AGREEMENT AND PLAN OF SHARE EXCHANGE
AMONG
EDISON RENEWABLES, INC.
AND
THE PERSONS SET FORTH ON
THE SIGNATURE PAGE HEREOF
Dated as of August 3, 2004
TABLE OF CONTENTS
1. AGREEMENT AND PLAN OF SHARE EXCHANGE
AGREEMENT AND PLAN OF SHARE EXCHANGE.........................................1
2. SCHEDULES
SCHEDULE 3.2(a)(ii)...........................................................
SCHEDULE 3.3 .................................................................
SCHEDULE 3.5 .................................................................
SCHEDULE 3.7 .................................................................
SCHEDULE 3.10.2 ..............................................................
SCHEDULE 3.14 ................................................................
SCHEDULE 3.20 ................................................................
SCHEDULE 3.23 ................................................................
SCHEDULE 4.2(b) ..............................................................
SCHEDULE 4.6 .................................................................
SCHEDULE 4.7 .................................................................
SCHEDULE 4.20 ................................................................
SCHEDULE 4.21 ................................................................
SCHEDULE 5.2 . ...............................................................
AGREEMENT AND PLAN OF SHARE EXCHANGE dated as of August 3, 2004 by and
among EDISON RENEWABLES, INC., a Nevada corporation (the "Company") and the
persons set forth on the signature page hereto (the "NextPhase Shareholders").
The Company and the NextPhase Shareholders are sometimes collectively referred
to as the "Parties" and individually as a "Party".
RECITALS:
---------
Company is a publicly traded company which currently has its securities
traded on the OTC Bulletin Board. The Company currently has no operations.
The NextPhase Shareholders own all of the issued and outstanding shares of
common stock (no par value per share) (the "NextPhase Common Stock) of NextPhase
Technologies, Inc., a California corporation ("NextPhase")
NextPhase owns technology relating to high speed wireless networks which
have the ability to penetrate densely populated areas, and special antennas and
equipment in the area of microwave technology (the "Assets").
Subject to the terms and conditions hereof, the Company deem it desirable
and in the best interests of their respective corporations and shareholders that
the NextPhase Shareholders shall exchange their respective NextPhase Common
Stock for shares of common stock $.001 par value per share, (the "Company Common
Stock") of the Company, upon the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual benefits to be derived
hereby and the representations, warranties, covenants and agreements herein
contained, the Parties agree as follows:
ARTICLE I
DEFINED TERMS; SCHEDULES
1.1 Defined Terms. Capitalized terms used in this Agreement will have the
meanings given such terms in Article XIV hereof or elsewhere in the text of this
Agreement, and variants and derivatives of such terms shall have correlative
meanings.
1.2 Schedules. References to a Schedule will include any applicable disclosure
expressly set forth on the face of any other Schedule if specifically
cross-referenced to such other Schedule. Each Schedule and the information,
agreements and documents expressly listed in each Schedule will be considered a
part of this Agreement as if set forth herein in full and will be deemed to
constitute representations and warranties under this Agreement, limited as set
forth in the applicable provision of this Agreement under which such Schedule is
delivered or on the face of such Schedule; provided, however, that the
representations and warranties set forth in this Agreement shall not be affected
or deemed qualified, modified or limited in any respect by the information
provided in the Schedules
except to the extent that any qualification, modification or limitation to any
representation and warranty is expressly and conspicuously set forth on the face
of such particular Schedule.
ARTICLE II
SHARE EXCHANGE
2.1 Share Exchange.
(a) Subject to the terms and provisions set forth in this Agreement, each
share of NextPhase Common Stock issued and outstanding immediately prior to the
Effective Time shall, automatically and without any further action of the
NextPhase Shareholders or the Company be exchanged for one (1) share of Company
Common Stock.
(b) If any NextPhase Shareholder is entitled to receive fractional shares
of Purchaser Common Stock pursuant to the Share Exchange, such holder instead
will be entitled to receive (i) one whole share of Company Common Stock in lieu
of such fractional share if such holder would have otherwise been entitled to
receive or purchase one-half or more of a share of Company Common Stock; and
(ii) otherwise such holder shall not be entitled to receive or purchase any
additional shares or fractional shares.
(c) Subject to the provisions hereof, each outstanding certificate or
certificates held by a NextPhase Shareholder theretofore representing shares of
NextPhase Shares, and theretofore surrendered by such holder to the Company or
its transfer agent for cancellation, shall be entitled to receive in exchange
therefor (i) as promptly as practicable after the Effective Time, certificates
representing that NextPhase Shareholder's proportionate number of shares of
Company Common Stock for each share of NextPhase Common Stock surrendered, as is
specified in Section 2.1(a) hereof. If the shares of Company Common Stock (or
any portion thereof) are to be delivered to any person other than the person in
whose name the certificate or certificates representing the NextPhase Common
Stock surrendered in exchange therefor are registered, in addition to any other
requirements of applicable law, it shall be a condition to such exchange that
the certificate or certificates so surrendered shall be properly endorsed or
otherwise be in proper form for transfer and that the person requesting such
exchange shall pay to the Company or its transfer agent any transfer or other
taxes required by reason of the delivery of Company Common Stock to a person
other than the registered holder of the certificate or certificates surrendered,
or shall establish to the satisfaction of the Company or its transfer agent that
such tax has been paid or is not applicable.
(d) The Company Common Stock is being issued hereunder in a private
transaction exempt from registration under Section 5 of the Securities Act,
pursuant to Section 4(2) of the Securities Act, and accordingly such shares of
Company Common Stock may not be sold or otherwise transferred or disposed of by
the holders thereof unless they are registered under the Securities Act or
unless an exemption from such registration is available. Accordingly, a
restrictive legend will be placed on any instruments, certificates or other
documents evidencing such shares of Company Common Stock in, or substantially
in, the following form:
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"The shares represented by this certificate have not been
registered under the Securities Act of 1933. These shares
have been acquired for investment and not for distribution.
They may not be sold, assigned, mortgaged, pledged,
hypothecated, transferred or otherwise disposed of without
an effective registration statement for such shares under
the Securities Act of 1933 or an opinion of counsel for the
Company that registration is not required under such Act."
(e) Unless and until outstanding certificates representing shares of
NextPhase Common Stock prior to the Effective Time shall be surrendered as
provided in Section 2.1(c) hereof, dividends and other distributions, if any
(including, without limitation, any shares issuable in connection with stock
split-ups or other recapitalizations), payable as of any date subsequent to the
Effective Time to the holders of record of shares of Company Common Stock shall
not be paid to the holders of such certificates, but in the case of each such
certificate which shall be so surrendered: (i) there shall be paid, upon such
surrender, to the record holder of the certificate for shares of Company Common
Stock issued in exchange therefor, the full amount, without any interest
thereon, of the dividends and any other distributions (including, without
limitation, any shares issued in connection with stock split-ups or other
recapitalizations) referred to above which theretofore became payable with
respect to the number of shares of Company Common Stock represented by such
certificate; and (ii) there shall be paid to such record holder, on the payment
date therefor, the amount of any such dividend or other distribution with
respect to such number of shares, if the record date for the determination of
the stockholders entitled to such dividend or other distribution shall be prior
to the surrender of such certificate but the payment date of such dividend shall
be subsequent to such surrender.
(f) Promptly after the Effective Time, the Company's transfer agent shall
mail to each holder of certificates that immediately prior to the Effective Time
represented NextPhase Common Stock a form of letter of transmittal and
instructions for use in surrendering such certificates and receiving Company
Common Stock in exchange therefor.
(g) No holder of NextPhase Common Stock shall have any of the rights of a
stockholder of the Company with respect to Company Common Stock to be issued in
the share exchange hereunder until the Effective Time.
2.2 Further Assurances. The NextPhase Shareholders and NextPhase each agree
that, from time to time, after the Closing, as and when requested by the Company
or by its successors and assigns, officers of the Company shall, in the name of
each of the NextPhase Shareholders or NextPhase, as the case may be, execute and
deliver, or cause to be executed and delivered, at the sole expense of the
Company, all deeds, assignments and other instruments and shall take or cause to
be taken all such other and further actions as the Company may deem necessary or
appropriate in order more fully to compete and confirm to the Company title to
and possession of all the property, rights, privileges, immunities, powers,
purposes, franchises and all and every other interest of the shares exchange
referred to in Section 2.1 hereof, and otherwise to carry out the intent and
purposes of this Agreement.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE NEXTPHASE SHAREHOLDERS
The NextPhase Shareholders, jointly and severally, make the following
representations and warranties to the Company. Each of the following
representations and warranties shall be deemed material, and the Company, in
executing, delivering and consummating this Agreement, has relied upon the
correctness and completeness, in all material respects, of each of such
representations and warranties:
3.1 Valid Existence; Qualification. NextPhase is a corporation duly organized,
validly existing and in good standing under the laws of the State of California.
