EXHIBIT "A"
AGREEMENT
MADE EFFECTIVE AS OF 17 APRIL 2000 (the "Effective Date").
BETWEEN: DXP US, INC., a corporation incorporated in Delaware having its
registered office address at 00 Xxx Xxxxxxx Xxxx, Xxxxx, Xxxxxxxx,
00000 (County of Kent) ("DXP US");
AND: ALDERSEY EGERTON XXXXXXX-XXXXXX ("Xx. Xxxxxxx-Xxxxxx"), of
Crouchlands, Kirdford, Nr. Xxxxxxxxxxxxx, Xxxx Xxxxxx, Xxxxxxx,
XX00 0XX XXxxXX XXXXX Elek ("Xx. Xxxx"), of Xxxx Xxxx Xxxxx,
Xxxxxxx, Xxxx, Xxxxxxx, XX00 0XX,
XXXXX XXXXXXX ("Xx. Xxxxxxx"), of The Coach House, Pigbush Lane,
Loxwood, Xxxxxxxxxxxxx, Xxxx Xxxxxx, Xxxxxxx, XX00 0XX; and POV
US, LLC, ("POV") a limited liability company organized in Delaware
having its registered office address at 00 Xxx Xxxxxxx Xxxx,
Xxxxx, Xxxxxxxx, 00000 (County of Kent)
(collectively, the "DXP US Shareholders"; individually, a "DXP US
Shareholder");
AND: XXXXXX X. XXXXXXX ("Xx. Xxxxxxx"), of 0000 Xxxxxxxx Xxxxx,
Xxxxxxx, Xxxxxxx, 00000, X.X.X.; and
XXXXXXX XXXX ("Xx. Xxxx"), of c/o Westgate Management Company, 000
Xxxx Xxxxx Xxxxxx, Xxxxxxx, XX, 00000 X.X.X.
(collectively, the "POV Shareholders"; individually, a "POV
Shareholder");
AND: IQROM COMMUNICATIONS, INC. (formerly Hiking Adventures, Inc.,) a
Nevada corporation having an office at Suite 400-127, 000 Xxxx
Xxxxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxx, 00000 ("HAI");
AND: IQROM COMMUNICATIONS ACQUISITIONS CO., a Nevada corporation having
an office at Suite 400-127, 000 Xxxx Xxxxxxxx Xxxxxx, Xxxxxxxxxx,
Xxxxxxxxxx, 00000 ("ICA").
WHEREAS:
A. The authorized share capital of DXP US consists of 1,000,000 shares of common
stock with a par value of US$0.001 per share, of which 1,000 shares (the "DXP US
Shares") are issued and outstanding;
B. The sole legal and beneficial owners of the DXP US Shares are the DXP US
Shareholders as follows:
DXP US Shareholder Number of DXP US Shares Held Proportion of DXP US Shares Held
------------------ ---------------------------- --------------------------------
Xx. Xxxxxxx-Xxxxxx 225 22.5%
Xx. Xxxx 225 22.5%
Xx. Xxxxxxx 50 5.0%
POV 500 50.0%
---- -----
Total 1000 100.0%
Xx. Xxxxxxx-Xxxxxx, Xx. Xxxx and Xx. Xxxxxxx are together called the "DXP
Shareholders".
C. Xx. Xxxxxxx is the sole inventor of a trading card optical compact disc and
method of using and forming the compact disc (the "Invention") described in U.S.
Patent No. 5,982,736 issued 9 November 1999 (the "Patent");
D. Xx. Xxxxxxx has transferred all right, title and interest in respect of the
Invention and the Patent to POV, all the issued and outstanding shares of which
are legally and beneficially owned by the POV Shareholders;
E. POV has assigned the Patent absolutely to Diskxpress US Inc., a Delaware
corporation ("Diskxpress US");
F. DXP US legally and beneficially owns all of the issued and outstanding share
capital (the "DXP Shares") of IQROM Limited (formerly DXP New Media Services
Limited) ("DXP"), a company incorporated under the laws of England (registered
number 3732349) with its registered office at 0 Xxxxxxxxxx Xxxxxx, Xxxxxxx
Xxxxxxx, Xxxxxx, Xxxxxxx, XX0X 0XX;
G. DXP US holds an exclusive U.S. license under the Patent granted by Diskxpress
US in the form attached hereto as Schedule A (the "Patent License") and a supply
contract with Xxxxxx Limited ("Diskxpress"), a company incorporated in England
(registered number 2727317) in the form attached hereto as Schedule B (the
"Supply Contract");
H. The DXP Shareholders have agreed to exchange their DXP US Shares for voting
common shares of HAI, on the terms and conditions described in this Agreement
(the "DXP UK Exchange"). The POV Shareholders and HAI have agreed that
immediately subsequent to the DXP UK Exchange, DXP US will merge with and into
ICA on the terms and conditions described in this Agreement (the
"Reorganization");
I. The POV Shareholders have agreed to procure compliance with the terms of this
Agreement by POV;
J. DXP is indebted to Blue Capital AG ("Blue Capital") in respect of a principal
loan of US$1,000,000 plus interest thereon (collectively, the "Indebtedness")
advanced to DXP to provide bridge financing pending completion of the
transactions contemplated in this Agreement; and
K. In relation to the acquisition of DXP by DXP US, DXP US agreed to pay Xx Xxxx
and Xx Xxxxxxx-Xxxxxx US$786,393.25 and US$786,390.76 respectively as part of
the consideration for the ordinary shares in DXP owned by Xx Xxxx and Xx
Xxxxxxx-Xxxxxx. Such sums (together the "DXP US Debt") remain outstanding.
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the covenants
and agreements herein contained, the parties hereto do covenant and agree (the
"Agreement") as follows:
1. TRANSACTIONS
1.1 Subject to the terms and conditions of this Agreement:
(a) The DXP Shareholders shall transfer all of their DXP US Shares to
HAI in exchange for 6,400,314 voting common shares of HAI , (to be
issued to the transferors in the proportions indicated in Recital
B of this Agreement), plus up to US $1,651,108 ("UK Monetary
Consideration") to be paid (at the discretion of the DXP
Shareholders) by solicitor's trust cheque, certified cheque, bank
draft or wire transfer to the DXP Shareholders in the same
proporations, in accordance with paragraphs 1.5, 1.7 and 6.2 of
this Agreement; and
(b) As a result of the Reorganization, all of the DXP US Shares issued
and outstanding and owned by POV shall be converted into 6,400,314
voting common shares of HAI (the "HAI Shares"), plus up to
US$1,651,108 (the "POV Monetary Consideration") to be paid (at the
discretion of POV) by solicitor's trust cheque, certified cheque,
bank draft or wire transfer in accordance with paragraphs 1.5, 1.7
and 6.2 of this Agreement (the UK Monetary Consideration and the
POV Monetary Consideration are hereinafter collectively referred
to as the "Monetary Consideration"); and
(c) As a result of the Reorganization, all of the DXP US Shares issued
and outstanding and owned of record by HAI by virtue of the
exchange set forth in Section 1.1(a) above, shall automatically be
canceled and retired and shall cease to exist and shall no longer
be outstanding and HAI shall cease to have any rights with respect
thereto; and
(d) Subsequent to the DXP UK Exchange, DXP US will be merged with and
into ICA and the separate existence of DXP US will cease and ICA
will continue as the surviving corporation (the "Surviving
Corporation") pursuant to this Agreement which includes a plan of
merger for the purposes of Section 92A.100 of the Nevada Revised
Statutes and by the filing on April 19, 2000 after the Effective
Date, or on such other date as may be agreed between the parties,
(the "Closing Date") with the Secretary of State of the State of
Nevada articles of merger and with the filing on the Closing Date
with the Secretary of State of the State of Delaware a certificate
of merger (the articles of merger and the certificate of merger
are together called the "Merger Documents");
(e) The Articles of Incorporation and By-Laws of ICA shall be the
Articles of Incorporation and By-Laws of the Surviving Corporation
from and after the Effective Date, subject to the right of the
Surviving Corporation to amend its Articles of Incorporation and
By-Laws from time to time in accordance with the laws of the State
of Nevada.
(f) The mode of carrying the merger into effect and the manner and
basis of converting the shares of DXP US owned by POV into shares
of HAI are as follows:
(i) Each share of DXP US which is issued and outstanding and
owned by POV on the Closing Date shall, by virtue of the
Merger and without any action on the part of the holder
thereof, be converted into 12,800.628 shares of HAI stock,
plus cash up to US $3,302.216.
(ii) Each share of HAI stock which is issued and outstanding on
the Closing Date or held by HAI as treasury shares shall
continue to evidence ownership of the same number of
shares of HAI stock.
