SECURITIES PURCHASE AGREEMENT AND PLAN OF REORGANIZATION
AND
PLAN OF REORGANIZATION
THIS
SECURITIES PURCHASE AGREEMENT AND PLAN OF REORGANIZATION (the “Agreement”)
is
entered into effective as of January 9, 2007 by and among Advanced Plant
Pharmaceuticals, Inc. a Delaware corporation (the “Company”),
World
Health Energy, Inc., a Delaware corporation (the “Target”),
and
the stockholders of Target (the “Selling
Stockholders”)
listed
on Exhibit A attached hereto.
R
E C I T A L S
A. The
Company has authorized capital stock consisting of 880,000,000 shares of common
stock (“Common
Stock”),
$0.0007 par value, of which 798,157,996 shares are issued and outstanding and
10,000,000 shares of preferred stock, par value $0.0007 (“Preferred
Stock”),
of
which 5,000,000 shares have been designated as Series A Preferred Stock, par
value $0.0007 (the “Series
A Preferred”)
of
which 5,000,000 shares are issued and outstanding.
B. Target
has authorized capital stock consisting of 1,000 shares of common stock, no
par
value, of which 100 shares (the “Target
Shares”)
are
issued and outstanding and held by the Selling Stockholders. Target is a
renewable energy company focused on developing and producing alternative fuels
in biodiesel production plans (the “Business”)
C. The
Selling Stockholders wish to sell, and the Company wishes to purchase, all
of
the Target Shares on the Closing Date (as defined below), in exchange for
55,000,000 shares of the Company’s Common Stock (the “Shares”)
as
more particularly set forth below.
A
G R E E M E N T
It
is
agreed as follows:
1. Securities
Purchase and Reorganization
1.1 Agreement
to Exchange Securities.
Subject
to the terms and upon the conditions set forth herein, each Selling Stockholder
agrees to sell, assign, transfer and deliver to the Company, and the Company
agrees to purchase from each Selling Stockholder, the Target Shares owned by
the
respective Selling Stockholder as set forth on Exhibit A attached hereto, in
exchange for the transfer, by the Company to each Selling Stockholder a pro
rata
share of the Shares, as follows: (i) 5,000,000 Shares transferred to the Selling
Stockholders at Closing (the “Initial
Shares”)
and
(ii) 50,000,000 Shares (the “Remaining
Shares”)
to be
issued to the Selling Stockholders within 3 days of the filing of an amendment
to the Company’s Articles of Incorporation with the Delaware Secretary of State
(the “Effective
Date”)
to
either (A) increase the Company’s authorized Common Stock to at least
930,000,000 (a “Capitalization
Increase”)
or (B)
to effectuate a reverse split of the Company’s Common Stock (the “Reverse
Split”).
If
the Company effects a Reverse Split prior to any Capitalization Increase, the
Remaining Shares due Selling Stockholders shall be proportionately reduced
to
give effect to the Reverse Split. For example, if the Company effects a 1-for-10
Reverse Split, the Selling Stockholders would receive 5,000,000 Remaining
Shares. The Company is under no obligation to take any action to effect
either a Capitalization Increase or a Reverse Split. The number of Shares that
each Selling Stockholder is entitled to receive as determined hereunder is
set
forth opposite each Selling Stockholder’s name on Exhibit
A.
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1.2. Instruments
of Transfer.
(a) Target
Shares.
Each
Selling Stockholder shall deliver to the Company original certificates
evidencing the Target Shares along with executed stock powers, in form and
substance satisfactory to the Company, for purposes of assigning and
transferring all of their right, title and interest in and to the Target Shares.
From time to time after the Closing Date, and without further consideration,
the
Selling Stockholders will execute and deliver such other instruments of transfer
and take such other actions as the Company may reasonably request in order
to
facilitate the transfer to the Company of the securities intended to be
transferred hereunder.
(b) The
Shares.
The
Company shall deliver to the Selling Stockholders on (i) the Closing Date
original certificates evidencing the Initial Shares and (ii) after the Effective
Date, the Remaining Shares, in form and substance satisfactory to the Selling
Stockholders, in order to effectively vest in the Selling Stockholders all
right, title and interest in and to the Shares. From time to time after the
Closing Date, and without further consideration, the Company will execute and
deliver such other instruments and take such other actions as the Selling
Stockholders may reasonably request in order to facilitate the issuance to
them
of the Shares.
1.3 Closing.
The
closing (“Closing”)
of the
exchange of the Target Shares and the Initial Shares shall take place at the
offices of Spectrum Law Group, LLP, 0000 Xxxx Xxxxxx, Xxxxx 000, Xxxxxx, XX
00000 at 10:00 a.m., Pacific Daylight Time, on the third (3rd)
Business Day following the satisfaction (or, to the extent permitted by Law,
waiver by the party or parties entitled to the benefits thereof) of the
conditions set forth in Sections 5.1 and 5.2 (other than those conditions that
by their nature are to be satisfied at the Closing, but subject to the
fulfillment or waiver of those conditions), or at such other place, time and
date as shall be agreed in writing by the Company and the Target. The date
on
which the Closing occurs is referred to in this Agreement as the “Closing
Date.”
1.4 Tax
Free Reorganization.
The
parties intend that the transaction under this Agreement qualify as a tax-free
reorganization under Section 368(a)(1)(B) of the Internal Revenue Code of 1986,
as amended.
2. Representations,
Warranties and Covenants of the Selling Stockholders.
Each
Selling Stockholder severally represents, warrants and covenants to and with
the
Company with respect to himself, as follows:
2.1. Title
to Shares.
Each
Selling Stockholder is the sole record and beneficial owner of the Target Shares
held by such Selling Stockholder, free and clear of all liens, encumbrances,
equities, assessments and claims, and that there are no warrants, options,
subscriptions, calls, or other similar rights of any kind for the issuance
or
purchase of any of the Target Shares or other securities of the Target held
by
such Selling Stockholder. Upon delivery of
the
Target Shares by each Selling Stockholder and payment of the Company Shares
in
full by the Company pursuant to this Agreement, each Selling Stockholder will
transfer to the Company valid legal title to the Target Shares held by such
Selling Stockholder, free and clear of all restrictions, liens, encumbrances,
equities, assessments and claims (other than any restrictions, liens,
encumbrances, equities, assessments or claims as may arise from or as a result
of (i) restrictions under applicable Federal and state securities laws, and
(ii)
any act or omission of the Company).
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2.2. Authority
Relative to this Agreement.
Each
Selling Stockholder has all requisite individual or corporate power and
authority, as the case may be, to enter into and to carry out all of the terms
of this Agreement and all other documents executed and delivered in connection
herewith (collectively, the “Documents”).
All
individual or corporate action, as the case may be, on the part of each Selling
Stockholder necessary for the authorization, execution, delivery and performance
of the Documents by such Selling Stockholder has been taken and no further
authorization on the part of such Selling Stockholder is required to consummate
the transactions provided for in the Documents. When executed and delivered
by
each Selling Stockholder, the Documents shall constitute the valid and legally
binding obligation of such Selling Stockholder, enforceable in accordance with
their respective terms, except as limited by applicable bankruptcy, insolvency
reorganization and moratorium laws and other laws affecting enforcement of
creditor’s rights generally and by general principles of equity.
2.3. Securities
Matters.
(a) Each
Selling Stockholder understands that (i) the Shares have not been registered
or
qualified under the Securities Act of 1933, as amended (the “Securities
Act”)
or any
state securities or “blue sky” laws, on the ground that the sale provided for in
this Agreement and the issuance of the securities hereunder is exempt from
registration and qualification under Sections 4(2) and 18 of the Securities
Act,
and (ii) the Company’s reliance on such exemptions is predicated on the each
Selling Stockholder’s representations set forth herein.
(b) Each
Selling Stockholder acknowledges that an investment in the Company involves
an
extremely
high degree of risk,
lack of
liquidity and substantial restrictions on transferability and that such Selling
Stockholder may lose his, her or its entire investment in the
Shares.
