder contained in Section 4
and Exhibits D, the issuance of the Exchange Shares pursuant to this Agreement
(a) is exempt from the registration and prospectus delivery requirements of the
Securities Act, (b) has 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) has been
accomplished in conformity with all other applicable United States federal and
state securities Laws.
Section 6.8 CAPITALIZATION AND RELATED MATTERS.
(a) CAPITALIZATION. The authorized capital stock of the Acquiror
Company consists of 25,000,000 shares of the Acquiror Company's Common Stock, of
which 8,400,000 shares are issued and outstanding. All issued and outstanding
shares of the Acquiror Company's Common Stock are duly authorized, validly
issued, fully paid and nonassessable, and have not been issued in violation of
any preemptive or similar rights. At the Closing Date, the Acquiror Company will
14
have sufficient authorized and unissued Acquiror Company's Common Stock to
consummate the transactions contemplated hereby. Except as disclosed in the SEC
Documents, there are no outstanding options, warrants, purchase agreements,
participation agreements, subscription rights, conversion rights, exchange
rights or other Equity Securities or contracts that could require the Acquiror
Company to issue, sell or otherwise cause to become outstanding any of its
authorized but unissued shares of capital stock or any Equity Securities or
Equity Securities convertible into, exchangeable for or carrying a right or
option to purchase Equity Securities or to create, authorize, issue, sell or
otherwise cause to become outstanding any new class of Equity Securities. There
are no outstanding stockholders' agreements, voting trusts or arrangements,
registration rights agreements, rights of first refusal or other contracts
pertaining to the Equity Securities of the Acquiror Company. The issuance of all
of the shares of Acquiror Company's Common Stock described in this Section
6.8(a) have been in compliance with United States federal and state securities
Laws.
(b) NO REDEMPTION REQUIREMENTS. Except as set forth in the SEC
Documents, there are no outstanding contractual obligations (contingent or
otherwise) of the Acquiror Company to retire, repurchase, redeem or otherwise
acquire any Equity Securities of shares of capital stock of, or other Equity
Securities of, the Acquiror Company or to provide funds to or make any
investment (in the form of a loan, capital contribution or otherwise) in any
other Person.
(c) DUE AUTHORIZATION. The issuance of the Exchange Shares has been
duly authorized and, upon delivery to the Pearl Shareholder of certificates
therefor in accordance with the terms of this Agreement, the Exchange 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 Pearl Shareholder and restrictions on transfer imposed by
this Agreement and the Securities Act.
Section 6.9 COMPLIANCE WITH LAWS. Except as would not have a Material
Adverse Effect, the business and operations of the Acquiror Company have been
and are being conducted in accordance with all applicable Laws and Orders.
Except as would not have a Material Adverse Effect, the Acquiror Company has not
received notice of any violation (or any Proceeding involving an allegation of
any violation) of any applicable Law or Order by or affecting such Acquiror
Company and, to the knowledge of the Acquiror Company, no Proceeding involving
an allegation of violation of any applicable Law or Order is threatened or
contemplated. Except as would not have a Material Adverse Effect, the Acquiror
Company is not subject to any obligation or restriction of any kind or
character, nor is there, to the knowledge of the Acquiror Company, any event or
circumstance relating to the Acquiror Company that materially and adversely
affects in any way its business, properties, assets or prospects or that
prohibits the Acquiror Company from entering into this Agreement or would
prevent or make burdensome its performance of or compliance with all or any part
of this Agreement or the consummation of the transactions contemplated hereby.
Section 6.10 CERTAIN PROCEEDINGS. There is no pending Proceeding that
has been commenced against the Acquiror Company. To the knowledge of the
Acquiror Company, no such Proceeding has been threatened.
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Section 6.11 NO BROKERS OR FINDERS. No Person has, or as a result of
the transactions contemplated hereby will have, any right or valid claim against
the Acquiror Company for any commission, fee or other compensation as a finder
or broker, or in any similar capacity.
Section 6.12 ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth in
the SEC Documents, the Acquiror Company has no debt, obligation or liability
(whether accrued, absolute, contingent, liquidated or otherwise, whether due or
to become due, whether or not known to the Acquiror Company) arising out of any
transaction entered into at or prior to the Closing Date or any act or omission
at or prior to the Closing Date, except to the extent set forth on or reserved
against on the Acquiror Company Balance Sheet. All debts, obligations or
liabilities with respect to directors and officers will be cancelled prior to
the Closing. The Acquiror Company has not incurred any liabilities or
obligations under agreements entered into in the usual and ordinary course of
business since July 1, 2006. The Acquiror Company Balance Sheet provides a true
and fair view of the assets and liabilities (whether accrued, absolute,
contingent, liquidated or otherwise, whether due or to become due, whether or
not known to Acquiror Company) as at June 30, 2006. Section
6.13 CHANGES. Except as set forth in the SEC Documents, the Acquiror
Company has , since June 30, 2006, conducted its business in the ordinary course
and has not:
(a)
NON-ORDINARY COURSE TRANSACTIONS. Entered into any transaction other
than in the usual and ordinary course of business, except for this Agreement.