NextPhase has the power to carry on its business as now conducted and to own its
assets. NextPhase is not qualified to do business as a foreign corporation in
any other state or jurisdiction, and is not required to be so qualified in any
other jurisdiction in order to own its assets or carry on its business as now
conducted, and there has not been any claim by any other jurisdiction to the
effect that NextPhase is required to qualify or otherwise be authorized to do
business as a foreign corporation therein. The copies of NextPhases's
certificate of Incorporation, as amended to date, certified by the Secretary of
the State of California, and By-Laws, as amended to date (certified by the
Secretary of NextPhase), which have been delivered to the Company, are true and
complete copies of those documents as in effect on the date hereof.
3.2 Capitalization.
(a) The authorized capital stock of NextPhase consists of Fifty Million
(50,000,000) shares of Common Stock, no par value per share, of which Twelve
Million Nine Hundred Forty-Three Thousand (12,943,000) shares are issued and
outstanding. All of such issued and outstanding shares of NextPhase Common
Stock, as of the date hereof are, and as of the Closing Date shall be, duly
authorized, validly issued, fully paid and nonassessable. There are no
outstanding Derivative Securities of NextPhase that are convertible into or
exchangeable for any securities of NextPhase, and there are no outstanding
subscriptions, options, warrants, rights, calls or other commitments or
agreements to which NextPhase is a party or by which it is bound calling for the
issuance, transfer, sale or disposition of any securities of NextPhase or
Derivative Securities. Each NextPhase Shareholder owns outright the number of
shares of NextPhase Common Stock set forth next to his respective name on
Schedule 3.2(a)(ii) attached hereto, free and clear of all Liens.
(b) NextPhase has not made any investments in, and does not own, any of the
capital stock of, or any other equity interest in, any other Person.
3.3 Consents. Except as set forth on Schedule 3.3 attached hereto, no consent
of any Body or other Person is required to be received by or on the part of the
NextPhase Shareholders or NextPhase to enable the NextPhase Shareholders to
enter into and carry out this Agreement and the Transaction.
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3.4 Authority; Binding Nature of Agreement.
(a) The NextPhase Shareholders each have the capacity to enter into this
Agreement and carry out their respective obligations hereunder.
(b) This Agreement constitutes the valid and binding obligation of each of
the NextPhase Shareholders and is enforceable against each of them in accordance
with its terms.
3.5 Financial Statements. The NextPhase Financial Statements, a copy of which
is set forth in Schedule 3.5, (i) are true and complete, (ii) are in accordance
with the Books and Records of NextPhase, (iii) fairly present the financial
position of NextPhase as of the NextPhase Balance Sheet Date and the results of
their operations for the year ended March 31, 2004 and the interim period ended
June 30, 2004, and (iv) were prepared in conformity with United States generally
accepted accounting principles consistently applied throughout the periods
covered thereby.
3.6 Liabilities. As at the NextPhase Balance Sheet Date, NextPhase had no
Liabilities, other than those Liabilities reflected or reserved against in the
NextPhase Balance Sheet, and there was no basis for the assertion against
NextPhase of any Liability not so reflected or reserved against therein.
3.7 Actions Since the NextPhase Balance Sheet Date. Except as otherwise
expressly provided or set forth in, or required by, this Agreement, or as set
forth in Schedule 3.7 attached hereto, since the NextPhase Balance Sheet Date,
NextPhase has not (i) incurred any material Liability or other Liability not in
the ordinary and usual course of business and consistent with past practice,
(ii) made any wage or salary increases or granted any bonuses; (iii) mortgaged,
pledged or subjected to any Lien any of its assets, or permitted any of its
assets to be subjected to any Lien; (iv) sold, assigned or transferred any of
its assets, except in the ordinary and usual course of business consistent with
past practice; (v) changed its accounting methods, principles or practices; (vi)
revalued any of its assets, including, without limitation, writing down the
value of inventory or writing off notes or accounts receivable; (vii) incurred
any damage, destruction or loss (whether or not covered by insurance) adversely
affecting its assets or business which has had or could be reasonably expected
to have a Material Adverse Effect; (viii) canceled any indebtedness or waived or
released any right or claim; (ix) incurred any Material Adverse Change in
employee relations; (x) amended, canceled or terminated any Contract or Permit
or entered into any Contract or Permit which was not in the ordinary and usual
course of business consistent with past practice; (xi) increased or changed its
assumptions underlying, or methods of calculating, any doubtful account
contingency or other reserves; (xii) paid, discharged or satisfied any
Liabilities other than the payment, discharge or satisfaction in the ordinary
and usual course of business of Liabilities set forth or reserved for on the
NextPhase Balance Sheet, as the case may be, or thereafter incurred in the
ordinary and usual course of business consistent with past practice; (xiii) made
any capital expenditure, entered into any lease or incurred any obligation to
make any capital expenditure; (xiv) failed to pay or satisfy when due any
Liability; (xv) failed to carry on its business in the ordinary and usual
course, consistent with the past practice, so as to reasonably keep available
the services of its employees, and to preserve its assets and business and the
goodwill of its suppliers, customers, distributors and others having business
relations with it; (xvi) disposed of or allowed the lapse of any Proprietary
Rights or disclosed to any Person any Proprietary Rights not theretofore a
matter of public knowledge; (xvii)
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issued or sold, or agreed to issue or sell, any of its capital stock or shares
of capital, as the case may be, options, warrants, rights or calls to purchase
such stock or shares, any securities convertible into or exchangeable for such
capital stock, shares of capital or other corporate securities, or effected any
subdivision or other recapitalization affecting its capital stock or shares of
capital, as the case may be; (xviii) declared, paid or set aside any dividends
or other distributions or payments on its capital stock or shares of capital, as
the case may be, or redeemed or repurchased, or agreed to redeem or repurchase,
any of its shares of its capital stock or shares of capital, as the case may be;
(xix) made any loans or advances to any Person, or assumed, guaranteed, endorsed
or otherwise became responsible for the obligations of any Person; (xx) incurred
any indebtedness for borrowed money (except as a result of its endorsement, for
collection or deposit, of negotiable instruments received in the ordinary and
usual course of business); or (xxi) other than this Agreement or the Transaction
contemplated hereby, entered into any transaction or course of conduct not in
the ordinary and usual course of business and consistent with past practice.
3.8 Adverse Developments. Since the NextPhase Balance Sheet Date there has been
no Material Adverse Change in the assets, business, operations (financial or
otherwise), or prospects of NextPhase, there has been no act or omission on the
part of NextPhase or others which would form the basis for the assertion against
NextPhase of any material Liability, no other event has occurred which could be
reasonably expected to have a Material Adverse Effect, and the NextPhase
Shareholders do not know of any development or threatened development of a
nature which could be reasonably expected to have a Material Adverse Effect.
3.9 Taxes. All taxes, including, without limitation, income, property, sales,
use, utility, franchise, capital stock, excise, value added, employees'
withholding, social security and unemployment taxes imposed by the United
States, any state, locality or any foreign country and any and all political
subdivisions thereof and localities therein, or by any other taxing authority,
which have or may become due or payable by NextPhase and all interest and
penalties thereon, whether disputed or not, have been paid in full or adequately
provided for by reserves shown in the Books and Records; all deposits required
by law to be made by NextPhase with respect to estimated income, franchise and
employees' withholding taxes have been duly made; and all tax returns, including
estimated tax returns, required to be filed have been duly and timely filed. No
extension of time for the assessment of deficiencies for any year is in effect.
No deficiency notice is proposed, or, to the knowledge of NextPhase, threatened
against NextPhase. The tax returns of NextPhase have never been audited.
3.10 Ownership of Assets; Trademarks, Patents, Etc.
3.10.1 Assets Generally.
(a) NextPhase owns outright, and has good and marketable title to,
all of the Assets , free and clear of all Liens. None of the Assets are subject
to any restriction with regard to transferability. NextPhase does not own any
assets other than the Assets.
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(b) NextPhase does not have any agreements, options, commitments or
understandings with, of or to any person to acquire any of the Assets or any
rights or interest therein, except for this Transaction.