(ii) As promptly as practicable after the Closing Date of the
Reorganization, each holder of an outstanding certificate
or certificates theretofore representing shares of DXP US
shall surrender the same to ICA and shall receive in
exchange a certificate or certificates representing the
number of shares of HAI stock into which the shares of DXP
US stock represented by the certificate or certificates so
surrendered shall have been converted. Each share of
capital stock of DXP US held in treasury shall be canceled
and retired and no payment or conversion into shares of
ICA or HAI will be made in respect thereto.
(g) On the Closing Date, the separate existence of DXP US shall cease
and it shall be merged with and into the Surviving Corporation.
All the property, including real, personal and intangible, of DXP
US and ICA, and all of their debts, shall be transferred to and
vested in the Surviving Corporation, without further act or deed.
The Surviving Corporation shall thenceforth be responsible and
liable for all the liabilities and obligations of each of DXP US
and ICA, and any claim or judgment against either DXP US or ICA
may be enforced against the Surviving Corporation.
(h) The Surviving Corporation does hereby agree that it may be served
with process in the State of Delaware in any proceeding for
enforcement of any obligation of DXP US, as well as for
enforcement of any obligation of Surviving Corporation arising
from the merger herein provided for, including any suit or other
proceeding to enforce the right of any stockholder as determined
in appraisal proceedings pursuant to Section 262 of the General
Corporation Law of the State of Delaware; does hereby irrevocably
appoint the Secretary of State of the State of Delaware as its
agent to accept service of process in any such suit or other
proceedings; and does hereby specify the following address without
the State of Delaware to which a xxx of such process shall be
mailed by the Secretary of State of the State of Delaware.
000 Xxxx Xxxxxxxx Xxxxxx, Xxxxx 000-000
Xxxxxxxxxx, Xxxxxxxxxx 00000
(i) The Board of Directors and the proper officer of HAI, ICA and DXP
US are hereby authorized, empowered, and directed to do any and
all acts and things, and to make, execute, deliver, file, and
record any and all instruments, papers, and documents which shall
be or become necessary, proper, or convenience to carry out or put
into effect any of the provisions of this Agreement and Plan of
Merger or of the merger herein provided for.
1.2 Except as expressly noted otherwise, the transactions contemplated under
this Agreement shall be completed (the "Completion") at the offices of DXP's
solicitors, Messrs. Xxxxxxx Suddards, 0 Xxxxxxxxxx Xxxxxx, Xxxxxxx Xxxxxxx,
Xxxxxx, Xxxxxxx, XX0X 0XX, or at such other place as may be agreed between the
parties, at 9:00 o'clock a.m. local time in London, England, or at such other
time as may be agreed between the parties, (the "Time of Closing") on the
Closing Date.
1.3 On the Closing Date, immediately prior to Completion, HAI shall acquire from
existing HAI shareholders 2,466,250 voting common shares of HAI for a price not
to exceed US$0.001 per share.
1.4 On the Closing Date, HAI shall complete a financing (the "First Financing")
in accordance with the terms of a Subscription Agreement substantially in the
form of Schedule C attached hereto, to raise US$9,900,000 to repay the DXP US
Debt, pay the first tranche of the Monetary Consideration and for working
capital purposes, by issuing not more than 1,320,000 units at a price not less
than US$7.50 per unit, with each unit consisting of one common share of HAI and
one-half warrant. Each holder of two one-half warrants will be entitled to
acquire one further common share of HAI at a price not less than US$7.50 if the
Warrant is exercised in the first year after issuance of the warrants, or for a
price not less than US$10.00 if the Warrant is exercised in the second year
after issuance of the warrants. After two years, the warrants will expire if not
exercised.
1.5 On the Closing Date, the First Financing proceeds shall be applied as
follows:
(a) US$1,572,784.01 shall be paid to Xx Xxxx and Xx Xxxxxxx-Xxxxxx in
satisfaction of the DXP US Debt (thereby creating an inter-company
loan of US$1,572,784.01 between HAI and DXP US which will remain
outstanding, repayable on demand and without any interest;
(b) US$827,215.99 shall be paid to the DXP US Shareholders in the
proportions set out in Recital B of this Agreement on account of
the Monetary Consideration;
(c) all amounts owing by DXP in respect of the Indebtedness (after
deduction of any amount Blue Capital may elect to assign to DXP on
account of a subscription to participate in the First Financing)
shall be paid to Blue Capital on behalf of DXP to completely
discharge the Indebtedness, and DXP shall thereupon be indebted to
HAI to repay to HAI an amount equal to the Indebtedness on demand
without interest, or on such other terms as may be agreed in
writing between HAI and DXP; and
(d) the balance of the First Financing proceeds shall be transferred
to the bank account of HAI.
1.6 On the Closing Date, the solicitors for HAI shall receive into trust the
funds required to complete a further financing (the "Second Financing") in
accordance with the terms of a Subscription Agreement (the "Second Subscription
Agreement") substantially in the form of Schedule D attached hereto, to raise
US$2,475,000 (the "Second Financing Funds") to pay the second tranche of the
Monetary Consideration and for working capital purposes, by issuing not more
than 330,000 common shares (the "Second Financing Shares") at a price not less
than US$7.50 per share, provided however that the Second Financing Funds shall
only be released from trust and the Second Financing Shares shall only be issued
on the following terms:
(a) if the revenues from the ordinary business operations carried on
by DXP, ICA and HAI, calculated in accordance with generally
accepted accounting principles ("GAAP") applied consistent with
past financial records of DXP and HAI, ("DXP Revenues") for 1
April 2000 to 30 June 2000 are greater than US$1.9 million, then
all of the Second Financing Funds will be released to HAI and all
of the Second Financing Shares will be issued under the Second
Subscription Agreement at a price of US$7.50 per share; in respect
of DXP, GAAP will be the generally accepted accounting principles
consistently applied in the United Kingdom; in respect of ICA, DXP
US and HAI, GAAP will be the generally accepted accounting
principles consistently applied in the United States;
(b) for every US$1 by which DXP Revenues for 1 April 2000 to 30 June
2000 are less than US$1.9 million, US$1.29 of the Second Financing
Funds will remain held in trust; the balance of the Second
Financing Funds shall be paid to HAI and a corresponding number of
the Second Financing Shares shall be issued under the Second
Subscription Agreement at a price of US$7.50 per share;
(c) for every US$1 by which DXP Revenues for 1 July 2000 to 30
September 2000 are greater than US$2.5 million, US$1.29 of the
Second Financing Funds remaining in trust will be released to HAI
and a corresponding number of the Second Financing Shares will be
issued under the Second Subscription Agreement at a price of
US$7.50 per share;
(d) for every US$1 by which DXP Revenues for 1 October 2000 to 31
December 2000 are greater than US$4.0 million, US$1.29 of the
Second Financing Funds remaining in trust will be released to HAI
and a corresponding number of the Second Financing Shares will be
issued under the Second Subscription Agreement at a price of
US$7.50 per share; and
(e) any of the Second Financing Funds that remain in trust after
application of subparagraphs 1.6(a) to (d) above will be returned
to the subscribers under the Second Subscription Agreement and a
corresponding number of the Second Financing Shares will not be
issued under the Second Subscription Agreement.
1.7 On and after the Closing Date, the U.K. solicitors for HAI shall handle the
Second Financing Funds in the amount of US$2,475,000 as described in paragraph
1.6 and in accordance with a form of escrow letter attached hereto as Schedule E
(the "Escrow Letter"), and as the Second Financing Shares are issued and the
Second Financing Funds are released from trust, the Second Financing Funds shall
be paid to the DXP US Shareholders within 30 days of the relevant time periods
set forth below, in the proportions set out in Recital B on account of the
Monetary Consideration on the following terms:
(a) if DXP Revenues for 1 April 2000 to 30 June 2000 are greater than
US$1.9 million, then all of the Second Financing Funds will be
paid to the DXP US Shareholders in full and final satisfaction of
the Monetary Consideration;
(b) for every US$1 by which DXP Revenues for 1 April 2000 to 30 June
2000 are less than US$1.9 million, US$1.29 of the Second Financing
Funds will remain held in trust and the balance of the Second
Financing Funds shall be paid to the DXP US Shareholders in the
proportions set out in Recital B on account of the Monetary
Consideration;
(c) for every US$1 by which DXP Revenues for 1 July 2000 to 30
September 2000 are greater than US$2.5 million, US$1.29 of the
Second Financing Funds remaining in trust will be released to the
DXP US Shareholders in the proportions set out in Recital B on
account of the Monetary Consideration;
(d) for every US$1 by which DXP Revenues for 1 October 2000 to 31
December 2000 are greater than US$4.0 million, US$1.29 of the
Second Financing Funds remaining in trust will be released to the
DXP US Shareholders in the proportions set out in Recital B on
account of the Monetary Consideration; and
(e) in accordance with subparagraph 1.6 (e) above, any of the Second
Financing Funds that remain in trust after application of
subparagraphs 1.7 (a) to (d) above will be returned to the
subscribers under the Subscription Agreement, and the Monetary
Consideration shall be reduced by a corresponding amount.
