Exhibit 2.1
The securities offered hereby have not been registered under the US Securities
Act of 1933 (the "Act") and may not be offered or sold in the United States or
to U.S. persons unless the securities are registered under the Act, or an
exemption from the registration requirements of the Act is available. Hedging
transactions involving the securities offered hereby may not be conducted unless
in compliance with the Act.
SHARE PURCHASE AGREEMENT
THIS AGREEMENT made as of the 6th day of January, 2005.
AMONG:
SECURAC CORP., a publicly traded corporation incorporated
under the laws of the State of Nevada
("PubCo")
- and -
RISK GOVERNANCE, INC., a corporation incorporated under the
laws of the State of Delaware and operating in the State of
Massachusetts ("RGI")
- and -
all of the Shareholders of RGI as listed in SCHEDULE J
attached hereto (collectively, the "Vendors")
WHEREAS:
A. the Vendors are the registered and beneficial owners of all of the
issued and outstanding shares of RGI ("RGI Shares");
B. the authorized capital of RGI consists of ten million (10,000,000)
shares of common stock par value $.001, of which three million
twenty-eight thousand six hundred seventy-five (3,028,675) shares are
issued and outstanding as fully paid and non-assessable, and one
million (1,000,000) shares of unissued blank check preferred stock;
C. Pursuant to the Letter of Intent dated October 8, 2004 (the "LOI"),
PubCo (the "Purchaser") has agreed to purchase, and RGI and the Vendors
have accepted such offer and agreed to sell all of the RGI Shares,
which include all of the assets, equipment, leases, contracts and
intellectual property of RGI upon the terms and conditions set out in
this Agreement;
NOW THEREFORE in accordance with the terms and conditions of the LOI
and for good and valuable consideration, the receipt and sufficiency of
which each of the parties hereto hereby acknowledges, the parties
hereto covenant and agree as follows:
ARTICLE ONE
DEFINITIONS AND INTERPRETATION
SECTION 1.1 DEFINITIONS
In this Agreement, the following words and terms shall have the
following meanings:
(a) "AGREEMENT", "HERETO", "HEREOF", "HEREIN", "HEREBY",
"HEREUNDER" and similar expressions mean this Agreement, as it
may be amended from time to time;
(b) "BANK" has the meaning set forth in Section 3.1(e);
(c) "BUSINESS" means the business currently carried on by RGI of
marketing the Risk Governance Software;
(d) "BUSINESS ASSETS" means RGI's entire right, title and interest
in the following assets, including, but not limited to, those
assets listed on the Financial Statements of RGI:
(i) Tangible Assets. All equipment, inventory, machinery,
office furniture and fixtures, leasehold
improvements, office materials and supplies, and all
other tangible personal property used or usable by
RGI in the operation of the Business wherever
located, including without limitation, those items
identified in SCHEDULE A, together with any
replacements and additions made between the date of
this Agreement and the Closing;
(ii) Leases. The real property leases listed in SCHEDULE
B, including any security deposits relating thereto
(the "Leases");
(iii) Contracts and Agreements. The contracts, agreements
and non-real property leases relating to the
operation of the Business which are listed
individually or by category in SCHEDULE C hereto,
including any renewals, extensions, amendments or
modifications thereof, and any additional contracts,
agreements and non-real property leases entered into
by RGI in the ordinary course of business between the
date of this Agreement and the Closing (the
"Contracts");
(iv) Intellectual Property. All intellectual property and
rights, whether registered or unregistered,
including, but not limited to all patents, patent
applications, copyrights, trademarks, service marks,
domain names, trade names, trade secrets, know-how,
concepts, technical data, proprietary rights,
proprietary processes, the Risk Governance Software
or any rights to the Risk Governance Software,
licences, computer software, permits, and other
intangible property rights and interests applied for,
issued to or owned by RGI, or under which RGI is
licensed, and used or useable necessary in the
operation of RGI's Business as now conducted and as
proposed to be conducted, including without
limitation the intellectual property listed in
SCHEDULE D hereto (the "Company Intellectual
Property");
(v) Business Records. All files, logs, records, books of
account, financial records, client and supplier files
and lists, including telephone numbers, and
addresses, payroll and personnel records, corporate
records and minute books, marketing data and reports,
prospect lists, brochures, art work, photographs,
advertising materials, consultants' reports, design
drawings and other materials, including computer
software and records, which concern the operation of
the Business, which includes, but is not limited to
the following:
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(A) All literature and product brochures in both
paper and electronic form;
(B) Customer list with payment history and
renewal dates and amounts in electronic
format;
(C) User documentation in paper and electronic
format;
(D) Support notes for installations and other
common support situations and descriptions
of standard errors and their resolutions;
and
(E) Goodwill. All goodwill associated with the
Business and the Business Assets;
(e) "BUSINESS DAY" means any day, other than Saturday, Sunday or
any statutory holiday in the State of Nevada;
(f) "CLAIMS" means any claim, demand, order, action, cause of
action, damage, loss, cost, liability or expense, including
reasonable legal fees on a solicitor and his own client basis
and all reasonable costs incurred in investigating or pursuing
any of the foregoing or any proceeding relating to any of the
foregoing;
(g) "CLOSING" means the closing of the transaction contemplated in
this Agreement and the execution and delivery of the Closing
Documents by the parties hereto, the RGI Shares to the
Purchaser and the Purchase Price to the Vendors as provided
for in this Agreement;
(h) "CLOSING DATE" means the date on which the Closing occurs,
namely January 7, 2004, or such other date to which the
parties may agree from time to time;
(i) "CLOSING DOCUMENTS" means the documents to be delivered to
PubCo's Counsel as contemplated in Article 2 of this
Agreement;
(j) "COMPANY INTELLECTUAL PROPERTY" has the meaning set forth in
Section 1.1(d)(iv) of this Agreement;
(k) "CONTRACTS" means the contracts, agreements and non-real
property leases as set out in SCHEDULE C;
(l) "FINANCIAL STATEMENTS" means the financial statements of RGI
attached hereto as SCHEDULE E;
(m) "LEASES" means the real property leases as set out in SCHEDULE
B;
(n) "LIABILITIES" includes liabilities of any kind calculated in
accordance with generally accepted accounting principles and
without limiting the generality of the foregoing includes
accounts payable, deferred revenues, income tax for the period
ending with the change of control on Closing, long term
obligations and cancellation/termination costs for services
which the Purchaser will not require, as set forth in SCHEDULE
F;
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(o) "PARTIES" means the Vendor and the Purchaser and their
respective permitted assigns, if any, together, and "Party"
means any one of them;
(p) "PROPRIETARY INFORMATION AND INVENTIONS AGREEMENTS" has the
meaning set forth in Section 3.1(r)(iii) of this Agreement;
(q) "PUBCO'S COUNSEL" means Burnet, Xxxxxxxxx & Xxxxxx LLP and
Xxxxxxxxx & Xxxxxx LLP;
(r) "PUBCO SHARES" means common shares in the capital of PubCo, as
presently constituted;
(s) "PURCHASER" means PubCo;
(t) "RGI SHARES" means all of the issued and outstanding shares of
RGI;
(u) "RISK GOVERNANCE SOFTWARE" means the enterprise software
product provided by Risk Governance Ltd.;
(v) "VENDOR'S COUNSEL" means OlenderFeldman LLP.
SECTION 1.2 CONSTRUCTION OF AGREEMENT
In this Agreement:
(a) all usage of the word "including" in this Agreement shall mean
"including, without limitation," throughout this Agreement;
(b) the division of this Agreement into separate Articles,
Sections and Subsections and the insertion of headings is for
convenience of reference only and shall not affect the
construction or interpretation of this Agreement;
(c) all references to currency herein are to the lawful money of
the United States of America; and
(d) words importing the singular include the plural and vice
versa; and words importing gender include all genders.
