AGREEMENT AND PLAN OF ACQUISITION
AGREEMENT
AND PLAN OF ACQUISITION
B
E T W E
E N :
JUPITER
Global Holdings, Corp., a corporation incorporated under the laws of the
State
of Nevada (the "Purchaser")
-
and
-
Macro
Communications Inc., a corporation incorporated
under
the
laws of the State of Georgia (the "Corporation"),
-
and
-
Xxxxxx
Xxxxxxx and Xxxx Xxxxxxx (the "Shareholder(s)").
-1-
AGREEMENT
AND PLAN OF ACQUISITION
-2-
THIS
Agreement and Plan of Acquisition (“AGREEMENT”) made as of the 13th day of
September, 2005.
B
E T W E
E N :
JUPITER
Global Holdings, Corp., a corporation incorporated under the laws of the
State
of Nevada (the "Purchaser")
-
and
-
Macro
Communications Inc., a corporation incorporated
under
the
laws of the State of Georgia (the "Corporation"),
-
and
-
Xxxxxx
Xxxxxxx and Xxxx Xxxxxxx (the "Shareholders").
WHEREAS:
1. The
Shareholders are the registered and beneficial owner of 100% of all the
issued
and outstanding shares in the capital of the Corporation;
2. The
Purchaser wishes to purchase, and the Corporation wishes to sell, 80% of
the
shares in the capital of the Corporation on the terms and conditions herein
contained;
|
NOW
THEREFORE THIS AGREEMENT WITNESSES that in consideration of the
mutual
covenants and agreements herein contained and the sum of $1.00
of lawful
money of United States and other good and valuable consideration
paid by
each of the parties hereto to each of the other parties hereto
(the
receipt and sufficiency of which are hereby acknowledged), it
is agreed
between the parties hereto as
follows:
|
1.1 Defined
Terms.
In
this
Agreement and in the schedules hereto, unless there is something in the
subject
matter or context inconsistent therewith, the following terms and expressions
will have the following meanings:
(a)
"Affiliate" of any person means any corporation which, directly or indirectly,
is controlled by, controls or is under direct or indirect common control
with
such person;
(b)"arm's
length" will have the meaning of a transaction between financially unrelated
companies or between persons in which each acts in their own
self-interest;
-3-
(c)
"Audited
Financial Statements" means the audited consolidated financial statements
of the
Corporation as at and for the fiscal year ended December 31, 2004, including
but
not limited to a balance sheet, an income statement, a statement of changes
in
financial position and together with the notes thereto and the opinion
of the
Corporation's auditors thereon, a copy of which is attached hereto as Schedule
A, all prepared in accordance with generally accepted accounting principles,
consistently applied;
(d)
"Audited
Statements Date" means date of Audited Financial Statements;
(e)
"Business" means the business carried on by the Corporation which primarily
involves the location in Duluth, Georgia, Macro Communications, Inc. and
its
facilities based Application Service Provider, ASP. Macro’s lines of business
includes; prepaid calling card platforms, international gateway and arbitrage
services, enhanced IVR solutions, co-location services and emerging technologies
and Universal Point of Sale Activation Services;
(f)"Business
Day" means any day on which the Main Branch of the Bank of America is open
for
business;
(g)
"Closing
Date" means September 22, 2005, or such other date as the Corporation and
Purchaser may agree upon;
(h)
"Closing
Time" means 10:00 A.M. EST in Atlanta, Georgia on the Closing Date or such
other
time on the Closing Date as the parties hereto may agree upon;
(i)
"Condition" of the Corporation means the condition of the assets, liabilities,
operations, activities, earnings, prospects, affairs or financial position
of
the Corporation;
(j)
"Control"
means, with respect to any corporation, the ownership of more than 50%
of the
voting shares of that corporation, including any shares which are voting
only
upon the occurrence of a contingency where such contingency has occurred
and is
continuing;
(k)
"Corporation" means Macro Communications, Inc.;
(l)
"Encumbrances" means mortgages, charges, pledges, security interests, liens,
encumbrances, actions, claims, demands and equities of any nature whatsoever
or
howsoever arising and any rights or privileges capable of becoming any
of the
foregoing;
(m)
"generally accepted accounting principles" means the accounting principles
so
described and promulgated by the American Institute of Chartered Accountants
which are applicable as at the date on which any calculation made hereunder
is
to be effective or as at the date of any financial statements referred
to
herein, as the case may be;
(n)
"Interim
Financial Statements" means the consolidated financial statements of the
Corporation as at and for the six (6) month period ended June 30, 2005
consisting of a balance sheet, an income statement and a statement of changes
in
financial position together with the notes thereto, , all prepared in accordance
with generally accepted accounting principles, consistently
applied;
(o)
"Interim
Period" means the period from and including the date of this Agreement
to and
including the Closing Date;
(p)
"Leased
Premises" means all premises leased by the Corporation under the
Leases;
-4-
(q)
"Leases"
means the leases and the agreements to lease under which the Corporation
leases
any real property, as listed in Schedule C attached hereto;
(r)
"Licences" means all of the licences, registrations and qualifications
to do
business held by the Corporation;
(s)
"Person"
means and includes any individual, corporation, partnership, firm, joint
venture, syndicate, association, trust, government, governmental agency
or board
or commission or authority, and any other form of entity or
organization;
(t)
"Purchase
Price" means the sum of $2,000,000.00 USD which is the amount payable by
the
Purchaser to the Corporation for all of the Purchased Shares, as provided
herein; subject to audit.
(u)
"Purchased Shares" means the 4000 shares of common stock to be issued by
the
Corporation and purchased by the Purchaser hereunder;
(v)
"Real
Properties" means the real properties owned by the Corporation, which are
described in Schedule D attached hereto, and
(w)
"Warranty
Claim" means a claim made by either the Purchaser or the Corporation based
on or
with respect to the inaccuracy or non-performance or non-fulfilment or
breach of
any representation or warranty made by the other party contained in this
Agreement or contained in any document or certificate given in order to
carry
out the transactions contemplated hereby.
1.2 Best
of
Knowledge.
Any
reference herein to "the best of the knowledge" of the Corporation and
the
Shareholder will be deemed to mean the actual knowledge of the Corporation
and
the Shareholder and the knowledge which they would have had if they had
conducted a diligent inquiry into the relevant subject matter.
1.3 Schedules
and Exhibits.
The
schedules and exhibits listed in this Agreement and which are attached
to this
Agreement are incorporated into this Agreement by reference and are deemed
to be
part hereof.
-5-
1.4 Currency.
Unless
otherwise indicated, all dollar amounts referred to in this Agreement are
in
lawful money of United States.
1.5 Choice
of
Law and Attornment.
This
Agreement shall be governed by and construed in accordance with the laws
of the
State of Nevada and the laws of the United States applicable
therein.
The
parties agree that the courts of the State of Nevada will have exclusive
jurisdiction to determine all disputes and claims arising between the
parties.
1.6 Interpretation
Not Affected by Headings or Party Drafting.
The
division of this Agreement into articles, sections, paragraphs, subsections
and
clauses and the insertion of headings are for convenience of reference
only and
shall not affect the construction or interpretation of this Agreement.
The terms
"this Agreement", "hereof", "herein", "hereunder" and similar expressions
refer
to this Agreement and the schedules hereto and not to any particular article,
section, paragraph, clause or other portion hereof and include any agreement
or
instrument supplementary or ancillary hereto. The parties hereto acknowledges
that their respective legal counsel have reviewed and participated in settling
the terms of this Agreement, and the parties hereby agree that any rule
of
construction to the effect that any ambiguity is to be resolved against
the
drafting party shall not be applicable in the interpretation of this
Agreement.
1.7 Number
and Gender.
In
this
Agreement, unless there is something in the subject matter or context
inconsistent therewith:
|
(a)
|
words
in the singular number include the plural and such words shall
be
construed as if the plural had been
used;
|
|
(b)
|
words
in the plural include the singular and such words shall be construed
as if
the singular had been used, and
|
|
(c)
|
words
importing the use of any gender shall include all genders where
the
context or party referred to so requires, and the rest of the
sentence
shall be construed as if the necessary grammatical and terminological
changes had been made.
|
1.8 Time
of
Essence.
Time
shall be of the essence hereof.
-6-
2.1 Purchased
Shares.
On
the
terms and subject to the fulfilment of the conditions hereof, the Corporation
will issue and sell to the Purchaser, and the Purchaser will purchase and
accept
from the Corporation, the Purchased Shares. The Corporation shall issue
and
deliver the Purchased Shares at Closing. The Purchased Shares be subject
to the
Pledge Agreement and Escrow Agreement hereunder. The Purchased Shares shall
be
issued as restricted securities and exempt from registration under the
Securities Act of 1933 and comparable state law, and accordingly, shall
include
a restrictive legend thereon.
2.2 Purchase
Price.
(a)
The
price payable by the Purchaser to the Corporation for the Purchased Shares
will
be the sum of $2,000,000.00 USD;
|
|
2.3 Payment
of Purchase Price.
The
Purchase Price will be paid as follows:
(a)
At the
Closing Time, the Purchaser will pay to the Corporation, the sum of $1.00,
and
balance of funds as outlined herein;
(b)
A payment
in the form bank cashier's check or bank wire, payable to the order of
the
Corporation in the amount of Seventy Thousand Dollars ($70,000.00). This
payment
is acknowledged by the parties as being paid in full and received by the
Corporation towards the Purchase Price prior to the Closing Date.
(c)
Purchaser’s promissory note, dated as of the date of this Agreement, in the
principal amount of One Million Nine Hundred Thirty-Thousand Dollars
($1,930,000.00) (the "Promissory Note") and less any funds advanced prior
to the
time of closing.
(d)
This
Promissory Note shall be in the form of Exhibit A. The Promissory Note
shall be
secured by the Purchased Shares pursuant to a Pledge Agreement in the form
of
Exhibit B.
(e)
A portion
of the Purchase Price will be applied to unsettled debt of the Corporation
as
per a use of proceeds budget agreed to by the Purchaser and Corporation.
The
Corporation and the Shareholder and their Affiliates will have received
releases
from all necessary parties, in a form acceptable to the Corporation's and
Shareholder's counsel, whereby the Corporation and the Shareholder and
their
Affiliates are unconditionally released from all guarantees, covenants
and other
arrangements providing financial assistance or support to or on behalf
of the
Corporation.
(f)
The
parties will execute at Closing an Escrow Agreement, a copy of which is
attached
hereto as Schedule E, governing the release of the Purchased Shares as
per the
terms of the Pledge Agreement.
-7-
ARTICLE
3 Representations and Warranties
3.1 Representations
and Warranties by the Corporation and the Shareholder.