(b) 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 other than
changes, events or conditions in the usual and ordinary course of its business,
none of which would have a Material Adverse Effect;
(c) LOANS. Made any loans or advances to any Person;
(d) LIENS. Created or permitted to exist any Lien on any material
property or asset of the Acquiror Company, other than Permitted Liens;
(e) 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;
(f) DIVIDENDS. Declared, set aside, made or paid any dividend or other
distribution to any of its stockholders;
(g) MATERIAL CONTRACTS. Terminated or modified any Material Acquiror
Company Contract, except for termination upon expiration in accordance with the
terms thereof;
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(h) CLAIMS. Released, waived or cancelled any claims or rights relating
to or affecting the Acquiror Company in excess of US $10,000 in the aggregate or
instituted or settled any Proceeding involving in excess of US $10,000 in the
aggregate;
(i) DISCHARGE OF LIABILITIES. Paid, discharged or satisfied any claim,
obligation or liability in excess of US $10,000 in the aggregate, except for
claims, obligations or liabilities incurred prior to the date of this Agreement
in the ordinary course of business;
(j) INDEBTEDNESS. Created, incurred, assumed or otherwise become liable
for any Indebtedness in excess of US $10,000 in the aggregate, other than
professional fees relating to the SEC Documents or the transactions contemplated
hereby;
(k) GUARANTEES. Guaranteed or endorsed in a material amount any
obligation or net worth of any Person;
(l) ACQUISITIONS. Acquired the capital stock or other securities or any
ownership interest in, or substantially all of the assets of, any other Person;
(m) 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;
(n) AGREEMENTS. Except as set forth in the SEC Documents, entered into
any agreement, or otherwise obligated itself, to do any of the foregoing.
Section 6.14 MATERIAL CONTRACTS.
(a) Except to the extent filed with the SEC Documents, the Acquiror
Company has made available to Pearl, prior to the date of this Agreement, true,
correct and complete copies of each written Material Acquiror Company Contract,
including each amendment, supplement and modification thereto.
(b) ABSENCE OF DEFAULTS. Each Material Acquiror Company Contract is a
valid and binding agreement of the Acquiror Company and, to the knowledge of the
Acquiror Company, the other parties thereto, and each such Material Company
Contract is in full force and effect. Except as would not have a Material
Adverse Effect, the Acquiror Company is not in breach or default of any Material
Acquiror Company Contract to which it is a party and, to the knowledge of the
Acquiror Company, no other party to any Material Acquiror Company Contract is in
breach or default thereof. Except as would not have a Material Adverse Effect,
no event has occurred or circumstance exists that (with or without notice or
lapse of time) would (a) contravene, conflict with or result in a violation or
breach of, or become a default or event of default under, any provision of any
Material Acquiror Company Contract or (b) permit the Acquiror Company or any
other Person the right to declare a default or exercise any remedy under, or to
accelerate the maturity or performance of, or to cancel, terminate or modify any
Material Acquiror Company Contract. The Acquiror Company has not received notice
of the pending or threatened cancellation, revocation or termination of any
Material Acquiror Company Contract to which it is a party. There are no
renegotiations of, or attempts to renegotiate, or outstanding rights to
renegotiate any material terms of any Material Acquiror Company Contract.
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Section 6.15 EMPLOYEES.
(a) The Acquiror Company has no employees, independent contractors or
other Persons providing research or other services to it. Except as would not
have a Material Adverse Effect, the Acquiror Company is and has been 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 Company 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.
(b) No director, officer or employee of the Acquiror Company is a party
to, or is otherwise bound by, any contract (including any confidentiality,
noncompetition or proprietary rights agreement) with any other Person and each
employee of the Acquiror Company is employed on an at-will basis.
Section 6.16 TAX RETURNS AND AUDITS.
(a) TAX RETURNS. The Acquiror Company has filed all Tax Returns
required to be filed by or on behalf of the Acquiror Company and has paid all
Taxes of the Acquiror Company required to have been paid (whether or not
reflected on any Tax Return). Except as set forth in the SEC Documents, (a) no
Governmental Authority in any jurisdiction has made a claim, assertion or threat
to the Acquiror Company that the Acquiror Company is or may be subject to
taxation by such jurisdiction; (b) there are no Liens with respect to Taxes on
the Acquiror Company's property or assets other than Permitted Liens; and (c)
there are no Tax rulings, requests for rulings, or closing agreements relating
to the Acquiror Company for any period (or portion of a period) that would
affect any period after the date hereof.
(b) NO ADJUSTMENTS OR CHANGES. Neither the Acquiror Company nor any
other Person on behalf of the Acquiror Company (a) has executed or entered into
a closing agreement pursuant to Section 7121 of the Code or any predecessor
provision thereof or any similar provision of Law; or (b) has agreed to or is
required to make any adjustments pursuant to Section 481(a) of the Code or any
similar provision of Law.
(c) NO DISPUTES. There is no pending audit, examination, investigation,
dispute, Proceeding or claim with respect to any Taxes of the Acquiror Company,
nor is any such claim or dispute pending or contemplated, nor is there any basis
for any such dispute, Proceeding or claim. The Acquiror Company has delivered to
Pearl true, correct and complete copies of all Tax Returns, if any, examination
reports and statements of deficiencies assessed or asserted against or agreed to
by the Acquiror Company since its inception and any and all correspondence with
respect to the foregoing.
(d) REAL PROPERTY HOLDING COMPANY. The Acquiror Company is not and has
not been a United States real property holding corporation within the meaning of
Section 897(c)(2) of the Code at any time during the applicable period specified
in Section 897(c)(1)(A)(ii) of the Code.
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(e) NO TAX ALLOCATION OR SHARING AGREEMENTS. The Acquiror Company is
not a party to any Tax allocation or sharing agreement. The Acquiror Company (a)
has not been a member of a Tax Group filing a consolidated income Tax Return
under Section 1501 of the Code (or any similar provision of state, local or
foreign law), and (b) has no liability for Taxes for any Person under Treasury
Regulations Section 1.1502-6 (or any similar provision of Law) as a transferee
or successor, by contract or otherwise.