1.8 Any dispute as to whether any of the targets for DXP Revenues described in
paragraph 1.6 or 1.7 has been met shall be determined by the written decision of
Xx. Xxxx XxxXxxxxxx after his review of the financial records of ICA, DXP and
HAI, which they shall make available for his review at his request. If there is
any dispute with Xx. XxxXxxxxxx'x decision, it shall be resolved by the
auditor's for DXP whose decision shall be final.
2. CONDITIONS PRECEDENT
2.1 HAI's obligations to carry out the terms of this Agreement and to complete
its transactions contemplated under this Agreement are subject to the fulfilment
to the satisfaction of HAI of each of the following conditions that:
(a) DXP shall have entered into an extension of DXP's exclusive
license agreement with iOra Limited to a minimum of three years
substantially in the form of Schedule F attached hereto;
(b) on or before the Closing Date, HAI shall have received the fully
executed Subscription Agreements and the funds required thereunder
in respect of the First Financing (which may include an assignment
by Blue Capital to HAI of some or all of the Indebtedness on
account of a subscription for the First Financing) and the Second
Financing;
(c) at the Time of Closing, the common shares of HAI will be quoted on
the Over the Counter Bulletin Board of NASD (the "OTC Board");
(d) at the Time of Closing, a legal opinion dated as of the Closing
Date in respect of DXP US, POV and the Patent License
substantially in the form of Schedule G to this Agreement (the
"DXP US Legal Opinion"), shall be provided to HAI;
(e) as of the Time of Closing, DXP US, the DXP US Shareholders and the
POV Shareholders (collectively, the "Vendor Group") shall have
complied in all material respects with their respective covenants
and agreements contained in this Agreement;
(f) as of the Time of Closing, the representations and warranties of
each of the Vendor Group contained in this Agreement or contained
in any certificates or documents delivered by any of them pursuant
to this Agreement shall be true in all material respects as if
such representations and warranties had been made as of the Time
of Closing;
(g) on or before the Time of Closing, HAI will have received in a form
reasonably satisfactory to HAI, a legal opinion or opinions
concerning the ownership of the Patent and of its relevance in the
context of the CDRom business cards manufactured by Diskxpress and
sold by DXP;
(h) on or before the time of Closing, HAI will have received, in a
form reasonably satisfactory to HAI, a legal opinion that the
Reorganization does not require the approval or other action of
the shareholders of HAI; and
(i) on or before the Time of Closing, HAI will have received in a form
reasonably satisfactory to HAI, confirmation of the approval by
the DXP US Shareholders to the Reorganization.
PROVIDED ALWAYS that a breach of the conditions contained in paragraphs
(e) and (f) will only permit HAI to terminate this Agreement and the
transactions contemplated hereby if such breach has a material adverse
effect on the business or prospects of DXP US (and its subsidiaries).
The conditions set forth above are for the exclusive benefit of HAI and may be
waived by HAI in whole or in part at any time at or before the Time of Closing.
2.2 The obligations of the Vendor Group to carry out the terms of this Agreement
and to complete the transactions contemplated under this Agreement are subject
to the fulfilment to their satisfaction of each of the following conditions
that:
(a) after cancellation of 2,466,250 HAI shares immediately prior to
the Time of Closing and prior to the First Financing and the
Second Financing, HAI's issued share capital will be not more than
7,533,750 common shares;
(b) at the Time of Closing, an opinion dated as of the Closing Date,
substantially in the form of Schedule H to this Agreement (the
"HAI Legal Opinion") shall be provided to the Vendor Group;
(c) at the Time of Closing, the common shares of HAI will be quoted on
the OTC Board;
(d) by the Time of Closing, HAI shall have received the fully executed
Subscription Agreements and the funds required thereunder in
respect of the First Financing and the Second Financing;
(e) as of the Time of Closing, HAI shall have complied in all material
respects with its covenants and agreements contained in this
Agreement;
(f) as of the Time of Closing, the representations and warranties of
HAI contained in this Agreement or contained in any certificates
or documents delivered by it pursuant to this Agreement shall be
true in all material respects as if such representations and
warranties had been made by HAI as of the Time of Closing;
(g) as of the Time of Closing, the execution by all appropriate
parties of the Merger Documents; and
(h) on or before the Time of Closing, the DXP US Shareholders will
have received in a form reasonably satisfactory to them,
confirmation of the approval by HAI to the Reorganization.
The conditions set forth above are for the exclusive benefit of the Vendor Group
and may be waived by the Vendor Group in whole or in part at or before the Time
of Closing.
2.3 The parties acknowledge and agree each with the other that this Agreement
and all of the transactions contemplated under this Agreement are subject to
receipt of any regulatory approvals that may be required under applicable laws.
If any such approvals are required but are not obtained by the Closing Date,
then this Agreement shall terminate and be of no further force or effect.
3. COVENANTS, AGREEMENTS AND ACKNOWLEDGEMENTS
3.1 Each of the Vendor Group jointly and severally covenants and agrees with HAI
that each of the Vendor Group shall:
(a) from and including the Effective Date through to and including the
Time of Closing, do all such acts and things that may be
necessary, and cause DXP and DXP US (collectively, the "Vendor
Corporations") and POV to do all such acts and things that may be
necessary, to comply with the covenants of the Vendor Group and to
complete the transactions contemplated herein, and to ensure that
all of the representations and warranties of each of the Vendor
Group contained in this Agreement or any certificates or documents
delivered by any of them pursuant to this Agreement remain true
and correct in all material respects;
(b) from and including the Effective Date through to and including the
Time of Closing, preserve and protect all of the goodwill, assets,
business and undertaking of the Vendor Corporations and, without
limiting the generality of the foregoing, carry on the businesses
of the Vendor Corporations in the ordinary and proper course; and
(c) from and including the Effective Date through to and including the
Time of Closing, keep confidential all discussions and
communications (including all information communicated therein)
between the parties, and all written and printed materials of any
kind whatsoever exchanged by the parties, except only any
information or material that:
(i) was in the public domain at the time of disclosure to a
party (the "Recipient");
(ii) was already in the possession of the Recipient prior to
disclosure, as demonstrated by the Recipient through
tangible evidence;
(iii) subsequently enters the public domain through no fault of
the Recipient or any officer, director, employee or agent
of the Recipient; or
(iv) is required to be disclosed by law or by a court or
regulatory authority of competent jurisdiction;
and, if so requested by HAI, each of the Vendor Group shall
arrange for any director, officer, employee, authorized agent or
representative of the Vendor Corporations to enter into, and each
of the Vendor Group themselves shall enter into, a non-disclosure
agreement with HAI in a form acceptable to HAI acting reasonably.
3.2 Except as expressly contemplated in this Agreement, each of the Vendor Group
jointly and severally covenants and agrees with HAI that, from and including the
Effective Date through to and including the Time of Closing, each of the Vendor
Group shall not sell, encumber or dispose of, or negotiate with any other person
in respect of a sale, encumbrance or disposition of, or cause or permit any of
the Vendor Corporations to sell, encumber or dispose of or negotiate with any
other person in respect of a sale, encumbrance or disposition of, the Patent or
any of the DXP Shares, the DXP US Shares or any other shares, goodwill, assets,
business or undertaking of the Vendor Corporations.
3.3 Each of the Vendor Group acknowledges to and agrees with HAI that HAI's
investigation shall in no way limit or otherwise adversely affect the rights of
HAI as provided for hereunder in respect of the representations and warranties
of each of the Vendor Group contained in this Agreement or in any certificates
or documents delivered by any of them pursuant to this Agreement.
3.4 HAI covenants and agrees with the Vendor Group that HAI shall:
(a) from and including the Effective Date through to and including the
Time of Closing, do all such acts and things that may be necessary
to ensure that all of the representations and warranties of HAI
contained in this Agreement or in any certificates or documents
delivered by it pursuant to this Agreement remain true and correct
in all material respects;
(b) from and including the Effective Date through to and including the
Time of Closing, preserve and protect all of the goodwill, assets,
business and undertaking of HAI and, without limiting the
generality of the foregoing, carry on the business of HAI in the
ordinary and proper course;
(c) from and including the Effective Date through to and including the
Time of Closing, subject to its legal reporting obligations, keep
confidential all discussions and communications (including all
information communicated therein) between the parties, and all
written and printed materials of any kind whatsoever exchanged by
the parties, except only any information or material that:
(i) was in the public domain at the time of disclosure to a
party (the "Recipient");
(ii) was already in the possession of the Recipient prior to
disclosure, as demonstrated by the Recipient through
tangible evidence;
(iii) subsequently enters the public domain through no fault of
the Recipient or any officer, director, employee or agent
of the Recipient; or
(iv) is required to be disclosed by law or by a court or
regulatory authority of competent jurisdiction;
and, if so requested by the Vendor Group, HAI shall arrange for
any director, officer, employee, authorized agent or
representative of HAI to enter into, and HAI itself shall enter
into, a non-disclosure agreement with the Vendor Group, or one or
more of the Vendor Corporations, in a form acceptable to the
Vendor Group acting reasonably; and
(d) obtain the prior written approval from Xx. Xxxx of the form of any
press release to be issued prior to the Time of Closing; and
(e) complete the First Financing on the Closing Date.