3.10.2 Trademarks, Patents, Etc. Schedule 3.10.2 sets forth a true and
complete list of (including, without limitation, each application number, serial
number or registration number, the class of goods or services covered and the
expiration date for each country in which a Proprietary Right has been
registered) and a brief description of all any and all registered trademarks,
registered service marks, trademark and service xxxx applications and
unregistered trademarks and service marks included in, or related to, the Assets
(collectively, the "Trademarks"), patents and copyrights (including, without
limitation, all registrations, licenses and applications pertaining thereto),
patent license rights, trade secrets, franchises, inventions, processes,
designs, specifications, plans, drawings, system documentation, programming,
databases, know-how, confidential information, shop rights, licenses, internet
domain names, world wide web addresses and all other proprietary information,
processes and formulae owned by NextPhase (the "Other Intellectual Property")
and all other intellectual property rights related thereto (collectively, with
the Trademarks and the Other Intellectual Property, the "Proprietary Rights").
No other person, firm or corporation has any proprietary or other interest in
any such Proprietary Rights and NextPhase is not a party to or bound by any
contract requiring the payment to any person, firm or corporation of any
royalty. NextPhase is not infringing upon any Proprietary Rights or otherwise
violating the rights of any third party with respect thereto, and no proceedings
have been instituted, and no claim has been received by NextPhase, and NextPhase
and the NextPhase Shareholders are not aware of any claim, alleging any such
violation. There are no pending applications with regard to any Proprietary
Right. NextPhase has taken all reasonable and prudent steps to protect the
Proprietary Rights from infringement by any other person. No other person, (i)
has the right to use any of NextPhase's Trademarks on the goods on, or in
connection with the services for, which they are now being used, either in
identical form or, to the best of the NextPhase Shareholders' knowledge, in such
near resemblance thereto as to be likely, when applied to the goods or services
of any such person, to cause confusion with such Trademarks or to cause a
mistake or to deceive, (ii) has a license or the right to use any Proprietary
Right of NextPhase, whether by license, sublicense or other rights (iii) has
notified NextPhase that it is claiming any ownership of or right to use such
Proprietary Rights, or (iv) to the best of the NextPhase Shareholders'
knowledge, is infringing upon any such Proprietary Rights in any way.
3.11 Insurance. NextPhase has no insurance policies.
3.12 Litigation; Compliance with Law. There are no Actions relating to NextPhase
or any of its Assets pending or, to the knowledge of the NextPhase Shareholders,
threatened, or any order, injunction, award or decree outstanding, against
NextPhase or against or relating to any of its assets; and there exists no basis
for any such Action. NextPhase is not in violation of any law, regulation,
ordinance, order, injunction, decree, award, or other requirement of any
governmental or other regulatory Body, court or arbitrator relating to its
assets.
3.13 Real Property. NextPhase does not own or lease, or use under license or the
like, any real property.
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3.14 Agreements and Obligations; Performance. Except for the Contracts listed
and briefly described in Schedule 3.14 attached hereto (the "NextPhase Listed
Agreements"), NextPhase is not a party to, or bound by, any Contract.
3.15 Condition of Assets. NextPhase does not own any tangible personal property.
3.16 Permits and Licenses. NextPhase does not require any Permits from any
Bodies.
3.17 Occupational Heath and Safety and Environmental Matters. The operations of
NextPhase does not require or have any, Permits from any Bodies relating to
occupational health and safety or environmental matters. There is no litigation,
investigation or other proceeding pending or, to the knowledge of the NextPhase
Shareholders, threatened or known to be contemplated by any Body in respect of
or relating to NextPhase with respect to occupational health and safety or
environmental matters. NextPhase is not liable in any respect for any violation
of any, applicable United States federal, state, local or foreign laws or
regulations, pertaining to occupational health and safety and environmental
matters, including, without limitation, those relating to the emission,
discharge, storage, release or disposal of Materials of Environmental Concern
into ambient air, surface water, ground water or land surface or sub-surface
strata or otherwise relating to the manufacture, processing, distribution, use,
handling, disposal or transport of Materials of Environmental Concern. NextPhase
has not received any notice of a possible claim or citation against it or in
respect of, or with regard to its respective assets or the Business, relating to
occupational health and safety or environmental matters, and the NextPhase
Shareholders are not aware of any basis for any such Action.
3.18 [Intentionally omitted.]
3.19 [Intentionally omitted.]
3.20 Employment Relations. Schedule 3.20 contains a true and complete list of
all current employees and independent contractors of NextPhase, the address of
their place of work, and their respective salaries and or compensation packages
for the past 12 months. The aggregate annual compensation and/or benefits
payable by NextPhase in NextPhase's most recently completed fiscal year, and for
NextPhase's current fiscal year is $ -0- and estimated to be $500,000
respectively. No employees have expressed intention to leave NextPhase.
NextPhase has not made any promises of increases in wages, salary, compensation,
payments, benefits or otherwise. In the past, to the knowledge of NextPhase,
NextPhase has complied with all United States federal, state, local, foreign,
and other applicable laws, rules and regulations respecting employment and
employment practices, terms and conditions of employment and wages and hours,
and has not engaged in any unfair labor practice which, in any of the foregoing
cases, could have a Material Adverse Effect. There is not pending, or, to the
knowledge of the NextPhase Shareholders threatened, any unfair labor practice
charge or complaint against NextPhase by or before the United States Federal
National Labor Relations Board or any comparable state, local or foreign agency
or authority. No litigation, arbitration, administrative proceeding or
governmental investigation is now pending, and, to the knowledge of the
NextPhase Shareholders, no current, former or prospective employee has made any
claim or has
8
threatened litigation, arbitration, administrative proceeding or governmental
investigation, against NextPhase arising out of any law relating to
discrimination against employees or employment practices.
3.21 Employee Benefit Plans.
3.21.1 NextPhase has no plan, program, policy, practice, contract,
agreement or other arrangement providing for compensation, severance,
termination pay, performance awards, stock or stock-related awards, fringe
benefits or other employee benefits of any kind, whether formal or informal,
proposed or final, funded or unfunded and whether or not legally binding,
including, without limitation, each employee benefit plan within the meaning of
Section 3(3) of the Employment Retirement Income Security Act of 1974, as
amended, and regulations promulgated thereunder ERISA and NextPhase has no
liability in connection therewith or with regard thereto.
3.22 No Breach. Neither the execution and delivery of this Agreement nor
compliance by the NextPhase Shareholders with any of the provisions hereof nor
the consummation of the Transaction will:
(a) violate or conflict with any provision of the Certificate of
Incorporation, By-Laws or other organizational document of NextPhase;
(b) violate or conflict with or, alone or with notice or the passage of
time, or both, result in the breach or termination of, or otherwise give any
party the right to terminate, or declare a Default under, the terms of any
Contract to which NextPhase or any of the NextPhase Shareholders is a party or
by which any of them may be bound, or otherwise violate or conflict with any
Permit of any Body;
(c) result in the creation of any Lien upon any of the assets of NextPhase
or the NextPhase Shares;
(d) violate any judgment, order, injunction, decree or award against, or
binding upon NextPhase or any of the NextPhase Shareholders or upon any of the
assets of NextPhase; or
(e) violate any law or regulation of any jurisdiction relating to NextPhase
or any of the NextPhase Shareholders or the Assets.
3.23 Brokers. Except as set forth on Schedule 3.23 attached hereto, neither
NextPhase nor the NextPhase Shareholders have engaged, consented to, or
authorized any broker, finder, investment banker or other third party to act on
its behalf, directly or indirectly, as a broker or finder in connection with the
Transaction.
3.24 Prior Names and Addresses. Since inception, NextPhase has not used any
business name or had any business address other than its current name and
business address.
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3.25 Books and Records. NextPhase has made and kept (and given the Company
access to) its Books and Records and accounts, which, in reasonable detail,
accurately and fairly reflect the activities of NextPhase. NextPhase has not
engaged in any material transaction, maintained any bank account or used any
corporate or company funds except for transactions, bank accounts and funds
which have been and are reflected in the normally maintained Books and Records
of NextPhase.
3.26 Payments. Neither NextPhase nor the NextPhase Shareholders have, directly
or indirectly paid or delivered any fee, commission or other sum of money or
item or property, however characterized, to any finder, agent, client, customer,
supplier, government official or other Person, in the United States or any other
country, which is illegal under any federal, state or local laws of the United
States (including, without limitation, the U.S. Foreign Corrupt Practices Act)
or such other country.
3.27 Sales of Securities. No communication made by NextPhase in connection with
the offer, sale or issuance of its securities to investors contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements made not misleading. All offers, sales and/or
issuances of securities by NextPhase have been made pursuant to applicable
exceptions from registration under Section 5 of the Securities Act.
