SECURITIES PURCHASE AND SALE AGREEMENT
This
SECURITIES PURCHASE AND SALE AGREEMENT (this “Agreement”),
dated
as of the date set forth on the signature page below, by and among the seller
signatory
hereto
(the “Seller”)
and
the purchaser signatory hereto (the “Purchaser”
and
referred to together with the Seller, each as a “party”
and
collectively as the “parties”).
In
consideration of the mutual promises and covenants contained in this Agreement,
which the parties definitively deem to be adequate and sufficient in all
respects, the parties hereto agree as follows:
1. Sale
of Shares.
1.1 Sale
of Shares.
Subject
to the terms and conditions of this Agreement, at the Closing (as defined in
Section 2.1) the Seller will sell to the Purchaser, and the Purchaser will
purchase from the Seller, the number of shares of common stock (the
“Common
Stock”),
set
forth hereto on Exhibit
A
(the
“Shares”)
of the
company set forth on Exhibit
A
hereto
(the “Company”),
for
the aggregate purchase price indicated on Exhibit
A
(the
“Purchase
Price”).
1.2 Purchase
Price Adjustments.
There
shall be no purchase price adjustments with respect to the Shares at the Closing
or following the Closing. The parties agree that the Purchase Price has been
negotiated at arms-length and such Purchase Price is fair and reasonable in
all
respects notwithstanding any publicly quoted bids, asks, or past, present,
or
future transaction prices for the Common Stock of the Company and
notwithstanding any third-party valuation of the Company.
2. The
Transaction.
2.1 The
Closing.
Subject
to the conditions precedent set forth in Article 6 herein, the closing of the
sale and purchase of the Shares under this Agreement (the “Closing”)
shall
take place at the law offices of Wuersch & Xxxxxx LLP, 000 Xxxx Xxxxxx,
00xx
Xxxxx,
Xxx Xxxx, XX 00000 no later than the closing date specified on Exhibit
A
hereto
(the “Closing
Date”)
or at
such other date and time as the parties mutually agree when the respective
conditions precedent set forth in Article 6 have been satisfied or waived in
accordance with the terms and conditions set forth therein.
(a) Prior
to
the Closing and pursuant to the terms of Escrow (as defined in Section 6.6),
the
Seller shall deliver into the escrow of Purchaser’s counsel the stock
certificate representing the Shares (the “Certificate”)
and a
duly executed stock power (the “Stock
Power”)
providing for the transfer of the Shares to the Purchaser, together with the
irrevocable letter of instruction to the Company’s transfer agent acknowledging
and agreeing to such transfer (the “Instruction
Letter”),
in
form acceptable to the Purchaser.
(b) At
the
Closing, the Purchaser shall pay by wire transfer of immediately available
funds
in accordance with the instructions set forth on Exhibit
A,
or
other method of delivery acceptable to the Seller, the aggregate Purchase Price
for the Shares.
(c) At
the
Closing, upon confirmation of the transmittal of the Purchaser Price by wire
transfer, the Certificate, Stock Power and Instruction Letter shall immediately
be released from Escrow to the Purchaser who shall thereto legally possess
all
right, title and interest in the Shares.
3. Representations
and Warranties of the Seller.
The
Seller hereby represents and warrants to the Purchaser, in Seller’s individual
capacity and as a duly authorized representative of the Company, that the
statements contained in this Article 3 are true and complete as of the date
of
this Agreement and at Closing unless otherwise qualified herein.
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3.1 Organization
and Standing.
The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the state of its incorporation as set forth on Exhibit
A
hereto
and has full corporate power and authority to conduct its business as presently
conducted, and as proposed to be conducted by it. The Company has at all times
complied with all provisions of (i) its corporate charter formation instruments
and all amendments thereto, each as in full force and effect and described
on
Exhibit
A
(the
“Charter”),
and
(ii) its governing bylaws and all amendments thereto, each as in full force
and
effect and described on Exhibit
A
(the
“Bylaws”),
and
the Company is not in default under, or in violation of, any provision of its
Charter or Bylaws. The Seller has delivered, or caused to be delivered, to
the
Purchaser a true, complete and correct copy of the Company’s Charter and By-laws
(collectively, the “Governing
Instruments”).
3.2 Authority
for Agreement; No Conflict.
The
Seller has full power and authority to enter into and perform this Agreement
and
to carry out the transactions contemplated by this Agreement. The execution,
delivery and performance by the Seller of this Agreement and each other
document, instrument or agreement to be executed and delivered by the Seller
and
the Company in connection herewith or incorporated herein by reference thereto
and the consummation by the Seller and the Company of the transactions
contemplated hereby and thereby, have been duly authorized by all necessary
individual action of the Seller and all necessary corporate action of the
Company. This Agreement has been duly executed and delivered by the Seller
and
constitutes the valid and binding obligation of the Seller, enforceable in
accordance with its terms, subject as to enforcement of remedies to applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
generally the enforcement of creditors’ rights and subject to a court’s
discretionary authority with respect to the granting of a decree ordering
specific performance or other equitable remedies. The execution and delivery
of
this Agreement, the consummation of the transactions contemplated hereby and
the
compliance with its provisions will not (a) conflict with or violate any
provision of the Governing Instruments of the Company, (b) require any filing
(except in respect of requisite disclosures to be filed with the U.S. Securities
and Exchange Commission); or (c) require any permit, order, authorization,
consent or approval of, any United States court, arbitrational tribunal,
administrative agency or commission or other United States governmental or
regulatory authority or agency (each of the foregoing is hereafter referred
to
as a “Governmental
Authority”).
3.3 Governmental
Consents and Compliance.
(a) Exemption
From Registration.
Based
in part on the representations and warranties of the Purchaser herein, no
consent, approval, order or authorization of, or registration, qualification,
designation, declaration or filing with, any Governmental Authority is required
on the part of the Seller or the Company in connection with the offer, issuance,
sale and delivery of the Shares or the other transactions contemplated by this
Agreement (other than filings required under the Securities Exchange Act of
1934, as amended (the “Exchange
Act”)
and
the rules and regulations promulgated thereunder (the “Exchange
Act Rules”).
(b) Securities
Transaction Compliance.
In
reliance on the representations and warranties made by the Purchaser in this
Agreement, the offer and sale of the Shares to the Purchaser have been made
in
compliance with any and all applicable Laws. “Laws”
means
any and all federal, state, provincial, regional, local or foreign law
(including common law), statute, code, ordinance, rule, regulation or other
similar pronouncement binding upon or affecting the Company issued by a
Governmental Authority, including, without limitation, the Securities Act and
the Exchange Act, and the respective rules and regulations promulgated
thereunder.
(c) Conflicts.
The
execution and delivery by the Seller of this Agreement and any other document,
instrument or agreement to be executed and delivered by the Seller or the
Company in connection herewith and the consummation by the Seller and the
Company of the transactions contemplated hereby and thereby will not conflict
with or violate any Laws binding upon or affecting the Company issued by a
Governmental Authority or Laws applicable to the Seller or by which any of
Seller’s properties or assets are bound or are subject.
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(d) Court
Orders.
There
is no order, judgment, ruling, injunction, assessment, award, decree or writ
from any Governmental Authority and no any action, arbitration, audit, hearing,
investigation, litigation, or suit (whether civil, criminal, administrative,
investigative, or informal) commenced, brought, conducted, or heard by or
before, or otherwise involving, any Governmental Authority or arbitrator of
any
kind whatsoever, at law or in equity, pending or, to the Seller’s
Knowledge
(as
defined below), threatened against the Seller, the Company or any other Person
(as defined below), which would give a third party the right to enjoin or
rescind the transactions contemplated by this Agreement or otherwise prevent
the
Seller from complying with the terms and provisions of this Agreement.
“Knowledge”
means
those facts or circumstances actually known or any facts or circumstances which
would be known after due and reasonable inquiry; “Person”
means
an individual, a corporation, a limited liability company, a partnership, a
trust, an unincorporated association, a government or any agency,
instrumentality or political subdivision of a government, or any other entity
or
organization.
(e) Legal
Compliance.
The
Company is in compliance with all applicable Laws, and is in compliance with
all
permits required to conduct its business prior to the Closing, except where
non-compliance would not materially or adversely affect the Company. To the
Seller’s Knowledge, there are no inquiries, demands, complaints or
investigations being conducted by any Governmental Authority or any Person
with
respect to the Company or with respect to the Seller that could impair the
Closing of this Agreement or impair the unencumbered legal right, title and
interest of the Purchaser in the Shares after the Closing.
3.4 Corporate
Structure and Operations.
(a) Share
Capital.
At the
Closing, the Company has only the capitalization as set forth on Exhibit
A
hereto.
All of the Shares have been duly authorized and validly issued, are fully paid
and nonassessable, and were issued in compliance with (i) the Company’s
Governing Instruments, (ii) all requisite action on the part of the Board of
Directors and shareholders of the Company, (iii) all applicable federal and
state securities Laws and (iv) any and all preemptive rights or rights of first
refusal of any Person. Exhibit
A
sets
forth any and all securities and rights of any Person to acquire equity
interests in the Company, including, without limitation, pursuant to any Option.
“Option”
means
any warrant, stock option, call, put, preemptive right, convertible obligation,
subscription for stock or securities convertible into or exchangeable for stock
of the Company, or any other similar right, security, instrument or agreement,
or any stock appreciation rights or phantom stock.