3.5 HAI covenants and agrees with the Vendor Group that, from and including the
Effective Date through to and including the Time of Closing, HAI shall not:
(a) issue any stock whatsoever or any option, warrant, security or
other instrument convertible into stock nor enter into any
agreement to do any of the foregoing;
(b) increase the liabilities of HAI, save for any costs incurred in
the preparation and execution of any of the transactions
contemplated by this Agreement.
3.6 The parties to this Agreement hereby acknowledge that agreement has
previously been reached between the parties to this Agreement and certain
employees and directors or prospective employees and directors of DXP US, HAI
and ICA in relation to the grant of options in the stock of HAI as set out in
Schedule I. A suitable stock option scheme shall be formally adopted as soon as
reasonably practicable following the Closing Date.
3.7 At the time of Closing, HAI will take all necessary corporate actions so
that as soon as practicable after Closing the directors of HAI will be:
Xx. Xxxxxxx-Xxxxxx
Xx. Xxxx
Xx. Xxxxxxx
Xx. Xxxxxxx
Xx. Xxxx
Xxxx X. Xxxxx
Xxxxxxx Xxxxxx
Xxxxxx Xxxxxx
3.8 At the time of Closing, HAI will take all necessary corporate actions so
that as soon as practicable after Closing the officers of HAI will be:
President: Xx. Xxxx
Treasurer: Xx. Xxxx
Secretary: Xxxx X. Xxxxx
4. REPRESENTATIONS AND WARRANTIES
4.1 In order to induce HAI to enter into this Agreement and complete its
transactions contemplated hereunder, DXP US, POV and each of the POV
Shareholders jointly and severally represents and warrants to HAI that:
(a) POV has good and sufficient power, authority and capacity to enter
into this Agreement and complete the transactions contemplated
under this Agreement on the terms and conditions set forth herein;
(b) the proportion of DXP US Shares indicated in Recital B of this
Agreement to be held by POV will on the Closing Date immediately
prior to Completion be validly issued and outstanding fully paid
and non-assessable common shares of DXP US registered in the name
of, and legally and beneficially owned by, POV, free and clear of
all voting restrictions, trade restrictions, liens, claims,
charges or encumbrances of any kind whatsoever other than as set
out in the Certificate of Incorporation of DXP US;
(c) POV and each of the POV Shareholders has such knowledge and
experience in financial and business matters as to be capable of
evaluating the merits and risks of an investment in the HAI Shares
and is able to bear the economic risk of loss of POV's entire
investment;
(d) HAI has provided to POV the opportunity to ask questions and
receive answers concerning the terms and conditions of the
issuance of the HAI Shares and POV and the POV Shareholders have
had access to such information concerning HAI as POV and the POV
Shareholders have considered necessary or appropriate in
connection with the investment decision to acquire the HAI Shares;
(e) POV is acquiring the HAI Shares for POV's own account, for
investment purposes only and not with a view to any resale,
distribution or other disposition of the HAI Shares in violation
of any applicable United States securities laws;
(f) POV has not agreed to acquire the HAI Shares as a result of any
form of general solicitation or general advertising, including
advertisements, articles, notices or other communications
published in any newspaper, magazine or similar media or broadcast
over radio, or television, or any seminar or meeting whose
attendees have been invited by general solicitation or general
advertising and POV is an "accredited investor" as such term is
defined in Rule 501(a) under the United States Securities Act of
1933, as amended (the "Securities Act");
(g) DXP US has been duly incorporated under the laws of Delaware and
will at the Effective Date be validly existing under the laws of
Delaware, and
(i) will not be subject to any statutory registration or
filing requirements applicable to public reporting
companies;
(ii) will have the power, authority and capacity to carry out
the terms of this Agreement; and
(iii) will be in good standing with respect to the filing of all
annual reports required under the laws of Delaware;
(h) the issued share capital of DXP US is or will be as set forth in
Recital B of this Agreement;
(i) the DXP US Shares will on the Closing Date immediately prior to
Completion be validly issued and outstanding fully paid ordinary
shares of DXP US registered in the names of, and legally and
beneficially owned by, the DXP US Shareholders, free and clear of
all voting restrictions, trade restrictions, liens, claims,
charges or encumbrances of any kind whatsoever, save for those
imposed by law and the Articles of Association of DXP US;
(j) except for the DXP US Shares, there are and there will be on the
Closing Date no documents, instruments or other writings of any
kind whatsoever which constitute a security of DXP US and there
are and will be on the Closing Date no options, agreements or
rights of any kind whatsoever to acquire directly or indirectly
any other shares of DXP US;
(k) save as set out in Schedule 4.1 the Articles of Incorporation of
DXP US have not been and at Completion will not have been altered
since the incorporation of DXP US, except to effect the change of
its name to its present name;
(l) save for the acquisition of DXP and the related transactions, DXP
US has not traded nor entered into any agreement, has no
liabilities has no safety deposit boxes, or bank or brokerage
accounts;
(m) DXP US has the corporate power to own the assets it owns;
(n) except as disclosed in writing to HAI prior to HAI's execution of
this Agreement, none of the Vendor Group or any other officer,
director or employee of DXP or DXP US is indebted or under
obligation to DXP US on any account whatsoever; and
(o) the directors, officers, key employees and independent contractors
and consultants of DXP US are as listed on Schedule J to this
Agreement;
(p) save in relation to the DXP US Debt, no payments of any kind
whatsoever have been made or authorized by DXP US directly or
indirectly to or on behalf of any of the Vendor Group or any of
the directors, officers, key employees, independent contractors or
consultants of DXP US;
(q) DXP US has good and sufficient power, authority and capacity to
complete its respective transactions contemplated under this
Agreement on the terms and conditions set forth herein.