The
Corporation and the Shareholder hereby jointly and severally represent
and
warrant to the Purchaser as follows, and confirm that the Purchaser is
relying
upon the accuracy of each of such representations and warranties in connection
with the purchase of the Purchased Shares and the completion of the other
transactions hereunder:
|
(1)
|
Corporate
Authority and Binding Obligation. The Corporation has good right,
full
corporate power and absolute authority to enter into this Agreement
and to
issue and sell the Purchased Shares to the Purchaser in the manner
contemplated herein and to perform all of the Corporation's obligations
under this Agreement. The Shareholder has good right, full power
and
authority to enter into this Agreement and to perform all of
the
Shareholder's obligations under this Agreement. The Corporation’s
shareholders and boards of directors have taken all necessary
or desirable
actions, steps and corporate and other proceedings to approve
or
authorize, validly and effectively, the entering into, and the
execution,
delivery and performance of this Agreement and the issuance and
sale of
the Purchased Shares by the Corporation to the Purchaser. This
Agreement
is a legal, valid and binding obligation of the Corporation and
the
Shareholder, enforceable against each of them in accordance with
its terms
subject to:
|
(a)
Bankruptcy,
insolvency, moratorium, reorganisation and other laws relating to or affecting
the enforcement of creditors' rights generally, and
(b) the
fact
that equitable remedies, including the remedies of specific performance
and
injunction, may only be granted in the discretion of a court.
|
(2)
|
No
Other Purchase Agreements. No person has any agreement, option,
understanding or commitment, or any right or privilege (whether
by law,
pre-emptive or contractual) capable of becoming an agreement,
option or
commitment, including convertible securities, warrants or convertible
obligations of any nature, for:
|
(a) the
purchase, subscription, allotment or issuance of, or conversion into, any
of the
unissued shares in the capital of the Corporation or any securities of
the
Corporation;
(b) the
purchase from the Corporation of any of the Purchased Shares, or
(c) the
purchase or other acquisition from the Corporation of any its undertaking,
property or assets, other than in the ordinary course of the
Business.
|
(3)
|
Contractual
and Regulatory Approvals. Except as specified in Schedule F attached
hereto, the Corporation is not under any obligation, contractual
or
otherwise, to request or obtain the consent of any person, and
no permits,
licenses, certifications, authorisations or approvals of, or
notifications
to, any federal, State, municipal or local government or governmental
agency, board, commission or authority are required to be obtained
by the
Corporation or the Corporation:
|
|
(a)
|
in
connection with the execution, delivery or performance by the
Corporation
of this Agreement or the completion of any of the transactions
contemplated herein;
|
|
(b)
|
to
avoid the loss of any permit, licence, certification or other
authorisation, or
|
(c) in
order
that the authority of the Corporation to carry on the Business in the ordinary
course and in the same manner as presently conducted remains in good standing
and in full force and effect as of and following the closing of the transactions
contemplated hereunder.
Complete
and correct copies of any agreements under which the Corporation is obligated
to
request or obtain any such consent have been provided to the
Purchaser.
-8-
(4)
Status, Constating Documents and Licences.
(a) The
Corporation is a corporation duly incorporated and validly subsisting in
all
respects under the laws of the State of Georgia. The Corporation has all
necessary corporate power to own its properties and to carry on its business
as
it is now being conducted.
(b) The
articles, by-laws and other constating documents of the Corporation, as
amended
to the date hereof, are listed in Schedule G attached hereto, and complete
and
correct copies of each of those documents have been delivered to the
Purchaser.
(c) The
Corporation is duly licensed, registered and qualified as a corporation
to do
business, is up-to-date in the filing of all required corporate returns
and
other notices and filings and is otherwise in good standing in all respects,
in
each jurisdiction in which:
|
(i)
|
it
owns or leases property, or
|
|
(ii)
|
the
nature or conduct of its business or any part thereof, or the
nature of
the property of the Corporation or any part thereof, makes such
qualification necessary or desirable to enable the Business to
be carried
on as now conducted or to enable the property and assets of the
Corporation to be owned, leased and operated by
it.
|
All
of
the Corporation's Licences are listed in Schedule H attached hereto and
are
valid and subsisting. Complete and correct copies of the Licences have
been
delivered to the Purchaser. The Corporation is in compliance with all terms
and
conditions of the Licences. There are no proceedings in progress, pending
or, to
the best of the knowledge of the Corporation and the Shareholder, threatened,
which could result in the revocation, cancellation or suspension of any
of the
Licences.
|
(5)
|
Compliance
with Constating Documents, Agreements and Laws. The execution,
delivery
and performance of this Agreement and each of the other agreements
contemplated or referred to herein by the Corporation, and the
completion
of the transactions contemplated hereby, will not constitute
or result in
a violation or breach of or default under, or cause the acceleration
of
any obligations of the Corporation
under:
|
(a) any
term
or provision of any of the articles, by-laws or other constating documents
of
the Corporation;
(b) subject
to obtaining the contractual consents referred to in Schedule F hereof,
the
terms of any agreement (written or oral), indenture, instrument or understanding
or other obligation or restriction to which the Corporation or the Corporation
is a party or by which either of them is bound, or
(c) subject
to obtaining the regulatory consents referred to in Schedule F hereof,
any term
or provision of any of the Licences or any order of any court, governmental
authority or regulatory body or any law or regulation of any jurisdiction
in
which the Business is carried on.
|
(6)
|
Corporate
Records. The corporate records and minute books of the Corporation,
all of
which have been provided to the Purchaser, contain complete and
accurate
minutes of all meetings of the directors and shareholders of
the
Corporation held since its incorporation, and original signed
copies of
all resolutions and by-laws duly passed or confirmed by the directors
or
shareholders of the Corporation other than at a meeting. All
such meetings
were duly called and held. The share certificate books, register
of
security holders, register of transfers and register of directors
and any
similar corporate records of the Corporation are complete and
accurate.
All exigible security transfer tax or similar tax payable in
connection
with the transfer of any securities of the Corporation has been
duly
paid.
|
|
(7)
|
Authorized
and Issued Capital. The authorized capital of the Corporation
as of the
date of this Agreement consists of 10,000 shares, of which 1,000
common
shares have been duly issued and are outstanding as fully paid
and
non-assessable shares. No shares or other securities of the Corporation
have been issued in violation of any laws, the articles of incorporation,
by-laws or other constating documents of the Corporation or the
terms of
any shareholders' agreement or any agreement to which the Corporation
is a
party or by which it is bound. The Shareholder owns all 1,000
of the
issued and outstanding shares of the Corporation as the shareholder
of
record and as the beneficial owner, with good and marketable
title
thereto, free and clear of any and all Encumbrances.
|
-9-
|
(8)
|
Shareholders'
Agreements, etc. There are no shareholders' agreements, pooling
agreements, voting trusts or other similar agreements with respect
to the
ownership or voting of any of the shares of the
Corporation.
|
|
(9)
|
Financial
Statements.
|
(a) The
Audited Financial Statements have been prepared in accordance with generally
accepted accounting principles applied on a basis consistent with that
of the
previous fiscal year, are true, correct and complete in all material respects
and present fairly the consolidated financial condition of the Corporation
as of
December 31, 2004, including the consolidated assets and liabilities of
the
Corporation as of December 31, 2004, and the consolidated revenues, expenses
and
results of the operations of the Corporation for the fiscal year ended
on
December 31, 2004.
(b) The
Interim Financial Statements have been prepared in accordance with generally
accepted accounting principles applied on a basis consistent with the Audited
Financial Statements, are true, correct and complete in all material respects
and present fairly in all material respects the consolidated financial
condition
of the Corporation as of June 30, 2005, including the consolidated assets
and
liabilities of the Corporation as of June 30, 2005, and the consolidated
revenues, expenses and results of the operations of the Corporation for
the six
(6) month period ended on June 30, 2005.
(c) The
financial condition of the Corporation at the Closing Date is at least
as good
as the financial condition reflected in the Interim Financial
Statements.
(10) Financial
Records. All material financial transactions of the Corporation have been
recorded in the financial books and records of the Corporation in accordance
with good business practice, and such financial books and records:
(a) accurately
reflect in all material respects the basis for the financial condition
and the
revenues, expenses and results of operations of the Corporation shown in
the
Audited Financial Statements and the Interim Financial Statements,
and
(b) together
with all disclosures made in this Agreement or in the Schedules hereto,
present
fairly in all material respects the financial condition and the revenues,
expenses and results of the operations of the Corporation as of and to
the date
hereof.
No
information, records or systems pertaining to the operation or administration
of
the Business are in the possession of, recorded, stored, maintained by
or
otherwise dependent upon any other person.
(11) Liabilities
of the Corporation. There are no liabilities (contingent or otherwise)
of the
Corporation of any kind whatsoever, and to the best of the knowledge of
the
Corporation and the Shareholder there is no basis for assertion against
the
Corporation of any liabilities of any kind, other than:
(a) Liabilities
disclosed and reflected in or provided for in the Audited Financial Statements
or the Interim Financial Statements;
(b) liabilities
incurred since the Audited Statements Date which were incurred in the ordinary
course of the routine daily affairs of the Business and, in the aggregate,
are
not materially adverse to the Business, and
(c) Other
liabilities disclosed in this Agreement or in the schedules attached
hereto.
-10-
(12) Indebtedness.
Except as disclosed in the Audited Financial Statements, the Corporation
has no
bonds, debentures, mortgages, promissory notes or other indebtedness maturing
more than one year after the date of their original creation or issuance,
and is
not under any obligation to create or issue any bonds, debentures, mortgages,
promissory notes or other indebtedness maturing more than one year after
the
date of their original creation or issuance.
(13) Absence
of Certain Changes or Events. Since the Audited Statements Date, the Corporation
has not:
(a) incurred
any obligation or liability (fixed or contingent), except normal trade
or
business obligations incurred in the ordinary course of the Business, none
of
which is materially adverse to the Corporation;
(b) paid
or
satisfied any obligation or liability (fixed or contingent),
except:
|
(i)
|
current
liabilities included in the Audited Financial
Statements;
|
|
(ii)
|
current
liabilities incurred since the Audited Statements Date in the
ordinary
course of the Business, and
|
(iii) scheduled
payments pursuant to obligations under loan agreements or other contracts
or
commitments described in this Agreement or in the schedules hereto.
(c) created
any Encumbrance upon any of its properties or assets, except as described
in
this Agreement or in the schedules hereto;
(d) sold,
assigned, transferred, leased or otherwise disposed of any of its properties
or
assets, except in the ordinary course of the Business;
(e) purchased,
leased or otherwise acquired any properties or assets, except in the ordinary
course of the Business;
(f) waived,
cancelled or written-off any rights, claims, accounts receivable or any
amounts
payable to the Corporation, except in the ordinary course of the
Business;
(g) entered
into any transaction, contract, agreement or commitment, except in the
ordinary
course of the Business;
(h) terminated,
discontinued, closed or disposed of any plant, facility or business
operation;
(i) had
any
supplier terminate, or communicate to the Corporation the intention or
threat to
terminate its relationship with the Corporation, or the intention to
substantially reduce the quantity of products or services it sells to the
Corporation, except in the case of suppliers whose sales to the Corporation
are
not, in the aggregate, material to the Business or the Condition of the
Corporation;
(j) had
any
customer terminate, or communicate to the Corporation the intention or
threat to
terminate, its relationship with the Corporation, or the intention to
substantially reduce the quantity of products or services it purchases
from the
Corporation, or its dissatisfaction with the products or services sold
by the
Corporation, except in the case of customers whose purchases from the
Corporation are not, in the aggregate, material to the Business or the
Condition
of the Corporation;
(k) made
any
material change in the method of billing customers or the credit terms
made
available by the Corporation to its customers;
(l) made
any
material change with respect to any method of management, operation or
accounting in respect of the Business;
(m)
suffered any damage, destruction or loss (whether or not covered by insurance)
which has materially adversely affected or could materially adversely affect
the
Business or the Condition of the Corporation;
(n) increased
any form of compensation or other benefits payable or to become payable
to any
of the employees of the Corporation, except increases made in the ordinary
course of the Business;
(o) suffered
any extraordinary loss relating to the Business;
(p) made
or
incurred any material change in, or become aware of any event or condition
which
is likely to result in a material change in, the Business or the Condition
of
the Corporation or its relationships with its customers, suppliers or employees,
or
(q) authorized,
agreed or otherwise become committed to do any of the foregoing.
-11-
(14) Commitments
for Capital Expenditures. The Corporation is not committed to make any
capital
expenditures, nor have any capital expenditures been authorized by the
Corporation at any time since the Audited Statements Date, except for capital
expenditures made in the ordinary course of the routine daily affairs of
the
Business which, in the aggregate, do not exceed $50,000.00 as of the Closing
Date.