ARTICLE TWO
PURCHASE OF RGI SHARES AND CLOSING
SECTION 2.1 PURCHASE OF RGI SHARES
(a) Subject to the terms and conditions hereof, the Purchaser
offers and agrees to purchase from the Vendors, and the
Vendors accept such offer and agree to sell, assign and
transfer to the Purchaser, free and clear of all encumbrances,
all of the RGI Shares.
(b) The purchase price to be paid by the Purchaser to the Vendors
for the RGI Shares, (the "Purchase Price"), shall be as set
forth in SCHEDULE K.
(c) The parties hereby acknowledge and agree that the PubCo Shares
to be exchanged for the RGI Shares held by the Vendors as full
and final satisfaction of the Purchase Price, shall be issued
by PubCo to the Vendors by way of a direction to American
Stock Transfer and Trust Company from PubCo directing the
issuance of the PubCo Shares.
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SECTION 2.2 CLOSING AND DEEMED DATE
The Closing shall be completed at such time and at such place
on the Closing Date as may be agreed upon by the parties. The parties hereby
acknowledge that the transaction contemplated herein shall be deemed to have
closed effective at the close of business on the Closing Date and that the
profit and loss of RGI from the Closing Date and subsequent shall be for the
account of the Purchaser.
SECTION 2.3 PURCHASER'S CLOSING DOCUMENTS
At the Closing and upon the satisfaction of the closing
conditions set out in Article 5 of this Agreement the Purchaser shall deliver
the following to the Vendors in such form and content as the Vendors or their
solicitor may require, acting reasonably:
(a) the PubCo Shares;
(b) certified copies of resolutions of the directors of the
Purchaser approving the completion of the transactions
contemplated by this Agreement; and
(c) certificates of the President of the Purchaser regarding
representations, warranties and closing conditions.
SECTION 2.4 VENDORS' CLOSING DOCUMENTS
At the Closing and upon the satisfaction of the closing
conditions set out in Article 5 of this Agreement, the Vendors shall deliver the
following to the Purchaser in such form and content as the Purchaser or its
solicitor may require, acting reasonably:
(a) certificates representing the RGI Shares duly endorsed in
blank for transfer, or accompanied by irrevocable transfer
powers of attorney duly executed in blank, in either case by
the holder of record thereof, all in form and substance
sufficient to permit the valid registration of the Purchaser
as the owner of record of the RGI Shares;
(b) resignations and releases from all directors and officers of
RGI;
(c) the Company Intellectual Property;
(d) a written agreement of the shareholders of RGI, terminating
the Shareholder Agreement dated October 10, 2003;
(e) certified copies of resolutions of the directors and of a
special resolution of the shareholders of RGI approving the
completion of the transactions contemplated by this Agreement;
(f) opinion of solicitor for the Vendors;
(g) the certificates of the President of RGI regarding
representations, warranties and closing conditions;
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(h) certificates of good standing from the Commonwealth of
Massachusetts and the State of Delaware;
(i) such documents as may be required to change the signing
officers on the RGI bank accounts to the nominees of the
Purchaser;
(j) all credit cards in the name of RGI, all merchant cards and
machines;
(k) the minute books and the corporate seals of RGI; and
(l) such other documents and certificates as may be reasonably
requested by the Purchaser.
ARTICLE THREE
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 REPRESENTATIONS AND WARRANTIES OF THE VENDORS AND RGI
Each of the Vendors (other than Xxxxxx Xxxxx and Xxxxx Xxxxxx, to whom
this Section 3.1 does not apply) and RGI hereby jointly and severally represent
and warrant to the Purchaser (knowing that the Purchaser and PubCo's Counsel are
relying thereon) that:
(a) Organization, Good Standing and Records:
(i) RGI is duly incorporated, organized and validly
subsisting under the laws of the State of Delaware,
with all necessary corporate power, authority and
capacity to own its property and assets and to carry
on the Business as presently conducted, and has made
all necessary filings and has all required
registrations under all applicable corporate,
securities and taxation laws or any other laws to
which RGI is subject; and
(ii) the minute books of RGI contain all resolutions of,
and minutes of all meetings of, the directors and
shareholders of RGI and the books and records of RGI
are in good standing and are true and accurate;
(b) Authority and Enforceability: this Agreement has been duly
executed and delivered by each of the Vendors and is a valid
and binding obligation of such Vendors enforceable in
accordance with its terms, and the execution, delivery and
performance of this Agreement has been duly and validly
authorized and approved by the board of directors of RGI and
RGI has the corporate power and authority to enter into this
Agreement and to carry out its obligations hereunder and this
Agreement constitutes a valid and binding obligation
enforceable against RGI in accordance with its terms, subject
only to limitations with respect to enforcement imposed by law
in connection with bankruptcy or similar proceedings and to
the extent that equitable remedies such as specific
performance and injunction are in the discretion of the court
from which they are sought;
(c) Absence of Conflicting Agreements: each of the Vendors and RGI
are not a party to, bound or affected by or subject to any
agreement, instrument, charter or by-law provision, statute,
regulation, order, judgment, decree or law which would be
violated, contravened or breached by, or under which any
default would occur as a result of, the execution and delivery
of this Agreement or the performance of any of the terms of
this Agreement;
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(d) Compliance with Laws: neither the Vendors nor RGI has received
any notice asserting any violation or non-compliance in
connection with the Business or ownership or use of any of the
Business Assets with any applicable law, statute, rule,
regulation or order, whether federal, state or local; RGI is
in compliance in all material respects with all applicable
laws, holds all governmental and regulatory approvals,
licenses and authorizations required to conduct the Business
or own or use the Business Assets, all such governmental and
regulatory approvals, licenses and authorizations are in good
standing and RGI is in compliance with all requirements of
such governmental and regulatory approvals, licenses and
authorizations;
(e) Consents and Approvals: there are no consents, approvals,
orders or authorizations of any person, or any municipal,
state or federal governmental authority in the United States
of America or elsewhere or registrations, declarations,
notices, filings or recordings with any authorities required
to be obtained by the Vendors or RGI in connection with the
completion of the transaction contemplated by this Agreement,
except those consents required by Barclays Bank Plc (the
"Bank") in reference to various loans and credit facilities
provided by Xxxxxxx Bank to RGI and those disclosed in
Schedule M;
(f) Authorized RGI Shares: the authorized capital of RGI consists
of ten million (10,000,000) shares of common stock par value
$.001, of which three million twenty-eight thousand six
hundred seventy-five (3,028,675) shares are duly and validly
issued and outstanding as fully paid and non-assessable, and
one million (1,000,000) shares of unissued blank check
preferred stock;
(g) Ownership of RGI Shares: the Vendors are the registered and
beneficial owners of the RGI Shares, all of which are fully
paid and non-assessable, free and clear of any lien, security
interest, charge, hypothecation, privilege or encumbrance or
rights of others, other than the rights of the Purchaser under
this Agreement and there are no other shares, classes of
shares or securities convertible into shares issued and
outstanding in RGI;
(h) Options: no options, warrants or other rights to purchase
shares or other securities of RGI has been authorized, there
are no agreements in place as to the issue of any such
options, warrants, securities or other rights and no such
option, warrants, securities or other rights are outstanding,
other than those disclosed in Schedule M;
(i) Pre-emptive Rights: no person, firm or corporation has any
agreement or option or any right or privilege (whether by law,
pre-emptive or contractual) which at any time in the future
may become binding upon such Vendors in respect of the sale,
transfer, assignment, pledge, charge, mortgage, hypothecation
or other disposition or encumbrance of the RGI Shares, the
Business or the Business Assets, other than in respect of the
provisions of this Agreement, other than those disclosed in
Schedule M;
(j) Subsidiaries: RGI does not have any subsidiaries, and RGI does
not otherwise own any shares or securities of any corporation,
and is not a party to any agreements, options or commitments
to acquire any shares or securities of any corporation or
person or to acquire or lease any business operations, real
property or assets;
(k) Financial Statements: the financial statements of RGI for the
year ended December 31, 2003 and for the ten-month period
ended October 31, 2004 as set out in SCHEDULE E (collectively,
the "RGI Financial Statements"), fairly presents, in
accordance with generally accepted accounting principles in
the United States of America, consistently applied, the
financial position and condition of RGI at the dates thereof
and the results of the operations of RGI for the periods then
ended and reflect all assets, liabilities or obligations
(absolute, accrued, contingent or otherwise) of RGI as at the
date thereof and there has not been any material change in the
assets, liabilities or obligations (absolute, accrued,
contingent or otherwise) of RGI from the position set forth in
the RGI Financial Statements other than as disclosed herein or