(c) The
Company has made available to each Selling Stockholder or the advisors of any
such Selling Stockholder the opportunity to obtain information to evaluate
the
merits and risks of the investment in the Shares, and each Selling Stockholder
has received all information requested from the Company. Each Selling
Stockholder has had an opportunity to ask questions and receive answers from
the
Company regarding the terms and conditions of the offering of the Shares and
the
business, properties, plans, prospects, and financial condition of the Company
and to obtain additional information as such Selling Stockholder has deemed
appropriate for purposes of investing in the Shares pursuant to this
Agreement.
(d) Each
Selling Stockholder, personally or through advisors, has expertise in evaluating
and investing in private placement transactions of securities of companies
in a
similar stage of development to the Company and has sufficient knowledge and
experience in
financial and business matters to assess the relative merits and risks of an
investment in the Company. In connection with the purchase of the Shares, each
Selling Stockholder has relied solely upon independent investigations made
by
such Selling Stockholder and has consulted such Selling Stockholder’s own
investment advisors, counsel and accountants. Each Selling Stockholder has
adequate means of providing for current needs and personal contingencies, has
no
need for liquidity, and can sustain a complete loss of the investment in the
Shares.
3
(e) The
Shares which the Company is to issue hereunder will be acquired for each Selling
Stockholder’s own account, for investment purposes, not as a nominee or agent,
and not with a view to or for sale in connection with any distribution of the
Shares in violation of applicable securities laws.
(f) Each
Selling Stockholder understands that no federal or state agency has passed
upon
the Shares or made any finding or determination as to the fairness of the
investment in the Shares.
(g) Each
Selling Stockholder is an “Accredited Investor” as defined in Rule 501(a) of
Regulation D promulgated under the Securities Act. Each Selling Stockholder
acknowledges that the Shares may be purchased only by persons who come within
the definition of an “Accredited Investor” as that term is defined in Rule
501(a) of Regulation D promulgated under the Securities Act.
(h) No
Selling Stockholder has received any general solicitation or general advertising
concerning the Shares, nor is any Selling Stockholder aware of any such
solicitation or advertising.
(i) Each
Selling Stockholder understands that the Shares will be characterized as
“restricted” securities under federal securities laws inasmuch as they are being
acquired in a transaction not involving a public offering and that under such
laws and applicable regulations such securities may be resold without
registration under the Securities Act only in certain limited circumstances.
Each Selling Stockholder agrees that such Selling Stockholder will not sell
all
or any portion of the Shares except pursuant to registration under the
Securities Act or pursuant to an available exemption from registration under
the
Securities Act. Each Selling Stockholder understands and acknowledges that
all
certificates representing the Shares shall bear the following legend or a legend
of similar import and that the Company shall refuse to transfer the Shares
except in accordance with such restrictions:
“THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER CERTAIN STATE
SECURITIES LAWS. NO SALE OR TRANSFER OF THESE SHARES MAY BE MADE IN THE ABSENCE
OF (1) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR (2) AN OPINION
OF
COUNSEL THAT REGISTRATION UNDER THE ACT OR UNDER APPLICABLE STATE SECURITIES
LAWS IS NOT
REQUIRED
IN CONNECTION WITH SUCH PROPOSED SALE OR TRANSFER.”
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2.4. Full
Disclosure.
No
representations or warranties made by any Selling Stockholder in this Agreement,
in any of the exhibits or schedules attached to this Agreement, or in the
schedules attached hereto, or in any other statements furnished or to be
furnished by the such Selling Stockholder to the Company pursuant to this
Agreement contains any untrue statement of a material fact or omits to state
a
material fact necessary to make any statement contained herein or therein not
misleading.
Copies
of all documents heretofore or hereafter delivered or made available to the
Company by any Selling Stockholder pursuant hereto were or will be complete
and
accurate records of such documents.
3. Representations,
Warranties and Covenants of the Target and the Selling
Stockholders.
The
Target and each Selling Stockholder jointly and severally represents, warrants
and covenants to the Company as follows (exceptions to the following
representations and warranties shall be set forth on Schedules 3.1 through
3.22,
which collectively are referred to as the “Disclosure
Schedule”):
3.1. Authority
Relative to this Agreement.
The
Target has all requisite corporate power and authority to enter into and to
carry out all of the terms of this Agreement and all other documents executed
and delivered in connection herewith (collectively, the “Documents”).
All
corporate action on the part of the Target necessary for the authorization,
execution, delivery and performance of the Documents by the Target has been
taken and no further authorization on the part of the Target is required to
consummate the transactions provided for in the Documents. When executed and
delivered by the Target, the Documents shall constitute the valid and legally
binding obligation of the Target, enforceable in accordance with their
respective terms, except as limited by applicable bankruptcy, insolvency
reorganization and moratorium laws and other laws affecting enforcement of
creditor’s rights generally and by general principles of equity.
3.2. Capitalization
of the Target.
The
authorized capital stock of the Target consists of 1,000 shares of common stock,
no par value (the “Target
Common Stock”),
of
which 100 shares are issued and outstanding. All issued and outstanding shares
of Target Common Stock are duly authorized, validly issued, fully paid and
nonassessable, and are held of record by the Selling Stockholders. There are
no
outstanding options, warrants, rights, subscriptions, calls, contracts or other
agreements to issue, purchase or acquire, or securities convertible into, shares
of capital stock or other securities of any kind representing an ownership
interest in the Target and no Selling Stockholder is a party to any proxy,
voting trust or other agreements with respect to the voting of the Target Common
Stock.
3.3. Subsidiaries.
Target
has, and as of the Closing Date will have, no subsidiaries.
3.4. Organization
and Standing.
The
Target is a corporation duly organized, validly existing and in good standing
under the laws of its state or jurisdiction of Delaware and is duly qualified
or
registered to do business as a foreign corporation and is in good standing
in
each jurisdiction in which the character of the business conducted by it or
the
location of the properties
owned or leased by it makes such qualification necessary and where the failure
to be so qualified would have a material adverse effect on the Target.
The Target
has the full corporate power and authority to own or lease and operate its
properties and to carry on its business as now being conducted.
5
3.5. No
Default or Legal Restrictions.
The
Target is not in violation of its articles of incorporation, bylaws or other
governing documents. The Target is not in default under, or in breach of any
term or provision of, any contract, agreement, lease, license, commitment,
mortgage, indenture, bond, note, instrument or other obligation set forth on
Schedule
3.22
(each a
“Contract”)
where
such default or breach would have a material adverse effect on the Target.
The
execution and delivery of this Agreement by the Target and the Selling
Stockholders and the consummation of the transactions contemplated hereby do
not
and will not violate the articles of incorporation, bylaws or other governing
documents of the Target, and, except where
any
such conflict, breach, default or violation would not have a material adverse
effect on the Target, the execution and delivery of this Agreement by the Target
and the Selling Stockholders and the consummation of the transactions
contemplated hereby do not and will not (a) conflict with or result in any
breach of (or create in any party the right to accelerate, terminate, modify
or
cancel) any terms, conditions or provisions of, or constitute a default under,
or require the consent of any party to, or result in the imposition of any
lien
or encumbrance upon any asset or property of the Target pursuant to the terms
and conditions of, any Contract to which the Target or any Selling Stockholder
is now a party or by which any of them or any of their respective properties,
assets or rights may be bound or affected, (b) violate any provision of any
law,
rule or regulation of any administrative agency or governmental body, or any
order, writ, injunction or decree of any court, administrative agency,
governmental body or arbitrator, or (c) require any filing with, or license,
permit, consent or other governmental approval of, any federal, state or local
governmental body or governmental agency (including, without limitation, the
Securities and Exchange Commission, other than the filing of a From D and
similar state securities laws filings.)
3.6. Compliance
with Law.
The
Target is not in violation of any federal, state, local or foreign law,
ordinance, regulation, judgment, decree, injunction or order of any court or
other governmental entity. The Target has procured and are currently in
possession of all licenses, permits and other governmental authorizations
required by federal, state or local laws for the operation of the business
of
the Target in each jurisdiction in which the Target is currently conducting
business, where the failure
to possess such
licenses, permits and authorizations would have a material adverse effect on
the
Target, and there is no basis for revoking any such license, permit or other
authorization.