3.28 Investment Representations.
(a) No Registration. Each NextPhase Shareholder understands that the
issuance and/or resale of the shares of Company Common Stock is not, and is not
being, registered under the Securities Act and the shares of Company Common
Stock must be held indefinitely unless they are subsequently registered
thereunder or an exemption from such registration is available.
(b) Accreditation/Sophistication. Each NextPhase Shareholder represents and
warrants further that (i) he is either an "accredited investor," as such term is
defined in Rule 501(a) promulgated under the Securities Act, or, either alone or
with his purchaser representative, has such knowledge and experience in
financial and business matters that he is capable of evaluating the merits and
risks of the acquisition of the shares of Company Common Stock; (ii) he is able
to bear the economic risks of an investment in the shares of Company Common
Stock, including, without limitation, the risk of the loss of part or all of his
investment and the inability to sell or transfer the shares of Company Common
Stock for an indefinite period of time; (iii) he has adequate financial means of
providing for current needs and contingencies and has no need for liquidity in
his investment in the shares of Company Common Stock; and (iv) he does not have
an overall commitment to investments which are not readily marketable that is
excessive in proportion to net worth and an investment in the shares of Company
Common Stock will not cause such overall commitment to become excessive.
(c) Company Information. Each NextPhase Shareholder has each reviewed all
of Company's reports, proxy and information statements and registration
statements filed by the Company with the SEC via the XXXXX system and each has
been afforded the opportunity to obtain such information regarding Company as he
has reasonably requested to evaluate the merits and risks
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of the undersigned's investment in the shares of Company Common Stock. No oral
or written representations have been made or oral information furnished to the
undersigned or his advisers in connection with the investment in the shares of
Company Common Stock.
(d) Legend. The undersigned acknowledges that a restrictive legend, in or
substantially in the following form, will be placed on any instrument,
certificate or other document evidencing the shares of Company Common Stock:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933. These shares
have been acquired for investment and not for distribution.
They may not be sold, assigned, mortgaged, pledged,
hypothecated, transferred or otherwise disposed of without
an effective registration statement for such shares under
the Securities Act of 1933 or an opinion of counsel for the
Company that registration is not required under such Act."
3.29 Untrue or Omitted Facts. No representation, warranty or statement by the
NextPhase Shareholders in this Agreement or contained in any Contract,
agreement, document or item furnished by NextPhase or the NextPhase Shareholders
to the Company relating to this Agreement and the transactions contemplated
hereby, contains any untrue statement of a material fact, or omits to state a
fact necessary in order to make such representations, warranties or statements
not materially misleading. Without limiting the generality of the foregoing,
there is no fact known to NextPhase that has had, or which may be reasonably
expected to have, a material adverse effect on the Transaction contemplated by
this Agreement, or the future use of the Assets by the Company that has not been
disclosed in this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company and Xxxxx Xxxxxxxx ("Xxxxxxxx"), jointly and severally, make
the following representations and warranties to the NextPhase Shareholders each
of which shall be deemed material, and the NextPhase Shareholders in executing,
delivering and consummating this Agreement, has relied upon the correctness and
completeness, in all material respects, of each of such representations and
warranties:
4.1 Valid Existence; Qualification. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Nevada. The
Company has the power to carry on its business as now conducted and to own its
assets. The Company is qualified to do business as a foreign corporation in the
State of New York and is not required to be so qualified in any other
jurisdiction in order to own its assets or carry on its business as now
conducted, and there has not been any claim by any other jurisdiction to the
effect that the Company is required to qualify or otherwise be authorized to do
business as a foreign corporation therein. The copies of the Company's
Certificate of Incorporation, as amended to date, certified by the appropriate
regulatory Body in their respective state of incorporation, and its By-Laws, as
amended to date (certified by the
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Secretary of the Company), which have been delivered to the NextPhase
Shareholders, are true and complete copies of those documents as in effect on
the date hereof.
4.2 Capitalization.
(a) The authorized capital stock of the Company consists of Two Hundred
Million (200,000,000) shares of Common Stock, $.001 par value per share, of
which Two Hundred Fourteen Thousand Four Hundred Seventy Five (214,475) shares
are issued and outstanding, and Twenty Million (20,000,000) shares of Preferred
Stock, $.001 par value per share, none of which are issued and outstanding. All
of such issued and outstanding shares of the Company Common Stock are duly
authorized, validly issued, fully paid and nonassessable. There are no
outstanding Derivative Securities of the Company that are convertible into or
exchangeable for any securities of the Company and there are no outstanding
subscriptions, options, warrants, rights, calls or other commitment or
agreements to which the Company is a party or by which it is bound calling for
the issuance, transfer, sale or disposition of any securities of the Company or
Derivative Securities.
(b) Except as set forth in Schedule 4.2(b), the Company has not made any
investments in, and does not own, any of the capital stock of, or any other
equity interest in, any other Person.
4.3 Consents. No consent of any Body or other Person is required to be received
by or on the part of the Company to enable the Company to enter into and carry
out this Agreement and the Transaction.
4.4 Authority; Binding Nature of Agreement.
(a) The Company has the corporate power and authority to enter into this
Agreement and carry out its obligations hereunder. The execution and delivery of
this Agreement and the consummation of the Transaction have been duly authorized
by the boards of directors of the Company, and no other corporate proceedings on
the part of the Company are necessary to authorize the execution and delivery of
this Agreement and the consummation of the Transaction.
(b) This Agreement constitutes the valid and binding obligation of each of
the Company and is enforceable against it in accordance with its terms.
4.5 Financial Statements. The Company Financial Statements included in the
Company's Annual Report on Form 10-KSB for the fiscal year ended March 31, 2004
(i) are true and complete, (ii) are in accordance with the Books and Records of
the Company, (iii) fairly present the financial position of the Company as of
the the Company Balance Sheet Date and the results of their operations for the
year ended March 31, 2004, and (iv) are prepared in conformity with generally
accepted accounting principles, consistently applied, and with Regulation S-X or
Regulation S-B Item 310, as applicable, promulgated under the Securities Act,
throughout the periods covered thereby.
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4.6 Liabilities. Except as set forth in Schedule 4.6 attached hereto, as of the
Company Balance Sheet Date, the Company had no Liabilities, other than those
Liabilities reflected or reserved against in the the Company Balance Sheet or
Liabilities which do not or will not have a Material Adverse Effect on the
Company, and there was no basis for the assertion against the Company of any
Liability not so reflected or reserved against in the the Company Balance Sheet
or which does not and will not have a Material Adverse Effect on the Company.
4.7 Actions Since the Company Balance Sheet Date. Except as otherwise expressly
provided or set forth in, or required by, this Agreement, or as set forth in
Schedule 4.7 attached hereto, since the Company Balance Sheet Date, the Company
has not (i) incurred any material Liability; (ii) made any wage or salary
increases or granted any bonuses; (iii) mortgaged, pledged or subjected to any
Lien any of its assets, or permitted any of its assets to be subjected to any
Lien; (iv) sold, assigned or transferred any of its assets; (v) changed its
accounting methods, principles or practices; (vi) revalued any of its assets,
including, without limitation, writing down the value of inventory or writing
off notes or accounts receivable; (vii) canceled any indebtedness or waived or
released any right or claim; (viii) incurred any Material Adverse Change in
employee relations; (ix) amended, canceled or terminated any Contract or Permit
or entered into any Contract or Permit; (x) increased or changed its assumptions
underlying, or methods of calculating, any doubtful account contingency or other
reserves; (xi) paid, discharged or satisfied any Liabilities; (xii) made any
capital expenditure, entered into any lease or incurred any obligation to make
any capital expenditure; (xiii) failed to pay or satisfy when due any Liability,
(A) unless such failure has not had and is reasonably expected not to have a
Material Adverse Effect on the Company, and (B) except for such Liabilities that
the Company does not believe in good faith are owed, do not exceed $50,000 in
the aggregate, and were included as liabilities in the Company Balance Sheet;
(xiv) issued or sold, or agreed to issue or sell, any of its capital stock,
options, warrants, rights or calls to purchase such stock, any securities
convertible into or exchangeable for such capital stock or other corporate
securities, or effected any subdivision or other recapitalization affecting its
capital stock; (xv) declared, paid or set aside any dividends or other
distributions or payments on its capital stock, or redeemed or repurchased, or
agreed to redeem or repurchase, any shares of its capital stock; (xvi) made any
loans or advances to any Person, or assumed, guaranteed, endorsed or otherwise
became responsible for the obligations of any Person; (xvii) incurred any
indebtedness for borrowed money (except as a result of its endorsement, for
collection or deposit, of negotiable instruments received in the ordinary and
usual course of business); or (xviii) other than this Agreement or the
Transaction entered into any transaction or course of conduct.