contemplated hereby; and since the date of the RGI Financial
Statements, there will not have been any material facts,
transactions, events or occurrences which could materially
affect the capital, assets, liabilities (absolute, accrued,
contingent or otherwise), business, operations, conditions
(financial or otherwise) or results of the operations of RGI
other than as disclosed herein or contemplated hereby;
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(l) Absence of Material Changes: since the date of the LOI there
has not been:
(i) any change in the condition or operation of the
Business, Business Assets, management, financial
condition or future prospects of RGI which has been
materially adverse to its continued operation or
viability; or
(ii) a transaction of a nature material to RGI, other than
transactions in the ordinary and normal course of
business or as contemplated by this Agreement, other
than those disclosed in Schedule M;
(m) Subscribers: as at the date hereof, RGI had not less than
approximately zero (0) corporate customers which generate in
the aggregate not less than $0.00of revenue to RGI per month;
(n) Liabilities: RGI does not have any outstanding liabilities,
absolute, accrued, contingent or otherwise (including by way
of guarantee, indemnification, surety or similar obligation),
other than those set out in any Schedule hereto including the
Financial Statements contained in SCHEDULE E and other than
trade or business obligations incurred after the date thereof
in the ordinary course of business consistent with past
practice, none of which is (A) in an amount greater than $0.00
unless disclosed on SCHEDULE F, or (B) materially adverse to
the results of operations, assets or financial condition of
RGI or manner of conducting the Business, and the Uniform
Commercial Code registrations against RGI set out in SCHEDULE
G relate only to the liabilities reflected in SCHEDULE F;
(o) Insolvency: no insolvency proceedings of any character,
including without limitation, bankruptcy, receivership,
reorganization, composition or arrangement with creditors,
voluntary or involuntary, affecting the Vendors, RGI, the
Business or any of the Business Assets, are pending or, to the
best of the Vendors and RGI's knowledge, threatened, and
neither the Vendors nor RGI have made any assignment for the
benefit of creditors or taken any action in contemplation of
or which would constitute the basis for the institution of
such insolvency proceedings;
(p) Tax Matters: RGI is not in default in filing any tax returns
or reports required to be filed as at the date of this
Agreement covering any federal, state, municipal or local
taxes or assessments in respect of its capital, income,
business or property, including without limitation withholding
taxes, and all such returns and reports have been duly filed
and are true, complete and correct and all taxes and
assessments shown on such reports or returns have been paid;
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(q) Title to Property and Assets: RGI has good and marketable
title to all its property and assets, real and personal,
including the property and assets set out in SCHEDULE A, free
and clear of all mortgages, pledges, liens, title retention
agreements, security agreements, encumbrances or charges of
any nature or kind whatsoever except as set out in SCHEDULE G,
and no person or company has any agreement, option, privilege,
license or right (whether by law, pre-emptive or contractual)
which obliges RGI to sell, transfer, assign, or in any other
way dispose of any such property or assets;
(r) Employment Agreements and Benefit Plans:
(i) RGI has no employment agreements, written or oral,
with its salaried employees, employee benefit plans,
pension plans, deferred profit sharing plans, bonus
plans or any other similar plan, scheme or
arrangement established for employees other than as
set out in SCHEDULE H;
(ii) RGI is not a party to a collective agreement with a
trade union or council of trade unions, the employees
of RGI are not members of a trade union or council of
trade unions which has been certified as bargaining
agent and there is no process of certification or
effort to organize a union currently in progress;
(iii) Other than with respect to Xxxxxx Xxxxxx and High
Ground Inc. to which this Section 3.1(r )(iii) does
not apply, each current and former employee and
officer of RGI and each current and former consultant
to RGI has executed and delivered a written agreement
containing proprietary information and intellectual
property assignment provisions for the benefit of
RGI, copies of which are attached as SCHEDULE C
(collectively, the "Proprietary Information and
Inventions Agreements"). No such current or former
employee, officer or consultant has excluded works or
inventions made prior to his or her employment or
consulting relationship with RGI from his or her
assignment of inventions pursuant to his or her
Proprietary Information and Inventions Agreement. RGI
does not believe it is or will be necessary to use
any inventions of any of its employees or consultants
(or persons it currently intends to hire) made prior
to their employment or consultancy with RGI.
(s) Litigation: neither the Vendors nor RGI are subject to any
judgment, award, order, writ, injunction, arbitration decision
or decree material adversely affecting the RGI Shares, the
Business Assets or the conduct of the Business; there is no
suit, action, litigation, enquiry, investigation, arbitration
proceeding or governmental proceeding, including appeals and
applications for review, in progress or pending or threatened
against or relating to such Vendors which affects RGI,
ownership of the RGI Shares, the Business or the Business
Assets or the ability of such Vendors or RGI to complete the
transactions contemplated by this Agreement, and there is not
presently outstanding against such Vendors or RGI any
judgment, decree, injunction, rule or order of any court or
governmental or regulatory authority and there are no
applications, complaints or proceedings pending or, to the
best of the Vendors' knowledge, threatened before any
governmental or regulatory authority relating to RGI, the
Business or the Business Assets which would have a material
adverse effect on RGI, the Business Assets or the conduct of
the Business, other than those disclosed in Schedule M;
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(t) Non-Arm's Length Agreements: there are no contracts,
agreements or arrangements to which RGI is a party with the
Vendors or with any person or corporation with which the
Vendors do not deal at arm's length, other than as disclosed
to PubCo in SCHEDULE L;
(u) Lease: RGI is not a party to any Lease;
(v) Insurance: RGI maintains such policies of insurance in such
amounts and against such risks as the Vendors believe to be
appropriate and adequate, all such policies of insurance are
in full force and effect and RGI is not in default, whether as
to the payment of premium or otherwise, under the terms of any
such policy as set out in SCHEDULE I hereto;
(w) Material Contracts: RGI is not a party to or bound by any
presently existing oral or written contract or commitment
which is material other than those contracts set out in
SCHEDULE B, SCHEDULE C, SCHEDULE D, SCHEDULE H and SCHEDULE I;
(x) Related Party Loans: RGI does not have any loans outstanding
to directors, former directors, officers, former officers,
shareholders or employees or to any person or corporation not
dealing with it at arm's length, other than those disclosed in
Schedule M;
(y) Intellectual Property: RGI owns or otherwise possesses
sufficient legal rights to all Company Intellectual Property
without any conflict with or infringement of the rights of
others. Except for the agreements with its own employees or
consultants described in Section 3.1(r)(iii) hereto, and
standard end-user license agreements, there are no outstanding
options, licenses or agreements of any kind relating to the
Company Intellectual Property, nor is RGI bound by or a party
to any options, licenses or agreements of any kind with
respect to the patents, trademarks, services marks, trade
names, copyrights trade secrets or other proprietary rights to
processes of any other person or entity. RGI has not received
any communications alleging, nor does RGI have any reason to
believe that it has violated or, by conducting its business as
proposed, would violate any of the patents, trademarks,
service marks, trade names, copyrights, trade secrets or other
proprietary rights or processes of any other person or entity,
and is not aware, based on reasonable investigation, of any
reasonable basis therefor or threat thereof;
(z) Investment Representations: The representations set forth on
Exhibit A hereto are incorporated by reference herein and are
true and correct for each Vendor;
(aa) Finder's Fees: no person, firm or corporation is entitled to
any finder's fee or other payment or compensation from the
Vendors or RGI in respect of the transactions contemplated by
this Agreement; and
(bb) From the date of the LOI to the Closing, the Vendors have not
permitted RGI and RGI has not without the Purchaser's consent
first had and received in writing:
(i) increased the compensation of any director, officer,
or employee;
(ii) borrowed any money;
(iii) paid back any shareholder loans;
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(iv) entered into any capital commitments whether by way
of lease, purchase, conditional sales agreement,
chattel mortgage or otherwise;
(v) guaranteed the indebtedness of any person, firm or
corporation;
(vi) released any liability of any debtor;
(vii) released any contract for the use of software,
telecommunication facilities or any other material
contract used in the conduct of its Business;
(viii) created any rights to purchase any of its securities
whether debt or equity;
(ix) entered into any arrangement with any other person,
firm or corporation to sell the assets or undertaking
of the business or the shares of the corporation; or
(x) entered into any transaction of any nature out of the
normal course of business.