Except
as otherwise disclosed on Schedule
3.6,
such
licenses are in full force and effect and there is no basis for any fines,
penalties, or revocation of such licenses.
3.7. Financial
Statements.
(a) The
Target is currently having an accounting firm authorized to practice before
the
Securities and Exchange Commission conduct an audit of the balance sheet of
the
Target as of December 31, 2006, and the related statements of operations,
shareholders’ equity and cash flows for the period from inception through
December 31, 2006 (the “Target
Audited Financial Statements”),
and
such audit shall be completed in sufficient time to have the Target
Financial Statements to be filed as an exhibit to the amendment of the Current
Report on Form 8-K described in Section 6.4 hereof. The Target Audited Financial
Statements will be true and accurate, in accordance with the books and records
of Target. Except as disclosed therein, the Target Financial Statements
(i) will be in accordance with the books and records of the Target and will
be prepared in conformity with generally accepted accounting principles
(“GAAP”)
consistently applied for all periods, and (ii) will fairly present the
financial position of the Target as of the respective dates thereof, and the
results of operations, and changes in shareholders’ equity and changes in cash
flow for the periods then ended, all in accordance with GAAP consistently
applied for all periods.
6
(b) Except
as
set forth on the Target Audited Financial Statements, the Target has no debt,
liability or obligations of any nature, whether accrued, absolute, contingent,
or otherwise, whether due or to become due and whether or not the amount hereof
is readily ascertainable, that will not be reflected as a liability in the
Target Audited Financial Statements or except for liabilities incurred by the
Target in the ordinary course of business, consistent with past practices which
are not otherwise prohibited by, or in violation of, or which will not result
in
a breach of, the representations, warranties, and covenants of the Target
contained in this Agreement. There will be no material loss contingencies (as
such term is used in Statement of Financial Accounting Standards No. 5
(“FAS
No. 5”)
issued
by the Financial Accounting Standards Board (the “FASB”)
which
will not be adequately provided for in the Target Audited Financial Statements
as required by FAS No. 5.
3.8. Absence
of Undisclosed Liabilities.
The
Target does not have any material liabilities, obligations or claims of any
kind
whatsoever which are required to be set forth in financial statements prepared
in accordance with GAAP, whether secured or unsecured, accrued or unaccrued,
fixed or contingent, matured or unmatured, direct or indirect, contingent or
otherwise and whether due or to become due (referred to herein individually
as a
“Liability”
and
collectively as “Liabilities”),
other
than (a) Liabilities that are reserved for or disclosed in the Target Audited
Financial Statements, (b) Liabilities that are set forth on Schedule
3.8,
(c)
Liabilities incurred by the Target in the ordinary course of business after
the
date of the Target Audited Financial Statements (none of which results from,
arises out of, relates to, is in the nature of, or was caused by any breach
of
contract, breach of warranty, tort, infringement or violation of law), or (d)
Liabilities for Contracts (other than any express executory obligations that
might arise due to any default or other failure of performance by the Target
prior to the Closing Date).
3.9. Absence
of Material Adverse Changes.
Since
the date of the Target Audited Financial Statements, there
has
not been any (a) material adverse change in the business, operations,
properties, condition (financial or otherwise) of the Target, (b) damage,
destruction or loss, whether covered by insurance or not, materially and
adversely affecting the business, properties or condition (financial or
otherwise) of the Target, or (c) change by the Target in accounting methods
or
principles used for financial reporting purposes, except as required by a change
in generally accepted accounting principles and concurred with by the Target’s
independent certified public accountants.
3.10. Real
Property.
7
(a) Schedule
3.10
contains
a list of all real property owned by or leased to the Target. Neither the Target
nor any Selling Stockholder has received any notification that there is any
violation of any law, ordinance or regulation with respect to such real property
that would result in a material fine or penalty or the abatement of which would
require a material capital expenditure.
(b) The
Target has good and marketable title to all real property indicated on
Schedule
3.10
as owned
by the Target, subject to (i) easements, servitudes and rights-of-way of record
or in actual or apparent use, (ii) any state of facts that a visual inspection
might reveal, (iii) rights of the public in any portion of the premises that
may
fall in any public street, way or alley, (iv) zoning laws, building laws and
building restrictions of record, (v) liens for current
taxes not yet due and payable or being contested in good faith by appropriate
proceedings, (vi) liens imposed by law incurred in the ordinary course of
business for obligations not yet due to carriers, warehousemen, laborers,
materialmen and the like, (vii) liens or imperfections of title that do not
materially detract or interfere with the present use or value of such real
property, and (viii) mortgages, liens, encumbrances, claims or restrictions,
if
any, that do not materially detract from or interfere with the present use
or
value of such real property.
(c) There
are
no pending or threatened condemnation proceedings relating to any real property
owned by or leased to the Target, or other matters affecting materially or
adversely the current use, occupancy, or value of any such real
property.
(d) There
are
no leases, subleases, licenses, material concessions, or other material
agreements, written or oral granting to any party or parties the right of use
or
occupancy of any portion of any real property owned by the Target.
(e) There
are
no outstanding options or rights of first refusal to purchase any of the real
property owned by the Target, or any portion thereof or interest
therein.
(f) The
leases relating to the real property leased by the Target or any of the
Subsidiaries are valid and in full force and there does not exist any default
thereunder that materially detracts from or interferes with the present use
or
value of such real property.
3.11. Tangible
Personal Property.
(a) The
Target has good and marketable title to all tangible personal property it
purports to own as of the date of the Target Audited Financial Statements
(except for personal property sold or otherwise disposed of since the date
of
the Target Audited Financial Statements in the ordinary course of business),
free and clear of all mortgages, liens, encumbrances, claims or restrictions
other than (i) liens for current taxes not due and payable or being contested
in
good faith by appropriate proceedings, (ii) liens imposed by law and incurred
in
the ordinary course of business for obligations not yet due to carriers,
warehousemen, laborers, materialmen and the like, and (iii) mortgages, liens,
encumbrances, claims or restrictions, if any, that do not materially detract
from or interfere with the present use or value of such personal
property.
8
(b) All
leases relating to personal property are valid and in full force and there
does
not exist any default thereunder where such default would materially detract
from or interfere with the present use or value of such personal
property.
3.12. Intellectual
Property Rights.
Schedule
3.12
contains
a list of all patents, trademarks, trade names, corporate names, service marks,
computer software, customer lists, processes, know-how and trade secrets
(collectively, the “Intellectual
Property”)
used
in or necessary for the conduct of the business of the Target or any of the
Subsidiaries as currently conducted. The Target owns, or is licensed to use,
all
of the Intellectual Property.
No
claim has been asserted or threatened by any person with respect to the use
of
such Intellectual Property or challenging or questioning the validity or
effectiveness of any such license or agreement with respect thereto, and the
use
of such Intellectual Property by the Target does not infringe on the rights
of
any other person.
3.13. Taxes.
(a) The
Target has filed all material returns, declarations, reports, claims for refund,
or information returns or statements relating to any Federal, State, local,
or
foreign income, gross receipts, license, payroll, employment, excise, severance,
stamp, occupation, premium, windfall profits, environmental, custom duties,
capital stock, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on minimum, estimated,
or other tax of any kind whatsoever, including any interest, penalty or addition
thereto whether disputed or not (individually, a “Tax”
and,
collectively, “Taxes”),
and
further including any schedule or attachment thereto, and any amendment thereof,
that the Target and the Subsidiaries were required to file under any Federal,
State, local, or foreign laws (individually, a “Tax
Return”
and,
collectively, “Tax
Returns”).
All
such Tax Returns were correct and complete in all material respects. All Taxes
owed by the Target have been paid when due or adequate provision has been made
therefore in the applicable financial statements. There are no security
interests or liens on any of the assets or the stock or other securities of
the
Target that arose in connection with any failure (or alleged failure) to pay
any
Tax.
(b) The
Target has withheld and paid all Taxes required by law to have been withheld
and
paid in connection with amounts paid or owing to any employee, commissioned
agent, creditor, stockholder, or other third party.