4.8 Adverse Developments. Since the Company Balance Sheet Date, there has been
no Material Adverse Change in the assets, business, operations (financial or
otherwise), or prospects of the Company, there has been no act or omission on
the part of the Company or others which would form the basis for the assertion
against the Company of any material Liability, no other event has occurred which
could be reasonably expected to have a Material Adverse Effect, and the Company
does not know of any development or threatened development of a nature which
could be reasonably expected to have a Material Adverse Effect.
4.9 Taxes. All taxes, including, without limitation, income, property, sales,
use, utility, franchise, capital stock, excise, value added, employees'
withholding, social security and
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unemployment taxes imposed by the United States, any state, locality or any
foreign country, or by any other taxing authority, which have or may become due
or payable by the Company and all interest and penalties thereon, whether
disputed or not, have been paid in full or if not paid, disclosed in the Books
and Records; all deposits required by law to be made by the Company with respect
to estimated income, franchise and employees' withholding taxes have been duly
made; and all tax returns, including estimated tax returns, required to be filed
have been duly and timely filed. No extension of time for the assessment of
deficiencies for any year is in effect. No deficiency notice is proposed, or, to
the knowledge of the Company or Xxxxxxxx, threatened against the Company. The
tax returns of the Company have never been audited.
4.10 Ownership of Assets. The Company does not own any assets.
4.11 Insurance. The Company does not hold any insurance.
4.12 Litigation; Compliance with Law. There are no Actions relating to the
Company or any of its assets or business, pending or, to the knowledge of the
Company, threatened, or any order, injunction, award or decree outstanding
against the Company or against or relating to any of its assets or business; and
to the knowledge of the Company or Xxxxxxxx, there exists no basis for any such
Action. the Company is not in violation of any law, regulation, ordinance,
order, injunction, decree, award, or other requirement of any governmental or
other regulatory Body, court or arbitrator relating to its assets.
4.13 Real Property. The Company does not own or lease, or use under license or
the like, any real property.
4.14 Agreements and Obligations; Performance. The Company is not a party to, or
is not bound by, any: (i) Contract which involves aggregate payments or receipts
in excess of $5,000 that cannot be terminated at will without penalty or premium
or any continuing Liability; (ii) Contract of any kind with any officer,
shareholder, director, or employee of the Company; (iii) Contract which is in
violation of applicable law; (iv) Contract for the purchase, sale or lease of
any materials, products, supplies or services which contains, or which commits
or will commit it for, a fixed term; (v) Contract of employment not terminable
at will without penalty or premium or any continuing Liability; (vi) deferred
compensation, bonus or incentive plan or Contract not cancelable at will without
penalty or premium or any continuing obligation or Liability; (vii) management
or consulting Contract not terminable at will without penalty or premium or any
continuing Liability; (viii) license or royalty Contract; (ix) Contract relating
to indebtedness for borrowed money; (x) union or other collective bargaining
Contract; (xi) Contract which, by its terms, requires the consent of any party
thereto to the consummation of the Transaction contemplated hereby; (xii)
Contract containing covenants limiting the freedom of the Company, or any
officer or employee thereof, to engage or compete in any line of business, or
with any Person, in any geographical area; (xiii) Contract or option relating to
the acquisition or sale of any business; (xiv) voting agreement or similar
Contract; (xv) option for the purchase of any asset, tangible or intangible;
(xvi) franchise, license or advertising Contract; (xvii) Contract with the
United States government, any state, local or foreign government, or (xviii)
other Contract which materially affects any of its assets, whether
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directly or indirectly, or which was entered into other than in the ordinary and
usual course of business.
4.15 Occupational Heath and Safety and Environmental Matters. The Company has no
operations as of the date hereof. There is no litigation, investigation or other
proceeding pending or, to the knowledge of the Company or Xxxxxxxx, threatened
or known to be contemplated by any Body in respect of or relating to the most
recent operations of the Company (the "Company Business") with respect to
occupational health and safety or environmental matters. To the Company's and
Morrison's knowledge, all previous operations of the Company were conducted in
compliance with all, and the Company is not liable in any respect for any
violation of any, applicable United States federal, state, local or foreign laws
or regulations, pertaining to occupational health and safety and environmental
matters, including, without limitation, those relating to the emission,
discharge, storage, release or disposal of Materials of Environmental Concern
into ambient air, surface water, ground water or land surface or sub-surface
strata or otherwise relating to the manufacture, processing, distribution, use,
handling, disposal or transport of Materials of Environmental Concern. The
Company has not received any notice of a possible claim or citation against or
in respect of any real property leased by the Company, or with regard to assets
or the the Company Business, relating to occupational health and safety or
environmental matters and neither the Company nor Xxxxxxxx are aware of any
basis for any such Action.
4.16 [Intentionally Omitted]
4.17 Employee Benefit Plans. The Company does not maintain and has never
maintained, nor does the Company make or has ever made employer contributions
with respect to its employees to, any "pension" or "welfare" benefit plans
(within the respective meanings of sections 3(2) and 3(1) of ERISA, and the
Company has no Liability in connection therewith or with regard thereto.
4.18 No Breach. Neither the execution and delivery of this Agreement nor
compliance by the Company with any of the provisions hereof, nor the
consummation of the Transaction, will:
(a) violate or conflict with any provision of the Certificate of
Incorporation or By-Laws of the Company;
(b) violate or conflict with, or alone or with notice or the passage of
time, or both, result in the breach or termination of, or otherwise give any
party the right to terminate, or declare a Default under, the terms of any
Contract to which the Company is a party or by which it may be bound;
(c) result in the creation of any Lien upon any of the assets of the
Company;
(d) violate any judgment, order, injunction, decree or award against, or
binding upon, the Company or upon any of its assets; or
(e) violate any law or regulation of any jurisdiction relating to the
Company.
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4.19 Brokers. The Company has not engaged, consented to, or authorized any
broker, finder, investment banker or other third party to act on its behalf,
directly or indirectly, as a broker or finder in connection with the
Transaction.
4.20 Employment Relations. The Company has no employees other than those set
forth on Schedule 4.20 attached hereto. In the past, to the knowledge of the
Company, the Company has complied with all United States federal, state, local,
foreign, and other applicable laws, rules and regulations respecting employment
and employment practices, terms and conditions of employment and wages and
hours, and has not engaged in any unfair labor practice which, in any of the
foregoing cases, could have a Material Adverse Effect. There is not pending, or,
to the knowledge of the Company or Xxxxxxxx threatened, any unfair labor
practice charge or complaint against the Company by or before the United States
Federal National Labor Relations Board or any comparable state, local or foreign
agency or authority. No litigation, arbitration, administrative proceeding or
governmental investigation is now pending, and, to the knowledge of the Company
no Person has made any claim or has threatened litigation, arbitration,
administrative proceeding or governmental investigation against the Company,
arising out of any law relating to discrimination against employees or
employment practices.
4.21 Prior Names and Addresses. Since inception, the Company has not used any
business name or had any business address other than its current name and
business address except as set forth on Schedule 4.21 attached hereto.
4.22 Payments. The Company has not directly or indirectly paid or delivered any
fee, commission or other sum of money or item or property, however
characterized, to any finder, agent, client, customer, supplier, government
official or other Person, in the United States or any other country, which is
illegal under any federal, state or local laws of the United States (including,
without limitation, the U.S. Foreign Corrupt Practices Act) or such other
country.
4.23 Books and Records. The Company has made and kept (and given the NextPhase
Shareholders access to) its Books and Records and accounts, which, in reasonable
detail, accurately and fairly reflect the activities of the Company. The Company
has not engaged in any material transaction, maintained any bank account or used
any corporate or company funds in connection with its business except for
transactions, bank accounts and funds which have been and are reflected in the
normally maintained Books and Records of the Company.
4.24 SEC Reports. The Company has filed with the SEC via the XXXXX System all
reports, proxies and information statements since January 1, 2003, and all
schedules and exhibits thereto (the "SEC Reports"), required to be filed by it
pursuant to the Exchange Act. Each of the SEC Reports, as of its respective
date, did not contain any untrue statement of material fact or fail to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading.
4.25 Sales of Securities. No communication made by the Company in connection
with the offer, sale or issuance of its securities contains any untrue statement
of a material fact or omits to state a material fact necessary in order to make
the statements made not misleading. All offers, sales and/or issuances of
securities by the Company have been made pursuant to registration statements
under the
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Securities Act or pursuant to applicable exceptions from registration under
Section 5 of the Securities Act.