4.2 In order to induce HAI to enter into this Agreement and complete its
transactions contemplated hereunder, each of DXP US and each of the DXP
Shareholders represents and warrants to HAI that:
(a) DXP was duly incorporated under the laws of England and remains
validly existing under the laws of England, and:
(i) is a "private company limited by shares" within the
meaning of section 1 of the Companies Xxx 0000, and is not
subject to any statutory registration or filing
requirements applicable to public reporting companies;
(ii) has the power, authority and capacity to enter into this
Agreement and carry out its terms; and
(iii) is in good standing with respect to the filing of all
annual reports required under the laws of England;
(b) the Directors and Officers of DXP are as follows:
(i) Xx. Xxxxxxx-Xxxxxx - Director;
(ii) Xx. Xxxxxxx - Director; and
(iii) Xx. Xxxx - Director;
(c) the DXP Shares will on the Closing Date immediately prior to
Completion be validly issued and outstanding fully paid ordinary
shares of DXP registered in the name of, and beneficially owned
by, DXP US, free and clear of all voting restrictions, trade
restrictions, liens, claims, charges or encumbrances of any kind
whatsoever, save for those imposed by law and the Articles of
Association of DXP;
(d) except for the DXP Shares, there are and there will be on the
Closing Date no documents, instruments or other writings of any
kind whatsoever which constitute a security of DXP and, except as
is provided for by operation of this Agreement, there are and
there will be on the Closing Date no options, agreements or rights
of any kind whatsoever to acquire directly or indirectly any other
shares of DXP;
(e) the Memorandum and Articles of Association of DXP have not been
and at Completion will not have been altered further to the
incorporation of DXP and the adoption of new Articles of
Association thereafter, except to effect the change of its name to
its present name and to increase and reclassify its share capital;
(f) all of the material transactions of DXP which are required to be
recorded or filed in or with the books or records of DXP have been
promptly and properly so recorded or filed and the minute books of
DXP contain all records of the meetings and proceedings of the
shareholders and directors of DXP since its incorporation;
(g) DXP holds all licences and permits that are required for carrying
on their respective businesses in the manner in which such
businesses have been carried on;
(h) DXP is the legal and beneficial owner of, or is otherwise
permitted to use, each of the existing properties and assets of
its business (excluding, for the avoidance of doubt, the Patent)
having an individual value in excess of (pound)10,000 used by DXP
and which is necessary or useful in the conduct of its business
(collectively the "DXP Assets") including, without limitation, the
domain names "xxxxxxxx.xxx", "xxxxxxxx.xx.xx" and "xxxxx.xxx"
(collectively, the "Domain Names") and the other assets listed on
Schedule K to this Agreement, which are owned or licensed as
indicated therein;
(i) the DXP Assets are free and clear of all liens, charges and
encumbrances of any kind whatsoever save and except those
specified as "Permitted Encumbrances" on Schedule K to this
Agreement, and in particular:
(i) DXP is the registered owner of the Domain Names, free and
clear of all encumbrances whatsoever, and is not a party
to or bound by any contract or any other obligation
whatsoever that limits or impairs its ability to sell,
transfer, assign or convey, or that otherwise affects, the
Domain Names save for its contracts with or obligations to
the domain name registration bodies or authorities;
(ii) All fees or other costs associated with maintaining the
registration of the Domain Names have been paid for the
2000 calendar year and the registration of the Domain
Names is in good standing with Network Solutions Inc. or
the appropriate registration bodies; and
(iii) no other person has been granted any interest in or right
to use all or any portion of the Domain Names during DXP's
ownership of the Domain Names;
(j) each item of machinery and equipment of any kind whatsoever
comprised in the DXP Assets is in reasonable operating condition
and in a state of reasonable maintenance and repair taking into
account its age and use;
(k) the only bank accounts of DXP are held at Lloyds TSB, Cheltenham
Branch UK and DXP does not have and will not have at Completion
any safety deposit box or any other bank or brokerage account;
(l) DXP has the corporate power to own the assets it owns, and to
carry on the business carried on by it, and is duly qualified to
carry on business in all jurisdictions in which it carries on
business;
(m) save for any costs and expenses arising in the ordinary course of
business, all material outstanding liabilities, whether direct,
indirect, absolute, contingent or otherwise, whatsoever of DXP
have been disclosed in writing to HAI prior to HAI's execution of
this Agreement, and the total liabilities of DXP (including the
Indebtedness owed by DXP to Blue Capital and the vendor of the
business known as Two Step) does not exceed US$3,000,000;
(n) except as disclosed in writing to HAI prior to HAI's execution of
this Agreement:
(i) no dividends or other distributions of any kind whatsoever
on any shares in the capital of DXP have been or will
prior to Completion be made, declared or authorized;
(ii) no new machinery or equipment of any kind whatsoever has
been ordered by, or installed or assembled on the premises
of, DXP
(iii) DXP is not indebted to any of the Vendor Group or the
Vendor Corporations;
(iv) none of the Vendor Group or any other officer, director or
employee of DXP or DXP US is indebted or under obligation
to DXP or DXP US on any account whatsoever; and
(v) DXP has not guaranteed or agreed to guarantee any debt,
liability or other obligation of any kind whatsoever of
any person, firm or corporation of any kind whatsoever;
(o) other than in the ordinary course of business, since DXP's
incorporation:
(i) there has not and will not on Completion have been any
material adverse change of any kind whatsoever in the
financial position or condition of DXP, or any damage,
loss or other change of any kind whatsoever in
circumstances materially affecting the business of DXP or
the DXP Assets or the right or capacity of DXP to carry on
its business;
(ii) DXP has not and DXP will not on Completion have waived or
surrendered any right of any kind whatsoever of material
value; and
(iii) except as may be expressly permitted under this Agreement,
DXP has not and DXP will not on Completion have
discharged, satisfied or paid any lien, charge or
encumbrance of any kind whatsoever or obligation or
liability of any kind whatsoever other than current
liabilities in the ordinary course of its business;
(p) the directors, officers, key employees and independent contractors
and consultants of DXP and DXP US are as listed on Schedule J to
this Agreement;
(q) no payments of any kind whatsoever have been made or authorized by
DXP or DXP US directly or indirectly to or on behalf of any of the
Vendor Group or any of the directors, officers, key employees,
independent contractors or consultants of DXP or DXP US;
(r) there are no pensions, profit sharing, group insurance or similar
plans or other deferred compensation plans of any kind whatsoever
affecting DXP other than those, if any, specified on Schedule J to
this Agreement;
(s) DXP is not now, nor has ever been, a party to any collective
agreement with any labour union or other association of employees
of any kind whatsoever, no collective bargaining agent has been
certified in respect of DXP, and there is no application pending
for certification of a collective bargaining agent in respect of
DXP;
(t) the contracts and agreements entered into with those individuals
specified in Schedule J to this Agreement and those additional
contracts and agreements specified on Schedule L to this Agreement
(collectively the "Material Contracts") constitute all of the
material contracts and agreements of DXP;
(u) except as may be noted on the appropriate Schedule to this
Agreement, the Material Contracts are in good standing in all
material respects and not in default in any respect;
(v) save as set out in Schedule K, DXP has not licensed, leased,
transferred, disposed of or encumbered any of the DXP Assets in
any way or permitted any third party access to any of the DXP
Assets the value of which may be compromised by such access,
including in particular the source code to any computer software,
any subscriber lists or any trade secret information included in
the DXP Assets, except only in accordance with the terms of the
Material Contracts or under any obligation of confidences;
(w) DXP is not in material breach of any applicable law, ordinance,
statute, regulation, by-law, order or decree of any kind
whatsoever including, without limitation, any applicable
securities laws;
(x) all tax returns and reports of DXP required by law to have been
filed have been filed and are substantially true, complete and
correct and all taxes and other government charges of any kind
whatsoever of DXP have been paid or accrued for;
(y) DXP has not:
(i) made any election under any applicable tax legislation
with respect to the acquisition or disposition of any
property at other than fair market value; or
(ii) entered into a transaction which will give rise to tax
payable by reference to deemed (as opposed to actual)
income, profits or gains;
(z) DXP has made all elections required to have been made under any
applicable tax legislation in connection with any distributions
made by it and all such elections were true and correct and filed
in the prescribed form and within the prescribed time period;
(aa) adequate provision has been made for taxes payable by DXP for the
current period for which tax returns are not yet required to be
filed and there are no agreements, waivers or other arrangements
of any kind whatsoever providing for an extension of time with
respect to the filing of any tax return by, or payment of, any tax
or governmental charge of any kind whatsoever by DXP;
(bb) DXP does not have any contingent tax liabilities in respect of
which provision would be required to be made in the audited
accounts of DXP prepared in accordance with GAAP, and there are no
grounds which would prompt a reassessment of DXP, including for
aggressive treatment of income or expenses in earlier tax returns
filed;
(cc) there are no amounts outstanding and unpaid for which DXP has
previously claimed a deduction under any applicable tax
legislation;
(dd) DXP has made all collections, deductions, remittances and payments
of any kind whatsoever and filed all reports and returns required
by it to be made or filed under the provisions of all applicable
statutes requiring the making of collections, deductions,
remittances or payments of any kind whatsoever;
(ee) there are no actions, suits, judgements, investigations or
proceedings of any kind whatsoever outstanding, pending or known
to be threatened against or affecting DXP at law or in equity or
before or by any federal, provincial, state, municipal or other
governmental department, commission, board, bureau or agency of
any kind whatsoever and there is no basis therefor;
(ff) the execution and delivery of this Agreement, the performance of
their respective obligations under this Agreement and the
Completion will not:
(i) conflict with, or result in the breach of or the
acceleration of any indebtedness under, or constitute
default under, any of the constating documents of DXP, or
any of the terms of any indenture, mortgage, agreement,
lease, licence or other instrument of any kind whatsoever
to which DXP is a party or by which it is bound, or any
judgement or order of any kind whatsoever of any court or
administrative body of any kind whatsoever by which it is
bound; nor
(ii) result in the violation of any law or regulation by DXP;
(gg) DXP has not incurred any liability for agency, brokerage, referral
or finder's fees, commissions or compensation of any kind
whatsoever with respect to this Agreement or any transaction
contemplated under this Agreement;
(hh) he has good and sufficient power, authority and capacity to enter
into this Agreement and complete the transactions contemplated
under this Agreement on the terms and conditions set forth herein;
(ii) the proportion of DXP US Shares indicated in Recital B of this
Agreement to be held by him will on the Closing Date immediately
prior to Completion be validly issued and outstanding fully paid
and non-assessable common shares of DXP US registered in the name
of, and legally and beneficially owned by him free and clear of
all voting restrictions, trade restrictions, liens, claims,
charges or encumbrances of any kind whatsoever other than as set
out in the Articles of Association of DXP US;
(jj) he has such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of an
investment in the HAI Shares and is able to bear the economic risk
of loss of his entire investment;
(kk) HAI has provided to him the opportunity to ask questions and
receive answers concerning the terms and conditions of the
issuance of the HAI Shares and the he has had access to such
information concerning HAI as he has considered necessary or
appropriate in connection with the investment decision to acquire
the HAI Shares;
(ll) he is acquiring the HAI Shares for his own account, for investment
purposes only and not with a view to any resale, distribution or
other disposition of the HAI Shares in violation of any applicable
United States securities laws;
(mm) he has not agreed to acquire the HAI Shares as a result of any
form of general solicitation or general advertising, including
advertisements, articles, notices or other communications
published in any newspaper, magazine or similar media or broadcast
over radio, or television, or any seminar or meeting whose
attendees have been invited by general solicitation or general
advertising;
(nn) he is not a "U.S. Person", the definition of which includes, but
is not limited to, an individual resident in the United States and
an estate or trust of which any executor or administrator or
trustee, respectively, is a U.S. Person, any partnership or
corporation organized or incorporated under the laws of the United
States, and any partnership or corporation organized or
incorporated under the laws of any foreign jurisdiction by a U.S.