(c) There
is
no dispute or claim concerning any Tax liability of, or attributable to, the
Target (including, without limitation, any dispute or claim with respect to
any
jurisdiction in which the Target do not currently file Tax Returns) either
(i)
claimed or raised by any authority in writing, or (ii) as to which the Target
or
any Selling Stockholder has knowledge.
(d) The
Target has not waived or extended any statute of limitations in respect of
any
assessment or collection of Taxes or any alleged, proposed or actual deficiency
in Taxes or agreed to any extension of time with respect to the filing of any
Tax Return.
(e) The
Target has not filed a consent under Section 341(f) of the Internal Revenue
Code
(the “Code”).
9
(f) The
Target has not made any payments, or is obligated to make payments, and is
not a
party to any agreement that under certain circumstances could obligate it to
make any payments that will not be deductible under Section 280G of the
Code.
(g) The
Target has no liability for the Taxes of any person or entity other than the
Target (i) under Section 1.1502-6 of the Treasury Regulations (or any similar
provision of State, local or foreign law), (ii) as a transferee or successor,
(iii) by contract, or (iv) otherwise.
3.14. Litigation.
Other
than as set forth on Schedule
3.14,
there
is no legal, administrative, arbitration or other proceeding, suit, claim or
action of any nature or investigation, review or audit of any kind pending
or
threatened against or involving the Target or its assets or
properties.
3.15. Employee
Benefit Plans.
(a) The
Target has complied in all material respects with all applicable laws relating
to the employment of labor, including, without limitation, the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”),
and
those relating to wage, hours, collective bargaining, unemployment insurance,
workers’ compensation, equal employment opportunity and the payment of
withholding taxes, including income and social security taxes, and has withheld
(and paid over
to
the appropriate authorities) all amounts required by law or agreement to be
held
from the wages or salaries of its employees.
(b) With
respect to each employee welfare benefit plan of the Target or any of the
Subsidiaries, as defined in Section 3(1) of ERISA (a “Welfare
Plan”),
and
any deferred benefit plan of the Target, as defined in Section 3(2) of ERISA
(a
“Pension
Plan”),
there
are no actions, suits or investigations or claim pending or to the best of
Seller’s knowledge, threatened with respect to the assets thereof, other than
routine claims for benefits.
(c) The
Target has made no contributions to or currently has any obligation to
contribute to (or any other liability, including any potential liability) with
respect to any Welfare or Pension Plan under which any employee was or may
be
entitled to any benefit that is a “Multiemployer Plan” as defined in Section
4001 of ERISA or any “Multiemployer Plan” within the meaning of Section 3(37) of
ERISA. In addition, there are no outstanding or authorized stock appreciation,
phantom stock, profit participation or similar rights with respect to the
Target.
3.16. Environmental
and Safety Laws.
(a) The
Target has complied with all Environmental Requirements (as defined below)
and
all health and safety laws, and no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand or notice has been filed or
commenced against the Target alleging any failure to so comply, except in each
case where the failure to comply would not have a material adverse effect on
the
Target. The Target has obtained and been in compliance with all of the terms
and
conditions of all permits, licenses and other authorizations that
are
required under, and has complied with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules and
timetables that are contained in, all Environmental Requirements and health
and
safety laws, except in each case where the failure to comply would not have
a
material adverse effect on the Target.
10
(b) The
Target has no liability for, and have not handled or disposed of, any Hazardous
Substance (as defined below), arranged for the disposal of any Hazardous
Substance, exposed any employee or other individual to any Hazardous Substance,
or owned or operated any property or facility in any manner that could form
the
basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand against the Target giving
rise
to any liability for damage to any site, location or body of water (surface
or
subsurface), for any illness of or personal injury to any employee or other
individual, or for any reason under any Environmental Requirement or health
and
safety law,
except where any such liability would not have a material adverse effect on
the
Company and the Subsidiaries, taken as a whole.
(c) None
of
the following exists at any real property or facility owned or operated by
the
Target: (i) underground storage tanks, (ii) asbestos-containing materials in
any
form or condition, (iii) materials or equipment containing polychlorinated
biphenyls, or (iv) landfills, surface impoundments or disposal
areas.
(d) “Environmental
Requirements”
means
all applicable statutes, regulations, rules, ordinances, codes, licenses,
permits, orders, approvals, plans, authorizations, concessions, franchises
and
similar items, or all governmental agencies, departments, commissions, boards,
bureaus or instrumentalities of the United States, states or political
subdivisions thereof and all applicable judicial, administrative and regulatory
decrees, judgments, and orders that are adopted and in effect as of the Closing
and that relate to the protection of human health or the environment, including,
without limitation, all requirements pertaining to reporting, licensing,
permitting, investigation and remediation of emissions, discharges, releases
or
threatened releases of Hazardous Substances, chemical substances, pollutants,
contaminants or hazardous or toxic substances, materials or wastes whether
solid, liquid or gaseous in nature, into the air, surface water, groundwater
or
land, or relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of chemical substances, materials
or
wastes, whether solid, liquid or gaseous in nature.
(e) The
term
“Hazardous
Substances”
shall
include without limitation: (i) those substances included within the definition
of “Hazardous Substances,” “Hazardous Materials,” “Toxic Substances” or “Solid
Waste” in CERCLA (42 U.S.C. sections 9601 et seq.), RCRA (42 U.S.C. sections
6901 et seq.), the Hazardous Materials Transportation Action (49 U.S.C. Sections
1801 et seq.) and the TSCA (15 U.S.C. sections 2601 et seq.) and the regulations
promulgated thereunder; (ii) those substances listed in the United States
Department of Transportation Table of Hazardous Materials (49 CFR 172.101 and
amendments thereto); and (iii) such other substances, materials and wastes
that,
prior to or as of the Closing, are classified as hazardous or toxic under
federal, state or local laws or regulations and that are regulated as such
under
such laws.
11
3.17. Accounts
Receivable.
All
accounts receivable that are reflected on the Target Audited Financial
Statements or that have arisen since the date of the Target Audited Financial
Statements (except such accounts receivable as have been collected since the
Target Audited Financial Statements) in excess of reserves for doubtful accounts
are valid and enforceable claims and arise out of bona fide transactions in
the
ordinary course of business in conformity with the applicable purchase orders,
agreements and specifications. Such accounts receivable are subject to no valid
defenses or offsets,
except such discounts as are customarily offered to customers in the ordinary
course of business and routine customer complaints or warranty demands that
are
not material in nature.
3.18. Inventory.
All
inventory of the Target, whether reflected on the Target Audited Financial
Statements or otherwise, consists of a quality and quantity usable and salable
in the ordinary course of business. The value of all items of obsolete inventory
and of inventory of below standard quality has been written down to realizable
market value, and the value at which such inventory is carried reflects the
Target’s normal inventory valuation policy of stating its inventory at the lower
of cost or market value, in each case in accordance with generally accepted
accounting principles.
3.19. Brokers
or Finders.
The
Target and the Selling Stockholders have engaged no broker, agent, finder or
investment advisor in connection with the transactions contemplated by this
Agreement, and no broker, agent or finder is entitled to any brokerage or
finder’s fee or other commission in respect of this Agreement or the
transactions contemplated hereby.
3.20. Employees.
(a) No
executive, key employee or group of employees has any plans to terminate
employment with the Target.
(b) The
Target is not a party to or bound by any collective bargaining agreement. The
Target has not experienced any strikes, grievances, claims of unfair labor
practices or other collective bargaining disputes since the organization of
the
Target.
(c) Except
as
set forth on Schedule
3.20,
the
Target is not a party to, and/or is bound by, any employment contract with
any
of its employees.
3.21. Insurance.
The
Target is insured under, or are the owners and beneficiaries under, as
appropriate, the policies listed in Schedule
3.21,
copies
of which policies of insurance have been provided to the Company.
3.22. Contracts
and Commitments; No Default.