(f) NO OTHER TAX RELATED AGREEMENTS. The Acquiror Company is not a
party to any agreement, contract or arrangement for services that would result,
individually or in the aggregate, in the payment of any amount that would not be
deductible by reason of Section 162(m), 280G or 404 of the Code. The Acquiror
Company is not a "consenting corporation" within the meaning of Section 341(f)
of the Code. The Acquiror Company does not have any "tax-exempt bond financed
property" or "tax-exempt use property" within the meaning of Section 168(g) or
(h), respectively of the Code. The Acquiror Company does not have any
outstanding closing agreement, ruling request, request for consent to change a
method of accounting, subpoena or request for information to or from a
Governmental Authority in connection with any Tax matter. During the last two
years, the Acquiror Company has not engaged in any exchange with a related party
(within the meaning of Section 1031(f) of the Code) under which gain realized
was not recognized by reason of Section 1031 of the Code.
Section 6.17 MATERIAL ASSETS. The financial statements of the Acquiror
Company set forth in the SEC Documents reflect the material properties and
assets (real and personal) owned or leased by the Acquiror Company.
Section 6.18 INSURANCE. The Acquiror Company has made available to
Pearl, prior to the date of this Agreement, true, correct and complete copies of
any insurance policies maintained by the Acquiror Company on its properties and
assets. Except as would not have a Material Adverse Effect, all of such policies
(a) taken together, provide adequate insurance coverage for the properties,
assets and operations of each Acquiror Company for all risks normally insured
against by a Person carrying on the same business as such Acquiror Company, and
(b) are sufficient for compliance with all applicable Laws and Material Acquiror
Company Contracts. Except as would not have a Material Adverse Effect, all of
such policies are valid, outstanding and in full force and effect and, by their
express terms, will continue in full force and effect following the consummation
of the transactions contemplated by this Agreement. Except as set forth in the
SEC Documents, the Acquiror Company has not received (x) any refusal of coverage
or any notice that a defense will be afforded with reservation of rights, or (y)
any notice of cancellation or any other indication that any insurance policy is
no longer in full force or effect or will not be renewed or that the issuer of
any policy is not willing or able to perform its obligations thereunder. All
premiums due on such insurance policies on or prior to the date hereof have been
paid. There are no pending claims with respect to the Acquiror Company or its
properties or assets under any such insurance policies, and there are no claims
as to which the insurers have notified the Acquiror Company that they intend to
deny liability. There is no existing default under any such insurance policies.
Section 6.19 LITIGATION; ORDERS. There is no Proceeding (whether
federal, state, local or foreign) pending or, to the knowledge of the Acquiror
Company, threatened against or affecting the Acquiror Company or the Acquiror
Company's properties, assets, business or employees. To the knowledge of the
19
Acquiror Company, there is no fact that might result in or form the basis for
any such Proceeding. The Acquiror Company is not subject to any Orders.
Section 6.20 LICENSES. Except as would not have a Material Adverse
Effect, the Acquiror Company possesses from the appropriate Governmental
Authority all licenses, permits, authorizations, approvals, franchises and
rights that are necessary for the Acquiror Company to engage in its business as
currently conducted and to permit the Acquiror Company to own and use its
properties and assets in the manner in which it currently owns and uses such
properties and assets (collectively, "ACQUIROR COMPANY PERMITS"). The Acquiror
Company has not received notice from any Governmental Authority or other Person
that there is lacking any license, permit, authorization, approval, franchise or
right necessary for the Acquiror Company to engage in its business as currently
conducted and to permit the Acquiror Company to own and use its properties and
assets in the manner in which it currently owns and uses such properties and
assets. Except as would not have a Material Adverse Effect, the Acquiror Company
Permits are valid and in full force and effect. Except as would not have a
Material Adverse Effect, no event has occurred or circumstance exists that may
(with or without notice or lapse of time): (a) constitute or result, directly or
indirectly, in a violation of or a failure to comply with any Acquiror Company
Permit; or (b) result, directly or indirectly, in the revocation, withdrawal,
suspension, cancellation or termination of, or any modification to, any Acquiror
Company Permit. The Acquiror Company has not received notice from any
Governmental Authority or any other Person regarding: (x) any actual, alleged,
possible or potential contravention of any Acquiror Company Permit; or (y) any
actual, proposed, possible or potential revocation, withdrawal, suspension,
cancellation, termination of, or modification to, any Acquiror Company Permit.
All applications required to have been filed for the renewal of such Company
Permits have been duly filed on a timely basis with the appropriate Persons, and
all other filings required to have been made with respect to such Acquiror
Company Permits have been duly made on a timely basis with the appropriate
Persons. All Acquiror Company Permits are renewable by their terms or in the
ordinary course of business without the need to comply with any special
qualification procedures or to pay any amounts other than routine fees or
similar charges, all of which have, to the extent due, been duly paid. Section
6.21 INTERESTED PARTY TRANSACTIONS. No officer, director or stockholder
of the Acquiror Company or any Affiliate or "associate" (as such term is defined
in Rule 405 under the Securities Act) of any such Person, has or has had, either
directly or indirectly, (1) an interest in any Person which (a) furnishes or
sells services or products which are furnished or sold or are proposed to be
furnished or sold by the Acquiror Company, or (b) purchases from or sells or
furnishes to, or proposes to purchase from, sell to or furnish any Acquiror
Company any goods or services; or (2) a beneficial interest in any contract or
agreement to which the Acquiror Company is a party or by which it may be bound
or affected.
Section 6.22 GOVERNMENTAL INQUIRIES. The Acquiror Company has provided
to Pearl a copy of each material written inspection report, questionnaire,
inquiry, demand or request for information received by the Acquiror Company from
any Governmental Authority, and the Acquiror Company's response thereto, and
each material written statement, report or other document filed by the Acquiror
Company with any Governmental Authority.
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Section 6.23 BANK ACCOUNTS AND SAFE DEPOSIT BOXES. The Acquiror Company
does not use a deposit or financial account, a lock box, or a safety deposit
box, in its business as presently conducted.
Section 6.24 INTELLECTUAL PROPERTY. The Acquiror Company does not own,
use or license any Intellectual Property in its business as presently conducted,
except as set forth in the SEC Documents. None of the intellectual property
owned by the Acquiror Company infringes on the rights of any person.