Person principally for the purposes of investing in securities not
registered under the Securities Act;
(oo) he was outside the United States at the time of negotiation,
execution and delivery of this Agreement;
(pp) no offers to sell the HAI Shares were made by any person to him
while he was in the United States; and
(qq) the HAI Shares are not being acquired, directly or indirectly, for
the account or benefit of a U.S. Person or a person in the United
States.
4.3 The following limitations apply to the representations and warranties
provided by each of the Vendor Group under paragraphs 4.1 and 4.2 of this
Agreement:
(a) The Vendor Group shall have no liability under the representations
and warranties in paragraph 4.1 in relation to any matter fully,
fairly and accurately disclosed to HAI or expressly provided for
or stated to be exceptions under the terms of this Agreement.
(b) In relation to the liability of the Vendor Group:
(i) in respect of claims under the representations and
warranties in paragraphs 4.1 and 4.2, the total liability
of DXP US shall be limited to US$9,900,000 and the total
liability of the DXP US Shareholders shall be limited to
the Monetary Consideration with each DXP US Shareholder
liable only in respect of his proportion of the Monetary
Consideration, provided that the limitations on liability
in this paragraph 4.3 shall not apply to claims which (or
delay in the discovery of which) are the consequence of
fraud, wilful default or wilful concealment by any of the
Vendor Group. Any liabilities of POV which are not
recovered by HAI may be recovered in equal proportions
from the POV Shareholders subject to the limitations set
out in this paragraph;
(ii) no liability shall attach to the Vendor Group in respect
of claims under the representations and warranties in
paragraphs 4.1 and 4.2 unless the individual claim exceeds
US$25,000 and unless the aggregate cumulative amount
payable by the Vendor Group in respect of all such claims
exceeds US$500,000 whereupon, subject to (i) above, the
Vendor Group shall be liable for the whole of such claims
and not merely for the excess;
(iii) all claims under the representations and warranties in
paragraphs 4.1 and 4.2 shall be made in writing to each of
the Vendor Group (specifying particulars of the claim in
reasonable detail based on the information in the
possession of the party making the claim);
(iv) no liability shall attach to the Vendor Group in respect
of claims under the representations and warranties in
paragraphs 4.1 and 4.2 unless the claim has been made in
accordance with paragraph (iii) above and received by the
Vendor Group no later than twelve [12] months following
the Closing Date;
(v) if any claim against the Vendor Group under the
representations and warranties in paragraphs 4.1 and 4.2
relates to a matter against which HAI is insured at the
relevant time, the Vendor Group shall have no liability
until all appropriate claims under such insurance have
been duly made and prosecuted in good faith and any
payment under such insurance shall satisfy pro tanto any
liability of any member of the Vendor Group; and
(vi) if and to the extent that HAI recovers any amount pursuant
to a claim from the Vendor Group and subsequently HAI is
entitled to recover any sum of money in respect of the
circumstances giving rise to that claim from any third
party or otherwise receives any monetary benefit in
respect thereof, then HAI shall take at its own expense
all reasonable steps to recover or obtain reimbursements
from such third party or obtain such monetary benefit and
thereafter to the extent that such payment by such third
party results in HAI having recovered from the Vendor
Group more than the amount of the loss occasioned by the
facts in respect of which the claim in question was made,
after taking the payment made by such third party or other
monetary benefit into account (net of the costs of
recovery), the Vendor Group shall be reimbursed for any
excess over such loss by HAI provided that HAI shall not
be required to repay to the Vendor Group any amount in
excess of the sum (net of the costs of recovery) so
received by HAI.
4.4 The representations and warranties of each of the Vendor Group contained in
this Agreement shall be true in all material respects at the Time of Closing as
though they were made at the Time of Closing, and they shall survive the
Completion and remain in full force and effect thereafter for the benefit of
HAI.
4.5 Each of the DXP US Shareholders and the POV Shareholders acknowledges and
agrees that:
(a) the HAI Shares have not been and will not be registered under the
Securities Act or the securities laws of any state of the United
States or other jurisdiction and that the Reorganization
contemplated hereby is being made in reliance on representations
and warranties by the POV Shareholders, POV and the DXP
Shareholders regarding the circumstances required for an exemption
from such registration requirements;
(b) the issuance of the HAI Shares has not been approved or
disapproved by the United States Securities and Exchange
Commission, any state securities agency, or any foreign securities
agency, and the class of HAI Shares is registered under the United
States Securities Exchange Act of 1934 (the "Exchange Act");
(c) the certificates representing the HAI Shares will bear a legend
stating that such shares have not been registered under the
Securities Act or the securities laws of any state of the United
States and may not be sold, transferred, pledged, traded or
otherwise assigned except in compliance with the Securities Act
and the Exchange Act; and
(d) none of the HAI Shares, will be offered, sold or otherwise
transferred by any of the DXP US Shareholders, directly or
indirectly, unless:
(i) the sale is to HAI;
(ii) the sale is made pursuant to the exemption from the
registration requirements under the Securities Act
provided by Rule 144 thereunder or Regulation S, and in
accordance with any applicable state securities or "Blue
Sky" laws;
(iii) the HAI Shares are sold in a transaction that does not
require registration under the Securities Act or any
applicable state laws and regulations governing the offer
and sale of securities, and he has prior to such sale
furnished to HAI an opinion of counsel to that effect
reasonably satisfactory to HAI; or
(iv) the HAI Shares have been registered under the Securities
Act for resale by the DXP US Shareholders.
HAI agrees to refuse the transfer of any HAI Shares hold by the DXP US
Shareholders not made in compliance with this section 4.5(d).
4.6 Each of the DXP US Shareholders and each of the POV Shareholders consents to
HAI making a notation on its records or giving instructions to any transfer
agent of HAI to implement the restrictions on transfer set forth and described
herein.
4.7 Each of the DXP US Shareholders agrees not to engage in hedging transactions
involving HAI Shares unless in compliance with the Securities Act and all
applicable laws, rules and regulations.
4.8 Each of the DXP US Shareholders and each of the POV Shareholders
acknowledges and accepts that there may be material tax consequences to a
shareholder in respect of an acquisition or disposition of the HAI Shares, and
that HAI gives no opinion and makes no representation with respect to the tax
consequences to a shareholder under United States, state, local or foreign tax
law in respect of the shareholder's acquisition or disposition of the HAI
Shares.