(a) Except
as
set forth in Schedule
3.22,
the
Target:
(i) has
no
written or oral contract, commitment, agreement or arrangement with any person
which (A) requires payments individually in excess of Fifteen Thousand
Dollars ($15,000) annually or in excess of Fifty Thousand Dollars ($50,000)
over
its term
(including without limitation periods covered by any option to extend or renew
by either party) and (B) is not terminable on thirty (30) days’ or less
notice without cost or other Liability;
(ii) does
not
pay any person or entity cash remuneration at the annual rate (including without
limitation guaranteed bonuses) of more than Fifty Thousand ($50,000) for
services rendered;
(iii) is
not
restricted by agreement from carrying on its businesses or any part thereof
anywhere in the world or from competing in any line of business with any person
or entity;
(iv) is
not
subject to any obligation or requirement to provide funds to or make any
investment (in the form of a loan, capital contribution or otherwise) in any
person or entity;
(v) is
not
party to any agreement, contract, commitment or loan to which any of its
directors, officers or shareholders or any Affiliate (or former Affiliate)
thereof is a party;
(vi) is
not
subject to any outstanding sales or purchase contracts, commitments or proposals
which is anticipated to result in any loss upon completion or performance
thereof;
(vii) is
not
party to any purchase or sale contract or agreement that calls for aggregate
purchases or sales in excess over the course of such contract or agreement
of
Fifty Thousand Dollars ($50,000) or which continues for a period of more than
twelve months (including without limitation periods covered by any option to
renew or extend by either party) which is not terminable on sixty (60) days’ or
less notice without cost or other Liability at or any time after the Closing;
and
(viii) has
no
distributorship, dealer, manufacturer’s representative, franchise or similar
sales contract relating to the payment of a commission.
(b) True
and
complete copies (or summaries, in the case of oral items) of all items disclosed
pursuant to this Section
3.22
have
been made available to the Company for review. Except as set forth in
Schedule
3.22,
all
such items are valid and enforceable by and against the Target in accordance
with their respective terms, the Target is not in breach, violation or default,
however defined, in the performance of any of its obligations thereunder, and
no
facts and circumstances exist which, whether with the giving of due notice,
lapse of time, or both, would constitute such a breach, violation or default
thereunder or thereof; and to the best knowledge of the Target, no other parties
thereto are in breach, violation or default, however defined, thereunder or
thereof, and no facts or circumstances exist which, whether with the giving
of
due notice, lapse of time, or both, would constitute such a breach, violation
or
default thereunder or thereof.
12
3.23. Full
Disclosure.
No
representations or warranties made by the Target and the Selling Stockholders
in
this Agreement, in any of the exhibits or schedules attached to this Agreement,
or in the schedules attached hereto, or in any other statements furnished or
to
be furnished by the Target and the Selling Stockholders to the Company pursuant
to this Agreement contains any untrue statement of a material fact or omits
to
state a material fact necessary to make any statement contained herein or
therein not misleading. Copies of all documents heretofore or hereafter
delivered or made available to the Company by the Target and the Selling
Stockholders pursuant hereto were or will be complete and accurate records
of
such documents.
4. Representations,
Warranties and Covenants of the Company.
Except
as set forth in any SEC Report (as defined in Section 4.7), the Company
represents, warrants and covenants to Target and each of the Selling
Stockholders as follows.
4.1. Organization
and Good Standing.
The
Company is a corporation duly organized, validly existing, and in good standing
under the laws of the State of Delaware and has full corporate power and
authority to enter into and perform its obligations under this Agreement.
4.2. Capitalization.
The
authorized capital stock of the Company on the date hereof consists of
880,000,000 shares of Common Stock, of which 798,157,996 shares
are issued and outstanding and 10,000,000 shares of Preferred Stock, of which
5,000,000 shares have been designated as Series A Preferred, of which 5,000,000
shares are issued and outstanding. All issued and outstanding shares of Common
Stock immediately prior to the Closing are duly authorized, validly issued,
fully paid and nonassessable. Pursuant to the Company’s 2007 Stock Incentive
Plan and an additional registration statement filed with the Securities and
Exchange Commission on Form S-8 on January 4, 2007, under the Securities Act
of
1933, as amended (the “Act”), there are collectively 70,000,000 shares of common
stock which may be issued pursuant to a resolution of the Board of Directors
authorizing such issuance for the purpose of the compensation of Directors,
Officers and outside consultants of the Company. Except for the items set forth
under this Section 4.2 or otherwise set forth in Schedule
4.2,
there
are no outstanding options, warrants, rights, subscriptions, calls, contracts
or
other agreements to issue, purchase or acquire, or securities convertible into,
shares of capital stock or other securities of any kind representing an
ownership interest in the Company.
4.3. Authority
Relative to this Agreement.
The
Company has all requisite corporate power and authority, to enter into and
to
carry out all of the terms of the Documents. All corporate action on the part
of
the Company necessary for the authorization, execution, delivery and performance
of the Documents by the Company has been taken and no further authorization
on
the part of the Company is required to consummate the transactions provided
for
in the Documents, including, without limitation, the issuance of the Shares.
When executed and delivered by the Company, the Documents shall constitute
the
valid and legally binding obligation of the Company, enforceable in accordance
with their respective terms, except as limited by applicable bankruptcy,
insolvency reorganization and moratorium laws and other laws affecting
enforcement of creditor’s rights generally and by general principles of
equity.
4.4. Issance
of Shares.
The
Shares have been duly authorized and, upon issuance in accordance with the
terms
hereof, shall be (i) validly issued, fully paid and non assessable
and (ii) free from all taxes, liens and charges with respect thereof. The
issuance by the Company of the Shares is exempt from registration under the
1933
Act.
13
4.5. No
Default or Legal Restrictions.
The
Company is not in violation of its articles of incorporation, bylaws or other
governing documents. The Company is not in default under, or in breach of any
term or provision of, any contract, agreement, lease, license, commitment,
mortgage, indenture, bond, note, instrument or other obligation where such
default or breach would have a material adverse effect on the Company, taken
as
a whole. The execution and delivery of the Documents by the Company and the
consummation of the transactions contemplated hereby and thereby do not and
will
not violate the articles of incorporation, bylaws or other governing documents
of the Company, and, except where any such conflict, breach, default or
violation would not have a material adverse effect on the Company, taken as
a
whole, the execution and delivery of this and thereby by the Company and the
consummation of the transactions contemplated hereby do not and will not (a)
conflict with or result in any breach of (or create in any party the right
to
accelerate, terminate, modify or cancel) any terms, conditions or provisions
of,
or constitute a default under, or require the consent of any party to, or result
in the imposition of any lien or encumbrance upon any asset or property of
the
Company pursuant to the terms and conditions of, any contract to which the
Company is now a party or by which any of them or any of their respective
properties, assets or rights may be bound or affected, (b) violate any provision
of any law, rule or regulation of any administrative agency or governmental
body, or any order, writ, injunction or decree of any court, administrative
agency, governmental body or arbitrator, or (c) require any filing with, or
license, permit, consent or other governmental approval of, any federal, state
or local governmental body or governmental agency (including, without
limitation, the Securities and Exchange Commission, other than the filing of
a
Form D and similar state securities laws filings).
4.6. Compliance
with Law.
The
Company is not in violation of any federal, state, local or foreign law,
ordinance, regulation, judgment, decree, injunction or order of any court or
other governmental entity. The Company has procured and are currently in
possession of all licenses, permits and other governmental authorizations
required by federal, state or local laws for the operation of the business
of
the Company in each jurisdiction in which the Company is currently conducting
business, where the failure to possess such licenses, permits and authorizations
would have a material adverse effect on the Company, taken as a whole, and
there
is no basis for revoking any such license, permit or other authorization. Such
licenses are in full force and effect and there is no basis for any fines,
penalties, or revocation of such licenses.
4.7. SEC
Reports.
The
Company has delivered to Target and the Selling Stockholders its Annual Reports
on Form 10-KSB for the year ending December 31, 2005; its Quarterly Reports
on
Form 10-QSB for the periods ending March 31, 2006, June 30, 2006, and September
30, 2006 and any amendments thereto (collectively, the “SEC
Reports”).
The
information in the SEC Reports is true and correct in all material respects
and
does not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in light of
the
circumstances under which they were made, not misleading.
14
4.8. Absence
of Material Adverse Changes.