(b) Derivative
and Ancillary Equity Rights.
Except
as set forth on Exhibit
A,
there
does not exist nor is there outstanding any right or security granted or issued
to any Person to cause the Company to issue or sell any shares of capital stock
or other securities of the Company to any Person (including, without limitation,
pursuant to any Option), or (iii) there is no obligation, contingent or
otherwise, of the Company to (x) repurchase, redeem or otherwise acquire any
share of the capital stock or other equity interests of the Company, or (y)
provide funds to, or make any investment in (in the form of a loan, capital
contribution or otherwise), or provide any guarantee with respect to the
obligations or liabilities of any other Person. The Company has not entered
into
any revenue sharing or interest agreements, license agreements, or similar
agreements providing for commissions, revenue sharing, equity-based
participation or equity-derived interests of any nature or kind in the Company.
(c) Regulation.
The
Company is not engaged in any activity regulated by any Governmental Authority
or self-regulatory organization, other than the registration and listing of
its
securities for public trading.
(d) Voting
Agreements.
There
are no voting trusts, proxies (contingent or otherwise), or other agreements
or
understandings with respect to the voting or disposition of the Shares or to
the
Knowledge of Seller with respect to any other shares of capital stock of the
Company.
(e) Share
Ownership.
The
Seller is the sole beneficial and record owner of the
Shares and
has
good and marketable title to all such Shares free and clear of any lien, charge,
mortgage, deeds of trust, pledge, easement, encumbrance, or security interest
encumbrances, convertible rights, derivative rights, pre-emptive rights and
contingent rights (such liens and all other third party rights, collectively,
“Liens”),
and
the Purchaser shall at the Closing acquire from the Seller all of the Seller’s
right, title and interest in and to the Shares without recourse.
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(f) Third
Party Rights.
The
Shares represent the sole equity ownership interest in the Company. No other
Person has any right, title or interest in the Shares, contingent or otherwise,
or any option or other right to acquire the Shares or claim any direct or
indirect right or interest in the Shares, or any other ownership or rights
of
any nature or kind in any issued or unissued securities or equity interests
of
the Company. The Shares are not the subject of any domestic consent decree
or
domestic relations order. If the Shares are marital property, the Seller
has
fully disclosed the existence of this Agreement to the spouse of the Seller
and
obtained written consent for the sale of the Shares. There are no subscriptions
for the purchase of any Shares or any equity or capital stock of any nature
or
kind, or any options, warrants, calls, or other rights to purchase any capital
stock or other equity interests of the Company nor has the Company taken
any
action to split, combine or subdivide the capital stock or other equity
interests of the Company.
(g) Liens.
There
are no Liens on the Company or Liens on any assets of the Company. The Company
has no subsidiaries and owns no real property. The Company (i) does not own
of
record or beneficially any equity interest in any other Person, (ii) is not
a
partner or member of any partnership, limited liability company, joint venture
or similar arrangement or agreement, and (iii) does not own or hold the right
to
acquire any stock, partnership interest, joint venture interest or other equity
ownership interest in any Person other than the Company.
(h) Compensation.
Other
than as disclosed in the Company’s Securities Filings (as defined below), the
Company has not (i) made, granted, or committed to make or grant: (1) any bonus
or any wage, salary or compensation to any (x) director or officer, or (x)
employee, independent contractor or consultant, or (2) (i) adopted, amended
or
terminated any employee benefit Plan (as defined below), program or arrangement,
or (ii) entered into, amended or terminated any employment agreement, deferred
compensation arrangement, collective bargaining agreement or other similar
arrangement with any of its current or prospective directors, officers,
employees, independent contractors, consultants or stockholders. “Securities
Filings”
means
all reports, forms, schedules, exhibits, documents, instruments, consents and
other filings made by the Company with the U.S. Securities and Exchange
Commission (the “SEC”). “Plan”
means
(i) all employee benefit plans (as defined in Section 3(3) of Employee
Retirement Income Security Act of 1974, as amended, and the regulations
thereunder (“ERISA”),
whether domestic or foreign), and (ii) all bonus (including transaction bonus),
incentive compensation, stock appreciation right, phantom stock, restricted
stock, restricted stock unit, performance stock, performance stock unit,
employee stock ownership, stock purchase, equity or equity-based, deferred
compensation, change in control, employment, noncompetition, nondisclosure,
vacation, holiday, sick leave, retention, severance, retirement, pension, money
purchase, target benefit, cash balance, excess benefit supplemental executive
retirement, profit sharing, life insurance, Section 125 cafeteria, adoption
assistance, dependent care assistance, voluntary employees beneficiary, multiple
employer welfare, accident, disability, fringe benefit, welfare benefit, paid
time off, employee loan, and salary continuation plans, programs, policies,
agreements, arrangements, commitments, practices, contracts and understandings
(written or unwritten) including without limitation, any trust, escrow or other
agreement related thereto and any similar plans, programs, policies, agreements,
arrangements, commitments, practices, contracts and understandings (written
or
unwritten). At and after the Closing, the Company will not owe to any Person
serving the Company as employee, former employee, contractor or consultant,
with
respect to any period prior to the Closing, any hourly wages, salary, bonus,
incentive pay, benefit pay, back pay, termination pay, reimbursements, dues,
advances, insurance pay or co-pay, tax make-whole payments, or any other payment
or obligation of any nature or kind.
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(i) Indebtedness.
At
Closing, the Company will not have any Indebtedness (as defined below),
contingent or otherwise, or assumed, guaranteed, or endorsed the Indebtedness
of
any other Person, or canceled any Indebtedness owed to it or released any
claim
possessed by it, other than trade payables incurred in the ordinary course
of
business, all of which shall be current and fully paid by the Company prior
to
the Closing Date. As of the date hereof there is no Indebtedness (i) which
relates to any breach of contract, breach of warranty, tort, infringement
or
violation of Law) and (ii) which, individually or in the aggregate, would
be
Material (as defined below) to the Company. All Indebtedness of the Company
shall be paid and forever satisfied with respect to any and all creditors
of the
Company, contingent or otherwise, by the Company prior to Closing. No
Indebtedness of the Seller shall impair the unencumbered vesting of all right,
title and interest in the Shares at Closing. “Indebtedness”
means
(a) all liabilities and obligations of the Company for credit in advance
of
payment, borrowed money or funded Indebtedness or issued in substitution
for or
exchange for borrowed money or funded Indebtedness (including obligations
in
respect of principal, accrued interest, any applicable prepayment charges
or
premiums and any unpaid fees, expenses or other monetary obligations in respect
thereof); (b) any Indebtedness evidenced by any note, bond, debenture or
other
debt security; (c) any lease obligations required to be capitalized in
accordance with GAAP; (d) all obligations for reimbursement then-required
to be
made as an obligor of any banker’s acceptance or similar transactions
(including, without limitation, standby letters of credit and similar contingent
sureties and guaranties); (e) all obligations for the deferred purchase price
of
property, all conditional sale obligations under any title retention agreement;
(f) any obligations with respect to the termination of any interest rate
hedging
or swap agreements; (g) all obligations of the type referred to in clauses
(a)
through (f) of this definition with respect to any Person for the payment
of
which either Company is responsible or liable, directly or indirectly, as
guarantor, obligor, surety or otherwise (excluding intercompany debt); and
(h)
obligations of the type referred to in clauses (a) through (g) of this
definition with respect to other Persons secured by any Lien on any property
or
asset of the Company. “Material”
means
having a value or liability of more than US$1,000.00 individually or in the
aggregate.
3.5 Disclosures
and Filings.
(a) Securities
Filings.
All
Securities Filings made with the SEC (i) have been filed in a timely manner
and
are true and complete in all respects; and (ii) have complied in all material
respects with the requirements of the SEC and all Laws and regulations under
the
regulation of any and all other applicable Governmental Authority. The Seller
and the Company have complied in all material respects with the policies of
the
Company and all charters of the committees of the Company’s Board of Directors,
each as set forth on Exhibit
A
hereto
and copies of which have been delivered to Purchaser prior to Closing. None
of
the Securities Filings contains any material error or misstatement or omits
to
state any material fact necessary to make the representations or statements
contained herein or therein are not misleading.
(b) Contracts.
The
Company has not engaged in any transactions with, or entered into any material
Contract (as defined below), except to the extent disclosed in Securities
Filings, including, without limitation, any Contracts with Affiliates, as
defined below. “Contract”
means
any written or oral agreements, contracts, leases, licenses, commitments,
arrangements, letters of understanding or undertakings. All Contracts between
the Company and the Seller shall terminate at the Closing. The Company has
not
made, or accepted, any loans, advances or capital contributions from, or
repayable investments to, or from, any Person. All Company Contracts have been
entered into in the ordinary course of business and have been entered into
without the commission of any act alone or in concert with any other Person,
or
any consideration having been paid or promised, that is or would be in violation
of any Laws. The Company is not required under any Contract to perform any
product or service warranties. “Affiliate”
of
a
specified Person means any other Person which, directly or indirectly, through
one or more intermediaries, controls, is controlled by, or is under common
control with such specified Person. For purposes of this definition,
“Control”
of
any
Person means authority as an officer or director of the Company or power and
authority to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting capital stock, by contract,
or otherwise.
(c) Legal
Actions.