(15) Dividends
and Distributions. Since the Audited Statements Date, the Corporation has
not
declared or paid any dividend or made any other distribution on any of
its
shares of any class, or redeemed or purchased or otherwise acquired any
of its
shares of any class, or reduced its authorized capital or issued capital,
or
agreed to any of the foregoing.
(16) Tax
Matters.
(a) For
purposes of this Agreement, the term "Governmental Charges" means and includes
all taxes, customs duties, rates, levies, assessments, reassessments and
other
charges, together with all penalties, interest and fines with respect thereto,
payable to any federal, State, municipal, local or other government or
governmental agency, authority, board, bureau or commission, domestic or
foreign.
(b) The
Corporation has duly and on a timely basis prepared and filed all tax returns
and other documents required to be filed by it in respect of all Governmental
Charges and such returns and documents are complete and correct. Complete
and
correct copies of all such returns and other documents filed in respect
of the
three fiscal years of the Corporation ending prior to the date hereof have
been
provided to the Purchaser.
(c) The
Corporation has paid all Governmental Charges which are due and payable
by it on
or before the date hereof. Adequate provision was made in the Audited Financial
Statements and Interim Financial Statements for all Governmental Charges
for the
periods covered by the Audited Financial Statements and Interim Financial
Statements, respectively. The Corporation has no liability for Governmental
Charges other than those provided for in the Audited Financial Statements
and
those arising in the ordinary course of the operation of the Business since
the
Audited Statements Date.
(d) U.S.
federal and state income tax assessments have been issued to the Corporation
covering all past periods up to and including the fiscal year ended December
31,
2003. There are no actions, suits, proceedings, investigations, inquiries
or
claims now pending or made or, to the best of the knowledge of the Corporation
and the Shareholder, threatened against the Corporation in respect of
Governmental Charges.
(e) There
are
no agreements, waivers or other arrangements providing for any extension
of time
with respect to the filing of any tax return or other document or the payment
of
any Governmental Charges by the Corporation or the period for any assessment
or
reassessment of Governmental Charges. Only the fiscal years of the Corporation
subsequent to December 31, 2003 remain open for reassessment for additional
taxes.
(f) The
Corporation has withheld from each amount paid or credited to any person
the
amount of Governmental Charges required to be withheld there from and has
remitted such Governmental Charges to the proper tax or other receiving
authorities within the time required under applicable legislation.
(g) Schedule
I attached hereto accurately sets out, for purposes of the tax code, the
following:
|
(i)
|
the
paid-up capital of all issued and outstanding shares in the capital
of the
Corporation;
|
|
(ii)
|
all
non-capital losses of the
Corporation;
|
(iii) all
net
capital losses of the Corporation;
|
(iv)
|
the
amount of all investment tax credits available to the
Corporation;
|
|
(v)
|
the
adjusted cost base of the Corporation's capital
properties;
|
|
(vi)
|
the
cost of the Corporation's depreciable properties, the capital
cost
allowance taken in respect of each class of such properties and
the
undepreciated capital cost of each class of such
properties;
|
(vii) the
amount (if any) of the Corporation's capital dividend account;
(viii) the
amount (if any) of the Corporation's cumulative eligible capital account,
and
|
(ix)
|
the
amount (if any) of the Corporation's refundable dividend tax
on
hand.
|
(h) The
Corporation is a private corporation and has been one since January 26,
2001.
-12-
(17) Litigation.
Except for the matters referred to in Schedule J attached hereto, there
are no
actions, suits or proceedings, judicial or administrative (whether or not
purportedly on behalf of the Corporation) pending or, to the best of the
knowledge of the Corporation and the Shareholder, threatened, by or against
or
affecting the Corporation, at law or in equity, or before or by any court
or any
federal, State, municipal or other governmental department, commission,
board,
bureau, agency or instrumentality, domestic or foreign. Except for the
matters
referred to in Schedule J, there are no grounds on which any such action,
suit
or proceeding might be commenced with any reasonable likelihood of
success.
(18) Environmental
Matters.
(a) For
the
purposes of this Agreement, the following terms and expressions shall have
the
following meanings:
|
(i)
|
"Environmental
Laws" means all applicable statutes, regulations, ordinances,
by-laws, and
codes and all international treaties and agreements, now or hereafter
in
existence in United States (whether federal, State or municipal)
and in
the United States (whether federal, state or local) relating
to the
protection and preservation of the environment, occupational
health and
safety, product safety, product liability or Hazardous
Substances.
|
|
(ii)
|
"Environmental
Permits" includes all orders, permits, certificates, approvals,
consents,
registrations and licences issued by any authority of competent
jurisdiction under Environmental
Laws.
|
(iii) "Hazardous
Substance" means, collectively, any contaminant in the, toxic substance,
dangerous goods or pollutant or any other substance which when released
to the
natural environment is likely to cause, at some immediate or future time,
material harm or degradation to the natural environment or material risk
to
human health.
|
(iv)
|
"Release"
means any release, spill, leak, emission, discharge, xxxxx, dumping,
escape or other disposal which is or has been made in contravention
of any
Environmental Laws.
|
(b) Except
as
disclosed in Schedule K attached hereto, the Corporation, the operation
of the
Business, the property and assets owned or used by the Corporation and
the use,
maintenance and operation thereof have been and are in compliance with
all
Environmental Laws. The Corporation has complied with all reporting and
monitoring requirements under all Environmental Laws. The Corporation has
not
received any notice of any non-compliance with any Environmental Laws,
and the
Corporation has never been convicted of an offence for non-compliance with
any
Environmental Laws or been fined or otherwise sentenced or settled such
prosecution short of conviction.
(c) The
Corporation has obtained all Environmental Permits necessary to conduct
the
Business and to own, use and operate the properties and assets of the
Corporation. All such Environmental Permits are listed in Schedule K and
complete and correct copies thereof have been provided to the
Purchaser.
(d) Except
as
disclosed in Schedule K, there are no Hazardous Substances located on or
in any
of the properties or assets owned or used by the Corporation, and no Release
of
any Hazardous Substances has occurred on or from the properties and assets
of
the Corporation or has resulted from the operation of the Business and
the
conduct of all other activities of the Corporation. Except as disclosed
in
Schedule K, the Corporation has not used any of its properties or assets
to
produce, generate, store, handle, transport or dispose of any Hazardous
Substances and none of the Real Properties or Leased Premises has been
or is
being used as a landfill or waste disposal site.
-13-
(e) Without
limiting the generality of the foregoing, except as disclosed in Schedule
K,
there are no underground or surface storage tanks or urea formaldehyde
foam
insulation, asbestos, polychlorinated biphenyls (PCBs) or radioactive substances
located on or in any of the properties or assets owned or used by the
Corporation. The Corporation is not, and there is no basis upon which the
Corporation could become, responsible for any clean-up or corrective action
under any Environmental Laws. The Corporation has never conducted or caused
to
be conducted an environmental audit, assessment or study of any of the
properties or assets of the Corporation.
(f) Except
as
disclosed in Schedule K, there are no pending or proposed changes to
Environmental Laws which would render illegal or restrict the manufacture
or
sale of any products manufactured or sold or services provided by the
Corporation.
(19) Title
to
Assets. The Corporation is the owner of and has good and marketable title
to all
of its properties and assets, including, without limitation, all properties
and
assets reflected in the Audited Financial Statements and all properties
and
assets acquired by the Corporation after the Audited Statements Date, free
and
clear of all Encumbrances whatsoever, except for:
(a) the
properties and assets disposed of, utilized or consumed by the Corporation
since
the Audited Statements Date in the ordinary course of the Business;
(b) the
Encumbrances disclosed or reflected in the Audited Financial Statements
or the
Interim Financial Statements;
(c) liens
for
taxes not yet due and payable, and
(d) the
Encumbrances described in Schedule L attached hereto.
No
other
person owns any assets which are being used in the Business, except for
the
Leased Premises and personal property leased by the Corporation. There
are no
agreements or commitments to purchase property or assets by the Corporation,
other than in the ordinary course of the Business.
(20) Deposit
Accounts and Safe Deposit Boxes of the Corporations. The name and address
of
each bank, trust company or similar institution with which the Corporation
has
one or more accounts or one or more safe deposit boxes, the number of each
such
account and safe deposit box and the names of all persons authorized to
draw
thereon or to have access thereto are as set forth in Schedule M attached
hereto.
(21) Accounts
Receivable. The accounts receivable of the Corporation reflected in the
Interim
Financial Statements and all accounts receivable of the Corporation arising
since the date of the Interim Financial Statements arose from bona fide
transactions in the ordinary course of the Business and are valid, enforceable
and fully collectible accounts (subject to a reasonable allowance, consistent
with past practice, for doubtful accounts as reflected in the Interim Financial
Statements or as previously disclosed in writing to the Purchaser). Such
accounts receivable are not subject to any set-off or counterclaim.
(22) Inventory.
The current inventory of the Corporation, subject to a reasonable allowance
for
obsolete inventory (consistent with the allowances reflected in the Audited
Financial Statements and the Interim Financial Statements), is good and
usable
and is capable of being processed and sold in the ordinary course of the
Business at normal profit margins.
-14-
(23) Real
Properties.
(a)
Schedule D attached hereto lists all real property owned by the Corporation
and
sets forth the legal description thereof. There are no agreements, options,
contracts or commitments to sell, transfer or otherwise dispose of the
Real
Properties or which would restrict the ability of the Corporation to transfer
the Real Properties.
|
(b)
|
The
Corporation is the absolute beneficial owner of, and has good
and
marketable title in fee simple to, the Real Properties, free
and clear of
any and all Encumbrances, except for:
|
|
(i)
|
the
Encumbrances described in Schedule L attached
hereto;
|
|
(ii)
|
liens
for current taxes not yet due, and
|
(iii) rights
of
parties in possession, zoning restrictions, easements, encroachments,
rights-of-way, reservations and restrictions that run with the land and
minor
title defects (if any) which do not, in the aggregate, materially adversely
affect the validity of title to or the value or marketability of the Real
Properties or materially adversely affect the use of the Real Properties
as they
are presently used by the Corporation in connection with the
Business.
Complete
and correct copies of all documents creating the Encumbrances described
in
Schedule L attached hereto have been provided to the Purchaser.
|
(c)
|
The
Real Properties described in Schedule D and all buildings and
structures
located thereon and the conduct of the Business as presently
conducted do
not violate, and the use thereof in the manner in which presently
used is
not adversely affected by, any zoning or building laws, ordinances,
regulations, covenants or official plans. The Corporation has
not received
any notification alleging any such violation. Such buildings
and
structures do not encroach upon any lands not owned by the Corporation.
There are no expropriation, condemnation or similar proceedings
pending
or, to the best of the knowledge of the Corporation and the Shareholder,
threatened, with respect to any of the Real Properties or any
part
thereof.
|
(24) Leased
Premises. Schedule C attached hereto describes all leases or agreements
to lease
under which the Corporation leases any real property. Complete and correct
copies of the Leases have been provided to the Purchaser. The Corporation
is
exclusively entitled to all rights and benefits as lessee under the Leases
and
the Corporation has not sublet, assigned, licensed or otherwise conveyed
any
rights in the Leased Premises or in the Leases to any other person. The
names of
the other parties to the Leases, the description of the Leased Premises,
the
term, rent and other amounts payable under the Leases and all renewal options
available under the Leases are accurately described in Schedule C. All
rental
and other payments and other obligations required to be paid and performed
by
the Corporation pursuant to the Leases have been duly paid and performed.