Since
the date of the latest SEC Report, there has not been any (a) material adverse
change in the business, operations, properties, condition (financial or
otherwise) of the Company, (b) damage, destruction or loss, whether covered
by
insurance or not, materially and adversely affecting the business, properties
or
condition (financial or otherwise) of the Company, taken as a whole, or (c)
change by the Company in accounting methods or principles used for financial
reporting purposes, except as required by a change in generally accepted
accounting principles and concurred with by the Company’s independent certified
public accountants.
4.9. Litigation.
There
is no legal, administrative, arbitration or other proceeding, suit, claim or
action of any nature or investigation, review or audit of any kind pending
or
threatened against or involving the Company or its assets or
properties.
4.10. Contracts
and Commitments; No Default.
(a) Except
as
set forth in Schedule
4.10,
the
Company:
(i) has
no
written or oral contract, commitment, agreement or arrangement with any person
which (A) requires payments individually in excess of Fifteen Thousand
Dollars ($15,000) annually or in excess of Fifty Thousand Dollars ($50,000)
over
its term (including without limitation periods covered by any option to extend
or renew by either party) and (B) is not terminable on thirty (30) days’ or
less notice without cost or other liability;
(ii) does
not
pay any person or entity cash remuneration at the annual rate (including without
limitation guaranteed bonuses) of more than Fifty Thousand ($50,000) for
services rendered;
(iii) is
not
restricted by agreement from carrying on its businesses or any part thereof
anywhere in the world or from competing in any line of business with any person
or entity;
(iv) is
not
subject to any obligation or requirement to provide funds to or make any
investment (in the form of a loan, capital contribution or otherwise) in any
person or entity;
(v) is
not
party to any agreement, contract, commitment or loan to which any of its
directors, officers or shareholders or any Affiliate (or former Affiliate)
thereof is a party;
(vi) is
not
subject to any outstanding sales or purchase contracts, commitments or proposals
which is anticipated to result in any loss upon completion or performance
thereof;
(vii) is
not
party to any purchase or sale contract or agreement that calls for aggregate
purchases or sales in excess over the course of such contract or agreement
of
Fifty Thousand Dollars ($50,000) or which continues for a period of more than
twelve months (including
without limitation periods covered by any option to renew or extend by either
party) which is not terminable on sixty (60) days’ or less notice without cost
or other Liability at or any time after the Closing; and
15
(viii) has
no
distributorship, dealer, manufacturer’s representative, franchise or similar
sales contract relating to the payment of a commission.
(b) True
and
complete copies (or summaries, in the case of oral items) of all items disclosed
pursuant to this Section
4.10
have
been made available to the Target and the Selling Stockholders for review.
Except as set forth in Schedule
4.10,
all
such items are valid and enforceable by and against the Company in accordance
with their respective terms, the Company is not in breach, violation or default,
however defined, in the performance of any of its obligations thereunder, and
no
facts and circumstances exist which, whether with the giving of due notice,
lapse of time, or both, would constitute such a breach, violation or default
thereunder or thereof; and to the best knowledge of the Company, no other
parties thereto are in breach, violation or default, however defined, thereunder
or thereof, and no facts or circumstances exist which, whether with the giving
of due notice, lapse of time, or both, would constitute such a breach, violation
or default thereunder or thereof.
4.11 Brokers
or Finders.
Except
as set forth on Schedule
4.11,
the
Company has not dealt with any broker or finder in connection with the
transactions contemplated hereby. The Company has not incurred, nor shall it
incur, directly or indirectly, any liability for any brokerage or finders’ fees,
agent commissions or any similar charges in connection with this Agreement
or
any transaction contemplated hereby.
4.12
Title.
The
Company has good and marketable title to all real property and good title to
all
personal property owned by them which is material to the business of the
Company, free and clear of all liens, encumbrances and defects except such
as do
not materially affect the value of such property and do not interfere with
the
use made and proposed to be made of such property by the Company. Any real
property and facilities held under lease by the Company are held by it under
valid, subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made of
such
property and buildings by the Company.
4.13 Insurance.
The
Company is insured by insurers of recognized financial responsibility against
such losses and risks and in such amounts as management of the Company believes
to be prudent and customary in the businesses in which the Company is engaged.
The Company has not been refused any insurance coverage sought or applied for
and the Company has no reason to believe that it will not be able to renew
its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not materially and adversely affect the condition,
financial or otherwise, or the earnings, business or operations of the Company.
4.14 Regulatory
Permits.
The
Company possesses all material certificates, authorizations and permits issued
by the appropriate federal, state or foreign regulatory authorities necessary
to
conduct their respective businesses, and the Company has not received
any notice of proceedings relating to the revocation or modification of any
such
certificate, authorization or permit.
16
4.15 Internal
Accounting Controls.
The
Company maintains a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management's general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with management's general
specific or authorization and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
4.16 Full
Disclosure.
No
representations or warranties made by the Company in this Agreement, in any
of
the exhibits or schedules attached to this Agreement, or in the schedules
attached hereto, or in any other statements furnished or to be furnished by
the
Company to the Target and the Selling Stockholders pursuant to this Agreement
contains any untrue statement of a material fact or omits to state a material
fact necessary to make any statement contained herein or therein not misleading.
Copies of all documents heretofore or hereafter delivered or made available
to
the Target and the Selling Stockholders pursuant hereto were or will be complete
and accurate records of such documents.
5. Conditions
to Closing; Deliveries. All
obligations of the parties under this Agreement are subject to the accuracy
and
truthfulness of all representations of the other parties, and the fulfillment
prior to the Closing, of all conditions precedent and to performance of all
convenants and agreements and completion of all deliveries contemplated herein,
unless specifically waived in writing by the party entitled to performance
or to
demand fulfillment of the covenant or delivery of the documents.
5.1 Company’s
Deliveries at Closing.
At the
Closing, the following documents shall be delivered (or caused to be delivered)
by the Company to the Target and each of the Selling Stockholders:
(a) Certificates
representing such Selling Stockholder’s pro-rata share of the Initial
Shares;
(b) A
certificate of an officer of the Company, in a form and substance reasonably
acceptable to the Target, dated as of the Closing Date, certifying that (i)
all
representations and warranties of the Company made herein are true and correct
as of the Closing Date; and (ii) the Company has performed and complied in
all
material respects with all agreements, covenants, obligations and conditions
required by this Agreement to be performed or complied with by the Company
on or
prior to the Closing;
(c) Certified
resolutions of the Board of Directors of the Company authorizing the
consummation of the transactions contemplated by this Agreement, including,
without limitation, resolutions authorizing the issuance of the
Shares;
17
(d) A
Form D
pursuant to Regulation D promulgated under the Securities Act, the filing of
which will be effected within fifteen (15) days of Closing.
(e) A
form of
Amendment (as defined in Section 6.1);
(f) Any
notices of sales required to be filed with the applicable federal and state
agencies, which will be filed within the applicable periods therefor;
(g) A
certificate of good standing of the Company from the State of Delaware as of
the
most recent practicable date; and
(h) Such
other documents and instruments as shall be reasonably necessary to effect
the
transactions contemplated hereby.
5.2. Selling
Stockholders’ and Target’s Deliveries at Closing.
At the
Closing, the Selling Stockholders shall deliver or cause to be delivered to
the
Company all of the following:
(a) Original
certificates representing the Target Shares to be exchanged pursuant to this
Agreement;
(b) Stock
assignments separate from certificate in the form and substance satisfactory
to
the Company and duly executed by each of the Selling Stockholders regarding
the
Target Shares;
(c) Original
counterparts to an Assignment of Intellectual Property agreement among Target,
Xxxxx Xxxx and Xxxxx Miedzygorski and the Company assigning all of the
intellectual property set forth in Schedule 3.12 or otherwise held by Target
or
either of the Selling Stockholders in substantially the form attached hereto
as
Exhibit
B
(the
“IP
Assignment”)
(d) A
certificate of an officer of the Target, in a form and substance reasonably
acceptable to the Company, dated as of the Closing Date, certifying that (i)
all
representations and warranties of the Target made herein are true and correct
as
of the Closing Date; and (ii) the Target has performed and complied in all
material respects with all agreements, covenants, obligations and conditions
required by this Agreement to be performed or complied with by the Target on
or
prior to the Closing.