Neither
the Seller nor the Company is party to any lawsuit, action, claim, suit or
proceeding of any nature or kind nor to the Knowledge of Seller is there any
threat of any lawsuit, action, claim, suit or proceeding by any Person or
Governmental Authority. There have been no, actions, suits, arbitrations,
judgments, proceedings, investigations or claims of any kind whatsoever, at
Law
or in equity, pending or threatened in writing, against the Company except
as
disclosed in the Company’s Securities Filings.
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(d) Taxes.
All
Taxes
(as
defined below) which are due and payable by the Company or claimed and asserted
by any Taxing Authority (as defined below) to be due and payable by the Company
have been timely paid. At Closing, there shall be no Taxes due or payable
to any
Taxing Authority with respect to any period prior to the Closing Date. All
Tax
Returns (as defined below) required to be filed by or on behalf of the Company
in all jurisdictions in which such Tax Returns are required to be filed (after
giving effect to any duly obtained extensions of time in which to make such
filings) have been duly and timely filed and are true and complete in all
material respects and all such Taxes have been paid. There are no Tax claims,
audits or proceedings pending or, to the Seller’s Knowledge threatened in
connection with the Company. There are not currently in force any waivers
or
agreements binding upon the Company for the extension of time or statute
of
limitations within which to file any Tax Return or for the assessment, payment
or collection of any Tax. The Company has properly and timely withheld and
paid
all Taxes required to have been withheld and paid in connection with amounts
paid or owing to any Person and has complied with the rules and regulations
relating to the withholding and remittance of Taxes. The Company is not a
party
to or bound by any Tax allocation or Tax sharing agreement (whether or not
written) with any other Person nor does it have any contractual obligation
to
indemnify any other Person with respect to Taxes. The Company is not and
never
has been a member of an affiliated group filing or required to file an
affiliated, consolidated, combined or unitary Tax Return nor does the Company
have any liability for the Taxes of any Person under Treas. Reg. § 1.1502-6 (or
any similar provision of Law), as a transferee or successor, by contract.
No
Liens for Taxes exist with respect to any of the assets or properties of
the
Company. No claim has been made by any Taxing Authority in a jurisdiction
where
the Company does not file Tax Returns that it is or may be subject to taxation
by, or required to file any Tax Return in, that jurisdiction. The Company
has
not executed or entered into any written agreement with, or obtained or applied
for any written consents or written clearances or any other Tax rulings from,
nor has there been any written agreement executed or entered into on its
behalf
with, any Taxing Authority. No claim has ever been made in writing to Seller,
the Company or any Subsidiary by any Governmental Authority in a jurisdiction
where the Company or any such Subsidiary does not file Tax Returns that the
Company or such Subsidiary is or may be subject to taxation by that
jurisdiction.
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“Tax”
and “Taxes”
shall mean any federal, national, state, local or foreign income,
gross
receipts, franchise, estimated, alternative minimum, add-on minimum,
sales, use, transfer, real property gains, registration, value added,
excise, natural resources, severance, stamp, occupation, premium,
windfall
profit, customs, duties, real property, personal property, capital
stock,
social security, unemployment, disability, payroll, license, employee
or
other withholding, unclaimed funds or other tax, of any kind whatsoever,
including any interest, penalties or additions to tax or additional
amounts or required contributions in respect of the foregoing; the
foregoing shall include any transferee or secondary liability for
a Tax
and any liability assumed by agreement or arising as a result of
being (or
ceasing to be) a member of any affiliated group (or being included
(or
required to be included) in any Tax Return relating thereto).
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“Tax
Return”
means any return, declaration, report, claim for refund, information
return or other document (including any related or supporting schedule,
statement or information) filed or required to be filed in connection
with
the determination, assessment or collection of any Tax of any party
or the
administration of any Laws, regulations or administrative requirements
relating to any Tax.
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“Taxing
Authority”
means any domestic or foreign national, state, provincial, multi-state
or
municipal or other local executive, legislative or judicial government,
court, tribunal, official, board, subdivision, agency, commission
or
authority thereof, or any other governmental body exercising any
regulatory or taxing authority thereunder having jurisdiction over
the
assessment, determination, collection or other imposition of any
Tax.
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3.6 Insurance.
The
Company carries valid insurance policies with respect to the assets, properties
and business in type and quantity which are reasonably adequate, sufficient
and
customary for businesses in the industry and geographic area in which the
Company operates.
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3.7 Employees.
There
are no pending or, to the Seller’s Knowledge, threatened, controversies,
grievances or claims by any employee or former employee of the Company with
respect to any such Person’s employment, termination of employment or
compensation and benefits that, if adversely decided, would be material to
the
Company. All liabilities of the Company to any and all current and former
employees and any other persons in effect prior to the Closing Date shall
terminate at or prior to the Closing. As of the Closing Date, the Company
shall
have no liabilities, contingent or otherwise, with respect to any and all
employees, former employees, contractors or consultants.
3.8 Environmental
Compliance.
The
Company is not in violation of any Laws pertaining to the environment or
hazardous materials.
3.9 Inventories
and Accounts.
At
Closing, the Company will have no inventories, no accounts payable and no
accounts receivable. To the extent any service providers to the Company submit
invoices for services rendered prior to the Closing Date or products sold to
the
Company prior to the Closing Date, all such invoices and liabilities thereto
(include the cost of returns) shall be at the sole charge of the Seller.
3.10 Intellectual
Property.
The
Company owns and possesses all right, title and interest in and to, or have
a
valid and enforceable right or license to use its intellectual property as
currently being used, without infringement on the rights of any other Person.
To
the Knowledge of Seller, the Company has not infringed, misappropriated or
otherwise conflicted with, any Intellectual Property of any third party and
the
conduct of the businesses as currently conducted by the Company does not
infringe upon any Intellectual Property owned by any third party.
3.11 Independent
Contractors and Service Providers.
Each
independent contractor and service provider (including, without limitation,
all
company attorneys and accountants) that currently perform or have in the past
performed services for the Company is subject to written agreement with the
Company. All such independent contractors have been fully paid all amounts
owing
to them by the Company and there are no disputes or controversies between any
such independent contractor or service provider and the Company whatsoever,
including without limitation, disputes regarding amounts owned or ownership
of
the Company intellectual property. All such written agreements are in full
force
and effect, and neither the Company nor any such independent contractor is
in
breach thereof. At and after the Closing, the Company will not owe to any Person
serving the Company as an independent contractor or service provider, with
respect to any period prior to the Closing, any payment, reimbursement,
disbursement, recoupment, advances, defrayal, or any other payment or obligation
of any nature or kind.
3.12 Books
And Records.
The
books and records of the Company true, correct and complete in all material
respects, provided, however, nothing contained in this Section shall be deemed
to modify or qualify any other representation or warranty set forth in this
Agreement. The corporate records shall include, without limitation, all board
and shareholder resolutions, all financial records, and the complete user-name,
password, and filer information with respect to the Company’s Electronic Data
Gathering And Retrieval (“XXXXX”)
account with the SEC. The corporate records of the Company have been, or at
Closing will be, delivered to the Purchaser.
3.13 Financial
Accounts.
Exhibit
A
sets
forth a complete and accurate description of all arrangements of the Company
with any and all banks, savings and loan associations and other financial
institutions providing for accounts, including, without limitation, checking
accounts, cash contribution accounts, safe deposit boxes, borrowing
arrangements, certificates of deposit or otherwise, indicating in each case
account numbers, if applicable, and the Person or Persons authorized to act
or
sign on behalf of the Company in respect of any of the foregoing (collectively,
the “Business
Accounts”).
No
Person holds any power of attorney or similar authority from the Company with
respect to any such Business Accounts. Not less than three (3) business days
prior to Closing, the Seller shall deliver or cause the Company to deliver
to
the Purchaser copies of all records pertaining to the Business Accounts. At
the
Closing, the Seller shall deliver all duly executed documentation required
by
each such Business Accounts to transfer all power and authority with respect
to
all such accounts to vest solely in Purchaser and Seller shall thereafter have
no power or authority whatsoever in regard to any and all such Business Accounts
and the Seller shall at the instruction of the Purchaser deliver all any and
all
assets in such Business Accounts to the accounts directed by the Purchaser.
There shall be no liabilities of Seller or the Company with respect to any
Business Accounts on or after Closing pertaining to any period prior to the
Closing.
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3.14 Fees
& Expenses.
No
Person is or will become entitled, by reason of any agreement or arrangement
entered into or made by or on behalf of the Company, to receive any commission,
brokerage, finder’s fee or other similar compensation in connection with the
consummation of the transactions contemplated by this
Agreement.
3.15 Foreign
Corrupt Practices Act.
Neither
the Company nor any director, officer, agent, or employee of the Company, or
to
Seller’s and the Company’s Knowledge any other Person associated with or acting
for or on behalf of the Company, has directly or indirectly (a) made any
contribution, gift, bribe, payoff, influence payment, kickback, or other payment
to any Person, private or public, regardless of form, whether in money,
property, or services (i) to obtain favorable treatment in securing business,
(ii) to pay for favorable treatment for business secured, (iii) to obtain
special concessions or for special concessions already obtained, for or in
respect of the Company, or (iv) in violation of any Laws, or (b) established
or
maintained any fund or asset that has not been recorded in the books and records
of the Company.
3.16 Comprehensive
Representations.