4.26 Untrue or Omitted Facts. No representation, warranty or statement by the
Company or Xxxxxxxx in this Agreement contains any untrue statement of a
material fact, or omits to state a material fact necessary in order to make such
representations, warranties or statements not misleading. Without limiting the
generality of the foregoing, there is no fact known to the Company or Xxxxxxxx
that has had, or which may be reasonably expected to have, a Material Adverse
Effect that has not been disclosed in this Agreement.
ARTICLE V
ACTION TO OCCUR
CONTEMPORANEOUSLY WITH CLOSING
5.1 Amendment of By-Laws. Contemporaneously with the Closing of the
Transaction, Company shall cause its Board of Directors to amend the By-Laws of
the Company to:
(a) Provide that the unanimous consent of the incumbent directors shall be
required for Company to (A) issue any shares of capital stock, Derivative
Securities or any other equity securities for any compensatory purposes to
employees, independent contractors or other third parties, including without
limitation, any securities registered for issuance or resale under a
registration statement on Form S-8 or any other form for a period of two (2)
years ending on the second anniversary of the Closing Date, and (B) enter into
and/or consummate any transaction, or series of transactions, which would result
in a "change in control" of the ownership of the Company's voting securities for
a period ending at the time that the certain $350,000 promissory note of even
date from NextPhase to Xxxxx Xxxxxxxx is satisfied in full. The term "change in
control" shall mean:
(i) The transfer, through one transaction or a series of related
transactions, either directly or indirectly, or through one or more
intermediaries, of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Securities Exchange Act of 1934) of 50% or more of
either the then outstanding shares of common stock or the combined voting
power of the Company's then outstanding voting securities entitled to vote
generally in the election of directors, or the last of any series of
transfers that results in the transfer of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Securities Exchange Act of
1934) of 50% or more of either the then outstanding shares of common stock
or the combined voting power of the Company's then outstanding voting
securities entitled to vote generally in the election of directors;
(ii) Approval by the shareholders of the Company of a merger or
consolidation, with respect to which persons who were the shareholders of
the Company immediately prior to such merger or consolidation do not,
immediately thereafter, own more than 50% of the combined voting power
entitled to vote generally in the
17
election of directors of the merged or consolidated company's then
outstanding voting securities, or a liquidation or dissolution of the
Company or the sale of all or substantially all of the assets of the
Company; and
(b) Provide that the Board of Directors shall consist of five (5) persons.
5.2 Filling of Vacancies on Board of Directors. Upon the amendment to the
Company's By-Laws to expand the Board of Directors to five (5) persons as set
forth in Section 6.1(b), Company shall cause the current directors of Company to
adopt a resolution appointing the persons listed on Schedule 5.2 as directors of
Company, to serve until their successors are duly elected and shall qualify,
which appointments shall take effect on the tenth (10th) day following the
filing of an information statement, complying with the requirements of Rule
14f-1 promulgated under the Exchange Act, by the Company.
5.3 Forgiveness of Debt. Contemporaneously with the Closing, the Company shall
cause Xxxxxxxx to forgive that certain indebtedness of the Company to Xxxxxxxx
represented by that certain $58,924.93 Promissory Note, effective April 19,
2004, from the Company to Xxxxxxxx.
ARTICLE VI
[intentionally omitted]
ARTICLE VII
[intentionally omitted]
ARTICLE VIII
[intentionally omitted]
ARTICLE IX
CLOSING
9.1 Location; Date. The closing of the Transaction (the "Closing") shall take
place at the offices of the Company's counsel in East Meadow, New York, at 10:00
a.m. (New York time) on the date hereof. The date of the Closing is referred to
in this Agreement as the "Closing Date."
9.2 Items to be Delivered to the Company. At the Closing, the NextPhase
Shareholders will deliver or cause to be delivered to the Company:
(a) stock certificates representing each NextPhase Shareholder's shares of
NextPhase Common Stock;
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(b) certified copies of all corporate actions of NextPhase reasonably
required by Company to authorize the issuance of new stock certificates
representing the shares of NextPhase Common Stock in the name of the Company;
and
(c) stock certificates for the shares of NextPhase Common Stock in the name
of Company.
(e) such other certified resolutions, documents and certificates as are
required to be delivered to the Company pursuant to the provisions of this
Agreement.
9.3 Items to be Delivered to the NextPhase Shareholders.
(a) The Company will deliver or cause to be delivered to the NextPhase
Shareholders as soon as practicable following the Closing, certificates
representing the shares of Company Common Stock in the names of the NextPhase
Shareholders in the denominations determined by the exchange ratio set forth in
Section 2.1(a) hereof.
(b) Certified copies of all corporate actions of Company reasonably
required by the NextPhase Shareholders to authorize the issuance of new stock
certificates representing the shares of Company Common Stock in the name of the
NextPhase Shareholders.
ARTICLE X
POST-CLOSING MATTERS
10.1 Further Assurances. On and after the Closing Date, the Parties shall take
all such further actions and execute and deliver all such further instruments
and documents as may be necessary or appropriate to carry out the Transaction.
10.2 Continuation of Director. During the one (1) year following the Closing
Date, NextPhase and the NextPhase Shareholders shall use reasonable best efforts
to cause Xxxx Xxxx to be nominated for election as a director each time
nominations for directors are made during such period, and NextPhase and the
NextPhase Shareholders shall use best efforts to cause Xxxx Xxxx to be elected
as a director of the Company during such period.
ARTICLE XI
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
11.1 Survival. The parties agree that their respective representations and
warranties contained in this Agreement shall survive the Closing for a period
expiring on the later of the first year anniversary of the Closing Date or the
latest date upon which the Company's Annual Report for the Company's fiscal year
following the fiscal year ending March 31, 2004 is required to be filed with the
SEC under the Exchange Act, except that the representations and warranties set
forth in Sections 3.1 through 3.4, 3.22, 3.28 and 3.29 (with respect to the
foregoing Article III representations and
19
warranties) and 4.1 through 4.4 and 4.25 (with respect to the foregoing Article
IV representations and warranties) shall continue for an indefinite duration,
subject to applicable statutes of limitation.
11.2 Indemnification.
11.2.1 General Indemnification Obligation of NextPhase and the NextPhase
Shareholders. From and after the Closing, NextPhase and the NextPhase
Shareholders, jointly and severally (the "NextPhase Indemnifying Parties"), will
reimburse, indemnify and hold harmless the Company, its current and former
directors, officers, employees and/or agents (collectively the "Company
Indemnified Parties") against and in respect of:
(a) any and all damages, losses, deficiencies, liabilities, costs and
expenses incurred or suffered by any the Company Indemnified Party that result
from, relate to or arise out of any misrepresentation, breach of warranty or
non-fulfillment of any agreement or covenant on the part of NextPhase or the
NextPhase Shareholders under this Agreement, or from any misrepresentation in or
omission from any certificate, schedule, statement, document or instrument
furnished to the Company pursuant hereto; and
(b) any and all Actions, assessments, audits, fines, judgments, costs and
other expenses (including, without limitation, reasonable legal fees and
expenses) incident to any of the foregoing or to the enforcement of this Section
11.2.1.
11.2.2 General Indemnification Obligation of the Company and Xxxxxxxx. From
and after the Closing, the Company and Xxxxxxxx, jointly and severally (the
"Company Indemnifying Parties"), will reimburse, indemnify and hold harmless the
NextPhase Shareholders, NextPhase and NextPhase's current and former directors,
officers, employees and/or agents (collectively the "NextPhase Indemnified
Parties") against and in respect of:
(a) any and all damages, losses, deficiencies, liabilities, costs and
expenses incurred or suffered by any NextPhase Indemnified Party that result
from, relate to or arise out of any misrepresentation, breach of warranty or
non-fulfillment of any agreement or covenant on the part of the Company under
this Agreement, or from any misrepresentation in or omission from any
certificate, schedule, statement, document or instrument furnished to the
NextPhase Shareholders or NextPhase pursuant hereto; and
(b) any and all Actions, assessments, audits, fines, judgments, costs and
other expenses (including, without limitation, reasonable legal fees and
expenses) incident to any of the foregoing or to the enforcement of this Section
11.2.2.
11.2.3 Method of Asserting Claims, Etc.
(a) The NextPhase Indemnifying Parties hereby appoint Xxxxxxx X. Xxxxx to
act as the NextPhase Indemnifying Parties representative (the "NextPhase
Representative") with respect to the matters set forth in this Section 11.2.3.