The
Corporation is not in default of any of its obligations under the Leases
and, to
the best of the knowledge of the Corporation and the Shareholder, none
of the
landlords or other parties to the Leases are in default of any of their
obligations under the Leases. The terms and conditions of the Leases will
not be
affected by, nor will any of the Leases be in default as a result of, the
completion of the transactions contemplated hereunder. The use by the
Corporation of the Leased Premises is not in breach of any building, zoning
or
other statute, by-law, ordinance, regulation, covenant, restriction or
official
plan. The Corporation has adequate rights of ingress to and egress from
the
Leased Premises for the operation of the Business in the ordinary
course.
(25)
Work
Orders and Deficiencies. There are no outstanding work orders, non-compliance
orders, deficiency notices or other such notices relative to the Real
Properties, the Leased Premises, the other properties and assets of the
Corporation or the Business which have been issued by any regulatory authority,
police or fire department, sanitation, environment, labour, health or other
governmental authorities or agencies. There are no matters under discussion
with
any such department or authority relating to work orders, non-compliance
orders,
deficiency notices or other such notices. The Business is not being carried
on,
and none of the Real Properties, the Leased Premises or the other properties
or
assets of the Corporation are being operated in a manner which is in
contravention of any statute, regulation, rule, code, standard or policy.
No
amounts are owing by the Corporation in respect of the Real Properties
or the
Leased Premises to any governmental authority or public utility, other
than
current accounts which are not in arrears.
-15-
(26)
Condition of Properties and Equipment. The buildings and structures comprise
the
Real Properties and, to the best of the knowledge of the Corporation and
the
Shareholder, those comprising the Leased Premises, are free of any structural
defect. The heating, ventilating, plumbing, drainage, electrical and air
conditioning systems and all other systems used in the Real Properties
and the
Leased Premises and all machinery, equipment, tools, furniture, furnishings
and
materials used in the Business are in good working order, fully operational
and
free of any defect, except for normal wear and tear.
(27)
Leases
of Personal Property. Except as set out in Schedule N attached hereto,
the
Corporation is not the lessee under any lease of personal property in respect
of
which the annual financial obligation exceeds $50,000.00. Complete and
correct
copies of each of the leases referred to in Schedule N have been provided
to the
Purchaser.
(28)
Intellectual Property.
(a) Schedule
O attached hereto lists and contains a description of:
|
(i)
|
all
patents, patent applications and registrations, trade marks,
trade xxxx
applications and registrations, copyrights, copyright applications
and
registrations, trade names and industrial designs, domestic or
foreign,
owned or used by the Corporation or relating to the operation
of the
Business;
|
|
(ii)
|
all
trade secrets, know-how, inventions and other intellectual property
owned
or used by the Corporation or relating to the Business, and
|
(iii) all
computer systems and application software, including without limitation
all
documentation relating thereto and the latest revisions of all related
object
and source codes therefore, owned or used by the Corporation or relating
to the
Business,
(all
of
the foregoing being hereinafter collectively called the "Intellectual
Property").
(b) The
Corporation has good and valid title to all of the Intellectual Property,
free
and clear of any and all Encumbrances, except in the case of any Intellectual
Property licensed to the Corporation as disclosed in Schedule O. Complete
and
correct copies of all agreements whereby any rights in any of the Intellectual
Property have been granted or licensed to the Corporation have been provided
to
the Purchaser. No royalty or other fee is required to be paid by the Corporation
to any other person in respect of the use of any of the Intellectual Property
except as provided in such agreements delivered to the Purchaser. The
Corporation has protected its rights in the Intellectual Property in the
manner
and to the extent described in Schedule O. Except as indicated in Schedule
O,
the Corporation has the exclusive right to use all of the Intellectual
Property
and has not granted any licence or other rights to any other person in
respect
of the Intellectual Property. Complete and correct copies of all agreements
whereby any rights in any of the Intellectual Property have been granted
or
licensed by the Corporation to any other person have been provided to the
Purchaser.
(c) Except
as
disclosed in Schedule O, there are no restrictions on the ability of the
Corporation or any successor to or assignee from the Corporation to use
and
exploit all rights in the Intellectual Property. All statements contained
in all
applications for registration of the Intellectual Property were true and
correct
as of the date of such applications. Each of the trade marks and trade
names
included in the Intellectual Property is in use. None of the rights of
the
Corporation in the Intellectual Property will be impaired or affected in
any way
by the transactions contemplated by this Agreement.
(d) The
conduct of the Business and the use of the Intellectual Property does not
infringe, and the Corporation has not received any notice, complaint, threat
or
claim alleging infringement of, any patent, trade xxxx, trade name, copyright,
industrial design, trade secret or other Intellectual Property or propriety
right of any other person, and the conduct of the Business does not include
any
activity which may constitute passing off.
-16-
(e) The
computer systems, including hardware and software, are free from viruses
and the
Corporation has taken, and will continue to take, all steps and implement
all
procedures necessary to ensure, so far as reasonably possible, that such
systems
are free from viruses and will remain so until the Closing Time.
|
(29)
|
Subsidiaries
and Other Interests. The Corporation has no subsidiaries and
does not own
any securities issued by, or any equity or ownership interest
in, any
other person. The Corporation is not subject to any obligation
to make any
investment in or to provide funds by way of loan, capital contribution
or
otherwise to any person
|
(30) Partnerships
or Joint Ventures. The Corporation is not a partner or participant in any
partnership, joint venture, profit-sharing arrangement or other association
of
any kind and is not party to any agreement under which the Corporation
agrees to
carry on any part of the Business or any other activity in such manner
or by
which the Corporation agrees to share any revenue or profit with any other
person.
(31) Customers.
The Corporation has previously delivered to the Purchaser a true and complete
list of all customers of the Business as of the date hereof. The Corporation
is
the sole and exclusive owner of, and has the unrestricted right to use,
such
customer list. Neither the customer list nor any information relating to
the
customers of the Business have, within three years prior to the date of
this
Agreement, been made available to any person other than the Purchaser.
Neither
the Corporation nor the Shareholder has any knowledge of any facts which
could
reasonably be expected to result in the loss of any customers or sources
of
revenue of the Business which, in the aggregate, would be material to the
Business or the Condition of the Corporation.
(32) Restrictions
on Doing Business. The Corporation is not a party to or bound by any agreement
which would restrict or limit its right to carry on any business or activity
or
to solicit business from any person or in any geographical area or otherwise
to
conduct the Business as the Corporation may determine. The Corporation
is not
subject to any legislation or any judgement, order or requirement of any
court
or governmental authority which is not of general application to persons
carrying on a business similar to the Business. To the best of the knowledge
of
the Corporation and the Shareholder, there are no facts or circumstances
which
could materially adversely affect the ability of the Corporation to continue
to
operate the Business as presently conducted following the completion of
the
transactions contemplated by this Agreement.
(33) Guarantees,
Warranties and Discounts. Except as described in Schedule P attached
hereto:
(a) the
Corporation is not a party to or bound by any agreement of guarantee,
indemnification, assumption or endorsement or any other like commitment
of the
obligations, liabilities (contingent or otherwise) or indebtedness of any
person;
(b) the
Corporation has not given any guarantee or warranty in respect of any of
the
products sold or the services provided by it, except warranties made in
the
ordinary course of the Business and in the form of the Corporation's standard
written warranty, a copy of which has been provided to the Purchaser, and
except
for warranties implied by law;
(c) during
each of the three fiscal years of the Corporation ended immediately preceding
the date hereof, no claims have been made against the Corporation for breach
of
warranty or contract requirement or negligence or for a price adjustment
or
other concession in respect of any defect in or failure to perform or deliver
any products, services or work which had, in any such year, an aggregate
cost
exceeding $amount;
-17-
(d) there
are
no repair contracts or maintenance obligations of the Corporation in favour
of
the customers or users of products of the Business, except obligations
incurred
in the ordinary course of the Business and in accordance with the Corporation's
standard terms, a copy of which has been provided to the Purchaser;
(e) the
Corporation is not now subject to any agreement or commitment, and the
Corporation has not, within three years prior to the date hereof, entered
into
any agreement with or made any commitment to any customer of the Business
which
would require the Corporation to repurchase any products sold to such customers
or to adjust any price or grant any refund, discount or other concession
to such
customer, and
(f) the
Corporation is not required to provide any letters of credit, bonds or
other
financial security arrangements in connection with any transactions with
its
suppliers or customers.
(34) Licences,
Agency and Distribution Agreements. Schedule Q attached hereto lists all
agreements to which the Corporation is a party or by which it is bound
under
which the right to manufacture, use or market any product, service, technology,
information, data, computer hardware or software or other property has
been
granted, licensed or otherwise provided to the Corporation or by the Corporation
to any other person, or under which the Corporation has been appointed
or any
person has been appointed by the Corporation as an agent, distributor,
licensee
or franchisee for any of the foregoing. Complete and correct copies of
all of
the agreements listed in Schedule Q have been provided to the Purchaser.
None of
the agreements listed in Schedule Q grant to any person any authority to
incur
any liability or obligation or to enter into any agreement on behalf of
the
Corporation.
(35) Outstanding
Agreements. The Corporation is not a party to or bound by any outstanding
or
executory agreement, contract or commitment, whether written or oral, except
for:
(a) any
contract, lease or agreement described or referred to in this Agreement
or in
the schedules hereto;
(b) any
contract, lease or agreement made in the ordinary course of the routine
daily
affairs of the Business under which the Corporation has a financial obligation
of less than $1,000,000 per annum and which can be terminated by the Corporation
without payment of any damages, penalty or other amount by giving not more
than
30 days' notice, and
(c) the
contracts, leases and agreements described in Schedule R attached hereto.
Complete
and correct copies of each of the contracts, leases and agreements described
in
Schedule R have been provided to the Purchaser.
(36) Good
Standing of Agreements. The Corporation is not in default or breach of
any of
its obligations under any one or more contracts, agreements (written or
oral),
commitments, indentures or other instruments to which it is a party or
by which
it is bound and there exists no state of facts which, after notice or lapse
of
time or both, would constitute such a default or breach. All such contracts,
agreements, commitments, indentures and other instruments are now in good
standing and in full force and effect without amendment thereto, the Corporation
is entitled to all benefits thereunder and, to the best of the knowledge
of the
Corporation and the Shareholder, the other parties to such contracts,
agreements, commitments, indentures and other instruments are not in default
or
breach of any of their obligations thereunder. There are no contracts,
agreements, commitments, indentures or other instruments under which the
Corporation's rights or the performance of its obligations are dependent
upon or
supported by the guarantee of or any security provided by any other
person.
(37) Employees.
Schedule S attached hereto sets forth the name, job title, duration of
employment, vacation entitlement, employee benefit entitlement and rate
of
remuneration (including bonus and commission entitlement) of each employee
of
the Corporation. Schedule S also sets forth the names of all employees
of the
Corporation who are now on disability, maternity or other authorized leave
or
who are receiving workers' compensation or short-term or long-term disability
benefits.
-18-
(38) Employment
Agreements. The Corporation is not a party to any written or oral employment,
service or consulting agreement relating to any one or more persons, except
for
oral employment agreements which are of indefinite term and without any
special
arrangements or commitments with respect to the continuation of employment
or
payment of any particular amount upon termination of employment. The Corporation
does not have any employee who cannot be dismissed upon such period of
notice as
is required by law in respect of a contract of hire for an indefinite
term.
(39) Labour
Matters and Employment Standards.
(a) The
Corporation is not subject to any agreement with any labour union or employee
association and has not made any commitment to or conducted negotiations
with
any labour union or employee association with respect to any future agreement
and, to the best of the knowledge of the Corporation and the Shareholder,
during
the period of five years preceding the date of this Agreement there has
been no
attempt to organise, certify or establish any labour union or employee
association in relation to any of the employees of the Corporation.
(b) There
are
no existing or, to the best of the knowledge of the Corporation and the
Shareholder, threatened, labour strikes or labour disputes, grievances,
controversies or other labour troubles affecting the Corporation or the
Business.