No
representation or warranty made by Seller to the Purchaser in this Agreement
or
any disclosure made in any of the Securities Filings omits to state a material
fact necessary to make the statements herein, in light of the circumstances
in
which they were made, not misleading. There is no fact known to the Seller
that
materially affects or, as far as can be reasonably foreseen, materially
threatens the Company that has not been set forth in this Agreement, or in
the
Securities Filings or delivered to Purchaser in writing.
4. Representations
and Warranties of the Purchaser.
The
Purchaser hereby represents and warrants to the Seller and for the benefit
of
the Company that the statements contained in this Article 4 are true and
complete as of the date of this Agreement and at Closing.
4.1 Authorization;
Enforceability.
The
Purchaser has the full power and authority to enter into this Agreement and
to
perform its obligations hereunder. The Purchaser has taken all corporate action
necessary to authorize its execution and delivery of this Agreement. This
Agreement has been duly executed and delivered by the Purchaser and, assuming
the due authorization, execution, and delivery by the Seller, constitutes the
Purchaser’s valid and binding obligation, enforceable in accordance with the
terms of this Agreement, subject to applicable bankruptcy, reorganization,
insolvency, and similar Laws affecting creditors’ rights generally and to
general principles of equity.
4.2 No
Conflict.
The
execution and delivery of this Agreement by the Purchaser and the performance
of
its obligations thereunder will not (i) violate or conflict with any provision
of Purchaser’s Governing Instruments, (ii) violate, conflict with, or give rise
to any right of termination, cancellation, or acceleration under any material
agreement or instrument to which the Purchaser is a party, or by which he,
it,
or any of its assets is bound, (iii) result in the imposition of any Lien on
any
Shares held by the Purchaser, (iv) violate or conflict with any applicable
Laws,
or (v) require any consent, approval or other action of, notice to, or filing
with any entity or Person (governmental or private) other than the disclosure
filings on Form 3 and Schedule 13D to be filed by the Purchaser with the SEC
in
compliance with the Exchange Act and the Exchange Act Rules, and requisite
disclosures to be filed on Form 8-K by the Company as required in compliance
with the Exchange Act and the Exchange Act Rules.
4.3 Investment
Representations.
The
Purchaser hereby represents and warrants to the Seller and the Company the
following:
(a) The
Purchaser will acquire the Shares to be purchased by it for its own account,
for
investment and not with a view to the distribution thereof, nor with any present
intention of distributing the same.
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(b) The
Purchaser understands that the Shares to be purchased by it: (i) will not
be
registered under the Securities Act of 1933, as amended (the “Securities
Act”)
or the
securities Laws of any state, by reason of issuance in a transaction exempt
from
the registration or qualification requirements of the Securities Act or such
securities Laws, the availability of which depends upon, among other things,
the
bona fide nature of the investment intent and the accuracy of the Purchaser’s
representations as expressed herein, and (ii) must be held indefinitely unless
a
subsequent disposition thereof is registered under the Securities Act or
is
exempt from registration.
(c) Based
on
the Purchaser’s Knowledge, experience and skill in evaluating and investing in
securities derived from actual participation in financial, investment and
business matters, the Purchaser is capable of evaluating the merits and risks
of
an investment in the Shares and the suitability of the Shares as an investment
for the Purchaser.
(d) The
Purchaser is aware that no guarantees have been or can be made respecting the
future value, if any, of the Shares or the profitability or success of the
business of the Company.
(e) The
Purchaser hereby acknowledges that it is acquainted with the requirements of
Section 16 and Section13(d) of the Exchange Act and the Exchange Act Rules.
The
Purchaser understands that, as a result of its acquisition of Shares, and in
order to comply with Section 16 and Section 13(d) and the Exchange Act Rules,
the Purchaser shall file a Form 3 and Schedule 13D and hereby agrees to make
such filing.
4.4 Regulation
S Representations.
(a) The
Purchaser acknowledges and agrees that the Company shall, and shall instruct
its
transfer agent to, refuse to register any transfer of the Common Stock issued
hereunder not made in accordance with the provisions of Regulation S, pursuant
to registration under Securities Act or pursuant to an available exemption
from
registration required under the Securities Act.
(b) The
Purchaser understands and acknowledges that the Shares have not been registered
under the Securities Act and are being offered and transferred in reliance
upon
the exemptions provided in Regulation S of the Securities Act and the Rules
and
Regulations adopted thereunder. Accordingly, the Shares may not be offered
or
sold in the U.S. or to U.S. Persons (as such term is used in Regulation S)
unless the securities are registered under the Securities Act, or an exemption
for the regulation requirements is available. Furthermore, hedging transactions
involving the Shares may not be conducted unless in compliance with the
Securities Act.
(c) The
Purchaser makes the following representations and warranties for the benefit
of
the Seller and the Company with the intent that the same may be relied upon
in
determining the suitability of the Purchaser as a qualified Non-U.S. Person
purchaser and transferee of securities:
(i) The
Purchaser did not receive the offer for the Shares (the “Offer”),
nor
was he, she or it solicited to purchase the Shares, in the United States; that
this Agreement has not been executed or delivered by the Purchaser in the United
States, and neither the Purchaser nor any Person acting on behalf of the
Purchaser has engaged, directly or indirectly, in any negotiations with respect
to the Offer or this Agreement in the United States;
(ii) The
Purchaser is not a U.S. Person (i.e., (i) not an individual resident in the
U.S.; (ii) a partnership or corporation organized or incorporated in the United
States; (iii) an estate of which any executor or administrator is a U.S. Person;
(iv) a trust of which any trustee is a U.S. Person; (v) a dealer holding an
account for a customer; (vi) an agency or branch of a foreign entity located
in
the U.S.; or (vii) a partnership or corporation (A) organized or incorporated
under the Laws of any foreign jurisdiction and (B) formed by a U.S. Person
principally for the purpose of investing in securities not registered under
the
Securities Act and is not acquiring the Shares for the account or benefit of
a
U.S. Person;
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(iii) The
Purchaser is not purchasing the Shares as a result of, or subsequent to,
(i) any
advertisement, article, notice or other communication published in any
newspaper, magazine or other publication or broadcast over television or
radio
in the U.S.; (ii) any promotional seminar or meeting in the U.S., or (iii)
any
solicitation by a Person not previously known to it in connection with
investments in securities generally; and
(iv) The
Shares have not been registered under the Securities Act or under any state
securities Laws and that the Purchaser agrees to transfer its Shares in the
U.S.
or to, or for the account or benefit of, U.S. Persons only if (i) the Shares
are
duly registered under the Securities Act and all applicable state securities
Laws; or (ii) there is an exemption from registration under the Securities
Act,
including any exemption from the registration requirements of the Securities
Act
which may be available pursuant to Rule 903 or Rule 904 under Regulation S,
and
all applicable state securities Laws; that prior to any such transfer the
Company may require, as a condition affecting a transfer of the Shares, an
opinion of counsel in form and substance satisfactory to the Company as to
the
registration or exemption therefrom under the Securities Act and applicable
state securities Laws; that the Company is under no obligation to register
the
Shares under the Securities Act or any applicable state securities Laws on
its
behalf or to assist it in complying with any exemption from such
registration;
(v) Except
as
distributed by Purchaser in accordance with the requirements and provisions
of
Rule 903 of Regulation S (i.e., the Shares may be allocated and distributed
to
Purchaser’s managed accounts so long as such distribution is made by Purchaser
in the manner specified by Rule 903), the Shares will be acquired solely for
the
account of the Purchaser, for investment purposes only, and not with a view
to,
or for sale in connection with, any distribution thereof and with no present
intention of distributing or reselling any part of the Shares.
(vi) The
Purchaser agrees not to sell, pledge, transfer, dispose of, or otherwise deal
with or engage in hedging transactions involving, its Shares or any portion
thereof except as otherwise permitted herein, unless and until counsel for
the
Company shall have determined that the intended disposition or action is
permissible and does not violate the Securities Act or any applicable state
securities Laws, or the rules and regulations thereunder.
(vii) The
Purchaser jurisdiction of principal place of business and corporate domicile,
as
set forth on the signature page hereto with respect to notices under this
Agreement, is true and correct.
4.5 Brokers
and Finders.
No
Person or entity acting on behalf or under the authority of the Purchaser is
or
will be entitled to any broker’s, finder’s, or similar fee or commission in
connection with the transactions contemplated hereby.
5. Transfer
of Shares.
5.1 Restricted
Shares.
“Restricted
Shares”
means
(a) the Shares and (b) any other shares of capital stock of the Company issued
in respect of such shares (as a result of stock splits, stock dividends,
reclassifications, recapitalizations or similar events); provided, however,
that
shares of Common Stock which are Restricted Shares shall cease to be Restricted
Shares (x) upon any sale pursuant to a registration statement under the
Securities Act, or Section 4(1) of the Securities Act or Rule 144 under the
Securities Act or (y) at such time as they become eligible for sale under Rule
144(k) under the Securities Act.
5.2 Transfers.
Restricted Shares shall not be sold or transferred unless either (i) they first
shall have been registered under the Securities Act, or (ii) such sale or
transfer is exempt from the registration requirements of the Securities
Act.
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5.3 Legend.