Section 6.25 TITLE TO AND CONDITION OF PROPERTIES. Except as would not
have a Material Adverse Effect, the Acquiror Company owns good and marketable
title to, or holds under valid leases or other rights to use, all real property,
plants, machinery, equipment and other personal property necessary for the
conduct of its business as presently conducted, free and clear of all Liens,
except Permitted Liens. The material buildings, plants, machinery and equipment
necessary for the conduct of the business of the Acquiror 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, 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.
Section 6.26 SEC DOCUMENTS; FINANCIAL STATEMENTS. The Acquiror Company
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 three (3) years
preceding the date hereof (the foregoing materials being collectively referred
to herein as the "SEC DOCUMENTS") and is 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. The financial
statements of the Acquiror Company included in the SEC Documents comply in all
material respects with applicable accounting requirements 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 adopted by 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 Company as at the dates thereof and the results of its
operations and cash flows for the periods then ended. The Acquiror Company is
not aware of any facts which would make the Acquiror Company's Common Stock
ineligible for quotation on the OTC Bulletin Board.
Section 6.27 STOCK OPTION PLANS; EMPLOYEE BENEFITS.
(a) STOCK OPTION Plans. The Acquiror Company has no stock option plans
providing for the grant by the Acquiror Company of stock options to directors,
officers or employees.
21
(b) EMPLOYEE BENEFIT PLANS. The Acquiror Company has no employee
benefit plans or arrangements covering its present and former employees or
providing benefits to such persons in respect of services provided the Acquiror
Company.
Section 6.28 ENVIRONMENTAL AND SAFETY MATTERS. Except as set forth in
the SEC Documents and except as would not have a Material Adverse Effect, the
Acquiror Company has at all time been and is in compliance with all
Environmental Laws applicable to the Acquiror Company. There are no Proceedings
pending or threatened against the Acquiror Company alleging the violation of any
Environmental Law or Environmental Permit applicable to the Acquiror Company or
alleging that the Acquiror Company is a potentially responsible party for any
environmental site contamination. 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 Company.
Section 6.29 MONEY LAUNDERING LAWS. The operations of the Acquiror
Company are and have been conducted at all times in compliance with applicable
financial recordkeeping and reporting requirements of the Currency and Foreign
Transactions Reporting Act of 1970, as amended, the money laundering statutes of
all Governmental Authorities, and the rules and regulations thereunder and any
related or similar rules, regulations or guidelines, issued, administered or
enforced by any Governmental Authority (collectively, the "MONEY LAUNDERING
LAWS") and no Proceeding involving the Acquiror Company with respect to the
Money Laundering Laws is pending or, to the knowledge of the Acquiror Company,
threatened.
Section 6.30 BOARD RECOMMENDATION. The Acquiror Company Board, at a
meeting duly called and held, has determined that this Agreement and the
transactions contemplated by this Agreement are advisable and in the best
interests of the Acquiror Company's stockholders.
ARTICLE VII.
COVENANTS OF THE ACQUIROR COMPANY
Section 7.1 RULE 144 REPORTING. Subject to the Acquiror Company
Shareholders not being in material breach of the warranties and representations
in Section 6, with a view to making available to the Acquiror Company's
stockholders the benefit of certain rules and regulations of the Commission
which may permit the sale of the Acquiror Company Common Stock to the public
without registration, from and after the Closing Date, the Acquiror Company
agrees to make and keep public information available, as those terms are
understood and defined in Rule 144; and file with the Commission, in a timely
manner, all reports and other documents required of the Acquiror Company under
the Exchange Act.
Section 7.2 SEC DOCUMENTS. From and after the Closing Date, in the
event the Commission notifies the Acquiror Company of its intent to review any
SEC Document filed prior to the Closing Date or the Acquiror Company receives
any oral or written comments from the Commission with respect to any SEC
Document filed prior to the Closing Date, the Acquiror Company shall promptly
notify the Acquiror Company Shareholders and the Acquiror Company Shareholders
shall fully cooperate with the Acquiror Company.
22
Section 7.3 NAME CHANGE. On or before the Closing Date, the Acquiror
Company shall change its corporate name to "Averox Inc."
Section 7.4 STOCK DIVIDEND. On or before the Closing Date, the Acquiror
Company shall declare a stock dividend of .2 shares of Acquiror Company Common
Stock for each outstanding share of Acquiror Company Common Stock.
Section 7.5 QUARTERLY REPORT. On or before the Closing Date, the
Acquiror Company shall file with the SEC its Quarterly Report on Form 10-Q for
the quarter ended September 30, 2006.
ARTICLE VIII.
CONDITIONS PRECEDENT OF THE ACQUIROR COMPANY
The Acquiror Company's obligation to acquire the Pearl Shares and to
take the other actions required to be taken by the Acquiror Company at the
Closing Date is subject to the satisfaction, at or prior to the Closing Date, of
each of the following conditions (any of which may be waived by the Acquiror
Company, in whole or in part):
Section 8.1 ACCURACY OF REPRESENTATIONS. The representations and
warranties of Pearl and the Pearl Shareholder set forth in this Agreement or in
any 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 except to the extent a representation or warranty is expressly
limited by its terms to another date. The representations and warranties of
Pearl and the Pearl Shareholder set forth in this Agreement or in any
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, except to
the extent a representation or warranty is expressly limited by its terms to
another date.
Section 8.2 PERFORMANCE BY PEARL AND THE PEARL SHAREHOLDER. All of the
covenants and obligations that Pearl and Pearl Shareholder are required to
perform or to comply with pursuant to this Agreement (considered collectively),
and each of these covenants and obligations (considered individually), must have
been duly performed and complied with in all material respects. Each document
required to be delivered by Pearl and the Pearl Shareholder pursuant to this
Agreement must have been delivered.