(e) A
certificate of the Selling Stockholders, in a form and substance reasonably
acceptable to the Company, dated as of the Closing Date, certifying that (i)
all
representations and warranties of the Selling Stockholders made herein are
true
and correct as of the Closing Date; and (ii) the Selling Stockholders have
performed and complied in all material respects with all agreements, covenants,
obligations and conditions required by this Agreement to be performed or
complied with by the Selling Stockholders on or prior to the
Closing.
(f) Certified
resolutions of the Board of Directors and the Stockholders of Target authorizing
the consummation of the transactions contemplated by this
Agreement;
18
(g) A
certificate of good standing of Target from the State of Delaware as of the
most
recent practicable date; and
(h) Such
other documents and instruments as shall be reasonably necessary to effect
the
transactions contemplated hereby.
6. Covenants.
6.1. Amendment
to Articles of Incorporation.
As soon
as is reasonably practicable following the Closing, the Company shall take
such
action as is necessary to obtain the Company’s stockholders’ approval of an
amendment (the “Amendment”)
to the
Articles of Incorporation in the form attached hereto as Exhibit C changing
the
name of the Company to “World Health Energy, Inc.” The Company shall cause an
information statement on Schedule 14C (an “Information
Statement”)
with
respect to the Amendment to be filed with the Securities and Exchange Commission
no later than February 5, 2007. One business day after expiration of the twenty
calendar day period provided by Rule 14c-2(b) promulgated under the Securities
Exchange Act occurs, the Company shall file the Amendment with the Secretary
of
State of Delaware.
6.2. Form
8-K.
The
Company shall prepare a Current Report on Form 8-K regarding terms of the
transaction contemplated by the Documents and the change in control contemplated
herein and cause such Current Report to be filed with the Securities and
Exchange Commission no later than four (4) business days following the Closing
Date.
6.3. Filings;
Consents; Removal of Objections.
Subject
to the terms and conditions herein provided, the parties hereto will use their
best efforts to take or cause to be taken all actions and do or cause to be
done
all things necessary, proper or advisable under applicable laws to consummate
and make effective, as soon as reasonably practicable, the transactions
contemplated hereby, including without limitation obtaining all consents of
any
person or entity, whether private or governmental, required in connection with
the consummation of the transactions contemplated herein. In furtherance, and
not in limitation of the foregoing, it is the intent of the parties to
consummate the transactions contemplated herein at the earliest practicable
time, and they respectively agree to exert their best efforts to that end,
including without limitation: (i) the removal or satisfaction, if possible,
of any objections to the validity or legality of the transactions contemplated
herein; and (ii) the satisfaction of the conditions to consummation of the
transactions contemplated hereby.
6.4. Further
Assurances; Cooperation; Notification.
(a) Each
party hereto will, at and after the Closing, execute and deliver such
instruments and take such other actions as the other party or parties, as the
case may be, may reasonably require in order to carry out the intent of this
Agreement. Without limiting the generality of the foregoing, at any time after
the Closing, at the request of the Company and without further consideration,
the Target and the Selling Stockholders will execute and deliver such
instruments of sale, transfer, conveyance, assignment and confirmation and
take
such action as the Company may reasonably deem necessary or desirable in order
to more effectively transfer,
convey and assign to the Company, and to confirm the Company’s title to, the
Target Shares.
19
(b) At
all
times from the date hereof until the Closing, each party will promptly notify
the other in writing of the occurrence of any event which it reasonably believes
will or may result in a failure by such party to satisfy the conditions and
covenants specified in Articles 5 and 6 hereof.
6.5. Public
Announcements.
On or
after the Closing Date, the Company and the Target shall issue a press release
(the “Press
Release”)
in a
form and substance acceptable to both parties disclosing the execution of this
Agreement. Other than the Press Release, none of the parties hereto will make
any public announcement with respect to the transactions contemplated herein
without the prior consent of the other parties, which consent will not be
unreasonably withheld or delayed; provided, however, that any of the parties
hereto may at any time make any announcements which are required by applicable
law so long as the party so required to make an announcement promptly upon
learning of such requirement notifies the other parties of such requirement
and
discusses with the other parties in good faith the exact proposed wording of
any
such announcement.
6.6. Tax
Matters; Cooperation
and Records Retention.
The
Target and the Company will (i) each provide the other with such assistance
as
may reasonably be requested by any of them in connection with the preparation
of
any Tax Return, audit or other examination by any taxing authority or judicial
or administrative proceedings relating to liability for Taxes, (ii) each retain
and provide the other with any records or other information which may be
relevant to such Tax Return, audit or examination, proceeding or determination,
and (iii) each provide the other with any final determination of such audit
or
examination, proceeding or determination that affects any amount required to
be
shown on any Tax Return of the other for any period. Without limiting the
generality of the foregoing, the Target and the Company will retain, until
the
applicable statutes of limitations (including all extensions) have expired,
copies of all Tax Returns, supporting work schedules and other records or
information which may be relevant to such Tax Returns for all Tax periods or
portions thereof ending on or before the Closing and will not destroy or
otherwise dispose of any such records without first providing the other party
with a reasonable opportunity to review and copy the same.
7. Survival
and Indemnification.
7.1. Survival.
The
representations and warranties of each party hereto shall survive the execution
of and delivery of this Agreement and the consummation of the transactions
contemplated hereby and the same shall be effective for a period
of
one (1) year from the Closing Date and no longer. The covenants and agreements
contained in this Agreement shall survive the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby and
the
same shall be effective in accordance with their respective terms.
7.2. Mutual
Indemnification.
Subject
to the limitations set forth in this Article 7, each party each agrees to
indemnify and save harmless each other party from and against any and all
losses, liabilities, expenses (including, without limitation, reasonable fees
and disbursements
of counsel), claims, liens, damages or other obligations whatsoever
(collectively, “Claims”)
that
may actually and reasonably be payable by virtue of or which may actually and
reasonably result from the inaccuracy of any of their respective representations
or the breach of any of their respective warranties, covenants or agreements
made in this Agreement or in any certificate, schedule or other instrument
delivered pursuant to this Agreement; provided, however, that no claim for
indemnity may be made hereunder if the facts giving rise to such Claim were
in
writing and known to the party seeking indemnification hereunder, such facts
constituted a breach of the conditions to closing of the party seeking
indemnification and the party seeking indemnification elected in any event
to
consummate the transactions contemplated by this Agreement. In addition, to
the
extent that applicable insurance coverage is available and paid to the party
seeking indemnification hereunder with respect to the Claim for which
indemnification is being sought, such amounts of insurance actually paid shall
be deducted from the amount of the Claim for which indemnification may be sought
hereunder and the indemnified party may recover only the amount of the loss
actually suffered by the party to be indemnified. To the extent that such
insurance payment is received subsequent to payment by the indemnifying party
hereunder, the indemnified party shall reimburse the indemnifying party, up
to
the amount previously paid by the indemnifying party, for the amount of such
insurance payment.
20
7.3. Procedures
for Indemnification.
Each
party agrees to give each other party prompt written notice of any event or
assertion of which it has knowledge concerning any such Claim and
as to
which it may request indemnification hereunder, and each party will cooperate
with the other in determining the validity of any such Claim. The indemnifying
party hereunder shall have the right to participate in, or control the defense
of (with counsel reasonably satisfactory to the indemnified party), any such
Claim for which indemnification has been requested hereunder. Each party agrees
not to settle or compromise any such Claim without the prior written consent
of
each other party. The giving of notice to the indemnifying party as provided
herein and the opportunity to participate or control the defense of the Claim
for which indemnification is sought shall be a prerequisite to any obligation
of
the indemnifying party to indemnify the indemnified party hereunder. Following
indemnification as provided hereunder, the indemnifying party shall be
subrogated to all rights of the indemnified party against all other parties
with
respect to the Claim for which indemnification has been made.
7.4. Limitations
on Indemnification.
Notwithstanding the provisions of Section 7.2 hereof, no claim for
indemnification by any party hereunder may be made unless the amount of the
Claim for which indemnification is sought exceeds $25,000.