Each
certificate representing the Shares upon issuance to the Purchaser shall
bear a
legend substantially in the following form:
THE
SECURITY OR SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY
STATE SECURITIES LAWS, AND MAY NOT BE OFFERED OR SOLD TO ANY PERSON EXCEPT
AS
SET FORTH IN THE FOLLOWING SENTENCE. THE HOLDER HEREOF AGREES THAT: (1) IT
WILL
NOT RESELL OR OTHERWISE TRANSFER THE SHARES EVIDENCED HEREBY EXCEPT (A) IN
AN
OFFSHORE TRANSACTION COMPLYING WITH RULE 903 OR RULE 904 OF REGULATION S OR
(B)
PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE) OR ANOTHER THEN AVAILABLE EXEMPTION UNDER THE
SECURITIES ACT AND STATE SECURITIES LAWS OR, (C) IN A TRANSACTION THAT DOES
NOT
REQUIRE REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE LAWS,
OR
(D) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE
UNDER
THE SECURITIES ACT (AND WHICH CONTINUES TO BE EFFECTIVE AT THE TIME OF SUCH
TRANSFER); (2) PRIOR TO ANY SUCH TRANSFER, IT WILL FURNISH TO THE TRANSFER
AGENT
FOR THE COMMON STOCK SUCH CERTIFICATIONS, LEGAL OPINIONS, OR OTHER INFORMATION
AS TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING
MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OR STATE SECURITIES LAWS; AND
(3) IT WILL DELIVER TO EACH PERSON TO WHOM THE COMMON STOCK EVIDENCED HEREBY
IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. FURTHERMORE,
HEDGING TRANSACTIONS INVOLVING THE SECURITIES EVIDENCED HEREBY MAY NOT BE
CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.
The
foregoing legend shall be removed from the certificates representing any
Restricted Shares, at the request of the holder thereof, at such time as they
become eligible for resale pursuant to Rule 144(k) under the Securities
Act.
6. Closing
6.1 Conditions
to the Purchaser’s Obligations.
The
obligation of the Purchaser to consummate the closing of the transaction
contemplated in this Agreement is subject to the satisfaction or waiver, at
or
before the Closing, of the following conditions set forth in this Section
6.1:
(a) All
filings, authorizations, approvals and consents shall have been made with or
obtained from all applicable Governmental Authorities and the Company shall
be
current and in compliance with all Securities Act and Exchange Act
filings;
(b) None
of
the parties hereto will be subject to any injunction, judgment, Order, decree
or
ruling that prohibits the consummation of the transactions contemplated by
this
Agreement;
(c) Seller
shall have executed and delivered to the Purchaser a certificate stating that
(i) the representations and warranties herein that are not qualified by
materiality are true and correct in all material respects, at and as of the
Closing as though then made, and the representations and warranties of the
Seller and the Company that are qualified by materiality are true and correct
at
and as of the Closing as though then made (except in each case for those
representations and warranties that are as of an earlier date, which shall
be
true and correct in all respects or in all material respects, as applicable,
as
of such earlier date); and (ii) the Seller have performed or caused to have
been
performed all of the covenants and agreements required by this Agreement to
be
performed by the Seller or the Company prior to the Closing;
(d) There
shall not have occurred any Material change with respect to the
Company;
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(e) Delivery
to the Purchaser of the Certificates for the Shares, duly endorsed for transfer,
accompanied by the duly executed Stock Power and the Instruction
Letter;
(f) Delivery
to the Purchaser of the duly executed written resignations, of each director
and
officer of the Company serving the Company as of the date of this Agreement,
each in the form of Exhibit
B
attached
hereto, to be effective upon (i) the execution of a resolution appointing such
individual to the Company’s Board of Directors as the Purchaser may recommend at
any time within ninety (90) days hereafter, with such appointment to become
effective at such time as the Purchaser may reasonably request, and (ii) ten
(10) calendar days following the filing with the U.S. Securities and Exchange
Commission of an Information Statement on Schedule 14f-1 by the Company (as
the
same may be amended prior to the expiration of such ten (10) day period, and
which amendment thereof shall extend the ten (10) day period therefrom), which
Schedule 14f-1 shall reflect the appointment of such new director and the
Seller’s resignation as described herein. No other directors or officers shall
have been appointed or elected to serve the Company after the execution of
this
Agreement by the Seller except as provided in the foregoing Section
6.1(f)(i).
(g) delivery
to the Purchaser of certificates of corporate good standing as of the most
recent practicable date from the Secretary of State where the Company is
incorporated and all other states where it is qualified to do
business;
(h) the
Purchaser shall have received the written legal opinion of counsel for the
Seller and for the Company, addressed to Purchaser as of the Closing Date in
the
form to be mutually agreed upon;
(i) delivery
to Purchaser of physical possessions of all original minute books, corporate
seals and stock records of the Company and all other books and records, permits,
policies, XXXXX xxxxx codes and the Governing Instruments of the Company;
(j) Delivery
of forms of termination of all Leases and Contracts effective as of Closing;
(k) the
Purchaser shall have completed a due diligence investigation of the Company’s
assets, liabilities, contracts and business the results of which shall be
satisfactory to the Purchaser as determined at its sole discretion; and
(l) any
other
document required to be delivered to the Purchaser pursuant to this Agreement
and such other documents as reasonably requested by the Purchaser.
Any
agreement or document to be delivered to the Purchaser pursuant to this Section
6.1, the form of which is not attached to this Agreement as an Exhibit, shall
be
in form and substance reasonably satisfactory to the Purchaser.
6.2 Conditions
to Seller’s Obligations.
The
respective obligations of the Seller to consummate the closing of the
transaction contemplated in this Agreement are subject to the satisfaction,
at
or before the Closing, of the following conditions set forth in this Section
6.2:
(a) all
filings, authorizations approvals and consents shall have been made with or
obtained from all applicable Governmental Authorities;
(b) none
of
the parties hereto will be subject to any injunction, judgment, Order, decree
or
ruling that prohibits the consummation of the transactions contemplated by
this
Agreement; and
(c) the
Purchaser shall have executed and delivered to the Seller a certificate stating
that (i) the representations and warranties of the Purchaser that are not
qualified by materiality are true and correct in all material respects at and
as
of the Closing as though then made, and the representations and warranties
of
the Purchaser that are qualified by materiality are true and correct at and
as
of the Closing as though then made (except in each case for those
representations and warranties that are as of an earlier date, which shall
be
true and correct in all respects or in all material respects, as applicable,
as
of such earlier date), and (ii) the Purchaser have performed or caused to have
been performed in all material respects all of the covenants and agreements
required by this Agreement to be performed by the Purchaser prior to the
Closing.
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6.3 Closing
Procedures.
All
proceedings to be taken and all documents to be executed and delivered by all
parties at the Closing shall be deemed taken and executed simultaneously, and
no
proceedings shall be deemed taken nor any documents executed or delivered until
all such actions have been taken, executed and delivered.
The
parties agree to execute the Closing upon release from Escrow (as provided
in
Section 6.6 below) of all Closing deliveries which shall be fully binding upon
the parties. The Escrow Agent shall promptly notify all parties of effectiveness
of the Closing. The Escrow Agent shall deliver and exchange execution originals
to all parties of all such Closing documentation within five (5) business days
after the Closing. At the Closing, each party shall be deemed to duly deliver
this Agreement to the other party effective upon release from Escrow.
6.4 Termination.
(a) This
Agreement shall terminate prior to the Closing upon the occurrence of any of
the
following: (i) the written agreement of the Seller and the Purchaser; (ii)
the
bankruptcy, receivership or involuntary dissolution of the Company or the
Purchaser; (iii) by the Seller, on the one hand, or by the Purchaser, on the
other hand, if Closing shall not have occurred on or before _______________,
provided that the right to terminate this Agreement shall not be available
to
either party whose material misrepresentations, material breach of warranty
or
failure to fulfill any material obligation under this Agreement has been the
cause of, or resulted in, the failure of the Closing to occur on or before
such
date; (iv) by the Purchaser if any event occurs which renders impossible
compliance with one or more of the closing conditions in Section 6.1 above
(other than through failure of the Purchaser to comply with its obligations
under this Agreement); and (v) by the Seller if any event occurs which renders
impossible compliance with one or more of the conditions set forth in Section
6.2 (other than through failure of the Seller or the Company to comply with
their obligations under this Agreement).
(b) In
the
event of the termination of this Agreement pursuant to Section 6.4(a), this
Agreement shall forthwith become null and void, and there shall be no further
obligation or liability on the part of any party hereto or its officers,
directors, or stockholders. Notwithstanding the foregoing sentence, (i) the
provisions of this Section 6.4 and the provisions of Sections 7 and 8 shall
remain in full force and effect and survive any termination of this Agreement;
and (ii) each party shall remain liable for any willful breach of this Agreement
prior to its termination.
6.5 Covenants
Pending Closing.