Section 8.3 NO FORCE MAJEURE EVENT. There shall not have been any
delay, error, failure or interruption in the conduct of the business of Pearl,
or any loss, injury, delay, damage, distress, or other casualty, due to force
majeure, 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.
Section 8.4 OFFICER'S CERTIFICATE. Pearl will have delivered to the
Acquiror Company a certificate executed by an officer of Pearl, certifying the
satisfaction by Pearl of the conditions specified in Sections 8.1, 8.2, and 8.3.
Section 8.5 PEARL SHAREHOLDER CERTIFICATE. The Pearl Shareholder will
have delivered to the Acquiror Company a certificate executed by the Pearl
Shareholder, certifying the satisfaction of the conditions of the Pearl
Shareholder specified in Sections 8.1 and 8.2.
23
Section 8.6 CONSENTS. All material consents, waivers, approvals,
authorizations or orders required to be obtained, and all filings required to be
made, by Pearl and/or the Pearl Shareholder 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 Pearl or
the Pearl Shareholder, 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 Pearl or the Acquiror
Company.
Section 8.7 DOCUMENTS. Pearl and the Pearl Shareholder shall have
delivered to the Acquiror Company at the Closing (a) share certificates
evidencing the number of Pearl Shares held by the Pearl Shareholder, along with
executed share transfer forms transferring the Pearl Shares to the Acquiror
Company together with a certified copy, if required, of a board resolution of
Pearl approving the registration of the transfer of such shares to Acquiror
Company (subject to Closing), (b) each of the Transaction Documents to which
Pearl and/or the Pearl Shareholder is a party, duly executed, (c) and such other
documents as the Acquiror Company may reasonably request for the purpose of (i)
evidencing the accuracy of any of the representations and warranties of Pearl
and the Pearl Shareholder pursuant to Section 8.1, (ii) evidencing the
performance of, or compliance by Pearl and the Pearl Shareholder with, any
covenant or obligation required to be performed or complied with by Pearl or the
Pearl Shareholder, as the case may be, (iii) evidencing the satisfaction of any
condition referred to in this Section, or (iv) otherwise facilitating the
consummation or performance of any of the transactions contemplated by this
Agreement.
Section 8.8 NO PROCEEDINGS. There must not have been commenced or
threatened by any third party against the Acquiror Company, Pearl or any Pearl
Shareholder, or against any Affiliate thereof, any Proceeding (which Proceeding
remains unresolved as of the Closing Date) (a) involving any challenge to, or
seeking damages or other relief in connection with, any of the transactions
contemplated by this Agreement, or (b) that may have the effect of preventing,
delaying, making illegal, or otherwise interfering with any of the transactions
contemplated by this Agreement.
Section 8.9 NO CLAIM REGARDING STOCK OWNERSHIP OR CONSIDERATION. There
shall not have been made or threatened by any Person any claim asserting that
such Person (a) is the holder of, or has the right to acquire or to obtain
beneficial ownership of the Pearl Shares or any other stock, voting, equity, or
ownership interest in, Pearl, or (b) is entitled to all or any portion of the
Acquiror Company Shares.
Section 8.10 AUDITED FINANCIAL STATEMENTS. Pearl shall have delivered
audited financial statements of Pearl and Pearl Pakistan meeting the
requirements of Form 8-K promulgated under the Securities Act on or before 12:00
noon, New York City time, on November 13, 2006.
ARTICLE IX.
CONDITIONS PRECEDENT OF PEARL
AND THE PEARL SHAREHOLDERS
The Pearl Shareholder's obligation to transfer the Pearl Shares and the
obligations of Pearl to take the other actions required to be taken by Pearl in
advance of or at the Closing Date are subject to the satisfaction, at or prior
to the Closing Date, of each of the following conditions (any of which may be
waived by Pearl and the Pearl Shareholder jointly, in whole or in part):
24
Section 9.1 ACCURACY OF REPRESENTATIONS. The representations and
warranties of the Acquiror Company and Acquiror Company Shareholders set forth
in this Agreement or in any 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 except to the extent a representation or
warranty is expressly limited by its terms to another date. The representations
and warranties of the Acquiror Company and Acquiror Company Shareholders set
forth in this Agreement or in any 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, except to the extent a representation or warranty is
expressly limited by its terms to another date.
Section 9.2 PERFORMANCE BY THE ACQUIROR COMPANY.
(a) All of the covenants and obligations that the Acquiror Company and
Acquiror Company Shareholders are required to perform or to comply with pursuant
to this Agreement (considered collectively), and each of these covenants and
obligations (considered individually), must have been performed and complied
with in all respects.
(b) Each document required to be delivered by the Acquiror Company and
Acquiror Company Shareholders pursuant to this Agreement must have been
delivered.
Section 9.3 NO FORCE MAJEURE EVENT. There shall not have been any
delay, error, failure or interruption in the conduct of the business of the
Acquiror Company, or any loss, injury, delay, damage, distress, or other
casualty, due to force majeure 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.
Section 9.4 CERTIFICATE OF OFFICER. The Acquiror Company will have
delivered to Pearl a certificate, dated the Closing Date, executed by an officer
of the Acquiror Company, certifying the satisfaction of the conditions specified
in Sections 9.1, 9.2, and 9.3.
Section 9.5 CERTIFICATE OF ACQUIROR COMPANY SHAREHOLDERS. The Acquiror
Company Shareholders will have delivered to Pearl a certificate, dated the
Closing Date, executed by such Acquiror Company Shareholder, if a natural
person, or an authorized officer of the Acquiror Company Shareholder, if an
entity, certifying the satisfaction of the conditions specified in Sections 9.1,
9.2 and 9.3.
Section 9.6 CONSENTS.
(a) All material consents, waivers, approvals, authorizations or orders
required to be obtained, and all filings required to be made, by the Acquiror
Company 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 Company, 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 Pearl or the Acquiror
Company.