The
maximum aggregate liability of the Target and the Selling Stockholders to the
Company for all claims arising under the Documents shall equal the product
of
(i) the number of Company Shares and (b) the average of the per share closing
price of the Common Stock for the five-day period preceding the day on which
the
liability becomes payable. In no event will the aggregate amount payable by
the
Company pursuant to this Article 7 exceed $500,000.
8. Miscellaneous.
8.1. Cumulative
Remedies.
Any
person having any rights under any provision of this Agreement will be entitled
to enforce such rights specifically, to recover damages by reason
of
any breach of any provision of this Agreement, and to exercise all other rights
granted by law, which rights may be exercised cumulatively and not
alternatively.
21
8.2. Successors
and Assigns.
Except
as otherwise expressly provided herein, this Agreement and any of the rights,
interests or obligations hereunder may not be assigned by any of the parties
hereto. All covenants and agreements contained in this Agreement by or on behalf
of any of the parties hereto will bind and inure to the benefit of the
respective permitted successors and assigns of the parties hereto whether so
expressed or not.
8.3. Severability.
Whenever possible, each provision of this Agreement will be interpreted in
such
manner as to be effective and valid under applicable law, but if any provision
of this Agreement is held to be prohibited by or invalid under applicable law,
such provision will be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of this Agreement or the other
documents.
8.4. Counterparts.
This
Agreement may be executed in two or more counterparts, any one of which need
not
contain the signatures of more than one party, but all such counterparts when
taken together will constitute one and the same agreement.
8.5. Entire
Agreement.
This
Agreement constitutes the entire agreement and understanding of the parties
with
respect to the subject matter thereof, and supersedes all prior and
contemporaneous agreements and understandings.
8.6 Notices.
Any
notices, consents, waivers or other communications required or permitted to
be
given under the terms of this Agreement must be in writing and will be deemed
to
have been delivered: (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by facsimile (provided confirmation of transmission is
mechanically or electronically generated and kept on file by the sending party);
or (iii) one business day after deposit with a nationally recognized overnight
delivery service, in each case properly addressed to the party to receive the
same. The addresses and facsimile numbers for such communications shall
be:
If to the Company: | ||
Advanced
Plant Pharmaceuticals, Inc.
|
||
00
Xxxx 00xx
Xxxxxx
|
||
Xxx
Xxxx, XX 00000
|
||
Telephone:
(000) 000-0000
|
||
Facsimile:
|
||
Attention:
Xxxxx Xxxxxxxxx
|
||
With a copy to: | ||
Spectrum
Law Group LLP
|
||
0000
Xxxx Xxxxxx, Xxxxx 000
|
||
Xxxxxx,
Xxxxxxxxxx 00000
|
||
Telephone:
(000) 000-0000
|
||
Facsimile:
(949.851-5940
|
||
Attention:
Xxxx X. Xxxxxxxx, Esq.
|
22
If
to the Target of the Selling Stockholders:
|
||
World
Health Energy, Inc
|
||
0000
Xxxxxxxx Xxxxxx
|
||
Xxxxx
Xxxxx, XX 00000
|
||
Telephone:
(000) 000-0000
|
||
Facsimile:
(000) 000-0000
|
||
Attention:
Xxxxx Miedzygorski
|
Written
confirmation of receipt (A) given by the recipient of such notice, consent,
waiver or other communication, (B) mechanically or electronically generated
by
the sender's facsimile machine containing the time, date, recipient facsimile
number and an image of the first page of such transmission or (C) provided
by a
nationally recognized overnight delivery service shall be rebuttable evidence
of
personal service, receipt by facsimile or receipt from a nationally recognized
overnight delivery service in accordance with clause (i),(ii) or (iii) above,
respectively.
8.7. Expenses
and Attorney Fees.
The
Company, Target and the Selling Stockholders shall each pay all of their
respective legal and due diligence expenses in connection with the transactions
contemplated by this Agreement, including, without limiting the generality
of
the foregoing, legal and accounting fees.
8.8. Waiver
of Conditions.
At any
time or times during the term hereof, the Company may waive fulfillment of
any
one or more of the conditions to its obligations in whole or in part, and Target
or the Selling Stockholders may waive fulfillment of any one or more of the
foregoing conditions to their obligation, in whole or in part, by delivering
to
the other party a written waiver or waivers of fulfillment thereof to the extent
specified in such written waiver or waivers. Any such waiver shall be validly
and sufficiently authorized for the purposes of this Agreement if, as to any
party, it is authorized in writing by an authorized representative of such
party. The failure of any party hereto to enforce at any time any provision
of
this Agreement shall not be construed to be a waiver of such provision, nor
in
any way to affect the validity of this Agreement or any part hereof or the
right
of any party thereafter to enforce each and every such provision. No waiver
of
any breach of this Agreement shall be held to constitute a waiver of any other
or subsequent breach.
8.9. Law
Governing.
This
Agreement shall be construed and interpreted in accordance with and governed
and
enforced in all respects by the laws of the State of Delaware.
8.10. Disputed
Matters.
Except
as otherwise provided in this Agreement, each party hereby agrees that any
suit,
action or proceeding arising out of or relating to this Agreement shall be
brought in either the United States District Court for the Central District
of
Delaware, and the parties hereby irrevocably and unconditionally submit to
the
jurisdiction of such courts. The parties hereby agree to waive trial by jury
in
any such suit, action or proceeding. The parties irrevocably waive and agree
not
to raise any objection any of them might
now
or hereafter have to the bringing of any such suit, action or proceeding in
any
such court including, without limitation, any objection that the place where
such court is located is an inconvenient forum. Each party agrees that any
judgment or order against that party in any such suit, action or proceeding
brought in such a court shall be conclusive and binding upon that party and
consents to any such judgment or order being recognized and enforced in the
courts of its jurisdiction of incorporation or organization or any other courts,
by registration or entry of such judgment or order, by a suit, action or
proceeding upon such judgment or order, or any other means available for
enforcement of judgments or orders.
23
8.11. Attorneys’
Fees.
If any
action at law or in equity is necessary to enforce or interpret the terms of
this Agreement, the prevailing party shall be entitled to reasonable attorneys’
fees, costs and disbursements in addition to any other relief to which such
party may be entitled.
8.12. Delivery
by Fax.
Delivery
of an executed counterpart of the Agreement or any exhibit attached hereto
by
facsimile transmission shall be equally as effective as delivery of an executed
hard copy of the same. Any party delivering an executed counterpart of this
Agreement or any exhibit attached hereto by facsimile transmission shall also
deliver an executed hard copy of the same, but the failure by such party to
deliver such executed hard copy shall not affect the validity, enforceability
or
binding nature effect of this Agreement or such exhibit.
8.13. Gender
Neutral Pronouns.
All
pronouns and any variations thereof shall be deemed to refer to the masculine,
feminine or neuter, singular or plural, as the identity of the referenced
person, persons, entity or entities may require.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
24
IN
WITNESS WHEREOF, each of the parties to this Agreement has executed or caused
this Agreement to be executed as of the date first above written.
“COMPANY” | |||
ADVANCED
PLANT PHARMACEUTICALS, INC.,
a
Delaware corporation
|
|||
By: /s/ Xxxxx Xxxxxxxxx | |||
Xxxxx Xxxxxxxxx, President |
|||
“TARGET” | “SELLING STOCKHOLDERS” | ||
WORLD HEALTH ENERGY, INC.,
a Delaware corporation
|
Signatures Appear on Exhibit A | ||
By: /s/ Xxxxx Miedzygorski | |||
Xxxxx Miedzygorski, President |
|||
25
EXHIBIT
A
SELLING
STOCKHOLDERS
Signature
of Selling
Stockholder
|
Target
Shares
Owned
|
Initial
Shares
|
Remaining
Shares
|
Total
Shares
|
/s/
Xxxxx Miedzygorski
Xxxxx
Miedzygorski
|
10
|
500,000
|
5,000,000
|
5,500,000
|
/s/
Xxxxx Xxxx
Xxxxx
Xxxx
|
90
|
4,500,000
|
45,000,000
|
49,500,000
|
26