In the event that any claim or demand for which the NextPhase Indemnifying
Parties would be liable to any of the Company Indemnified Party(ies)
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hereunder is asserted against or sought to be collected from any such the
Company Indemnified Parties by a third party, the Company Indemnified Party(ies)
shall notify the NextPhase Representative of such claim or demand, specifying
the nature of such claim or demand and the amount or the estimated amount
thereof to the extent then feasible (which estimate shall not be conclusive of
the final amount of such claim and demand) (the "Claim Notice"). The NextPhase
Indemnifying Parties shall thereupon, at their sole cost and expense, jointly
and severally, defend the Company Indemnified Party(ies) against such claim or
demand with counsel reasonably satisfactory to the Company Indemnified
Party(ies).
(b) The NextPhase Indemnifying Parties shall not, without the prior written
consent of the Company Indemnified Party(ies), consent to the entry of any
judgment against the Company Indemnified Party(ies) or enter into any settlement
or compromise which does not include, as an unconditional term thereof (i.e.,
there being no requirement that the Company Indemnified Party(ies) pay any
amount of money or give any other consideration), the giving by the claimant or
plaintiff to the Company Indemnified Party(ies) of a release, in form and
substance satisfactory to the Company Indemnified Party(ies), from all liability
in respect of such claim or litigation. If the Company Indemnified Party(ies)
desire to participate in, but not control, any such defense or settlement, it or
they may do so at its or their sole cost and expense. If, in the reasonable
opinion of the Company Indemnified Party(ies), any such claim or demand or the
litigation or resolution of any such claim or demand involves an issue or matter
which could have a Material Adverse Effect on the business, operations, assets,
properties or prospects of the Company Indemnified Party(ies) or its affiliates,
then the Company Indemnified Party(ies) shall have the right to control the
defense or settlement of any such claim or demand and its costs and expenses
shall be included as part of the indemnification obligation of the NextPhase
Indemnifying Parties hereunder; provided, however, that the Company Indemnified
Party(ies) shall not settle any such claim or demand without the prior written
consent of the NextPhase Representative, which consent shall not be unreasonably
withheld or delayed. If the Company Indemnified Party(ies) should elect to
exercise such right, the NextPhase Indemnifying Parties shall have the right to
participate in, but not control, the defense or settlement of such claim or
demand at its sole cost and expense.
(c) Notwithstanding anything hereinabove to the contrary, the Company
Indemnified Party(ies) shall have the right to employ separate counsel
(including local counsel), and the NextPhase Indemnifying Parties shall bear the
reasonable fees, costs and expenses of one (1) such separate counsel (and local
counsel) if (i) the use of counsel chosen by the NextPhase Representative to
represent the Company Indemnified Party(ies) would present such counsel with a
conflict of interest, (ii) the actual or potential defendants in, or targets of,
any such action include both the Company Indemnified Party(ies) and any of the
NextPhase Indemnifying Parties, and the NextPhase Representative on the one
hand, and the Company Indemnified Party(ies) on the other hand, shall have
reasonably concluded that there may be legal defenses available to the Company
Indemnified Party(ies) which are different from or additional to those available
to any of the NextPhase Indemnifying Parties, (iii) the NextPhase Representative
shall not have employed counsel reasonably satisfactory to the Company
Indemnified Party(ies) to represent the Company Indemnified Party(ies) within a
reasonable time after notice of the institution of such Action or (iv) the
NextPhase Representative shall authorize the Company Indemnified Party(ies) to
employ one (1) separate counsel at the expense of the NextPhase Indemnifying
Parties.
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(d) In the event the Company Indemnified Party(ies) should have a claim
against the NextPhase Indemnifying Parties hereunder that does not involve a
claim or demand being asserted against or sought to be collected from it by a
third party, the Company Indemnified Party(ies) shall send a Claim Notice with
respect to such claim to the NextPhase Representative. If the NextPhase
Representative disputes the NextPhase Indemnifying Parties' liability with
respect to such claim or demand, such dispute shall be resolved in accordance
with Section 11.3 hereof; if the NextPhase Representative does not notify the
Company Indemnified Party(ies), within twenty (20) days from receipt of notice
of such a claim, that it disputes such claim or demand, the amount of such claim
or demand shall be conclusively deemed a liability of the NextPhase Indemnifying
Parties hereunder.
(e) All claims for indemnification by any NextPhase Indemnified Party(ies)
under this Agreement shall be asserted and resolved under the procedures set
forth hereinabove by substituting in the appropriate place "Company Indemnifying
Parties" for "NextPhase Indemnifying Parties", "Company Indemnifying Parties"
for NextPhase Representative and "NextPhase Indemnified Party(ies)" for "Company
Indemnified Party(ies)."
11.3 Arbitration.
(a) All disputes under this Article XI shall be settled by binding
arbitration pursuant to the rules of the American Arbitration Association.
Arbitration may be commenced at any time by any Party hereto giving written
notice to each other Party to a dispute of its demand for arbitration, which
demand shall set forth the name and address of its arbitrator. Within twenty
(20) days of such notice, the other Party shall select its arbitrator and so
notify the demanding Party. Within twenty (20) days thereafter, the two
arbitrators so selected shall select the third arbitrator. In default of either
side naming its arbitrator as aforesaid or in default of the selection of the
third arbitrator as aforesaid, the American Arbitration Association shall
designate such arbitrator upon the application of either party. Any arbitration
proceeding hereunder shall take place in Suffolk County, New York or San Diego,
California or such other location as agreed to by the Parties. The dispute shall
be heard by the arbitrators within thirty (30) days after selection of the third
arbitrator. The decision of the arbitrators shall be rendered within thirty (30)
days after the hearing. Each Party shall pay its own expenses of arbitration and
the expenses of the arbitrators shall be equally shared; provided, however, that
if, in the opinion of the majority of the arbitrators, any claim for
indemnification or any defense or objection thereto was unreasonable, the
arbitrators may assess, as part of their award, all or any part of the
arbitration expenses of the other Party (including reasonable attorneys' fees)
and of the arbitrators against the Party raising such unreasonable claim,
defense or objection.
(b) To the extent that arbitration may not be legally permitted hereunder
or contractually permitted under any insurance policy providing coverage, and
the parties to any dispute hereunder may not at the time of such dispute
mutually agree to submit such dispute to arbitration, any party may commence a
civil Action in a court of appropriate jurisdiction to resolve disputes
hereunder.
(c) The decision of a majority of the arbitrators shall be final, binding
and conclusive, shall be specifically enforceable, and judgment may be entered
upon it in accordance with applicable law in the appropriate court in the States
of New York and California with no right of appeal therefrom.
22
11.4 Other Rights and Remedies Not Affected. The indemnification rights of the
parties under this Article XI are independent of, and in addition to, such
rights and remedies as the parties may have at law or in equity or otherwise for
any misrepresentation, breach of warranty or failure to fulfill any agreement or
covenant hereunder on the part of any party hereto, including, without
limitation, the right to seek specific performance, rescission or restitution,
none of which rights or remedies shall be affected or diminished hereby.
ARTICLE XII
[intentionally omitted]
ARTICLE XIII
MISCELLANEOUS PROVISIONS
13.1 Expenses. Except as otherwise provided in writing by the Parties, each of
the Parties shall bear its own expenses in connection herewith.
13.2 Confidential Information. All information that a disclosing party furnishes
in connection with the Transaction (the "Information") will be kept
confidential, will be used solely in connection with the Transaction and will
not, without prior written consent of the disclosing party, be used or
disclosed, directly or indirectly, in any manner whatsoever, in whole or in
part.
Notwithstanding anything hereinabove to the contrary, the obligations
imposed upon the parties herein shall not apply to Information:
(a) which is publicly available prior to the date hereof; or
(b) which hereafter becomes available to the public through no wrongful act
of the receiving party; or
(c) which was in the possession of the receiving party prior to the
commencement of negotiations between the parties with regard to the Transaction
and not subject to an existing agreement of confidence between the parties; or
(d) which is received from a third party without restriction, not in
violation of an agreement of confidence and without breach of this Agreement; or
(e) which is independently developed by the receiving party; or
(f) which is disclosed pursuant to a requirement or request of a government
agency, arbitrator or court, or pursuant to a requirement under applicable laws,
rules or regulations.
Upon the request of a disclosing party made at any time following any
termination of this Agreement in accordance with the terms hereof, the receiving
party will redeliver to the disclosing
23
party any and all written Information furnished to the receiving party and will
not retain any copies thereof.
13.3 Equitable Relief. The parties agree that the remedy at law for any breach
or threatened breach of the provisions of Section 13.2 will be inadequate and
the aggrieved party shall be entitled to injunctive relief to compel the
breaching party to perform or refrain from action required or prohibited
thereunder.