SECTION 3.2 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Vendors that:
(a) the Purchaser is a corporation duly organized and existing
under the laws of the State of Nevada;
(b) the PubCo Shares are quoted for trading on the NASD OTC
Bulletin Board and the Purchaser is subject to the reporting
requirements of Section 15(d) under the Securities Exchange
Act of 1934;
(c) the Purchaser has good and sufficient power, authority and
right to enter into and deliver this Agreement and to perform
its obligations hereunder;
(d) this Agreement constitutes a valid and binding obligation of
the Purchaser enforceable against the Purchaser in accordance
with its terms subject, however, to limitations with respect
to enforcement imposed by law in connection with bankruptcy or
similar proceedings and to the extent that equitable remedies
such as specific performance and injunction are in the
discretion of the court from which they are sought;
(e) the Purchaser is not a party to, bound or affected by or
subject to any agreement, instrument, charter or by-law
provision, statute, regulation, order, judgment, decree or law
which would be violated, contravened or breached by, or under
which any default would occur as a result of, the execution
and delivery by it of this Agreement or the performance by it
of any of the terms of this Agreement; and
(f) there are no consents, approvals, orders or authorizations of
any persons or governmental authorities in the United States
of America or elsewhere (or registrations, declarations,
filings or recording with any such authorities) required to be
obtained by the Purchaser in connection with the completion of
any of the transactions contemplated by this Agreement.
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ARTICLE FOUR
PRE-CLOSING MATTERS
SECTION 4.1 ACTIONS TO SATISFY CLOSING CONDITIONS
Each of the parties agrees to sign all agreements, documents and
resolutions and to take all actions as are within its power or control, and to
use commercially reasonable efforts to cause other actions to be taken which are
not within its power or control, to complete the transactions provided for in
this Agreement and to ensure compliance with any of the conditions set forth in
Article Five which are for the benefit of any other parties and that all of its
representations and warranties contained herein are true and correct on Closing.
SECTION 4.2 CONDUCT PRIOR TO CLOSING
The Vendors and RGI covenant that they shall carry on the business,
maintain and protect its goodwill, service its customers and generally carry on
the business as if the Vendors were to remain prudent owners of the Business and
RGI shall use its best efforts to maintain and enhance the Business.
SECTION 4.3 NO OTHER NEGOTIATIONS
The Vendors and RGI agree that, until the transactions provided for in
this Agreement have been completed or this Agreement has been terminated, the
Vendors and RGI shall not, directly or indirectly, or through agents or brokers,
continue or enter into any discussions or negotiations with any other party
regarding the possible sale, transfer, assignment, merger or consolidation of
RGI, the RGI Shares, the Business or any part of it.
ARTICLE FIVE
CONDITIONS OF CLOSING
SECTION 5.1 PURCHASER'S CONDITIONS
The obligation of the Purchaser to complete the purchase of the RGI
Shares shall be subject to the satisfaction of or compliance with, at or before
the Closing Date, each of the following conditions precedent, each of which is
acknowledged to be inserted for the exclusive benefit of the Purchaser and may
be waived by the Purchaser in whole or in part by notice in writing to the
Vendors:
(a) Regulatory Approval: approval of all regulatory bodies having
jurisdiction in connection with the transaction shall have
been obtained;
(b) Due Diligence: the Purchaser being satisfied in its sole
discretion with its due diligence review of RGI, the Business,
and the Business Assets, including, without limitation, the
RGI Financial Statements, the obligations and liabilities of
RGI, the validity and terms of the Leases and Contracts and
the title of RGI to the Business Assets;
(c) Liabilities: RGI having no liabilities (absolute, contingent,
accrued or otherwise) at the time of Closing other than those
disclosed in RGI's Financial Statements, or as fully disclosed
in the Schedules hereto, except as incurred in the ordinary
course of business consistent with past practise from the date
of the LOI to the Closing Date in amounts not exceeding $5,000
in the aggregate;
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(d) Representations and Warranties: all of the representations and
warranties of the Vendors and RGI made in this Agreement shall
be true and correct as at the Closing Date with the same
effect as if made at and as of the Closing Date and the
Purchaser shall have received at the Closing Date certificates
of the Vendors and RGI confirming the truth and correctness of
such representations and warranties;
(e) Performance of Obligations: the Vendors shall have performed
or complied with, in all material respects, all obligations,
covenants and agreements in this Agreement to be performed or
complied with by them by the Closing Date; and
(f) Lender's Consents: RGI shall have received consents or no
action letters, in a form satisfactory to the Purchaser,
evidencing the approval of the Bank of the transactions
contemplated by this Agreement.
SECTION 5.2 VENDORS' CONDITIONS
The obligation of the Vendors to complete the transactions
provided for in this Agreement shall be subject to the satisfaction of or
compliance with, at or before the Closing Date, each of the following conditions
precedent, each of which is hereby acknowledged to be inserted for the exclusive
benefit of the Vendors and may be waived by the Vendors in whole or in part by
notice in writing to the Purchaser:
(a) Representations and Warranties: all of the representations and
warranties of the Purchaser made in or pursuant to this
Agreement shall be true and correct as at the Closing Date
with the same effect as if made at and as of the Closing Date,
and the Vendors shall have received a certificate from a
senior officer of the Purchaser confirming the truth and
correctness in all respects of such representations and
warranties as of the Closing Date; and
(b) Performance of Obligations: the Purchaser shall have performed
or complied with, in all material respects, all obligations,
covenants and agreements in this Agreement to be performed or
complied with by the Purchaser by the Closing Date.
ARTICLE SIX
INDEMNIFICATION
SECTION 6.1 MUTUAL INDEMNIFICATION FOR BREACHES OF WARRANTY, ETC.
The Vendors (other than Xxxxxx Xxxxx and Xxxxx Xxxxxx, to whom
this Section 6.1 does not apply) covenant and agree with the Purchaser, and the
Purchaser covenants and agrees with the Vendors (the Party so covenanting and
agreeing to indemnify the other Party being referred to in this section as the
"Indemnifying Party", and the Party so to be indemnified being referred to as
the "Indemnified Party") that the Indemnifying Party shall:
(a) be solely liable and responsible for any and all Claims which
the Indemnified Party or its directors, officers, servants,
agents and employees, together with its successors, assigns
administrators, executors, heirs and all other legal
representatives of the foregoing, may suffer, sustain, pay or
incur; and
(b) as a separate and independent covenant, indemnify and save the
Indemnified Party and its directors, officers, servants,
agents and employees, together with its successors, assigns,
administrators, executors, heirs and all other legal
13
representatives of the foregoing, harmless from any and all
Claims which may be brought against or suffered by such
Persons or which they may sustain, pay or incur, as a result
of, arising out of, attributable to or connected with any
non-fulfilment of any covenant or agreement on the part of the
Indemnifying Party under this Agreement or any misstatement or
inaccuracy of or other incorrectness in or breach of any
representation or warranty of the Indemnifying Party contained
in this Agreement or in any certificate or other document
furnished by the Indemnifying Party pursuant to this
Agreement.