25
(b) Without limiting the foregoing, the Schedule 14(f) Filing shall
have been mailed to the stockholders of the Acquiror Company not less than ten
(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 shall remain unresolved as of the Closing Date).
Section 9.7 DOCUMENTS. The Acquiror Company must have caused the
following documents to be delivered to Pearl and/or the Pearl Shareholder:
(a) Share certificates evidencing the Pearl Shareholder's Exchange
Shares;
(b) A Secretary's Certificate, dated the Closing Date certifying
attached copies of (A) the Organizational Documents of the Acquiror Company, (B)
the resolutions of the Acquiror Company Board approving this Agreement and the
transactions contemplated hereby; and (C) the incumbency of each authorized
officer of the Acquiror Company signing this Agreement and any other agreement
or instrument contemplated hereby to which the Acquiror Company is a party;
(c) A Certificate of Good Standing of the Acquiror Company;
(d) Each of the Transaction Documents to which the Acquiror Company is
a party, duly executed; and
(e) Such other documents as Pearl may reasonably request for the
purpose of (i) evidencing the accuracy of any representation or warranty of the
Acquiror Company pursuant to Section 9.1, (ii) evidencing the performance by the
Acquiror Company of, or the compliance by the Acquiror Company with, any
covenant or obligation required to be performed or complied with by, the
Acquiror Company, (iii) evidencing the satisfaction of any condition referred to
in this Section 9, or (iv) otherwise facilitating the consummation of any of the
transactions contemplated by this Agreement.
Section 9.8 NO PROCEEDINGS. Since the date of this Agreement, there
must not have been commenced or threatened against the Acquiror Company, Pearl
or any Pearl Shareholder, or against any Affiliate thereof, any Proceeding
(which Proceeding remains unresolved as of the date of this Agreement) (a)
involving any challenge to, or seeking damages or other relief in connection
with, any of the transactions contemplated hereby, or (b) that may have the
effect of preventing, delaying, making illegal, or otherwise interfering with
any of the transactions contemplated hereby.
Section 9.9 NO CLAIMS REGARDING STOCK OWNERSHIP OR OTHER COMPENSATION.
There shall not have been made or threatened by any Person any claim asserting
that such Person is the holder of, or has the right to acquire or to obtain
beneficial ownership of the Acquiror Company Common Stock or any other stock,
voting, equity, or ownership interest in, the Acquiror Company.
Section 9.10 INVESTMENT OF $2,650,000. The Acquiror Company shall have
consummated the transactions contemplated by the certain Stock Purchase
Agreement by and among the Acquiror Company and certain purchasers pursuant to
which the Acquiror Company shall have issued to the purchasers 380,000 shares of
26
Common Stock in consideration for $2,650,000, payable in installments, of which
$150,000 shall be paid at the Closing. Section
9.11 SURRENDER OF SHARES. Xxxxxx X. Xxxxxx, Xxxxxx X. Xxxxxx and Xxxxxx
Xxxxxx Xxxxx shall have surrendered an aggregate of 5,800,000 restricted shares
of Common Stock of the Acquiror Company (6,960,000 after giving effect to the
stock dividend contemplated by Section 7.4) owned by them.
Section 9.12 ISSUANCE OF WARRANTS. The Pearl Shareholder shall have
received warrants to purchase up to 20% of the issued and outstanding Common
Stock of the Acquiror Company at an exercise price of $.01 per share in the
event that the purchasers referenced in Section 9.10 fail to pay the
installments due on the Stock Purchase Agreement.
ARTICLE X.
INDEMNIFICATION; REMEDIES
Section 10.1 SURVIVAL. All representations, warranties, covenants, and
obligations in this Agreement shall expire on the first (1st) anniversary of the
date this Agreement is executed (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, 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 10.2 INDEMNIFICATION BY THE ACQUIROR COMPANY SHAREHOLDERS. From
and after the execution of this Agreement until the expiration of the Survival
Period, each of the Acquiror Company Shareholders shall indemnify and hold
harmless the Acquiror Company, Company and the Pearl Shareholder (collectively,
the "COMPANY INDEMNIFIED PARTIES"), from and against any Damages arising,
directly or indirectly, from or in connection with:
(a) Any misrepresentation or breach of warranty made by the Acquiror
Company or the Acquiror Company Shareholders in this Agreement or in any
certificate delivered by the Acquiror Company pursuant to this Agreement;
(b) any breach by the Acquiror Company or the Acquiror Company
Shareholders of any covenant or obligation of the Acquiror Company in this
Agreement required to be performed by the Acquiror Company or the Acquiror
Company Shareholders on or prior to the Closing Date; or
(c) any and all Damages against the Acquiror Company, occurring on or
prior to the Closing Date.
27
Section 10.3 LIMITATIONS ON LIABILITY. No Company Indemnified Party
shall be entitled to indemnification pursuant to Section 10.2, unless and until
the aggregate amount of Damages to all Company Indemnified Parties with respect
to such matters under Section 10.4 exceeds US$20,000, at which time, Pearl
Indemnified Parties shall be entitled to indemnification for the total amount of
such Damages in excess of US $20,000 but in no event shall any party hereto be
liable for damages in excess of $2,650,000.
Section 10.4 DETERMINING DAMAGES. Materiality qualifications to the
representations and warranties of Pearl and the Acquiror Company shall not be
taken into account in determining the amount of Damages occasioned by a breach
of any such representation and warranty for purposes of determining whether the
aggregate damage threshold set forth in Section 10.3 has been met.
ARTICLE XI.
GENERAL PROVISIONS
Section 11.1 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. In the
event of termination of this Agreement, the obligation of each party to pay its
own expenses will be subject to any rights of such party arising from a breach
of this Agreement by another party.