(c) The
Corporation has complied with all laws, rules, regulations and orders applicable
to it relating to employment, including those relating to wages, hours,
collective bargaining, occupational health and safety, workers' hazardous
materials, employment standards, pay equity and workers' compensation.
There are
no outstanding charges or complaints against the Corporation relating to
unfair
labour practices or discrimination or under any legislation relating to
employees. The Corporation has paid in full all amounts owing under the
Workers'
Compensation laws or comparable state or federal legislation, and the workers'
compensation claims experience of the Corporation would not permit a penalty
reassessment under such legislation.
(40) Employee
Benefit and Pension Plans.
(a) Except
as
listed in Schedule T attached hereto, the Corporation does not have, and
is not
subject to any present or future obligation or liability under, any pension
plan, deferred compensation plan, retirement income plan, stock option
or stock
purchase plan, profit sharing plan, bonus plan or policy, employee group
insurance plan, hospitalization plan, disability plan or other employee
benefit
plan, program, policy or practice, formal or informal, with respect to
any of
its employees. Schedule T also lists the general policies, procedures and
work-related rules in effect with respect to employees of the Corporation,
whether written or oral, including but not limited to policies regarding
holidays, sick leave, vacation, disability and death benefits, termination
and
severance pay, automobile allowances and rights to company-provided automobiles
and expense reimbursements. (The plans, programs, policies, practices and
procedures listed in Schedule T are hereinafter collectively called the
"Benefit
Plans"). Complete and correct copies of all documentation establishing
or
relating to the Benefit Plans listed in Schedule T or, where such Benefit
Plans
are oral commitments, written summaries of the terms thereof, and the most
recent financial statements and actuarial reports related thereto and all
reports and returns in respect thereof filed with any regulatory agency
within
three years prior to the date hereof have been provided to the
Purchaser.
(b) The
pension plans included in the Benefit Plans are registered under and are
in
compliance with all applicable federal and state legislation and all reports,
returns and filings required to be made thereunder have been made. Such
pension
plans have been administered in accordance with their terms and the provisions
of applicable law. Each pension plan has been funded in accordance with
the
requirements of such plans and based on actuarial assumptions which are
appropriate to the employees of the Corporation and the Business. Based
on such
assumptions, there is no unfunded liability under any such pension plan.
No
changes have occurred since the date of the most recent actuarial report
provided to the Purchaser in respect of such pension plans which makes
such
report misleading in any material respect and, since the date of such report,
the Corporation has not made or granted or committed to make or grant any
benefit improvements to which members of the pension plans are or may become
entitled which are not reflected in such actuarial report. No funds have
been
withdrawn by the Corporation from any such pension plan or other Benefit
Plans.
-19-
(c) There
are
no pending claims by any employee covered under the Benefit Plans or by
any
other person which allege a breach of fiduciary duties or violation of
governing
law or which may result in liability to the Corporation and, to the best
of the
knowledge of the Corporation and the Shareholder, there is no basis for
such a
claim. There are no employees or former employees of the Corporation who
are
receiving from the Corporation any pension or retirement payments, or who
are
entitled to receive any such payments, not covered by a pension plan to
which
the Corporation is a party.
(41) Insurance.
Schedule U attached hereto contains a true and complete list of all insurance
policies maintained by the Corporation or under which the Corporation is
covered
in respect of its properties, assets, business or personnel as of the date
hereof. Complete and correct copies of all such insurance policies have
been
provided to the Purchaser. Such insurance policies are in full force and
effect
and the Corporation is not in default with respect to the payment of any
premium
or compliance with any of the provisions contained in any such insurance
policy.
To the best of the knowledge of the Corporation and the Shareholder, there
are
no circumstances under which the Corporation would be required to or, in
order
to maintain its coverage, should give any notice to the insurers under
any such
insurance policies which has not been given. The Corporation has not received
notice from any of the insurers regarding cancellation of such insurance
policies. The Corporation has not failed to present any claim under any
such
insurance policy in due and timely fashion. The Corporation has not received
notice from any of the insurers denying any claims.
(42) Non-Arm's
Length Matters. The Corporation is not a party to or bound by any agreement
with, is not indebted to, and no amount is owing to the Corporation by
or any
officers, former officers, directors, former directors, shareholders, former
shareholders, employees (except for oral employment agreements with employees)
or former employees of the Corporation or any person not dealing at arm's
length
with any of the foregoing. Since the Audited Statements Date, the Corporation
has not made or authorized any payments to the Shareholders or any officers,
former officers, directors, former directors, shareholders, former shareholders,
employees or former employees of the Corporation or to any person not dealing
at
arm's length with any of the foregoing, except for salaries and other employment
compensation payable to employees of the Corporation in the ordinary course
of
the routine daily affairs of the Business and at the regular rates payable
to
them.
(43) Government
Assistance. Schedule V attached hereto describes all agreements, loans,
other
funding arrangements and assistance programs (collectively called "Government
Assistance Programs") which are outstanding in favour of the Corporation
from
any federal, State, municipal or other government or governmental agency,
board,
commission or authority, domestic or foreign (collectively called "Government
Agencies"). Complete and correct copies of all documents relating to the
Government Assistance Programs have been delivered to the Purchaser. The
Corporation has performed all of its obligations under the Government Assistance
Programs, and no basis exists for any Government Agencies to seek payment
or
repayment by the Corporation of any amount or benefit received by it under
any
Government Assistance Programs.
(44) Compliance
with Laws. The Corporation is not in violation of any federal, state, municipal
or other law, regulation or order of any government or governmental or
regulatory authority, domestic or foreign, including, without limitation,
any
law, regulation or order relating to its telecommunication
services.
(45) Corporation's
Residency. The Corporation is a resident of the Stage of Georgia.
(46) Copies
of
Documents. Complete and correct copies (including all amendments) of all
contracts, leases and other documents referred to in this Agreement or
any
schedule hereto or required to be disclosed hereby have been delivered
to the
Purchaser.
-20-
(47) Disclosure.
No representation or warranty contained in this section 3.01, and no statement
contained in any schedule, certificate, list, summary or other disclosure
document provided or to be provided to the Purchaser pursuant hereto or
in
connection with the transactions contemplated hereby contains or will contain
any untrue statement of a material fact, or omits or will omit to state
any
material fact which is necessary in order to make the statements contained
therein not misleading.
3.2 Representations
and Warranties by the Purchaser.
The
Purchaser hereby represents and warrants to the Corporation and the Shareholder
as follows, and confirms that the Corporation and the Shareholder are relying
upon the accuracy of each of such representations and warranties in connection
with the sale of the Purchased Shares and the completion of the other
transactions hereunder:
|
(3.21)
|
Corporate
Authority and Binding Obligation. The Purchaser is a corporation
duly
incorporated and validly subsisting in all respects under the
laws of its
jurisdiction of incorporation. The Purchaser has good right,
full
corporate power and absolute authority to enter into this Agreement
and to
purchase the Purchased Shares from the Corporation in the manner
contemplated herein and to perform all of the Purchaser's obligations
under this Agreement. The Purchaser and its shareholders and
board of
directors have taken all necessary or desirable actions, steps
and
corporate and other proceedings to approve or authorise, validly
and
effectively, the entering into, and the execution, delivery and
performance of, this Agreement and the purchase of the Purchased
Shares by
the Purchaser from the Corporation. This Agreement is a legal,
valid and
binding obligation of the Purchaser, enforceable against it in
accordance
with its terms subject to:
|
(a) bankruptcy,
insolvency, moratorium, reorganisation and other laws relating to or affecting
the enforcement of creditors' rights generally, and
(b) the
fact
that equitable remedies, including the remedies of specific performance
and
injunction, may only be granted in the discretion of a court.
|
(3.22)
|
Contractual
and Regulatory Approvals. Except as specified in Schedule W attached
hereto, the Purchaser is not under any obligation, contractual
or
otherwise, to request or obtain the consent of any person, and
no permits,
licences, certifications, authorisations or approvals of, or
notifications
to, any federal, state, municipal or local government or governmental
agency, board, commission or authority are required to be obtained
by the
Purchaser in connection with the execution, delivery or performance
by the
Purchaser of this Agreement or the completion of any of the transactions
contemplated herein. Complete and correct copies of any agreements
under
which the Purchaser is obligated to request or obtain any such
consent
have been provided to the
Corporation.
|
|
(3.23)
|
Compliance
with Constating Documents, Agreements and Laws. The execution,
delivery
and performance of this Agreement and each of the other agreements
contemplated or referred to herein by the Purchaser, and the
completion of
the transactions contemplated hereby, will not constitute or
result in a
violation or breach of or default
under:
|
(a) any
term
or provision of any of the articles, by-laws or other constating documents
of
the Purchaser;
(b) subject
to obtaining the contractual consents referred to in Schedule W hereof,
the
terms of any indenture, agreement (written or oral), instrument or understanding
or other obligation or restriction to which the Purchaser is a party or
by which
it is bound, or
(c) subject
to obtaining the regulatory consents referred to in Schedule W hereof,
any term
or provision of any licenses, registrations or qualification of the Purchaser
or
any order of any court, governmental authority or regulatory body or any
applicable law or regulation of any jurisdiction.
-21-
4.1 Survival
of Warranties by the Corporation and Shareholder.
The
representations and warranties made by the Corporation and the Shareholder
and
contained in this Agreement, or contained in any document or certificate
given
in order to carry out the transactions contemplated hereby, will survive
the
closing of the purchase of the Purchased Shares provided for herein and,
notwithstanding such closing or any investigation made by or on behalf
of the
Purchaser or any other person or any knowledge of the Purchaser or any
other
person, shall continue in full force and effect for the benefit of the
Purchaser, subject to the following provisions of this section.
(a) Except
as
provided in (b) and (c) of this section, no Warranty Claim may be made
or
brought by the Purchaser after the date which is five (5) years following
the
Closing Date.
(b) Any
Warranty Claim which is based upon or relates to the tax liability of the
Corporation for a particular taxation year may be made or brought by the
Purchaser at any time prior to the expiration of the period (if any) during
which an assessment, reassessment or other form of recognized document
assessing
liability for tax, interest or penalties in respect of such taxation year
under
applicable tax legislation could be issued, assuming that the Corporation
does
not file any waiver or similar document extending such period as otherwise
determined.
(c) Any
Warranty Claim which is based upon or relates to the title to the Purchased
Shares or which is based upon intentional misrepresentation or fraud by
the
Corporation or the Shareholder may be made or brought by the Purchaser
at any
time.
After
the
expiration of the period of time referred to in (a) of this section, the
Corporation and the Shareholder will be released from all obligations and
liabilities in respect of the representations and warranties made by the
Corporation and the Shareholder and contained in this Agreement or in any
document or certificate given in order to carry out the transactions
contemplated hereby, except with respect to any Warranty Claims made by
the
Purchaser in writing prior to the expiration of such period and subject
to the
rights of the Purchaser to make any claim permitted by (b) and or (c) of
this
section.
|
4.2
|
Survival
of Warranties by Purchaser.
|
The
representations and warranties made by the Purchaser and contained in this
Agreement or contained in any document or certificate given in order to
carry
out the transactions contemplated hereby will survive the closing of the
purchase and sale of the Purchased Shares provided for herein and,
notwithstanding such closing or any investigation made by or on behalf
of the
Corporation or the Shareholder or any other person or any knowledge of
the
Corporation or the Shareholder or any other person, shall continue in full
force
and effect for the benefit of the Corporation and the Shareholder; provided
that
no Warranty Claim may be made or brought by the Corporation after the date
which
is five (5) years following the Closing Date.