SECTION 6.2 LIMITATION OF INDEMNITY
The obligations of liability and indemnification in Section 6.1 in
respect of such Claims and any claim for breach of representation and
warranty in this Agreement shall be subject to:
(i) the limitations mentioned in Section 9.3 respecting the
survival of the representations and warranties of the Parties;
(ii) the requirement that the Indemnifying Party shall, in respect
of any Claim made by any third person be afforded an
opportunity at its sole expense to resist and defend and
compromise the Claim;
(iii) subject to subsection ySection 6.2(v), the limitation that,
for Claims made in connection with any representation or
warranty, the Indemnifying Party shall not be required to pay
any such amount until the aggregate of such Claims exceed
US$5,000.00 and upon the aggregate of such Claims exceeding
US$1,200,000 the Indemnifying Party shall be required to pay
the entire amount owing in respect of all of such Claims and
not just the excess, provided that in no event shall the
aggregate of such claims exceed US$1,200,000.
(iv) the limitation that, no Party shall be indemnified if it has
not given notice to the Indemnifying Party within the
applicable survival period specified in Section 9.3 after the
Closing Date of the nature and extent of such Claim; and
(v) the limitation that, to the extent such Claims are caused by
the negligence of the Indemnified Party or to the extent that
the Indemnified Party is reimbursed by insurance proceeds, the
Indemnifying Party shall not be required to pay such amount.
ARTICLE SEVEN
CONFIDENTIALITY
SECTION 7.1 CONFIDENTIALITY
The Vendors hereby acknowledge and agree that:
(a) they shall not hereafter copy, reproduce, or use the Business
Assets other than the Tangible Assets as defined in Section
1.1(d)(i)(the "Tangible Assets"), or any documentation or
information relating thereto, or any portion thereof, without
the express written authorization of the Purchaser or solely
as necessary for the completion of the obligations of the
Vendors hereunder,
14
(b) all parts of the Business Assets other than the Tangible
Assets, and any information or documentation relating thereto,
will be considered by the Purchaser as confidential and of
such a nature to constitute "trade secrets", the proprietary
rights to and interest in said confidential information being
protected at law and in equity;
(c) that the Vendors will take all reasonable steps to ensure that
the Business Assets other than the Tangible Assets and all
portions and components thereof, and any information provided
regarding the Purchaser's business and financing plans are
held in confidence by the Vendors and that these items are not
disclosed or made available to any third party not authorized
by the Purchaser; and
(d) the Vendors shall not hereafter disclose any information
relating to this Agreement, the Business Assets other than the
Tangible Assets, the Purchaser's business plans and financing
plans, or any of their past dealings with the Business Assets
other than the Tangible Assets except with the prior written
consent of the Purchaser or as required by due process of law.
ARTICLE EIGHT
NON-SOLICITATION AND NON-COMPETITION
SECTION 8.1 DEFINITIONS
For the purposes of this Section 8, the following terms shall
have the following meanings;
(a) "Customer" means any Person who is a party to a service
contract, any Person who is or has been a customer of RGI or
the Purchaser at any time and any Person who has been directly
solicited by RGI to become a potential customer;
(b) "Person" includes an individual, body corporate, partnership,
joint venture, trust, unincorporated organization, or any
agency or instrumentality thereof or any entity recognized by
law;
(c) "Product" means the Risk Governance Software;
(d) "Related Person" means a Person who is deemed to be related to
another Person. The following Persons shall be deemed to be
related to each other:
(i) a body corporate and any Person who beneficially
owns, directly or indirectly, voting securities of
such body corporate or any affiliate thereof carrying
more than 20% of the voting rights attached to all
voting securities of the body corporate or affiliate
for the time being outstanding ("body corporate"
meaning any corporation, limited liability company or
other legal entity not referred to in the subclauses
listed below, and "affiliate" meaning any person or
entity controlled by or under common control with
another person or entity;
(ii) a partnership and any Person who is a partner
thereof;
(iii) a trust or estate and any Person who has a
substantial beneficial interest therein or as to
which such Person serves as a trustee, executor or in
a similar capacity;
15
(iv) persons who are spouses of one another or who are
co-habitating with one another, and
(v) a person and any relative of such Person or any
relative of the spouse of such Person, where such
relative has the same home as such Person; and
(e) "Vendors" shall mean all of the Shareholders of RGI as listed
in SCHEDULE J attached hereto except for Xxxxx Xxxxxx and
Xxxxxx Xxxxx.
SECTION 8.2 The Vendors covenant and agree that, at any time during any of the
periods set out in paragraph 8.4 the Vendors will not at any time nor allow a
Related Person, either individually or in partnership or jointly or in
connection with any Person or Persons including Related Persons or in any other
manner whatsoever, directly or indirectly, solicit the Customers.
SECTION 8.3 The Vendors covenant and agree that the Vendors will not nor permit
a Related Person at any time during any of the periods set out in paragraph 8.4,
either individually or in partnership, or jointly or in conjunction with any
Person or Persons, including, without limitation, any individual, firm,
association, syndicate, company, corporation, or together business enterprise,
as principal agent, shareholder, officer, or in any other manner whatsoever
carry on or be engaged in or be concerned with or interested in or advise, lend
money to, guarantee the debts or obligations of, or permit their names to be
used or employed by any Person or Persons, including, without limitation, any
individual, firm, association, syndicate, company, corporation, or other
business in competition with the Business, within any of the areas described in
paragraph 8.5.
SECTION 8.4 The period referred to in paragraph 8.3 is twenty-four (24) months
from the Closing Date.
SECTION 8.5 The area referred to in paragraph 8.3 is the European Union, North
America, and Asia.
SECTION 8.6 Each provision of this Agreement is declared to constitute a
separate and distinct covenant and to be severable from all other such separate
and distinct covenants. Without limiting the foregoing, each provision contained
in paragraphs 8.3, 8.4 and 8.5 is declared to constitute a separate and distinct
covenant in respect of each capacity and each activity specified in paragraph
8.3, each period specified in paragraph 8.4 and each geographical area specified
in paragraph 8.5 respectively, and to be severable from all other such separate
and distinct covenants, If any of the capacities, activities, periods or areas
specified in paragraphs 8.3, 8.4 and 8.5 respectively, are considered
unenforceable by a court of competent jurisdiction, such Court shall have
authority to limit such capacities, activities, periods, or areas to such
capacities, activities, periods, or areas as the Court finds proper in the
circumstances.
SECTION 8.7 If any covenant or provision in this Agreement is determined to be
void or unenforceable in whole or in part, it will not affect or impair the
enforceability or validity or any other covenants or provision of this
Agreement.
SECTION 8.8 The parties hereto each acknowledge that it would be difficult to
measure or calculate the damage to the Purchaser and/or RGI should they breach
any of the terms contained in this Agreement or breach any of their duties at
common law or in equity, and that such breach of this Agreement or of their
duties at common law or equity would result in irreparable harm to the Purchaser
and/or RGI and that monetary damages would, therefore, be an inadequate remedy
for any such breach. Accordingly, in the event of any such breach, in addition
to all other remedies available to the Purchaser and/or RGI at law or in equity,
the Purchaser and/or RGI shall be entitled as a matter of right to apply to a
Court of competent jurisdiction for such relief by way of restraining order,
injunction, decree or otherwise, as may be appropriate to restrain any such
breach or the continuation thereof without showing or proving actual damage, if
any, sustained by the Purchaser and/or RGI.
16
SECTION 8.9 The parties acknowledge that all restrictions in this Agreement are
necessary and fundamental to the protection of the business of RGI and are
reasonable and valid, and all defenses to its strict enforcement by RGI and/or
Purchaser are hereby waived by the Vendors.
ARTICLE NINE
GENERAL
SECTION 9.1 NOTICES
Any notice or other writing required or permitted to be given under
this Agreement shall be sufficiently given if delivered to the party to whom it
is given if delivered by prepaid courier to the party to whom it is given or if
transmitted by telecopier or other form of recorded communication, addressed to
that party:
(a) in the case of a notice to the Purchaser, as follows:
SECURAC CORP.