(a) The
Seller covenants and agrees that from the date hereof to the Closing Date,
to,
and to cause the Company to:
(i) operate
the businesses of the Company substantially as now operated and only in the
ordinary course and, to the extent of and consistent with such operation, use
reasonable efforts to preserve intact the present business organization,
maintain the Company’s reputation and the relationships with Persons having
business dealings with the Company;
(ii) maintain
the books, accounts and records of the Company in the usual, regular and
ordinary manner and consistent with past practice;
(iii) not
sell,
lease or dispose of any material business assets of the Company or encumber
the
Company with liabilities or Liens;
(iv) not
amend, adversely modify or terminate any Contract except as otherwise necessary
to comply with this Agreement; and
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(v) not
take
any action that might reasonably be expected to adversely affect the ability
of
either party to execute, deliver or perform this Agreement. The Seller, the
Company and the Purchaser will use their respective best efforts (A) to obtain
all necessary consents and approvals of governmental and regulatory authorities
to the consummation of the transactions contemplated by this Agreement, (B)
to
obtain all other waivers and/or consents necessary or advisable in connection
with the transactions contemplated by this Agreement, and (C) to perform, comply
with and fulfill all obligations, covenants and conditions required by this
Agreement to be performed, complied with and fulfilled by them prior to or
at
the Closing Date. All transactional matters, corporate ministerial actions,
regulatory filings or consent payments prior to Closing shall be at the Seller’s
sole cost and expense.
(b) Prior
to
the Closing, the Seller and the Company agree to permit the Purchaser and its
employees, agents and representatives to have reasonable access to the
properties, assets, books and records, contracts and other documents, on
reasonable prior notice, during regular business hours.
(c) Prior
to
the Closing, neither the Seller or the Company, on the one hand, nor the
Purchaser, on the other hand, nor any of their agents or affiliates, shall
either directly or indirectly make any press release or other public
communication after the date hereof with respect to the transaction contemplated
hereby without the prior written consent of all other parties hereto (which
shall not be unreasonably withheld) unless required by applicable Law, rule
or
regulation (including the rules and regulations of the SEC and any securities
quotation system or securities exchange) to make such a communication.
(d) Prior
to
Closing, the Company shall, and the Seller shall cause the Company to, fully,
faithfully and promptly discharge its ordinary course liabilities as and when
due and dischargeable, according to the terms of such liability so long as
any
such action is not in breach of this Agreement.
(e) The
Seller hereby agrees that it shall, and shall cause the Company to, conduct
the
on-going business operations of the Company in the ordinary course and shall,
and shall cause the Company to, take no action to liquidate or distribute its
business assets or dissolve or otherwise reclassify its corporate identity,
and
shall promptly notify the Purchaser if any third party attempts or executes
any
action which interferes with the consummation of the transactions contemplated
by this Agreement.
(f) Prior
to
Closing, the Company shall, and the Seller shall cause the Company to, not
make
or declare any distributions or dividends payable to stockholders. Prior to
the
date of the most recently filed annual report of the Company on Form 10-K or
Form 10-KSB, the Company shall not have any declared and unpaid dividends or
distributions owing to stockholders.
(g) Each
director and officer of the Company serving the Company as of the date of this
Agreement shall resign pursuant to the respective forms of resignation in the
forms attached as Exhibit
B
hereto,
to be effective upon (i) the execution of a resolution appointing such
individual to the Company’s Board of Directors as the Purchaser may recommend at
any time within ninety (90) days hereafter, with such appointment to become
effective at such time as the Purchaser may reasonably request, and (ii) ten
(10) calendar days following the filing with the U.S. Securities and Exchange
Commission of an Information Statement on Schedule 14f-1 by the Company (as
the
same may be amended prior to the expiration of such ten (10) day period, and
which amendment thereof shall extend the ten (10) day period therefrom), which
Schedule 14f-1 shall reflect the appointment of such new director and the
Seller’s resignation as described herein. Following the execution of this
Agreement and through the date of effectiveness of such resignations, no other
directors shall be appointed or elected to serve the Company except as otherwise
expressly provided in Section 6.1(f)(i) above. Following execution of this
Agreement by the Seller, no other officers of the Company and no powers of
attorney to act on behalf of the Company shall be appointed by the Company.
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6.6 Closing
Escrow.
(a)
The
Seller and the Purchaser acknowledge that pursuant to this Agreement the Seller
is conveying legal title of the Shares to the Purchaser at the Closing. To
facilitate efficiency at Closing the parties hereby appoint Wuersch & Xxxxxx
LLP to serve as Closing escrow agent (the “Escrow
Agent”).
Prior
to the Closing: (i) the Seller shall deliver to the Escrow Agent the
Certificate, Stock Power, the irrevocable Instruction Letter and all other
materials required to be delivered by Seller to the Purchaser at the Closing
pursuant to the terms and conditions set forth in this Agreement (the
“Seller
Escrow”);
and
(ii) the Purchaser shall deliver to the Purchase Price to the attorney trust
account of the Escrow Agent set forth on Exhibit
A
together
with all other materials required to be delivered by Purchaser to the Seller
at
the Closing pursuant to the terms and conditions set forth in this Agreement
(“Purchaser
Escrow”),
to be
held and released at Closing by the Escrow Agent or otherwise subject to
disposition in accordance with the terms and conditions of this Section 6.6
(the
“Escrow”).
The
Escrow Agent is expressly authorized by the parties to rely upon all
representations, warranties, covenants and other provisions of this Agreement.
(b)
At
the
Closing, upon satisfaction or waiver of all conditions precedent set forth
in
Article 6 of this Agreement as advised by the parties in the form set forth
on
Exhibit
C
hereto,
the Escrow Agent shall (i) initiate and deliver the Purchase Price to the Seller
by wire transfer in accordance with the Seller’s instructions set forth on
Exhibit
A;
and
(ii) upon FedWire confirmation (as defined below) of transmittal of the wire
transfer to the Seller of the Purchase Price, the Escrow Agent shall deliver
the
Certificate, Stock Power and irrevocable Instruction Letter to the Company’s
transfer agent for re-issuance of such securities on a new certificate in the
name of Purchaser as holder of record of said securities. “FedWire confirmation”
is the assignment of a unique transmittal number from the Real Time Gross
Settlement Funds Transfer system operated by the U.S. Federal Reserve Bank,
which assignment shall be conveyed to the Escrow Agent by the Escrow Agent’s
bank.
(c) In
the
event of termination of this Agreement in accordance with the terms and
conditions set forth herein without Closing, the Escrow Agent shall promptly
return (i) the Seller Escrow to the Seller; and (ii) the Purchaser Escrow to
the
Purchaser, subject to reimbursement by each party for reasonable out of pocket
expenses expected to be incurred by the Escrow Agent for the returns to such
party.
(d) In
the
event of any controversy between the parties hereto or any third person with
respect to the escrow services provided by the Escrow Agent, the Escrow Agent,
at its sole discretion, shall not be required to make any determinations or
take
any action. If there is any dispute as to whom the Escrow Agent is to deliver
the Certificate, the Escrow Agent may, at its sole discretion, hold the
respective Seller Escrow or Purchaser Escrow until such party’s rights are
finally determined in a judicial forum or proceeding having competent
jurisdiction over the parties. Notwithstanding anything to the contrary herein,
the Escrow Agent may elect to deposit the Seller Escrow or Purchaser Escrow
into
any court of competent jurisdiction for resolution of any
controversy.
(e)
The
Escrow Agent’s duties are limited to those set forth in this Agreement. Except
in the case of willful misconduct or gross negligence, each of the Seller and
the Purchaser agree to jointly and severally indemnify and hold harmless the
Escrow Agent with respect to any and all services rendered hereunder, including,
without limitation, all fees, costs, expenses and disbursements of counsel
incurred in enforcing the rights of the Escrow Agent with respect to this
Agreement and in defending any action against the Escrow Agent related to this
Agreement, in each case irrespective of the outcome of such action thereto.
The
Seller and the Purchaser expressly exculpate the Escrow Agent for any and all
actions taken, or omitted to be taken, in good faith reliance upon this
Agreement and the transactions contemplated hereunder.
(f)
Each
of
the parties expressly acknowledges and agrees that the Escrow Agent is serving
as legal counsel to the Purchaser. Each of the Seller and the Purchaser hereby
acknowledge that under no circumstances shall the escrow agency services of
the
Escrow Agent be deemed to constitute a conflict of interest in respect of
services rendered hereby and each party fully and knowingly waives any claim
of
such conflict. The parties expressly acknowledge and agree that the Escrow
Agent
may act as its own legal counsel, which representation shall not be the basis
for disqualification as either Escrow Agent or as counsel.
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6.7 Release.
At
Closing, Seller, on Seller’s own behalf and each of Seller’s past, present and
future Affiliates, legal representatives, heirs, beneficiaries and assigns
(“Seller
Related Persons”)
hereby
releases and forever discharges each Company and each of its past, present
and
future Affiliates, stockholders, members, successors and assigns and their
respective officers, directors and employees (each, a “Releasee”
and
collectively, “Releasees”),
from
any and all claims, demands, proceedings, causes of action, (including rights
of
contribution, if any, court orders, obligations, contracts and agreements
(express or implied), debts or liabilities under or related to the Shares,
the
Company or its predecessors in interest, including any liability or obligation
arising under or pursuant to any stockholder agreement, indemnity agreements,
employment agreement or other compensation agreement, accrued and unpaid
compensation or any claim for indemnification pursuant to the Governing
Instruments of the Company, in each case, whether known or unknown, suspected
or
unsuspected, both at Law and in equity, which the Seller or any of the Seller
Related Persons now has, has ever had or hereafter has against the Releasees.