-22-
|
4.3
|
Limitations
on Warranty Claims
|
(a) The
Purchaser shall not be entitled to make a Warranty Claim if the Purchaser
has
been advised in writing or otherwise has actual knowledge prior to the
Closing
Time of the inaccuracy, non-performance, non-fulfilment or breach which
is the
basis for such Warranty Claim and the Purchaser completes the transactions
hereunder notwithstanding such inaccuracy, non-performance, non-fulfilment
or
breach.
(b) The
amount of any damages which may be claimed by the Purchaser pursuant to
a
Warranty Claim shall be calculated to be the cost or loss to the Purchaser
after
giving effect to:
|
(i)
|
any
insurance proceeds available to the Corporation in relation to
the matter
which is the subject of the Warranty Claim, and
|
|
(ii)
|
the
value of any related, determinable tax benefits realised, or
which will
(with reasonable certainty) be realised within a 2 year period
following
the date of incurring such cost or loss, by the Corporation or
the
Purchaser in relation to the matter which is the subject of the
Warranty
Claim.
|
(c) The
Purchaser shall not be entitled to make any Warranty Claim until the aggregate
amount of all damages, losses, liabilities and expenses incurred by the
Purchaser as a result of all misrepresentations and breaches of warranties
contained in this Agreement or contained in any document or certificate
given in
order to carry out the transactions contemplated hereby, after taking into
account (b) of this section, is equal to $100,000.00. After the aggregate
amount
of such damages, losses, liabilities and expenses incurred by the Purchaser
exceeds $100,000.00, the Purchaser shall only be entitled to make Warranty
Claims to the extent that such aggregate amount, after taking into account
the
provisions of paragraph (b) of this section, exceeds $200,000.00.
(d) Notwithstanding
any other provisions of this Agreement or of any agreement, certificate
or other
document made in order to carry out the transactions contemplated hereby,
the
maximum aggregate liability of the Corporation and the Shareholder together
in
respect of all Warranty Claims by the Purchaser will be limited to
$500,000.00.
5.1 Covenants
by the Corporation and the Shareholder.
The
Corporation and the Shareholder jointly and severally covenant to the Purchaser
that they will do or cause to be done the following:
|
(5.12)
|
Investigation
of Business and Examination of Documents. During the Interim
Period, the
Corporation and the Shareholder will provide and will cause the
Corporation to provide access to, and will permit the Purchaser,
through
its representatives, to make such investigation of, the operations,
properties, assets and records of the Corporation and of its
financial and
legal condition as the Purchaser deems necessary or advisable
to
familiarise itself with such operations, properties, assets,
records and
other matters. Without limiting the generality of the foregoing,
during
the Interim Period the Corporation and the Shareholder will permit
the
Purchaser and its representatives to have access to the premises
used in
connection with the Business at such reasonable times as may
be designated
by the Corporation so as not to disrupt the routine daily affairs
of the
Business, and will produce for inspection and provide copies
to the
Purchaser of:
|
(a) all
agreements and other documents referred to in section 3.1 hereof or in
any of
the schedules attached hereto and all other contracts, leases, licenses,
title
documents, title opinions, insurance policies, pension plans, information
relating to employees of the Corporation, customer lists, information relating
to customers and suppliers of the Corporation, documents relating to all
indebtedness and credit facilities of the Corporation, documents relating
to
legal or administrative proceedings and all other documents of or in the
possession of the Corporation or relating to the Business;
(b) all
minute books, share certificate books, registers of security holders, registers
of transfers of securities, registers of directors and other corporate
documents
of the Corporation;(c) all books, records, accounts, tax returns and financial
statements of the Corporation, and
(c) all
other
information which, in the reasonable opinion of the Purchaser's representatives,
is required in order to make an examination of the Corporation and the
Business.
Subject to section 4.3 hereof, such investigations and inspections shall
not
mitigate or affect the representations and warranties of the Corporation
and the
Shareholder hereunder, which shall continue in full force and
effect.
-23-
|
(5.13)
|
Conduct
of Business. Except as contemplated by this agreement or with
the prior
written consent of the Purchaser, during the Interim Period the
Corporation and the Shareholder will, and will cause the Corporation
to:
|
(a) operate
the Business only in the ordinary course thereof, consistent with past
practices;
(b) take
all
actions within their control to ensure that the representations and warranties
in section 3.1 hereof remain true and correct at the Closing Time, with
the same
force and effect as if such representations and warranties were made at
and as
of the Closing Time, and to satisfy or cause to be satisfied the conditions
in
section 6.1 hereof;
(c) promptly
advise the Purchaser of any facts that come to their attention which would
cause
any of the Corporation's and the Shareholder's representations and warranties
herein contained to be untrue in any respect;
(d) take
all
action to preserve the Business and the goodwill of the Corporation and
its
relationships with customers, suppliers and others having business dealings
with
it, to keep available the services of its present officers and employees
and to
maintain in full force and effect all agreements to which the Corporation
is a
party, and take all other action reasonably requested by the Purchaser
in order
that the Business and the Condition of the Corporation will not be impaired
during the Interim Period;
(e) promptly
advise the Purchaser in writing of any material adverse change in the Business
or the Condition of the Corporation during the Interim Period;
(f) maintain
all of the Corporation's tangible properties and assets in the same condition
as
they now exist, ordinary wear and tear excepted;
(g) maintain
the books, records and accounts of the Corporation in the ordinary course
and
record all transactions on a basis consistent with past practice;
(h) ensure
that the Corporation does not create, incur or assume any long-term debt
(including obligations in respect of leases) or create any Encumbrance
upon any
of its properties or assets or guarantee or otherwise become liable for
the
obligations of any other person or make any loans or advances to any
person;
(i) ensure
that the Corporation does not sell or otherwise dispose of any of its properties
or assets except in the ordinary course of the Business;
(j) ensure
that the Corporation does not terminate or waive any right of substantial
value
of the Business;
(k) ensure
that the Corporation does not make any capital expenditure in excess of
$150,000.00 in respect of any particular item or in excess of $250,000.00
in the
aggregate;
(l) maintain
the inventories of the Business in accordance with past practice;
(m)
keep
in full force all of the Corporation's current insurance policies;
(n) take
all
actions within their control to ensure that the Corporation performs all
of its
obligations falling due during the Interim Period under all agreements
to which
the Corporation is a party or by which it is bound;
(o) ensure
that the Corporation does not enter into any agreement other than agreements
made in the ordinary course of the Business consistent with past practice
and
which involve obligations of less than $25,000.00;
(p) not
take
any action to amend the articles of incorporation or by-laws of the
Corporation;
(q) ensure
that the Corporation does not declare or pay any dividends, redeem or repurchase
any shares in the capital of the Corporation or make any other distributions
in
respect of the shares of the Corporation, and
(r) ensure
that the Corporation does not increase, in any manner, the compensation
or
employee benefits of any of its directors, officers or employees, or pay
or
agree to pay to any of its directors, officers or employees any pension,
severance or termination amount or other employee benefit not required
by any of
the employee benefit plans and programs referred to in the schedules attached
hereto.
-24-
|
(5.13)
|
Issuance
of Purchased Shares. At or before the Closing Time, the Corporation
and
the Shareholder will cause all necessary steps and corporate
proceedings
to be taken in order to permit the Purchased Shares to be duly
and
regularly issued to the Purchaser.
|
|
(5.14)
|
Resignation
of Officers and Directors. At or before the Closing Time, the
Corporation
and the Shareholder will cause each person who is a director
or officer of
the Corporation, other than such persons as may be designated
in writing
by the Purchaser, to submit his or her written resignation as
a director
or officer to the Corporation which will be effective at the
Closing
Time.
|
|
(5.15)
|
Releases
by the Corporation and the Shareholder. At the Closing Time,
the
Corporation and the Shareholder will execute and deliver to the
Purchaser
a release in the form of the draft release attached hereto as
Schedule X.
|
5.2 Covenants
by the Purchaser.
The
Purchaser covenants to the Corporation and the Shareholder that it will
do or
cause to be done the following:
|
(5.21)
|
Confidentiality.
Prior to the Closing Time and, if the transaction contemplated
hereby is
not completed, at all times after the Closing Time, the Purchaser
will
keep confidential all information obtained by it relating to
the
Corporation and the Business, except such information
which:
|
(a) prior
to
the date hereof was already in the possession of the Purchaser, as demonstrated
by written records;
(b) is
generally available to the public, other than as a result of a disclosure
by the
Purchaser, or
(c) is
made
available to the Purchaser on a non-confidential basis from a source other
than
the Corporation, the Shareholder or their representatives.
The
Purchaser further agrees that such information will be disclosed only to
those
of its employees and representatives of its advisors who need to know such
information for the purposes of evaluating and implementing the transaction
contemplated hereby. Notwithstanding the foregoing provisions of this paragraph,
the obligation to maintain the confidentiality of such information will
not
apply to the extent that disclosure of such information is required in
connection with governmental or other applicable filings relating to the
transactions hereunder, provided that, in such case, unless the Corporation
otherwise agrees, the Purchaser will, if possible, request confidentiality
in
respect of such governmental or other filings. If the transactions contemplated
hereby are not consummated for any reason, the Purchaser will return forthwith,
without retaining any copies thereof, all information and documents obtained
from the Corporation, the Shareholder and the Corporation.
6.1 Conditions
to the Obligations of the Purchaser.
Notwithstanding
anything herein contained, the obligation of the Purchaser to complete
the
transactions provided for herein will be subject to the fulfilment of the
following conditions at or prior to the Closing Time, and the Corporation
and
the Shareholder jointly and severally covenant to use their best efforts
to
ensure that such conditions are fulfilled.
|
(6.12)
|
Accuracy
of Representations and Warranties and Performance of Covenants.
The
representations and warranties of the Corporation and the Shareholder
contained in this Agreement or in any documents delivered in
order to
carry out the transactions contemplated hereby shall be true
and accurate
on the date hereof and at the Closing Time with the same force
and effect
as though such representations and warranties had been made
as of the
Closing Time (regardless of the date as of which the information
in this
Agreement or in any schedule or other document made pursuant
hereto is
given). In addition, the Corporation and the Shareholder shall
have
complied with all covenants and agreements herein agreed to
be performed
or caused to be performed by them at or prior to the Closing
Time. In
addition, the Corporation and the Shareholder shall have delivered
to the
Purchaser a certificate in the form of Schedule Z attached
hereto
confirming that the facts with respect to each of such representations
and
warranties by the Corporation and the Shareholder are as set
out herein at
the Closing Time and that the Corporation and the Shareholder
have
performed all covenants required to be performed by them
hereunder.
|
-25-
|
(6.13)
|
Material
Adverse Changes. During the Interim Period there will have
been no change
in the Business or the Condition of the Corporation, howsoever
arising,
except changes which have occurred in the ordinary course of
the Business
and which, individually or in the aggregate, have not affected
and may not
affect the Business or the Condition of the Corporation in
any material
adverse respect. Without limiting the generality of the foregoing,
during
the Interim Period:
|
(a) no
damage
to or destruction of any material part of the property or assets of the
Corporation shall have occurred, whether or not covered by
insurance;
(b) none
of
the employees of the Corporation shall have resigned or have indicated
their
intention to resign from employment with the Corporation, and
(c) The
Shareholders agree that X.X. Xxxxxx Wholesale (“Petrey’) a company operationally
controlled by the Shareholders to continue to purchase services from the
Corporation for a period of three (3) years from date of closing. The
Corporation will have the right to increase prices to Xxxxxx by 5% a year,
but
prices to be competitive with other pricing in the industry.
|
(6.14)
|
No
Restraining Proceedings. No order, decision or ruling of any
court,
tribunal or regulatory authority having jurisdiction shall have
been made,
and no action or proceeding shall be pending or threatened which,
in the
opinion of counsel to the Purchaser, is likely to result in an
order,
decision or ruling:
|
(a) to
disallow, enjoin, prohibit or impose any limitations or conditions on the
purchase and sale of the Purchased Shares contemplated hereby or the right
of
the Purchaser to own the Purchased Shares, or
(b) to
impose
any limitations or conditions which may have a material adverse effect
on the
Business or the Condition of the Corporation.
|
(6.15)
|
Consents.