Section 11.2 PUBLIC ANNOUNCEMENTS. The Acquiror Company shall promptly,
but no later than three (3) days following the execution of this Agreement,
issue a press release disclosing the transactions contemplated hereby. Prior to
the Closing Date, Pearl and the Acquiror Company 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.
Section 11.3 CONFIDENTIALITY.
(a) Subsequent to the date of this Agreement, the Acquiror Company, the
Acquiror Company Shareholders, the Pearl Shareholder and Pearl 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 (i) 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
28
of such party, (ii) 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 (iii) the furnishing or use of such information is required by or
necessary or appropriate in connection with legal proceedings.
(b) In the event that any party is required to disclose any information
of another party pursuant to Section (ii) or (iii) of Section 11.3(a), 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 11.3. 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.
(c) If the transactions contemplated by this Agreement are not
consummated, each party will return or destroy as much of such written
information as the other party may reasonably request.
Section 11.4 NOTICES. All notices, consents, waivers, and other
communications under this Agreement must be in writing and will be deemed to
have been duly given when (a) delivered by hand (with written confirmation of
receipt), (b) sent by telecopier (with written confirmation of receipt), or (c)
when received by the addressee, if sent by a nationally recognized overnight
delivery service (receipt requested), in each case to the appropriate addresses
and telecopier numbers set forth below (or to such other addresses and
telecopier numbers as a party may designate by written notice to the other
parties):
If to Acquiror Company:
0000 X. Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxx 00000
XXX
Attention: Xxxxxx X. Xxxxxx
Telephone No.: x0-000-000-0000
with a copy to
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
XXX
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telephone No.: x0-000-000-0000
Facsimile No.: x0-000-000-0000
29
If to Pearl or the Pearl Shareholder
c/o Pearl Consulting (Private) Limited
Xxxxx 0, Xxxxxx Xxxxx Xxxxxxx Trust Complex
X-0/0, Xxxx Xxxx Xxxx
Xxxxxxxxx, Xxxxxxxx
Attn.: Xxxxxx Xxxxxxx, Managing Director
Telephone No. +92 -51-2875737
Facsimile No. x00-00-0000000
with a copy to
Xxxxxx Xxxxxx Rosenman LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
XXX
Attention: Xxxx X. Xxxxxxx, Esq.
Telephone No.: x0-000-000-0000
Facsimile No.: x0- 000-000-0000
Section 11.5 FURTHER ASSURANCES. The parties agree (a) to furnish upon
request to each other such further information, (b) to execute and deliver to
each other such other documents, and (c) to do such other acts and things, all
as the other party may reasonably request for the purpose of carrying out the
intent of this Agreement and the documents referred to in this Agreement.
Section 11.6 WAIVER. The rights and remedies of the parties to this
Agreement are cumulative and not alternative. Neither the failure nor any delay
by any party in exercising any right, power, or privilege under this Agreement
or the documents referred to in this Agreement will operate as a waiver of such
right, power, or privilege, and no single or partial exercise of any such right,
power, or privilege will preclude any other or further exercise of such right,
power, or privilege or the exercise of any other right, power, or privilege. To
the maximum extent permitted by applicable law, (a) no claim or right arising
out of this Agreement or the documents referred to in this Agreement can be
discharged by one party, in whole or in part, by a waiver or renunciation of the
claim or right unless in writing signed by the other party; (b) no waiver that
may be given by a party will be applicable except in the specific instance for
which it is given; and (c) no notice to or demand on one party will be deemed to
be a waiver of any obligation of such party or of the right of the party giving
such notice or demand to take further action without notice or demand as
provided in this Agreement or the documents referred to in this Agreement.
Section 11.7 ENTIRE AGREEMENT; MODIFICATION. This Agreement supersedes
all prior agreements between the parties with respect to its subject matter and
constitutes (along with the documents referred to in this Agreement) a complete
and exclusive statement of the terms of the agreement between the parties with
respect to its subject matter. This Agreement may not be amended except by a
written agreement executed by the party against whom the enforcement of such
amendment is sought.
30
Section 11.8 ASSIGNMENT; SUCCESSORS; AND THIRD PARTY BENEFICIARIES. No
party may assign any of its rights under this Agreement without the prior
consent of the other parties. Subject to the preceding sentence, this Agreement
will apply to, be binding in all respects upon, and inure to the benefit of and
be enforceable by the respective successors and permitted assigns of the
parties. Except as set forth in Section 7.1 and Section 10.3, nothing expressed
or referred to in this Agreement will be construed to give any Person other than
the parties to this Agreement any legal or equitable right, remedy, or claim
under or with respect to this Agreement or any provision of this Agreement. This
Agreement and all of its provisions and conditions are for the sole and
exclusive benefit of the parties to this Agreement and their successors and
assigns.
Section 11.9 SEVERABILITY. If any provision of this Agreement is held
invalid or unenforceable by any court of competent jurisdiction, the other
provisions of this Agreement will remain in full force and effect. Any provision
of this Agreement held invalid or unenforceable only in part or degree will
remain in full force and effect to the extent not held invalid or unenforceable.
Section 11.10 SECTION HEADINGS; CONSTRUCTION. The headings of Sections
in this Agreement are provided for convenience only and will not affect its
construction or interpretation. All references to "Section" or "Sections" refer
to the corresponding Section or Sections of this Agreement . All words used in
this Agreement will be construed to be of such gender or number as the
circumstances require. Unless otherwise expressly provided, the word "including"
does not limit the preceding words or terms.
Section 11.11 GOVERNING LAW. This Agreement will be governed by the
laws of the State of New York without regard to conflicts of laws principles.
Section 11.12 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
[Signature Pages Follow]
31
IN WITNESS WHEREOF, the parties have executed and delivered this Share
Exchange Agreement as of the date first written above.
ACQUIROR COMPANY:
FLICKERING STAR FINANCIAL INC.