4.9 In order to induce the Vendor Group to enter into this Agreement and
complete the transactions contemplated hereunder, HAI represents and warrants to
the Vendor Group that:
(a) HAI was and remains duly incorporated and validly existing under
the laws of the State of Nevada, and HAI is in good standing with
respect to all filings required by the Nevada Secretary of State;
(b) the authorized capital of HAI consisted of 50,000,000 shares with
a par value of $0.001 per share, of which 10,000,000 shares (the
"Outstanding Shares") were issued and outstanding as of the
Effective Date;
(c) other than as contemplated in this Agreement, no further shares of
HAI will be issued after the Effective Date, and there are no
commitments, plans or arrangements of any kind whatsoever to issue
any further shares of HAI, nor are there any outstanding options,
warrants, convertible securities or other rights of any kind
whatsoever calling for the issuance of any of the unissued shares
of HAI;
(d) except for the 10,000,000 common shares of HAI that are currently
issued and the further shares and warrants to be issued pursuant
to this Agreement, there are no documents, instruments or other
writings of any kind whatsoever which constitute a security of
HAI;
(e) the HAI Shares to be issued on Completion will be, when issued,
validly issued as fully paid and non-assessable and the DXP US
Shareholders will own the HAI Shares in the proportions set out in
Recital B of this Agreement;
(f) HAI has good and sufficient power, authority and capacity to enter
into this Agreement and complete its transactions contemplated
under this Agreement on the terms and conditions set forth herein;
(g) the common shares of HAI are currently quoted on the OTC Board;
(h) HAI is in material compliance with all applicable laws,
ordinances, statutes, regulations, by-laws, orders and decrees of
any kind whatsoever including, without limitation, all applicable
United States securities laws;
(i) the constating documents of HAI have not been altered since the
incorporation of HAI, except to effect changes of its name,
culminating in its present name, and to complete a 12.5:1 forward
split to increase its issued and outstanding share capital from
800,000 to 10,000,000 common voting shares;
(j) all of the material transactions of HAI which are required to be
recorded or filed in or with the books or records of HAI have been
promptly and properly so recorded or filed and the minute books of
HAI contain all records of the meetings and proceedings of the
shareholders and directors of HAI since its incorporation;
(k) HAI holds all licences and permits that are required for carrying
on its business in the manner in which such business has been
carried on;
(l) HAI has the corporate power to own the assets it owns, and to
carry on the business carried on by it, and is duly qualified to
carry on business in all jurisdictions in which it carries on
business;
(m) HAI is not a party to or bound by any material contracts other
than this Agreement and a standard form of agreement with its
stock transfer agent;
(n) HAI has good and sufficient power, authority and capacity to enter
into this Agreement and complete the transactions contemplated
under this Agreement on the terms and conditions set forth herein;
(o) the execution and delivery of this Agreement, the performance of
HAI's obligations under this Agreement and the Completion will
not:
(i) conflict with, or result in the breach of or the
acceleration of any indebtedness under, or constitute
default under, any of the constating documents of HAI, or
any of the terms of any indenture, mortgage, agreement,
lease, licence or other instrument of any kind whatsoever
to which HAI is a party or by which HAI is bound, or any
judgement or order of any kind whatsoever of any court or
administrative body of any kind whatsoever by which HAI is
bound; nor
(ii) result in the violation of any law or regulation of any
kind whatsoever by HAI;
(p) HAI has not incurred any liability for agency, brokerage, referral
or finder's fees, commissions or compensation of any kind
whatsoever with respect to this Agreement or any transaction
contemplated under this Agreement; and
(q) HAI has disclosed to the Vendor Group all and any liabilities of
HAI, whether actual or contingent, present or future other than in
relation to liabilities incurred in the ordinary and proper course
of business which on the Effective Date do not and on the Date of
Closing will not exceed US$200,000 in the aggregate.
4.10 The representations and warranties of HAI contained in this Agreement shall
be true in all material respects at the Time of Closing as though they were made
at the Time of Closing, and they shall survive the Completion and remain in full
force and effect thereafter for the benefit of the Vendor Group.
4.11 In order to induce the Vendor Group to enter into this Agreement and
complete the transactions contemplated hereunder, ICA and HAI, jointly and
severally, represent and warrant to the Vendor Group that:
(a) ICA was and remains duly incorporated and validly existing under
the laws of the State of Nevada, and ICA is in good standing with
respect to all filings required by the Nevada Secretary of State;
(b) the authorized capital of ICA consisted of 1,500 shares with no
par value of which 100 shares were issued and outstanding and all
of which were owned by HAI as of the Effective Date;
(c) no further shares of ICA will be issued after the Effective Date,
and there are no commitments, plans or arrangements of any kind
whatsoever to issue any further shares of ICA nor are there any
outstanding options, warrants, convertible securities or other
rights of any kind whatsoever calling for the issuance of any of
the unissued shares of ICA;
(d) except for the 100 common shares of ICA that are currently issued,
there are no documents, instruments or other writings of any kind
whatsoever which constitute a security of ICA;
(e) ICA has good and sufficient power, authority and capacity to enter
into this Agreement and complete its transactions contemplated
under this Agreement on the terms and conditions set forth herein;
(f) ICA is not a party to or bound by any material contracts other
than this Agreement;
(g) ICA has good and sufficient power, authority and capacity to enter
into this Agreement and complete the transactions contemplated
under this Agreement on the terms and conditions set forth herein.
4.12 The representations and warranties of ICA contained in this Agreement shall
be true in all material aspects at the Time of Closing as though they were made
at the Time of Closing, and they shall survive the Completion and remain in full
force and effect thereafter for the benefit of the Vendor Group.
5. INDEMNITY
5.1 Notwithstanding the completion of the transactions contemplated under this
Agreement, the representations, warranties and acknowledgements of any of the
Vendor Group contained in this Agreement or any certificates or documents
delivered by any of them pursuant to this Agreement shall survive the Completion
and shall continue in full force and effect thereafter for the benefit of HAI.
If any of the representations, warranties or acknowledgements given by any of
the Vendor Group is found to be untrue or there is a breach of any covenant or
agreement in this Agreement on the part of any of the Vendor Group, then the
party or parties responsible shall jointly and severally indemnify and save
harmless HAI from and against any and all liability, claims, debts, demands,
suits, actions, penalties, fines, losses, costs (including legal fees,
disbursements and taxes as charged on a lawyer and own client basis), damages
and expenses of any kind whatsoever which may be brought or made against HAI by
any person, firm or corporation of any kind whatsoever or which may be suffered
or incurred by HAI, directly or indirectly, arising out of or as a consequence
of any such misrepresentation or breach of warranty, acknowledgement, covenant
or agreement. Without in any way limiting the generality of the foregoing, this
shall include any loss of any kind whatsoever which may be suffered or incurred
by HAI, directly or indirectly, arising out of any material assessment or
reassessment levied upon DXP or DXP US for tax, interest and/or penalties
relating to any period of business operations up to and including the Closing
Date and all claims, demands, costs (including legal fees, disbursements and
taxes as charged on a lawyer and own client basis) and expenses of any kind
whatsoever in respect of the foregoing.
5.2 Notwithstanding the completion of the transactions contemplated under this
Agreement, the representations, warranties and acknowledgements of HAI and ICA
contained in this Agreement or any certificates or documents delivered by HAI or
ICA pursuant to this Agreement shall survive the Completion and shall continue
in full force and effect thereafter for the benefit of the Vendor Group. If any
of the representations, warranties or acknowledgements given by HAI or ICA is
found to be untrue or there is a breach of any covenant or agreement in this
Agreement on the part of HAI, then HAI and ICA shall indemnify and save the
Vendor Group harmless from and against any and all liability, claims, debts,
demands, suits, actions, penalties, fines, losses, costs (including legal fees,
disbursements and taxes as charged on a lawyer and own client basis), damages
and expenses of any kind whatsoever which may be brought or made against any of
the Vendor Group by any person, firm or corporation of any kind whatsoever or
which may be suffered or incurred by any of the Vendor Group, directly or
indirectly, arising out of or as a consequence of any such misrepresentation or
breach of warranty, acknowledgement, covenant or agreement. Without in any way
limiting the generality of the foregoing, this shall include any loss of any
kind whatsoever which may be suffered or incurred by any of the Vendor Group,
directly or indirectly, arising out of any material assessment or reassessment
levied upon HAI or ICA for tax, interest and/or penalties relating to any period
of business operations up to and including the Closing Date and all claims,
demands, costs (including legal fees, disbursements and taxes as charged on a
lawyer and own client basis) and expenses of any kind whatsoever in respect of
the foregoing.
6. CLOSING
6.1 At the Time of Closing, the Vendor Group shall deliver to the solicitors for
HAI or make available to HAI and ICA:
(a) certified true copies of resolutions of the directors of POV and
DXP US evidencing that the directors of POV and DXP US have
approved this Agreement and all of the transactions of POV and DXP
US contemplated hereunder and in the Merger Documents,
specifically referring to:
(i) the conversion of the DXP US Shares held by the DXP US
Shareholders to HAI Shares as provided for in this
Agreement; and
(ii) the cancellation of the share certificates (the "Old Share
Certificates") representing the DXP US Shares held as set
forth in Recital B of this Agreement.
(b) the Old Share Certificates;
(c) all minute books of DXP and DXP US;
(d) all original and duplicate certificates, if any, evidencing
registration anywhere in the world of any interest in tangible or
intangible property included in the DXP Assets and, in the case of
any assets not yet registered in the name of DXP or DXP US, if
any, original assignments of each interest to DXP US, duly
executed in registrable form acceptable to HAI's solicitors,
acting reasonably;
(e) a release in the form of Schedule M to this Agreement from each of
the DXP US Shareholders and the POV Shareholders of all claims
against DXP or DXP US for outstanding amounts owing by either of
DXP or DXP US on account of any loans, bonuses, reimbursements,
compensation, fees, royalties, dividends or other consideration
whatsoever;
(f) the DXP Legal Opinions;
(g) a certificate of confirmation from each of the DXP US Shareholders
substantially in the form of Schedule N to this Agreement;
(h) the consent of Xx. Xxxx to become a Director and President of HAI,
the consent of Xxxx Xxxxx to become a Director and Secretary of
HAI, and the consents of Xx. Xxxxxxx-Xxxxxx, Xx. Xxxxxxx, Xx.