All consents required to be obtained in order to carry out the
transactions contemplated hereby in compliance with all laws
and
agreements binding upon the parties hereto shall have been obtained,
including the consents referred to in Schedules F and W attached
hereto.
|
|
(6.16)
|
Estoppel
Certificates. Prior to the Closing Time, the Purchaser shall
have received
from the landlords of the Leased Premises executed copies of
estoppel
certificates in the form of the draft certificate attached hereto
as
Schedule AA.
|
6.2 Waiver
or
Termination by Purchaser.
The
conditions contained in section 6.1 hereof are inserted for the exclusive
benefit of the Purchaser and may be waived in whole or in part by the Purchaser
at any time. The Corporation and the Shareholder acknowledge that the waiver
by
the Purchaser of any condition or any part of any condition shall constitute
a
waiver only of such condition or such part of such condition, as the case
may
be, and shall not constitute a waiver of any covenant, agreement, representation
or warranty made by the Corporation or the Shareholder herein that corresponds
or is related to such condition or such part of such condition, as the
case may
be. If any of the conditions contained in section 6.1 hereof are not fulfilled
or complied with as herein provided, the Purchaser may, at or prior to
the
Closing Time at its option, rescind this Agreement by notice in writing
to the
Corporation and the Shareholder and in such event the Purchaser shall be
released from all obligations hereunder and, unless the condition or conditions
which have not been fulfilled are reasonably capable of being fulfilled
or
caused to be fulfilled by the Corporation, the Shareholder or the Corporation,
then the Corporation and the Shareholder shall also be released from all
obligations hereunder.
-26-
6.3 Conditions
to the Obligations of the Corporation.
Notwithstanding
anything herein contained, the obligations of the Corporation and the
Shareholder to complete the transactions provided for herein will be subject
to
the fulfilment of the following conditions at or prior to the Closing Time,
and
the Purchaser will use its best efforts to ensure that such conditions
are
fulfilled.
|
(6.31)
|
Accuracy
of Representations and Warranties and Performance of Covenants.
The
representations and warranties of the Purchaser contained in
this
Agreement or in any documents delivered in order to carry out
the
transactions contemplated hereby will be true and accurate on
the date
hereof and at the Closing Time with the same force and effect
as though
such representations and warranties had been made as of the Closing
Time
(regardless of the date as of which the information in this Agreement
or
any such schedule or other document made pursuant hereto is given).
In
addition, the Purchaser shall have complied with all covenants
and
agreements herein agreed to be performed or caused to be performed
by it
at or prior to the Closing Time. In addition, the Purchaser shall
have
delivered to the Corporation a certificate in the form of Schedule
DD
attached hereto confirming that the facts with respect to each
of the
representations and warranties of the Purchaser are as set out
herein at
the Closing Time and that the Purchaser has performed each of
the
covenants required to be performed by it hereunder.
|
|
(6.32)
|
No
Restraining Proceedings. No order, decision or ruling of any
court,
tribunal or regulatory authority having jurisdiction shall have
been made,
and no action or proceeding shall be pending or threatened which,
in the
opinion of counsel to the Corporation or the Shareholder, is
likely to
result in an order, decision or ruling, to disallow, enjoin or
prohibit
the purchase and sale of the Purchased Shares contemplated
hereby.
|
|
(6.33)
|
Consents.
All consents required to be obtained in order to carry out the
transactions contemplated hereby in compliance with all laws
and
agreements binding upon the parties hereto shall have been obtained,
including the consents referred to in Schedules F and W attached
hereto.
|
6.4 Waiver
or
Termination by Corporation and Shareholder.
(6.41)
The
conditions contained in section 6.3 hereof are inserted for the exclusive
benefit of the Corporation and the Shareholder and may be waived in whole
or in
part by the Corporation and the Shareholder at any time. The Purchaser
acknowledges that the waiver by the Corporation and the Shareholder of
any
condition or any part of any condition shall constitute a waiver only of
such
condition or such part of such condition, as the case may be, and shall
not
constitute a waiver of any covenant, agreement, representation or warranty
made
by the Purchaser herein that corresponds or is related to such condition
or such
part of such condition, as the case may be. If any of the conditions contained
in section 6.3 hereof are not fulfilled or complied with as herein provided,
the
Corporation and the Shareholder may, at or prior to the Closing Time at
their
option, rescind this Agreement by notice in writing to the Purchaser and
in such
event the Corporation and the Shareholder shall each be released from all
obligations hereunder and, unless the condition or conditions which have
not
been fulfilled are reasonably capable of being fulfilled or caused to be
fulfilled by the Purchaser, then the Purchaser shall also be released from
all
obligations hereunder. In the event of any such termination by Corporation
or
the Shareholders pursuant to the Section, any increments of the Purchase
Price
paid by the Purchaser prior to such termination, shall be returned to the
Purchaser within 10 calendar days of the termination.
6.5 Right
of
First Refusal.
(6.51) At
anytime prior to the aggregate payment by Purchaser to the Corporation
of the
sum of $700,000 in principal amount of payments towards the Note, the parties
hereto agree that if a third-party bona fide purchaser (“Third-Party Offeror”)
presents a bona fide offer to purchase Shares of the Corporation, on like
terms
and conditions as the terms of this Agreement (“Third-Party Offer”), this
Agreement shall become voidable, at the election of the Corporation and
the
Shareholders. Provided
however,
the
Corporation’s and Shareholders’ right to elect to void this Agreement shall vest
only in the event that Purchaser fails to deliver to the Corporation the
same
amount of cash consideration offered by the Third-Party Offeror, which
shall be
no less than $900,000, within 60 calendar days from and after the delivery
of
written notice (“Third Party Offer Notice”) by the Corporation to the Purchaser
of the existence and terms of the Third-Party Offer. A Third-Party Offer
contemplated by this provision shall be defined as any offer to purchase
the
Shares of the Corporation on the same terms and conditions as set forth
in this
Agreement and the unconditional delivery by the Third-Party Offeror of
a cash
deposit of no less than $900,000 (“Third-Party Escrow Deposit”), which shall be
delivered by the Third-Party Offeror to an acceptable escrow or trust account
within 10 calendar days after the date of the Third-Party Offer is presented
to
the Corporation.
-27-
In
the
event that the Corporation elect to accept the Third-Party Offer as provided
above, and in the event that Purchaser fails to deliver to the Corporation
within the 60 day period defined above, an amount towards the Purchase
Price
equal to the Third-Party Escrow Deposit, less the aggregate amount of principal
paid by the Purchaser against the Note prior to the date of the Third Party
Notice, Corporation will return to Purchaser, within 7 calendar days after
the
voiding of this Agreement, the amount of the Purchase Price paid to the
Corporation by Purchaser towards the Note prior to the voiding of this
Agreement. Should Purchaser exercise its right to match any Third-Party
Offer as
set forth herein, the Note, the Pledge Agreement and the Agreement and
Plan of
Acquisition will otherwise be unaffected and will remain in full force
and
effect. At such time as the Purchaser delivers the aggregate sum of $700,000,
or
more, to the Corporation of principal payments against the Note, the Corporation
shall be prohibited from considering or accepting any Third-Party
Offer.
7.1 Closing
Arrangements.
Subject
to the terms and conditions hereof, the transactions contemplated herein
shall
be closed at the Closing Time at the offices of the Corporation at Xxxxx
000
0000 Xxxxxxxxx Xxxx Xxxxxx, Xxxxxxx, 00000 or at such other place or places
as
may be mutually agreed upon by the Corporation and the Purchaser.
7.2 Documents
to be Delivered.
At
or
before the Closing Time, the Corporation and the Shareholder shall execute,
or
cause to be executed, and shall deliver, or cause to be delivered, to the
Purchaser all documents, instruments and things which are to be delivered
by the
Corporation and the Shareholder pursuant to the provisions of this Agreement,
and the Purchaser shall execute, or cause to be executed, and shall deliver,
or
cause to be delivered, to the Corporation and the Shareholder all cheques
or
bank drafts and all documents, instruments and things which the Purchaser
is to
deliver or to cause to be delivered pursuant to the provisions of this
Agreement.
|
8.1
|
Indemnity
by the Corporation and the
Shareholder.
|
|
(1)
|
The
Corporation and the Shareholder hereby jointly and severally
agree to
indemnify and save the Purchaser harmless from and against any
claims,
demands, actions, causes of action, damage, loss, deficiency,
cost,
liability and expense which may be made or brought against the
Purchaser
or which the Purchaser may suffer or incur as a result of, in
respect of
or arising out of:
|
(a) any
non-performance or non-fulfilment of any covenant or agreement on the part
of
the Corporation or the Shareholder contained in this Agreement or in any
document given in order to carry out the transactions contemplated hereby;
(b) any
misrepresentation, inaccuracy, incorrectness or breach of any representation
or
warranty made by the Corporation or the Shareholder contained in this Agreement
or contained in any document or certificate given in order to carry out
the
transactions contemplated hereby, and
(c) all
costs
and expenses including, without limitation, legal fees on a solicitor-and-client
basis, incidental to or in respect of the foregoing.
|
(2)
|
The
obligations of indemnification by the Corporation and the Shareholder
pursuant to paragraph (1) of this section will
be:
|
(a) subject
to the limitations referred to in section 4.1 hereof with respect to the
survival of the representations and warranties by the Corporation and the
Shareholder;
(b) subject
to the limitations referred to in section 4.3 hereof, and
(c) subject
to the provisions of section 8.2 hereof.
-28-
8.2 Provisions
Relating to Indemnity Claims.
The
following provisions will apply to any claim by the Purchaser for
indemnification by the Corporation and the Shareholder pursuant to section
8.1
hereof (hereinafter, in this section, called an "Indemnity Claim").
(a) Promptly
after becoming aware of any matter that may give rise to an Indemnity Claim,
the
Purchaser will provide to the Corporation and the Shareholder written notice
of
the Indemnity Claim specifying (to the extent that information is available)
the
factual basis for the Indemnity Claim and the amount of the Indemnity Claim
or,
if an amount is not then determinable, an estimate of the amount of the
Indemnity Claim, if an estimate is feasible in the circumstances.
(b) If
an
Indemnity Claim relates to an alleged liability of the Corporation to any
other
person (hereinafter, in this section, called a "Third Party Liability"),
including without limitation any governmental or regulatory body or any
taxing
authority, which is of a nature such that the Corporation is required by
applicable law to make a payment to a third party before the relevant procedure
for challenging the existence or quantum of the alleged liability can be
implemented or completed, then the Corporation or the Purchaser may,
notwithstanding the provisions of paragraphs (c) and (d) of this section,
make
such payment or cause the Corporation to make such payment and forthwith
demand
reimbursement for such payment from the Corporation and the Shareholder
in
accordance with this Agreement; provided that, if the alleged liability
to the
third party as finally determined upon completion of settlement negotiations
or
related legal proceedings is less than the amount which is paid by the
Corporation and the Shareholder in respect of the related Indemnity Claim,
then
the Corporation or the Purchaser, as the case may be, shall forthwith following
the final determination pay to the Corporation and the Shareholder the
amount by
which the amount of the liability as finally determined is less than the
amount
which is so paid by the Corporation and the Shareholder.