0000, 000 - 0xx Xxx. X.X.
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Xxxx Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Burnet, Xxxxxxxxx & Xxxxxx LLP
Barristers & Solicitors
0000, 000 - 0 Xxxxxx X.X.
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Xxxxx X. Xxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
(b) in the case of a notice to the Vendors, as follows:
RISK GOVERNANCE, INC.
000 Xxxx Xxxxxx
Xxxxxxxxxx, XX
00000
Attention: Xxxxxx Xxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
17
with a copy to:
Xxxx X. Xxxxxxx, Esq.
OlenderFeldman, LLP
0000 Xxxxxx Xxxxxx
Xxxxx, Xxx Xxxxxx 00000
(000) 000-0000 (fax)
or at such other address as the party to whom a notice is to be given shall have
last notified to the party giving it in the manner provided in this section. Any
notice delivered or transmitted by telecopier or other method of recorded
communication to the party to whom it is addressed shall be deemed to have been
given and received on the day it is delivered or transmitted, provided that if
such day is not a business day in such place then the notice shall be deemed to
have been given and received on the business day next following such day.
SECTION 9.2 COSTS
Whether or not the Closing occurs, the Vendors and the
Purchaser agree that all costs and expenses incurred in connection with this
Agreement and the transaction contemplated hereby shall be paid by the party
incurring such expenses.
SECTION 9.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES
All representations and warranties, covenants and agreements
on the part of each of the parties contained in this Agreement, except those
with respect to title to the RGI Shares, shall survive the Closing for a period
of one year from the Closing Date. The representations and warranties of each
Vendor relating to title matters of the RGI Shares shall continue in full force
and effect for the benefit of the Purchaser and be unlimited as to duration.
SECTION 9.4 FURTHER ASSURANCES
The parties shall with reasonable diligence do all acts and
things and provide all reasonable assurances as may be required to consummate
the transaction contemplated by this Agreement, and each party shall provide all
further documents or instruments required by the other parties as may be
reasonably necessary or desirable to effect the purpose of this Agreement and
carry out is provisions whether before or after the Closing.
SECTION 9.5 ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the
parties and supersedes all prior agreements and understandings, oral or written,
by and between any of the parties with respect to the subject matter of this
Agreement. No supplement, modification or waiver of this Agreement shall be
binding unless executed in writing by the party to be bound by it.
SECTION 9.6 ASSIGNMENT; AGREEMENT BINDING
The parties agree that their rights and obligations under this
Agreement may not be assigned without the written consent of the other party
hereto. This Agreement shall enure to the benefit of and be binding upon each of
the parties hereto and their respective heirs, legal representatives, successors
and permitted assigns.
18
SECTION 9.7 SEVERABILITY
The invalidity or enforceability of any provision of this
Agreement or any covenant contained herein shall not affect the validity or
enforceability of any other provisions or covenants hereof and any such invalid
provision or covenant shall be deemed to be severable.
SECTION 9.8 BUSINESS DAY
Whenever under the terms of this Agreement an event is to
occur on any day that is not a Business Day in the relevant place, the
occurrence of that event shall be deferred to the next Business Day in such
place.
SECTION 9.9 TIME
Time shall be of the essence of this Agreement.
SECTION 9.10 GOVERNING LAW; JURISDICTION; SERVICE OF PROCESS
This Agreement shall be construed in accordance with and governed by the law of
the State of New York (without reference to its rules as to conflicts of law).
Each party irrevocably agrees that any legal action, suit or proceeding against
either of them arising out of or in connection with this Agreement or the
transactions contemplated hereby or disputes relating thereto (whether for
breach of contract, tortious conduct or otherwise) shall be brought exclusively
in the United States District Court for the Southern District of New York or, if
such court does not have jurisdiction, the state courts of New York located in
Manhattan, and hereby irrevocably accepts and submits to the exclusive
jurisdiction of the aforesaid courts in personam, with respect to any such
action, suit or proceeding. Each of the parties hereto waives to the fullest
extent permitted by law claim that such action, suit or proceeding brought in
the venue specified in this Section is brought in an inconvenient forum or that
such venue is otherwise improper, and any right to trial by jury in any action,
suit or proceeding brought to enforce, defend or interpret any rights or
remedies under, or arising in connection with or relating to, this Agreement.
Each of the parties hereto irrevocably consents to the service of any and all
legal process, summonses, notices and other documents which may be served in any
action, suit or proceeding in the United States District Court for the Southern
District of New York or the state courts of New York located in Manhattan, which
service may be made by mailing a copy of such process by certified or registered
mail, postage prepaid, to the party to be served at its address as provided in
Section 9.1 hereof, with such service to be effective upon receipt.
19
SECTION 9.11 COUNTERPARTS
This Agreement may be executed by the parties in separate counterparts
each of which when so executed and delivered shall be an original, and all
counterparts shall together constitute one and the same instrument.
IN WITNESS WHEREOF the parties have duly executed this Agreement as of
the date first above written.
SECURAC CORP.
Per: /s/ Xxxxx X. Xxxxx
---------------------------
RISK GOVERNANCE, INC.
Per: /s/ Xxxxx Xxxxxx
---------------------------
/s/ Xxxxxx Xxx /s/ Xxxxx Xxxxxx
---------------------------------------- --------------------------------
Witness to the signature of Su Ahmad XXXXXX XXXXX
/s/ Xxxxxx Xxx /s/ Xxxxx Xxxxxx
---------------------------------------- --------------------------------
Witness to the signature of Xxxxx Xxxxx XXXXX XXXXX
INDEPENDENT TOOL COMPANY LTD. FOREST NOMINEES LTD.
Per: /s/ Xxxxx Xxxxxx Per: /s/ Xxxxx Xxxxxx
---------------------------------------- --------------------------------
/s/ Xxxxxx Xxx /s/ Xxxxx Xxxxxx
---------------------------------------- --------------------------------
Witness to the signature of Xxxxx Xxxxxx XXXXX XXXXXX
/s/ Xxxxxx Xxx /s/ Xxxxx Xxxxxx
---------------------------------------- --------------------------------
Witness to the signature of Xxxxxxx Xxx XXXXXXX XXX
20
/s/ Xxxxxx Xxx /s/ Xxxxx Xxxxxx
---------------------------------------- --------------------------------
Witness to the signature of Xxxx Xxxxxxxx XXXX XXXXXXXX
/s/ Xxxxxx Xxx /s/ Xxxxx Xxxxxx
---------------------------------------- --------------------------------
Witness to the signature of Xxxxx Xxxxxx XXXXX XXXXXX
/s/ Xxxxxx Xxx /s/ Xxxxx Xxxxxx
---------------------------------------- --------------------------------
Witness to the signature of Xxxxxxxx Xxxxxx XXXXXXXX XXXXXX
/s/ Xxxxxx Xxx /s/ Xxxxx Xxxxxx
---------------------------------------- --------------------------------
Witness to the signature of Xxxxxx Xxxxx XXXXXX XXXXX
/s/ Xxxxxx Xxx /s/ Xxxxx Xxxxxx
---------------------------------------- --------------------------------
Witness to the signature of Xxxx Xxxxxxxx XXXX XXXXXXXX
/s/ Xxxxxx Xxx /s/ Xxxxx Xxxxxx
---------------------------------------- --------------------------------
Witness to the signature of Xxxxxx Xxxxxxxx XXXXXX XXXXXXXX
XXXXX TRADING LIMITED
Per: /s/ Xxxxx Xxxxxx
--------------------------------
/s/ Xxxxxx Xxx /s/ Xxxxx Xxxxxx
---------------------------------------- --------------------------------
Witness to the signature of Xxxx Xxxxx XXXX XXXXX
/s/ Xxxxxx Xxx /s/ Xxxxx Xxxxxx
---------------------------------------- --------------------------------
Witness to the signature of Xxxxx Xxxxx XXXXX XXXXX
/s/ Xxxxxx Xxx /s/ Xxxxx Xxxxxx
---------------------------------------- --------------------------------
Witness to the signature of Xxx Bound XXX BOUND
21
/s/ Xxxxxx Xxx /s/ Xxxxx Xxxxxx
---------------------------------------- --------------------------------
Witness to the signature of Xxxxxx Xxxxxxx XXXXXX XXXXXXX
/s/ Xxxxxx Xxx /s/ Xxxxx Xxxxxx
---------------------------------------- --------------------------------
Witness to the signature of Xxxxxxx Xxxxxx XXXXXXX XXXXXX
/s/ Xxxxxx Xxx /s/ Xxxxx Xxxxxx
---------------------------------------- --------------------------------
Witness to the signature of Xxxx Egaru XXXX EGARU
22
EXHIBIT A
VENDOR INVESTMENT REPRESENTATIONS
Each Vendor makes the following representations to Purchaser in order
to, among other things, establish an exemption from, or the inapplicability of,
the registration requirements of the United States Securities Act of 1933 (the
"Securities Act") to the offer and sale of PubCo Shares to the Vendors pursuant
to the Share Purchase Agreement (the "Exchange").