Xxxx, Xx. Xxxxxxx, Xxxxxxx Xxxxxx and Xxxxxx Xxxxxx to each become
a Director of HAI;
(i) the draft audited financial accounts of DXP for the fiscal period
just past; and
(j) confirmation that the DXP US Shareholders have approved the
Reorganization.
6.2 At the Time of Closing, HAI shall deliver to the solicitors for the DXP US
Shareholders or make available to the DXP US Shareholders:
(a) certified true copies of the resolutions of the directors or
shareholders (as appropriate) of HAI and ICA, evidencing that the
directors of HAI and ICA have approved this Agreement and all of
the transactions of HAI and ICA contemplated hereunder and in the
Merger Documents, including the issuance of the HAI Shares and the
payment of the DXP US Debt (US$1,572,784.01) and the first tranche
of the Monetary Consideration (US$827,215.99) upon conversion of
the DXP Shares, the appointment of Xx. Xxxx as a Director and
President of HAI, the appointment of Xxxx Xxxxx as a Director and
Secretary of HAI, the appointment of Xx. Xxxxxxx-Xxxxxx, Xx.
Xxxxxxx, Xx. Xxxx, Xx. Xxxxxxx, Xxxxxxx Xxxxxx and Xxxxxx Xxxxxx
as a Director of HAI and the resignation of Xx. Xxxx Xxxxxxx as a
Director and President and of Xx. Xxxx X. Xxxxx as a Director and
Secretary of HAI;
(b) share certificates representing the HAI Shares, or written
confirmation that HAI's stock transfer agent has been instructed
to issue and deliver to the DXP US Shareholders share certificates
representing the HAI Shares, registered in the names of the DXP US
Shareholders in the proportions set out in Recital B of this
Agreement;
(c) a certificate of confirmation signed by an officer of HAI
substantially in the form of Schedule O to this Agreement;
(d) the HAI Legal Opinion;
(e) the First Financing proceeds, as described in paragraph 1.5 of
this Agreement;
(f) the resignations of Xx. Xxxx X. Xxxxx and Xx. Xxxx Xxxxxxx as
Directors and officers of HAI, effective on Completion;
(g) the Escrow Letter; and
(h) confirmation that HAI has approved the Reorganization.
7. GENERAL
7.1 Time and each of the terms and conditions of this Agreement shall be of the
essence of this Agreement and any waiver by the parties of this paragraph 7.1 or
any failure by them to exercise any of their rights under this Agreement shall
be limited to the particular instance and shall not extend to any other instance
or matter in this Agreement or otherwise affect any of their rights or remedies
under this Agreement.
7.2 The Schedules to this Agreement incorporated by reference and the recitals
to this Agreement constitute a part of this Agreement.
7.3 This Agreement constitutes the entire Agreement between the parties hereto
in respect of the matters referred to herein and there are no representations,
warranties, covenants or agreements, expressed or implied, collateral hereto
other than as expressly set forth or referred to herein.
7.4 The headings in this Agreement are for reference only and do not constitute
terms of the Agreement.
7.5 The provisions contained in this Agreement which, by their terms, require
performance by a party to this Agreement subsequent to the Closing Date of this
Agreement, shall survive the Closing Date of this Agreement.
7.6 No alteration, amendment, modification or interpretation of this Agreement
or any provision of this Agreement shall be valid and binding upon the parties
hereto unless such alteration, amendment, modification or interpretation is in
written form executed by the parties directly affected by such alteration,
amendment, modification or interpretation.
7.7 Whenever the singular or masculine is used in this Agreement the same shall
be deemed to include the plural or the feminine or the body corporate as the
context may require.
7.8 The parties hereto shall execute and deliver all such further documents and
instruments and do all such acts and things as any party may, either before or
after the Closing Date, reasonably require in order to carry out the full intent
and meaning of this Agreement.
7.9 Any notice, request, demand and other communication to be given under this
Agreement shall be in writing and shall be delivered by hand to the appropriate
party at the address as first set out above or to such other addresses or by
such other means as may be designated in writing by the parties hereto in the
manner provided for in this paragraph, and shall be deemed to have been received
on the date of delivery by hand, or if delivered by e-mail, facsimile or
telecopy, then on the date transmission completes.
7.10 This Agreement shall be subject to, governed by, and construed in
accordance with the laws of the State of Nevada and the laws of the United
States of America applicable therein.
7.11 This Agreement may be signed by the parties in as many counterparts as may
be deemed necessary, each of which so signed shall be deemed to be an original,
and all such counterparts together shall constitute one and the same instrument.
Reproduction of signatures of any of the parties hereto or their authorized
signatories by way of telecopying device will be treated as though such
reproductions were executed originals.
7.12 It is the intent of the parties that the merger of DXP US with and into ICA
constitute a tax free reorganization as described in Section 368(a) of the
Internal Revenue Code of 1986, as amended. The parties hereto shall execute and
deliver such further documents and do such further acts as may be necessary to
achieve such result.
IN WITNESS WHEREOF the parties have hereunto set their hands and seals as of the
Effective Date:
SIGNED, SEALED & DELIVERED by ALDERSEY EGERTON )
XXXXXXX-XXXXXX in the presence of: )
)
------------------------------------------------------- )
Signature of Witness ) /s/ Aldersey X. Xxxxxxx-Xxxxxx
------------------------------
) ALDERSEY X. XXXXXXX-XXXXXX
Name: )
------------------------------------------------
Address: )
---------------------------------------------
)
-------------------------------------------------------
Occupation: )
------------------------------------------
SIGNED, SEALED & DELIVERED by )
XXXXXX XXXXX ELEK )
in the presence of: )
)
) /s/ Xxxxxx Xxxxx Xxxx
------------------------------------------------------- ----------------------
Signature of Witness ) XXXXXX XXXXX ELEK
)
Name: )
------------------------------------------------
Address: )
---------------------------------------------
)
-------------------------------------------------------
Occupation:
SIGNED, SEALED & DELIVERED by )
XXXXX XXXXXXX )
in the presence of: )
)
) /s/ Xxxxx Xxxxxxx
------------------------------------------------------- -----------------
Signature of Witness ) XXXXX XXXXXXX
)
Name: )
------------------------------------------------
Address: )
---------------------------------------------
)
-------------------------------------------------------
Occupation:
SIGNED, SEALED & DELIVERED by XXXXX XXXXXXX in the )
presence of: )
)
------------------------------------------------------- )
Signature of Witness ) /s/ Xxxxxx X. Xxxxxxx
---------------------
) XXXXX XXXXXXX
Name: )
------------------------------------------------
Address: )
---------------------------------------------
)
-------------------------------------------------------
Occupation: )
------------------------------------------
SIGNED, SEALED & DELIVERED by XXXXXXX XXXX in the )
presence of: )
)
------------------------------------------------------- )
Signature of Witness ) /s/ Xxxxxxx Xxxx
----------------
) XXXXXXX XXXX
Name: )
------------------------------------------------
Address: )
---------------------------------------------
)
-------------------------------------------------------
Occupation: )
------------------------------------------
EXECUTED by )
DXP US, INC. )
acting by two directors: )
)
/s/ Xxxxxx Xxxxx Elek )
-------------------------------------------------------
Name: Xxxxxx Xxxxx Xxxx )
)
Title: President and Director )
)
/s/ Xxxxxxx Xxxx )
-------------------------------------------------------
Name: )
)
Xxxxxxx Xxxx
-------------------------------------------------------
Title: Treasurer and Director
EXECUTED by )
POV US, LLC. )
acting by two members: )
)
/s/ Xxxxxxx Xxxx )
-------------------------------------------------------
Name: Xxxxxxx Xxxx
)
Title: Member )
)
)
/s/ Xxxxxx X.Xxxxxxx )
------------------------------------------------------- )
Title: Member )
)
)
EXECUTED by )
IQROM COMMUNICATIONS, INC. (formerly Hiking Adventures, )
Inc.) )
acting by its director: )
)
/s/ Xxxx Xxxxxxx )
-------------------------------------------------------
Name: XXXX XXXXXXX )
Title: DIRECTOR AND PRESIDENT )
EXECUTED by )
IQROM COMMUNICATIONS
ACQUISITIONS CO. )
Acting by its director )
/s/ Xxxx Xxxxxxx )
-------------------------------------------------------- )
Name: XXXX XXXXXXX
Title: DIRECTOR AND PRESIDENT