(c) The
Purchaser shall not negotiate, settle, compromise or pay (except in the
case of
payment of a judgement) any Third Party Liability as to which it proposes
to
assert an Indemnity Claim, except with the prior consent of the Corporation
and
the Shareholder (which consent shall not be unreasonably withheld or delayed),
unless there is a reasonable possibility that such Third Party Liability
may
materially and adversely affect the Business, the Condition of the Corporation
or the Purchaser, in which case the Purchaser shall have the right, after
notifying the Corporation and the Shareholder, to negotiate, settle, compromise
or pay such Third Party Liability without prejudice to its rights of
indemnification hereunder.
(d) With
respect to any Third Party Liability, provided the Corporation and the
Shareholder first admit the Purchaser's right to indemnification for the
amount
of such Third Party Liability which may at any time be determined or settled,
then in any legal, administrative or other proceedings in connection with
the
matters forming the basis of the Third Party Liability, the following procedures
will apply:
|
(i)
|
except
as contemplated by subparagraph (iii) of this paragraph, the
Corporation
and the Shareholder will have the right to assume carriage of
the
compromise or settlement of the Third Party Liability and the
conduct of
any related legal, administrative or other proceedings, but the
Purchaser
and the Corporation shall have the right and shall be given the
opportunity to participate in the defence of the Third Party
Liability, to
consult with the Corporation and the Shareholder in the settlement
of the
Third Party Liability and the conduct of related legal, administrative
and
other proceedings (including consultation with counsel) and to
disagree on
reasonable grounds with the selection and retention of counsel,
in which
case counsel satisfactory to the Corporation, the Shareholder
and the
Purchaser shall be retained by the Corporation and the
Shareholder;
|
|
(ii)
|
the
Corporation and the Shareholder will co-operate with the Purchaser
in
relation to the Third Party Liability, will keep it fully advised
with
respect thereto, will provide it with copies of all relevant
documentation
as it becomes available, will provide it with access to all records
and
files relating to the defence of the Third Party Liability and
will meet
with representatives of the Purchaser at all reasonable times
to discuss
the Third Party Liability, and
|
(iii) notwithstanding
subparagraphs (i) and (ii) of this paragraph, the Corporation and the
Shareholder will not settle the Third Party Liability or conduct any legal,
administrative or other proceedings in any manner which could, in the reasonable
opinion of the Purchaser, have a material adverse effect on the Business,
the
Condition of the Corporation or the Purchaser, except with the prior written
consent of the Purchaser.
-29-
(e) If,
with
respect to any Third Party Liability, the Corporation and the Shareholder
do not
admit the Purchaser's right to indemnification or decline to assume carriage
of
the settlement or of any legal, administrative or other proceedings relating
to
the Third Party Liability, then the following provisions will
apply:
|
(i)
|
the
Purchaser, at its discretion, may assume carriage of the settlement
or of
any legal, administrative or other proceedings relating to the
Third Party
Liability and may defend or settle the Third Party Liability
on such terms
as the Purchaser, acting in good faith, considers advisable,
and
|
|
(ii)
|
any
cost, loss, damage or expense incurred or suffered by the Purchaser
and
the Corporation in the settlement of such Third Party Liability
or the
conduct of any legal, administrative or other proceedings shall
be added
to the amount of the Indemnity
Claim.
|
8.3 Right
of
Set-Off.
Each
of
the Purchaser and the Corporation shall have the right to satisfy any amount
from time to time owing by it to the Corporation or the Shareholder by
way of
set-off against any amount from time to time owing by the Corporation or
the
Shareholder to the Purchaser or the Corporation, including any amount owing
to
the Purchaser pursuant to the Corporation's and Shareholder's indemnification
pursuant to section 8.1 hereof.
9.1 Further
Assurances.
Each
of
the Corporation, the Shareholder and the Purchaser hereby covenants and
agrees
that at any time and from time to time after the Closing Date it will,
upon the
request of the other party hereto, execute, acknowledge and deliver or
cause to
be done, executed, acknowledged and delivered all such further acts, deeds,
assignments, transfers, conveyances and assurances as may be required for
the
better carrying out and performance of all the terms of this
Agreement.
9.2 Remedies
Cumulative.
The
rights and remedies of the parties under this Agreement are cumulative
and in
addition to and not in substitution for any rights or remedies provided
by law.
Any single or partial exercise by any party hereto of any right or remedy
for
default or breach of any term, covenant or condition of this Agreement
does not
waive, alter, affect or prejudice any other right or remedy to which such
party
may be lawfully entitled for the same default or breach.
9.3 Notices.
|
(1)
|
Any
notice, designation, communication, request, demand or other
document,
required or permitted to be given or sent or delivered hereunder
to any
party hereto shall be in writing and shall be sufficiently given
or sent
or delivered if it is:
|
(a) delivered
personally to an officer or director of such party;
(b) sent
to
the party entitled to receive it by registered mail, postage prepaid, mailed
in
United States or Canada, or
(c) sent
by
telecopy machine.
|
(2)
|
Notices
shall be sent to the following addresses or telecopy
numbers:
|
(a) in
the
case of the Corporation:
Macro
Communications, Inc.
Xxxxx
000
0000 Xxxxxxxxx Xxxx Xxxxxx, Xxxxxxx, 00000
Attention:
Xxxx Xxxxx
-30-
(b) in
the
case of the Shareholder,
Xxxxxx
Xxxxxxx and Xxxx Xxxxxxx x/x Xxxx Xxxxx
Xxxxx
000
2160 Satellite Blvd Duluth, Georgia, 30097
|
(c)
|
in
the case of the Purchaser:
|
Jupiter
Global Holdings Inc.
Suite
400
- 00 Xxxx 0xx
Xxx.
Xxxxxxxxx,
X.X., X0X 0X0
Attention:
Xxxxx Xxxxx
or
to
such other address or telecopier number as the party entitled to or receiving
such notice, designation, communication, request, demand or other document
shall, by a notice given in accordance with this section, have communicated
to
the party giving or sending or delivering such notice, designation,
communication, request, demand or other document.
|
(3)
|
Any
notice, designation, communication, request, demand or other
document
given or sent or delivered as aforesaid
shall:
|
(a) if
delivered as aforesaid, be deemed to have been given, sent, delivered and
received on the date of delivery;
(b) if
sent
by mail as aforesaid, be deemed to have been given, sent, delivered and
received
(but not actually received) on the fourth Business Day following the date
of
mailing, unless at any time between the date of mailing and the fourth
Business
Day thereafter there is a discontinuance or interruption of regular postal
service, whether due to strike or lockout or work slowdown, affecting postal
service at the point of dispatch or delivery or any intermediate point,
in which
case the same shall be deemed to have been given, sent, delivered and received
in the ordinary course of the mails, allowing for such discontinuance or
interruption of regular postal service, and
(c) if
sent
by telecopy machine, be deemed to have been given, sent, delivered and
received
on the date the sender receives the telecopy answer back confirming receipt
by
the recipient.
9.4 Counterparts
and Facsimile Signatures.
This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed to be an original, including any duly executed facsimile or photocopy
from facsimile copies, but all of which shall constitute one and the same
agreement which shall be binding upon all parties hereto not signatories
to the
same counterpart.
9.5 Expenses
of Parties.
Each
of
the parties hereto shall bear all expenses incurred by it in connection
with
this Agreement including, without limitation, the charges of their respective
counsel, accountants, financial advisors and finders.
9.6 Brokerage
and Finder's Fees.
The
Corporation and the Shareholder jointly and severally agree to indemnify
the
Purchaser and the Corporation and hold each of them harmless in respect
of any
claim for brokerage or other commissions relative to this Agreement or
the
transactions contemplated hereby which is caused by actions of the Corporation
or the Shareholder or any of their Affiliates. The Purchaser will indemnify
the
Corporation and the Shareholder and hold them harmless in respect of any
claim
for brokerage or other commissions relative to this Agreement or to the
transactions contemplated hereby which is caused by actions of the Purchaser
or
any of its Affiliates.
-31-
9.7 Announcements.
No
announcement with respect to this Agreement will be made by any party hereto
without the prior approval of the other parties. The foregoing will not
apply to
any announcement by any party required in order to comply with laws pertaining
to timely disclosure, provided that such party consults with the other
parties
before making any such announcement.
9.8 Assignment.
The
rights of the Corporation and the Shareholder hereunder shall not be assignable
without the written consent of the Purchaser. The rights of the Purchaser
hereunder shall not be assignable without the written consent of the Corporation
and the Shareholder.
9.9 Successors
and Assigns.
This
Agreement shall be binding upon and enure to the benefit of the parties
hereto
and their respective successors and permitted assigns. Nothing herein,
express
or implied, is intended to confer upon any person, other than the parties
hereto
and their respective successors and assigns, any rights, remedies, obligations
or liabilities under or by reason of this Agreement.
9.10 Entire
Agreement.
This
Agreement and the schedules referred to herein constitute the entire agreement
between the parties hereto and supersede all prior agreements, representations,
warranties, statements, promises, information, arrangements and understandings,
whether oral or written, express or implied, with respect to the subject
matter
hereof. None of the parties hereto shall be bound or charged with any oral
or
written agreements, representations, warranties, statements, promises,
information, arrangements or understandings not specifically set forth
in this
Agreement or in the schedules, documents and instruments to be delivered
on or
before the Closing Date pursuant to this Agreement. The parties hereto
further
acknowledge and agree that, in entering into this Agreement and in delivering
the schedules, documents and instruments to be delivered on or before the
Closing Date, they have not in any way relied, and will not in any way
rely,
upon any oral or written agreements, representations, warranties, statements,
promises, information, arrangements or understandings, express or implied,
not
specifically set forth in this Agreement or in such schedules, documents
or
instruments.
9.11 Waiver.
Any
party
hereto which is entitled to the benefits of this Agreement may, and has
the
right to, waive any term or condition hereof at any time on or prior to
the
Closing Time provided, however, that such waiver shall be evidenced by
written
instrument duly executed on behalf of such party.
9.12 Amendments.
No
modification or amendment to this Agreement may be made unless agreed to
by the
parties hereto in writing.
-32-
IN
WITNESS WHEREOF the parties hereto have duly executed this agreement under
seal
as of the day and year first written above.
JUPITER
GLOBAL HOLDINGS, CORP.
by: _____________________________
c/s
_____________________________
office
MACRO
COMMUNICATIONS, INC.
by:
_____________________________
c/s
_____________________________
office
___________________________
XXXXXX
XXXXXXX
___________________________
XXXX
XXXXXXX
___________________________
_____________________________
Witness
-33-
LIST
OF SCHEDULES
Schedule
"A" Audited Financial Statements
Schedule
"B" Interim Financial Statements
Schedule
"C" Leases
Schedule
"D" Real Properties
Schedule
"E" Escrow Agreement
Schedule
"F" Corporation's Contractual and Regulatory Approvals
Schedule
"G" Constating Documents
Schedule
"H" Licences
Schedule
"I" Tax Matters
Schedule
"J" Litigation
Schedule
"K" Environmental Matters
Schedule
"L" Encumbrances
Schedule
"M" Bank Accounts
Schedule
"N" Leases of Real Properties
Schedule
"O" Intellectual Property
Schedule
"P" Guarantees, Warranties and Discounts
Schedule
"Q" Licences, Agency and Distribution Agreements
Schedule
"R" Material Contracts
Schedule
"S" Employees
Schedule
"T" Employee Benefit and Pension Plans
Schedule
"U" Insurance
Schedule
"V" Government Assistance
Schedule
"W" Purchaser's Contractual and Regulatory Approvals
Schedule
"X" Release by Corporation and Shareholder
Schedule
"Y" Corporation's Confirming Certificate (change “Z” to “Y”)
Schedule
"AA" Estoppel Certificate
Schedule
"BB" Purchaser's Confirming Certificate (change “DD” to “BB)
LIST
OF EXHIBITS
Exhibit
“A” Promissory Note
Exhibit
“B” Pledge Agreement