Notwithstanding anything in this Agreement to the contrary, the Seller agrees
that, should he become liable for indemnification to any the Purchaser
Indemnitee pursuant to this Agreement, the Company shall not have any liability
to the Seller for reimbursement, indemnification, subrogation or otherwise
as a
result of such breach. The Seller shall not have any right, whether by way
of
indemnification, contribution or otherwise, to reimbursement from the Purchaser
or any of its Affiliates (including the Company) for any indemnification
payments made by Seller.
6.8 Compliance
Undertakings.
The
Seller hereby acknowledges that Seller is acquainted with the requirements
of
Section 16 and Section 13(d) of the Exchange Act and the applicable
Exchange
Act Rules. The Seller understands that, as a result of its disposition of the
Shares, and in order to comply with Section 16 and Section 13(d) of the Exchange
Act and the applicable Exchange Act Rules, the Seller may be required to file
a
report on Form 4 and on Schedule 13D, and the Seller hereby undertakes and
agrees to make such filing in a timely manner if so required after Closing
and
after public announcement by the Company of this Agreement and the transactions
hereby.
6.9 Post-Closing
Undertakings.
The
Seller hereby agrees to take such actions following the Closing as the Purchaser
may reasonably request to effectuate the appointment to the Company’s Board of
Directors of such individual as the Purchaser may recommend at any time within
ninety (90) days hereafter, with such appointment to become effective at such
time as the Purchaser may reasonably request.
7. Indemnification
7.1 Indemnification
of the Purchaser.
From
and
after the Closing, the Seller shall indemnify the Purchaser and its respective
directors, officers, employees, Affiliates, stockholders, agents, attorneys,
representatives, successors and permitted assigns (collectively, the
“Purchaser
Indemnitees”),
against and hold the Purchaser Indemnitees harmless from:
(a)
any
Losses based upon, resulting from, arising out of, caused by or in connection
with, any inaccuracy in, or breach of, any of the representations and warranties
of Seller in this Agreement;
(b) any
Losses based upon, resulting from, arising out of, caused by or in connection
with any breach or nonperformance of any covenant, agreement or obligation
of
the Seller or, prior to Closing, the Company in this Agreement;
(c) any
Losses based on, resulting from, arising out of, caused by or in connection
with
(and notwithstanding any disclosure contained herein or otherwise known to
the
Purchaser Indemnitees), (i) any Taxes payable by the Company with respect to
any
pre-Closing period, to the extent allocable or attributable to the portion
of
such period beginning before or ending on the Closing Date, (ii) any liability
of the Company for Taxes of another Person, (iii) any transfer Taxes for which
the Seller are liable under this Agreement, or (iv) any Taxes of the Company
that are attributable to the Taxes of any member of an affiliated, consolidated,
combined or unitary group (other than the Company) of which the Company is
or
was a member on or prior to the Closing Date;
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(d) any
and
all Losses which Purchaser shall incur or suffer as a result of any act or
omission of Seller or Seller’s agents in connection with the breach of any Laws
prior to the Closing Date; or
(e) any
Losses based upon, resulting from, arising out of, caused by or in connection
with any failure of the Seller to comply with the provisions for indemnification
herein.
7.2 Limitations
on Indemnification of the Purchaser.
Except
as
otherwise set forth in this Agreement, the indemnification of the Purchaser
Indemnitees provided for in this Agreement shall be subject to the following
limitations and conditions set forth in this Section 7.2:
(a) Any
claim
by the Purchaser Indemnitee for indemnification shall be required to be made
by
delivering notice to the Seller no later than the thirtieth (30th)
day
following the expiration of the applicable statute of limitations pertaining
to
such subject matter (including valid extensions thereof);
(b) Except
for claims for indemnification relating to fraud, the Purchaser Indemnitees
shall not be entitled to indemnification unless the aggregate amount of all
such
Losses exceeds One Thousand Dollars ($1,000) (the “Indemnification
Threshold”),
and
thereafter the Purchaser Indemnitees shall be entitled to indemnification for
all amounts above the Indemnification Threshold as calculated from the Losses
up
to a maximum amount equal to the Purchase Price (the “Indemnification
Cap”),
provided, however, the Indemnification Cap shall not apply to claims for
indemnification relating to fraud.
7.3 Indemnification
of the Seller.
From
and
after the Closing Date, the Purchaser shall indemnify the Seller and successors
and assigns (collectively, the “Seller
Indemnitees”),
against and hold the Seller Indemnitees harmless from:
(a) any
Losses based upon, resulting from, arising out of, caused by or in connection
with, any inaccuracy in, or breach of, any of the representations and warranties
of Purchaser in this Agreement;
(b) any
Losses based upon, resulting from, arising out of, caused by or in connection
with any breach or nonperformance of any covenant, agreement or obligation
of
the Purchaser in this Agreement; or
(c) any
Losses based upon, resulting from, arising out of, caused by or in connection
with any failure of the Purchaser to comply with the provisions for
indemnification herein.
7.4 Limitations
on Indemnification of the Seller.
Notwithstanding
any other provisions of this Agreement, the indemnification of Seller
Indemnitees provided for in this Agreement shall be subject to the following
limitations and conditions set forth in this Section 7.4:
(a) except
as
set forth below, any claim by the Seller Indemnity for indemnification under
this Agreement shall be required to be made by delivering notice to the
Purchaser no later than the thirtieth (30th)
day
following the expiration of the applicable statute of limitations pertaining
to
such subject matter (including valid extensions thereof); and
(b) except
for claims for indemnification relating to fraud, Seller Indemnitees shall
not
be entitled to indemnification in excess of (i) the Indemnification Cap; and
(ii) until the aggregate amount of all indemnification claims exceeds the
Indemnification Threshold and thereafter Seller Indemnitees shall be entitled
to
indemnification for all Losses above the Indemnification Threshold.
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7.5 Procedures
Relating to Indemnification.
(a) Third-Party
Claims.
(i) In
order
for a party (the “Indemnitee”)
to be
entitled to any indemnification provided for under this Agreement in respect
of,
arising out of, or involving a claim or demand made by any Person against the
Indemnitee (a “Third-Party
Claim”),
such
Indemnitee must notify the party from whom indemnification hereunder is sought
(the “Indemnitor”)
in
writing of the Third-Party Claim no later than thirty (30) days after such
claim
or demand is first asserted (a “Third-Party
Claim Notice”).
A
Third-Party Claim Notice shall state in reasonable detail the amount or
estimated amount of such claim, and shall identify the specific basis (or bases)
for such claim, including the representations, warranties or covenants in this
Agreement alleged to have been breached. Failure to give a Third-Party Claim
Notice shall not affect the indemnification provided hereunder except to the
extent the Indemnitor shall have been actually prejudiced as a result of such
failure. Thereafter, the Indemnitee shall deliver to the Indemnitor, without
undue delay, copies of all notices and documents (including court papers
received by the Indemnitee) relating to the Third-Party Claim so long as any
such disclosure could not reasonably be expected to have an adverse effect
on
the attorney-client or any other privilege that may be available to the
Indemnitee in connection therewith.
(ii) If
a
Third-Party Claim is made against an Indemnitee, the Indemnitor shall be
entitled to participate, at its expense, in the defense thereof. Notwithstanding
the foregoing, if (A) the Indemnification Threshold has been exceeded, (B)
no
claim for injunctive relief is being made against Indemnitee, and (C) it is
reasonably likely that the Indemnitee will not suffer a Loss in excess of
Indemnitor’s indemnification obligation hereunder, the Indemnitor may elect to
assume and control the defense thereof with counsel selected by the Indemnitor
that is reasonably acceptable to Indemnitee. If the Indemnitor assumes such
defense, the Indemnitee shall have the right to participate in the defense
thereof and to employ counsel, at its own expense, separate from the counsel
employed by the Indemnitor, it being understood that the Indemnitor shall
control such defense; provided,
that,
Indemnitee’s expenses of counsel shall be an indemnified Loss for purposes of
this Article 9 if such counsel reasonably concludes that a conflict or potential
conflict exists between Indemnitee and Indemnitor that would make separate
representation advisable. If the Indemnitor so assumes the defense of any
Third-Party Claim, all of the indemnified parties shall reasonably cooperate
with the Indemnitor in the defense or prosecution thereof. Such cooperation
shall include, at the expense of the Indemnitor, the retention and (upon the
Indemnitor’s request) the provision to the Indemnitor of records and information
which are reasonably relevant to such Third-Party Claim, and making employees
available on a mutually convenient basis to provide additional information
and
explanation of any material provided hereunder. If the Indemnitor has assumed
the defense of a Third-Party Claim, (x) the Indemnitee shall not admit any
liability with respect to, or settle, compromise or discharge, such Third-Party
Claim without the Indemnitor’s prior written consent (which consent shall not be
unreasonably withheld or delayed); (y) the Indemnitee shall agree to any
settlement, compromise or discharge of a Third-Party Claim which the Indemnitor
may recommend and which by its terms releases the Indemnitee from any liability
in connection with such Third-Party Claim without cost or expense and without
any admission of violation, injunction or agreement to take or restrain from
taking any action; and (z) the Indemnitor shall not, without the written consent
of the Indemnitee, enter into any settlement, compromise or discharge or consent
to the entry of any judgment which imposes any expense, obligation or
restriction upon the Indemnitee or requires the Indemnitee to admit or
acknowledge to any fact or event, including any violation of Law.
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(b) Other
Claims.