1. Each Vendor represents and warrants to Purchaser that:
(a) it has not been provided with a prospectus or an offering
memorandum or any similar document in connection with the
Exchange;
(b) its decision to acquire the PubCo Shares in the Exchange has
not been based upon any verbal or written representations as
to fact or otherwise made by or on behalf of the Purchaser and
that the Vendor's decision is based entirely upon publicly
available information concerning Purchaser and its own
diligence;
(c) the PubCo Shares have not been registered under the Securities
Act of 1933, as amended (the "Securities Act"), with the
result that such securities are "restricted securities" within
the meaning of Regulation S and Rule 144 promulgated under the
Securities Act and may not be offered or sold within the
United States or to or for the account or benefit of a U.S.
Person (as defined in Rule 902(o) of Regulation S promulgated
under the Securities Act) except pursuant to registration
under the Securities Act or an exemption therefrom;
(d) it has been advised to consult its own legal advisors with
respect to any applicable resale restrictions and the Vendor
is solely responsible for compliance with applicable resale
restrictions;
(e) the Vendor understands that each certificate representing the
PubCo Shares acquired in the Exchange, and any securities
issued in exchange therefor, shall bear a legend reflecting
restrictions on resale except in compliance with applicable
securities laws and upon presentment of an opinion of counsel
reasonably satisfactory to Purchaser
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF
1933, AS AMENDED (THE "1933 ACT") AND MAY BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE
OF SUCH REGISTRATION ONLY (A) TO THE CORPORATION, (B)
OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 903
OR 904 OF REGULATION S UNDER THE 1933 ACT OR (C)
PURSUANT TO AN AVAILABLE EXEMPTION FROM SUCH
REGISTRATION REQUIREMENTS, PROVIDED IN SUCH LATTER CASE
THAT THE HOLDER UPON REQUEST PRIOR TO SUCH SALE
FURNISHES TO THE CORPORATION AN OPINION OF COUNSEL OF
RECOGNIZED STANDING TO THAT EFFECT REASONABLY
SATISFACTORY TO THE CORPORATION."
23
; and
(f) If Vendor is not a US Person (as defined in Rule 902(o) of
Regulation S promulgated under the Securities Act), Vendor (i)
is not a "distributor" of securities as such term is defined
in Regulation S nor a dealer in securities, and (ii)
acknowledges that it has not engaged in any hedging
transactions with regard to the PubCo Shares.
2. Each Vendor hereby represents, warrants and covenants to and
with Purchaser that:
(a) it is purchasing or acquiring the PubCo Shares in the Exchange
as principal and for its own account, and not for the benefit
of any other person or company except for a disclosed
principal;
(b) if required by applicable securities legislation, policy or
order of a securities regulatory authority or other regulatory
authority, Vendor will execute, deliver, file and otherwise
assist Purchaser in filing such reports and other documents
with respect to the PubCo Shares as may be reasonably
required;
(c) If the address of Vendor set forth on the signature page to
the Share Purchase Agreement is located outside of the United
States, Vendor is neither a U.S. Person (as defined in Rule
902(o) of Regulation S promulgated under the Securities Act)
nor is Vendor purchasing the PubCo Shares for the account of a
U.S. Person or for resale in the United States and the
undersigned confirms that the PubCo Shares have not been
offered to the undersigned in the United States;
(d) the purchase of the PubCo Shares in the Exchange does not
contravene any of the applicable securities legislation in the
jurisdiction in which the Vendor is resident and do not
trigger (i) any obligation to prepare and file a prospectus or
similar document, or any other report with respect to such
purchase, and (ii) any registration or other obligation on the
part of Purchaser;
(e) Vendor has had access to Purchaser's public filings with the
Securities and Exchange Commission, as well as recent business
and financial information of Securac;
(f) Vendor is capable of assessing the proposed investment as a
result of the undersigned's financial or investment
experience, and is able to bear the economic loss of its
investment. Vendor recognizes that its investment in Purchaser
by virtue of the Exchange involves a high degree of risk in
that: (i) Purchaser has incurred substantial losses since
inception and requires substantial funds to continue its plan
of operations and maintain its status as a public company;
(ii) an investment in Purchaser is highly speculative and only
investors who can afford the loss of their entire investment
should consider investing in Purchaser; (iii) Vendor may not
be able to liquidate Vendor's investment in Purchaser; and
(iv) transferability of the PubCo Shares is and will be
extremely limited;
(g) Vendor has read and understands the additional Risk Factors
set forth on Exhibit A-2 hereto;
(h) If the address of Vendor set forth on Schedule J to the Share
Purchase Agreement is located within the United States, Vendor
is an "accredited investor" within the meaning of Regulation D
promulgated under the Securities Act, as such term is defined
on Exhibit A-1 hereto; and
(i) the address of the Vendor listed on Schedule J of the Share
Purchase Agreement is such person's true and correct domicile.
EXHIBIT A-1
Accredited Investor Definition
The term "accredited investor" means:
(1) A bank as defined in Section 3(a)(2) of the Securities Act, or
a savings and loan association or other institution as defined
in Section 3(a)(5)(A) of the Securities Act, whether acting in
its individual or fiduciary capacity; a broker or dealer
registered pursuant to Section 15 of the Securities Exchange
Act of 1934; an insurance company as defined in Section 2(13)
of the Securities Act; an investment company registered under
the Investment Company Act of 1940 or a business development
company as defined in Section 2(a)(48) of that Act; a Small
Business Investment Company licensed by the United States
Small Business Administration under Section 301(c) or (d) of
the Small Business Investment Act of 1958; a plan established
and maintained by a state, its political subdivisions, or any
agency or instrumentality of a state or its political
subdivisions, for the benefit of its employees, if such plan
has total assets in excess of $5,000,000; an employee benefit
plan within the meaning of the Employee Retirement Income
Preferred Stock Act of 1974 ("ERISA"), if the investment
decision is made by a plan fiduciary, as defined in Section
3(21) of ERISA, which is either a bank, savings and loan
association, insurance company, or registered investment
advisor, or if the employee benefit plan has total assets in
excess of $5,000,000 or, is a self-directed plan, with the
investment decisions made solely by persons that are
accredited investors;
(2) A private business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940;
(3) An organization described in Section 501(c)(3) of the Internal
Revenue Code, corporation, Massachusetts or similar business
trust, or partnership, not formed for the specific purpose of
acquiring the Shares, with total assets in excess of
$5,000,000;
(4) A director or executive officer of PubCo;
(5) A natural person whose individual net worth, or joint net
worth with that person's spouse, at the time of such person's
purchase of the Shares exceeds $1,000,000;
(6) A natural person who had an individual income in excess of
$200,000 in each of the two most recent years or joint income
with that person's spouse in excess of $300,000 in each of
those years and which has a reasonable expectation of reaching
the same income level in the current year;
(7) A trust with total assets in excess of $5,000,000, not formed
for the specific purpose of acquiring the Shares, whose
purchase is directed by a sophisticated person as described in
Rule 506(b)(2)(ii) of Regulation D; or
(8) An entity in which all of the equity owners are "accredited
investors" under one or more of the foregoing categories.