By:____________________________
Xxxxxx X. Xxxxxx
President
ACQUIROR COMPANY SHAREHOLDERS:
__________________________________
Xxxxxx X. Xxxxxx
__________________________________
Xxxxxx X. Xxxxxx
___________________________________
Xxxxxx Xxxxxx Xxxxx
PEARL CONSULTING FZ -LLC
By:___________________________________
Xxxxxx Xxxxxxx
Manager
PEARL SHAREHOLDER:
__________________________________
Xxxxxx Xxxxxxx
32
OFFSHORE DELIVERY INSTRUCTIONS:
PRINT EXACT NAME IN WHICH YOU WANT THE SECURITIES TO BE REGISTERED
Attn: ____________________________________________
Address: ____________________________________________
____________________________________________
____________________________________________
Phone No. ____________________________________________
Facsimile No. ____________________________________________
33
EXHIBIT A
ACQUIROR COMPANY SHAREHOLDERS
ACQUIROR COMPANY SHAREHOLDER NAME AND ADDRESS
34
EXHIBIT B
DEFINITION OF "US PERSON"
1. "United States 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 United States
person;
(iv) Any trust of which any trustee is a United States 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 United States 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 United
States 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-United States person by a dealer or other professional fiduciary
organized, incorporated, or (if an individual) resident in the United
States shall not be deemed a "United States person."
3. Notwithstanding paragraph (1), any estate of which any professional
fiduciary acting as executor or administrator is a United States person
shall not be deemed a United States person if:
(i) An executor or administrator of the estate who is not a United States
person has sole or shared investment discretion with respect to the
assets of the estate; and
(ii) The estate is governed by foreign law.
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4. Notwithstanding paragraph (1), any trust of which any professional
fiduciary acting as trustee is a United States person shall not be deemed a
United States person if a trustee who is not a United States 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
United States 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 United States person.
6. Notwithstanding paragraph (1), any agency or branch of a United States
person located outside the United States shall not be deemed a "United
States 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 "United States persons."
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EXHIBIT D
NON US PERSON REPRESENTATIONS
The Pearl Shareholder, indicating that he is not a United States
person, severally and not jointly, further represents and warrants to the
Acquiror Company as follows:
8. At the time of (a) the offer by the Acquiror Company and (b) the acceptance
of the offer by the Pearl Shareholder, of the Acquiror Company Shares, the
Pearl Shareholder was outside the United States.
9. No offer to acquire the Acquiror Company Shares or otherwise to participate
in the transactions contemplated by this Agreement was made to the Pearl
Shareholder or its representatives inside the United States.
10. The Pearl Shareholder is not purchasing the Acquiror Company Shares for the
account or benefit of any United States person, or with a view towards
distribution to any United States person, in violation of the registration
requirements of the Securities Act.
11. The Pearl Shareholder will make all subsequent offers and sales of the
Acquiror Company 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, the Pearl Shareholder will not
resell the Acquiror Company Shares to any United States 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.
12. The Pearl Shareholder is acquiring the Acquiror Company Shares for the
Pearl Shareholder's own account, for investment and not for distribution or
resale to others.
13. The Pearl Shareholder has no present plan or intention to sell the Acquiror
Company Shares in the United States or to a United States person at any
predetermined time, has made no predetermined arrangements to sell the
Acquiror Company Shares and is not acting as a Distributor of such
securities.
14. Neither the Pearl Shareholder, its Affiliates nor any Person acting on the
Pearl 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 United States with respect to the Acquiror
Company Shares at any time after the Closing Date through the Distribution
Compliance Period except in compliance with the Securities Act.
15. The Pearl Shareholder consents to the placement of a legend on any
certificate or other document evidencing the Acquiror Company Shares
substantially in the form set forth in Section 4.2.5(b).
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16. The Pearl Shareholder is not acquiring the Acquiror Company 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.
17. The Pearl Shareholder has sufficient knowledge and experience in finance,
securities, investments and other business matters to be able to protect
the Pearl Shareholder's interests in connection with the transactions
contemplated by this Agreement.
18. The Pearl 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 Company Shares.
19. The Pearl Shareholder understands the various risks of an investment in the
Acquiror Company 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 Company Shares.
20. The Pearl Shareholder has had access to the Acquiror Company's publicly
filed reports with the SEC.
21. The Pearl Shareholder has been furnished during the course of the
transactions contemplated by this Agreement with all other public
information regarding the Acquiror Company that the Pearl Shareholder has
requested and all such public information is sufficient for the Pearl
Shareholder to evaluate the risks of investing in the Acquiror Company
Shares.
22. The Pearl Shareholder has been afforded the opportunity to ask questions of
and receive answers concerning the Acquiror Company and the terms and
conditions of the issuance of the Acquiror Company Shares.
23. The Pearl Shareholder is not relying on any representations and warranties
concerning the Acquiror Company made by the Acquiror Company or any
officer, employee or agent of the Acquiror Company, other than those
contained in this Agreement.
24. The Pearl Shareholder will not sell or otherwise transfer the Acquiror
Company 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.
25. The Pearl Shareholder understands and acknowledges that the Acquiror
Company is under no obligation to register the Acquiror Company Shares for
sale under the Securities Act.
26. The Pearl Shareholder represents that the address furnished by the Pearl
Shareholder on its signature page to this Agreement is the Pearl
Shareholder's principal residence if he is an individual or its principal
business address if it is a corporation or other entity.
27. The Pearl Shareholder understands and acknowledges that the Acquiror
Company 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 Company that has been supplied to the Pearl
Shareholder and that any representation to the contrary is a criminal
offense.
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28. The Pearl Shareholder acknowledges that the representations, warranties and
agreements made by the Pearl Shareholder herein shall survive the execution
and delivery of this Agreement and the purchase of the Acquiror Company
Shares.
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