In the
event any Indemnitee should have a claim against any Indemnitor under this
Agreement that does not involve a Third-Party Claim, the Indemnitee shall
deliver notice of such claim to the Indemnitor promptly following discovery
of
any indemnifiable Loss, but in any event not later than the last date set forth
in Section 7.2 or 7.4, as the case may be, for making such claim (a
“Claim
Notice”
and,
together with the Third-Party Claim Notices, an “Indemnification
Notice”).
Such
Claim Notice shall, to the extent known by Indemnitee at the time, state in
reasonable detail the amount or an estimated amount of such claim, and shall
specify the facts and circumstances, to the extent known by Indemnitee at the
time, which form the basis (or bases) for such claim, and shall further specify
the representations, warranties or covenants alleged to have been breached.
Failure to give a Claim Notice shall not affect the indemnification provided
hereunder except to the extent the Indemnitor shall have been actually
prejudiced as a result of such failure. Upon receipt of any a Claim Notice,
the
Indemnitor shall notify the Indemnitee as to whether the Indemnitor accepts
liability for any Loss and shall make payment to the Indemnitee within ten
business days of receipt of such notice. If the Indemnitor disputes liability
and does not pay such indemnification claim within ten business days of such
receipt, and Indemnitor is ultimately determined to be liable for such
indemnification, interest shall apply to the total amount of such claim at
the
highest legally permissible rate and shall be due and payable in addition to
any
claim for indemnification, which interest shall be calculated from the date
of
receipt of such Claim Notice by the Indemnitor, and Indemnitor shall furthermore
be liable for any and all subsequent Losses incurred by Indemnitee as a
consequence of the failure to pay such indemnification within ten business
days,
including, without limitation, any and all fees, costs, expenses and
disbursements of counsel to Indemnitee in connection with the enforcement of
this Agreement.
8. Miscellaneous.
8.1 Exchange
Act Filings.
As soon
as practicable after the Closing, the Company will make all finings with the
U.S. Securities and Exchange Commission as required under the Exchange Act
in
connection with the transactions contemplated by this Agreement and the Seller
and the Purchaser hereby consent to all such disclosures required thereunder
in
respect of such filings as determined by the Purchaser in its reasonable
discretion.
8.2 Successors
and Assigns.
This
Agreement, and the rights and obligations of the Purchaser hereunder, may be
assigned by the Purchaser to (a) any Person or entity to which Shares are
transferred by the Purchaser, or (b) to any to any affiliate, partner, member,
stockholder or subsidiary of the Purchaser, and, in each case, such transferee
shall be deemed a “Purchaser” for purposes of this Agreement; provided that each
such assignment of rights shall be contingent upon the transferee providing
a
written instrument to the Company notifying the Company of such transfer and
assignment and agreeing in writing to be bound by the terms of this Agreement.
The Company may not assign its rights under this Agreement.
8.3 Severability;
Survival.
The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement.
The representations and warranties of the Company and the Purchaser shall
survive the execution and delivery hereof and the Closing.
8.4 Further
Assurances.
Each
party hereto agrees to use such party’s reasonable best efforts to cause the
conditions to such party’s obligations herein set forth to be satisfied at or
prior to the Closing insofar as such matters are within its control. Each of
the
parties agrees to execute and deliver any and all further agreements, documents
or instruments necessary to effectuate this Agreement and the transactions
referred to herein or contemplated hereby or reasonably requested by any other
party to evidence its rights hereunder. In addition to any and all other
remedies that may be available at Law in the event of any breach of this
Agreement, the Purchaser shall be entitled to specific performance of the
agreements and obligations of the Company hereunder and to such other injunctive
or other equitable relief as may be granted by a court of competent
jurisdiction.
8.5 Governing
Law.
This
Agreement shall be governed by and construed in accordance with the Laws of
the
jurisdiction of the State of incorporation of the Company (without regard to
conflicts of Laws provisions).
8.6 Notices.
All
notices, requests, consents and other communications under this Agreement shall
be in writing and shall be deemed delivered (a) three business days after being
sent by registered or certified mail, return receipt requested, postage prepaid
or (b) one business day after being sent via a reputable nationwide overnight
courier service guaranteeing next business day delivery, in each case to the
intended recipient as set forth on Exhibit
A
hereto.
Any party may give any notice, request, consent or other communication under
this Agreement using any other means (including, without limitation, personal
delivery, messenger service, telecopy, first class mail or electronic mail),
but
no such notice, request, consent or other communication shall be deemed to
have
been duly given unless and until it is actually received by the party for whom
it is intended. Any party may change the address to which notices, requests,
consents or other communications hereunder are to be delivered by giving the
other parties notice in the manner set forth in this Section.
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8.7 Entire
Agreement.
This
Agreement (including its Exhibits) constitutes the entire agreement and
understanding of the parties hereto with respect to the subject matter hereof
and supersedes all prior agreements and understandings relating to such subject
matter.
8.8 Third
Party Beneficiaries.
This
Agreement is intended for the benefit of the parties hereto and the Escrow
Agent, and their respective permitted successors and assigns and is not for
the
benefit of, nor may any provision hereof be enforced by, any other
Person.
8.9 Amendments
and Waivers.
This
Agreement may be amended only in writing signed by all parties. No waivers
of or
exceptions to any term, condition or provision of this Agreement, in any one
or
more instances, shall be deemed to be, or construed as, a further or continuing
waiver of any such term, condition or provision.
8.10 Fees
and Expenses.
Each
party shall pay its own respective fees and expenses of its advisors, counsel,
accountants and other experts, if any, and all other expenses, incurred by
such
party incident to the negotiation, preparation, execution, delivery and
performance of this Agreement.
8.11 Section
Headings and References; Construction.
The
section headings are for the convenience of the parties and in no way alter,
modify, amend, limit or restrict the contractual obligations of the parties.
Any
reference in this agreement to a particular section or subsection shall refer
to
a section or subsection of this Agreement, unless specified otherwise. Whenever
the context may require, any pronouns used in this Agreement shall include
the
corresponding masculine, feminine or neuter forms, and the singular form of
nouns and pronouns shall include the plural, and vice versa.
8.12 SECURITIES
LAW COMPLIANCE.
THE PARTIES ACKNOWLEDGE AND AGREE THAT THE COMPANY IS A PUBLIC COMPANY AND
THEREFORE NO DISCLOSURES MAY BE MADE REGARDING THE EXISTENCE OF THIS AGREEMENT
UNTIL AFTER PUBLIC ANNOUNCEMENT. SUCH INITIAL PUBLIC ANNOUNCEMENT SHALL BE
MADE
SOLELY BY BYE COMPANY AFTER CLOSING BY DISCLOSURE ON FORM 8-K AND BY PRESS
RELEASE, IN EACH CASE AS DETERMINED AT THE COMPANY’S SOLE DISCRETION AFTER THE
CLOSING. THE PARTIES AGREE TO FULLY COMPLY WITH ALL APPLICABLE SECURITIES LAWS
NOT TO TRADE AT ANY TIME IN THE COMPANY’S SECURITIES ON THE BASIS OF MATERIAL
NON-PUBLIC INFORMATION.
8.13 Confidentiality.
Seller
covenants and agrees that from and after the Closing Date, Seller shall not
disclose, directly or indirectly, any Confidential Information. If the
disclosure of Confidential Information is required by Law or compelled by any
Governmental Authority, the Seller agrees to provide the Purchaser with as
much
prior written notice of such disclosure as is reasonably possible. “Confidential
Information”
means
(i) all information belonging to, used by, or which is in the possession of
the
Company or the Seller relating to the Company’s business or assets specifically
including, but not limited to, information relating to the Company’s products,
services, strategies, pricing, customers, representatives, suppliers,
distributors, technology, finances, employee compensation, computer software
and
hardware, inventions, developments, or trade secrets, and (ii) all information
relating to the acquisition of the Company by the Purchaser hereunder, including
without limitation all strategies, negotiations, discussions, terms, conditions
and other information relating to this Agreement and each other document and
agreement delivered in connection herewith, in each case to the extent that
such
information is not required to be disclosed by applicable Law or compelled
to be
disclosed by any Governmental Authority. Notwithstanding the foregoing, the
term
“Confidential
Information”
does
not include information that (i) is or becomes generally available to or known
by the public (other than as a result of a disclosure by the Seller),
provided,
that
the
source of such information is not known by Seller to be bound by a
confidentiality agreement with the Company; or (ii) is independently developed
by the Seller without violating this Agreement. The Seller acknowledges that
following the Closing all of the Confidential Information will be the exclusive
proprietary property of the Company, whether or not prepared in whole or in
part
by the Seller and whether or not disclosed to or entrusted to the custody of
the
Seller.
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8.14 Counterparts;
Facsimile Signatures.
This
Agreement may be executed in any number of counterparts, each of which shall
be
deemed to be an original, and all of which shall constitute one and the same
document. This Agreement may be executed by facsimile
signatures.
[Signature
Page Follows]
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IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized representative of the 9th
day of
January, 2008.
SELLER:
/s/
Xxxxxxxx
Xxxxxx
Xxxxxxxx
Xxxxxx
PURCHASER:
By:
/s/
Xxxxxx
Schoni
Name:
Xxxxxx
Schoni
Title: Director
By:
/s/
Xxxxx
Xxxxxx
Name:
Xxxxx
Xxxxxx
Title:
Director