EXHIBIT A-2
RISK FACTORS
Except as otherwise noted, as used herein the term "Company" refers to Securac
Corp. and its subsidiaries.
START-UP COMPANY WITHOUT OPERATIONS.
The Company is an early stage company and has not yet generated revenue from its
software products and related services. Consequently, the Company will not have
an operating history upon which a meaningful evaluation of the Company and its
prospects can be based. The Company and its prospects are subject to all of the
risks inherent in the establishment of a new business enterprise, and the
likelihood of the success of the Company must be considered in light of the
problems, expenses, difficulties, complications and delays frequently
encountered in connection with the establishment of a new business.
LOSSES EXPECTED
In connection with establishing its business, the Company will incur costs
intended to provide future, rather than current, benefits, including costs in
connection with developing its technology and marketing its technology. As a
result, the Company expects to incur losses for an indeterminate period. Securac
Inc. has incurred losses since inception in 2002 and the Company expects to
incur a loss in 2004. There can be no assurance that the Company will achieve
profitability in the near-term or at all.
DEPENDENCE ON SENIOR MANAGEMENT
The Company is highly dependent upon its senior management team. The loss of the
services of any member of senior management may have a material adverse effect
on the Company. The Company does not presently maintain "key man" life insurance
with respect to members of senior management.
NEED TO RECRUIT ADDITIONAL PERSONNEL
The Company will require additional personnel in order to implement its business
plan. There can be no assurance, however, that the Company will succeed in
recruiting the requisite qualified personnel in a timely manner or at all.
DEPENDENCE ON ADDITIONAL CAPITAL FOR FUTURE GROWTH
The Company expects that in order to implement its business plan it will require
significant additional equity and/or debt financing. There can be no assurance
that any financing will be available on terms satisfactory to the Company or at
all. The issuance of additional equity would dilute the ownership interest of
the holders of the PubCo Shares.
COMPETITION
There are many companies that offer or are planning to offer some or all of the
products and services we plan to offer. There can be no assurance that the
Company's business will not be adversely affected by competition from existing
competitors or new market entrants that may be significantly larger and have
greater financial and marketing resources.
LACK OF MARKET ACCEPTANCE AND LONG SALES LEAD TIME
The Company's software applications have not yet generated significant
acceptance among potential customers and will require a relatively long period
of time to educate potential customers as to the anticipated benefits as well as
time, complexities and costs of implementation. While the Company has begun to
establish strategic relationships to assist in this process, the Company will
need to overcome these obstacles prior to achieving meaningful revenue.
UNKNOWN LIABILITIES FROM HISTORICAL OPERATIONS
The Company's management has recently been designated and was not involved in
the Company's historical operations prior to the recent acquisition of Securac
Inc. Despite representations from prior management to the contrary and due
diligence, there may be obligations and liabilities of the Company related to
the historical operations of which current management is not aware. These
obligations and liabilities, if any, could adversely affect the Company's
business and the market for its stock.
[SCHEDULES HAVE BEEN INTENTIONALLY OMITTED]
[FORM OF POWER OF ATTORNEY EXECUTED BY EACH SHAREHOLDER PARTY TO
THE SHARE PURCHASE AGREEMENT]
POWER OF ATTORNEY
By this Power of Attorney made on the day of 200_, I [name] of [address] being
(1) the holder of __ shares in the capital of RGLH Limited ("RGLHL") or, if Step
One of the Proposals (both expressions as defined below) set out below has not
completed as at the date of this Power of Attorney, the holder of shares in the
capital of Risk Governance Limited ("RGL") (in either case the "RGL SHARES") and
(2) the holder of __ shares (the "RGI SHARES") in the capital of Risk Governance
Inc. ("RGI ") HEREBY APPOINT any person who is at the relevant time a director
of either RGLHL or RGL or any of Xxxxx Xxxxxx, Xxxx Xxxxxxxx or Xxxxx Xxxxx to
be my true and lawful attorney (the "ATTORNEY") to agree, execute and deliver
any deeds, contracts, undertakings, approvals and assurances in law on my behalf
as my Attorney shall in his sole unfettered discretion think fit and to sign in
the Attorney's name or in my name and on my behalf all such agreements and
documents (whether by way of deed or not) as he shall think fit containing such
covenants, representations, warranties or other provisions as he shall in his
absolute and unfettered discretion decide in connection with:
(a) the share for share exchange whereby each of the shareholders in RGL
shall swap shares in RGL for shares in RGLHL ("STEP ONE"); and/or
(b) the proposed sale of the entire issued share capital of RGL or RGLHL
to Securac Holdings Inc. (or any other person (whether a natural
person or not) so nominated by Securac Holdings Inc. to effect the
said purchase) (the "BUYER"); and/or
(c) the proposed sale of the entire issued share capital of RGI to the
Buyer
(together the "PROPOSALS").
In particular, but without prejudice to the generality of the foregoing, I
hereby authorise the Attorney in my name:
(a) to approve and sign on my behalf an acquisition agreement (the "RGL
AGREEMENT") to be made between myself and the other members of RGL
or RGLHL (as the case may be) (1) and the Buyer (2) and any other
person who may be a party to the RGL Agreement and to give
warranties, indemnities, covenants and undertakings in connection
therewith including, without limitation, a tax indemnity;
(b) to approve and sign on my behalf a disclosure letter relating to the
RGL Agreement and any other deed (including, without limitation, a
tax deed of indemnity) or document that may in the unfettered
discretion of the Attorney be necessary, desirable or ancillary to
the RGL Agreement;
(c) to exercise all voting rights attaching to my RGL Shares and to
receive notice of any meeting of shareholders of RGL or RGLHL (as
the case may be), approve and sign any consent to such a meeting
being held on short notice and vote at any such meeting and/or sign
any written resolution of RGL and/or RGLHL;
(d) to approve and sign on my behalf an acquisition agreement (the "RGI
AGREEMENT") to be made between myself and the other members of RGI
(1) and the Buyer (2) and any other person who may be a party to the
RGI Agreement and to give warranties, indemnities, covenants and
undertakings in connection therewith;
(e) to approve and sign on my behalf a disclosure letter relating to the
RGI Agreement and any other deed or document that may in the
unfettered discretion of the Attorney be necessary, desirable or
ancillary to the RGI Agreement;
(f) to exercise all voting rights attaching to my RGI Shares and to
receive notice of any meeting of shareholders of RGI, approve and
sign any consent to such a meeting being held on short notice and
vote at any such meeting and/or sign any written resolution of RGI;
(g) to take any other steps and sign any other agreement and/or document
in connection with any of the Proposals as my Attorney may, in his
absolute discretion, consider necessary or desirable;
in each such case as the Attorney may in his absolute discretion think fit.
I hereby undertake to ratify and confirm everything which the Attorney shall do
or purport to do by virtue of this Power of Attorney and fully to indemnify the
Attorney against all losses, liabilities, costs, claims, actions, demands, or
expenses which he may incur or which may be made against him as a result of or
in connection with anything lawfully done by virtue of this Power of Attorney.
I hereby declare that my Attorney shall have the power to appoint any substitute
and to delegate to that substitute all or any powers hereby conferred other than
this power of substitution as if he had been originally appointed by this Power
of Attorney.
I hereby declare that this Power of Attorney shall be irrevocable until [31
January 2005].
I hereby authorise the delivery of a copy of this Power of Attorney to any
person or persons who may reasonably require such a copy.
This Power of Attorney is governed by and shall be construed in accordance with
English law.
IN WITNESS whereof this Power of Attorney has been duly executed as a Deed on
the date set out above.
EXECUTED as a DEED by )
___ )......................
in the presence of: )
Witness' Signature: ....................................................
Witness' Name: ....................................................
Witness' Address: ....................................................
....................................................
Witness' Occupation: ....................................................