13.4 Publicity. Neither the Company nor NextPhase nor the NextPhase Shareholders
will issue any report, statement, release or other public announcement
pertaining to the matters contemplated by this Agreement without the prior
written consent of the other unless required by law, rule or regulation.
13.5 Entire Agreement. This Agreement, including the schedules and exhibits
attached hereto, which are a part hereof, constitutes the entire agreement of
the Parties with respect to the subject matter hereof. The representations,
warranties, covenants and agreements set forth in this Agreement and in the
financial statements, schedules or exhibits delivered pursuant hereto constitute
all the representations, warranties, covenants and agreements of the Parties and
upon which the Parties have relied, shall not be deemed waived or otherwise
affected by any investigation made by any party hereto and, except as may be
specifically provided herein, no change, modification, amendment, addition or
termination of this Agreement or any part thereof shall be valid unless in
writing and signed by or on behalf of the party to be charged therewith.
13.6 Notices. Any and all notices or other communications or deliveries required
or permitted to be given or made pursuant to any of the provisions of this
Agreement shall be deemed to have been duly given or made for all purposes when
in writing and hand delivered or sent by certified or registered mail, return
receipt requested and postage prepaid, overnight mail, nationally recognized
overnight courier or telecopier as follows:
If to the Company, at:
Edison Renewables, Inc.
0000 Xxxx Xxxx Xxxxxx
Xxxx Xxxx, Xxx Xxxx 00000
Attention: President
Telecopier Number: (000) 000-0000
With a copy to:
Certilman Balin Xxxxx & Xxxxx, LLP
00 Xxxxxxx Xxxxxx
Xxxx Xxxxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
Telecopier Number: (000) 000-0000
24
If to any NextPhase Shareholder at:
c/o Xxxxxxx X. Xxxxx (the NextPhase Representative)
0000 Xxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Telecopier Number: (000) 000-0000
With a copy to:
Xxxx X. Xxxx, Esq.
0000 Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Telecopier Number (000) 000-0000
If to NextPhase at:
0000 Xxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, Chief Executive Officer
Telecopier Number: (000) 000-0000
With a copy to:
Xxxx X. Xxxx, Esq.
0000 Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Telecopier Number (000) 000-0000
or at such other address as any party may specify by notice given to the other
party in accordance with this Section 13.6.
13.7 Choice of Law; Severability. This Agreement shall be governed by, and
interpreted and construed in accordance with, the laws of the State of Nevada,
excluding choice-of-law principles thereof. In the event any clause, section or
part of this Agreement shall be held or declared to be void, illegal or invalid
for any reason, all other clauses, sections or parts of this Agreement which can
be effected without such void, illegal or invalid clause, section or part shall
nevertheless continue in full force and effect.
13.8 Successors and Assigns; No Assignment. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and
assigns; provided, however, that neither NextPhase, the NextPhase Shareholders
nor the Company may assign any of its respective rights or delegate any of its
respective duties under this Agreement without the prior written consent of the
other.
25
13.9 Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, and all of which taken together shall
constitute one and the same instrument.
13.10 Facsimile Signatures. Signatures hereon which are transmitted via
facsimile shall be deemed original signatures.
13.11 Representation by Counsel; Interpretation. Each Party acknowledges that it
has been represented by counsel in connection with this Agreement and the
Transaction. Accordingly, any rule or law or any legal decision that would
require the interpretation of any claimed ambiguities in this Agreement against
the party that drafted it has no application and is expressly waived by each
Party. The provisions of this Agreement shall be interpreted in a reasonable
manner to give effect to the intent of the parties hereto.
13.12 Headings; Gender. The headings, captions and/or use of a particular gender
or neuter under sections of this Agreement are for convenience of reference only
and do not in any way modify, interpret or construe the intent of the parties or
affect any of the provisions of this Agreement.
ARTICLE XIV
DEFINITIONS
14.1 Defined Terms. As used herein, the terms below shall have the following
meanings. Any of such terms, unless the context otherwise requires, may be used
in the singular or plural, depending upon the reference.
"Action" shall mean any action, claim, suit, demand, litigation,
governmental or other proceeding, labor dispute, arbitral action, governmental
audit, inquiry, investigation, criminal prosecution, investigation or unfair
labor practice charge or complaint.
"Agreement" shall mean this Agreement and Plan of Share Exchange dated as
of August 3, 2004, among the Company, and the persons listed on the signature
page of this Agreement.
"Assets" shall have the meaning ascribed to it in the Recitals of this
Agreement.
"Body" shall mean a federal, state, local, and foreign governmental body,
political subdivision of such foreign governmental body, or other regulatory
body.
"Books and Records" shall mean all books, ledgers, files, reports, plans,
drawings, records and lists, including, without limitation, all computer
programs and other software, of every kind relating to an entity's business,
operations, assets, liabilities, personnel, customers and suppliers.
"Breaching Party" shall have the meaning ascribed to it in Section 13.1
hereof.
"Certificate of Merger" shall have the meaning ascribed to it in Section
2.2 hereof.
26
"Claim Notice" shall have the meaning ascribed to it in Section 11.2.3(a)
hereof.
"Closing" shall have the meaning ascribed to it in Section 9.1 hereof.
"Closing Date" shall have the meaning ascribed to it in Section 9.1 hereof.
"Company" shall have the meaning ascribed to it in heading of this
Agreement.
"Company Balance Sheet" shall mean the balance sheet of the Company as of
the Company Balance Sheet Date which is included as part of the Company
Financial Statements.
"Company Balance Sheet Date" shall mean December 31, 2003.
"Company Business" shall have the meaning as ascribed to it in Section 4.15
hereof.
"Company Common Stock" shall have the meaning ascribed to it in Section
2.1(a) hereof. "Company Financial Statements" shall mean the financial
statements of the Company as of the Company Balance Sheet Date and for the year
ended December 31, 2003, consistent with those presented in the SEC Reports.
"Company Indemnified Parties" shall have the meaning ascribed to it in
Section 11.2.1. hereof.
"Company Indemnifying Parties" shall have the meaning ascribed to it in
Section 11.2.2 hereof.
"Contract" shall mean any agreement, contract, note, lease, evidence of
indebtedness, purchase order, letter of credit, indenture, security or pledge
agreement, franchise agreement, undertaking, covenant not to compete, employment
agreement, license, instrument, obligation, commitment, course of dealing or
practice, understanding or arrangement, whether written or oral, to which a
particular Person is a party or is otherwise bound.
"Copyrights" shall mean registered copyrights, copyright applications and
unregistered copyrights.
"Default" shall mean any breach, default and/or other violation, and/or the
occurrence of any event that with or without the passage of time or the giving
of notice or both would constitute a breach, default or other violation, under,
or give any Person the right to accelerate, terminate or renegotiate, any
Contract.
"Derivative Securities" shall mean warrants, options, rights, shares of
capital stock, evidences of indebtedness, or other securities, which are
convertible, exercisable or exchangeable into shares of common stock.
27
"Effective Time" shall have the meaning ascribed to it in Section 2.2
hereof.
"ERISA" shall have the meaning ascribed to it in Section 3.21 hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Information" shall have the meaning ascribed to it in Section 13.2 hereof.
"Liability" shall mean any direct or indirect liability, obligation,
indebtedness, commitment, expense, claim, deficiency, guaranty or endorsement of
or by any Person of any type, whether accrued, absolute, contingent, matured,
unmatured or otherwise.
"Lien" shall mean any claim, lien, pledge, option, charge, restriction,
easement, security interest, deed of trust, mortgage, right-of-way,
encroachment, building or use restriction, conditional sales agreement,
encumbrance or other right of third parties, whether voluntarily incurred or
arising by operation of law, and includes, without limitation, any agreement to
give any of the foregoing in the future, and any contingent sale or other title
retention agreement or lease in the nature thereof. "Material Adverse Change"
shall mean a change that creates a Material Adverse Effect.
"Material Adverse Effect" shall mean any material adverse effect on the
business, properties, operations, assets, liabilities, condition (financial or
otherwise), or prospects of the Company, on the one hand, or NextPhase, on the
other hand, as applicable.
"Materials of Environmental Concern" shall mean pollutants, contaminants,
hazardous or noxious or toxic materials or wastes.
"Xxxxxxxx" shall have the meaning ascribed to it in the header paragraph of
Article IV.
"NextPhase" shall have the meaning ascribed to it in the Recitals of this
Agreement.
"NextPhase Balance Sheet" shall mean the balance sheet of NextPhase as of
the NextPhase Balance Sheet Date which is included as part of the NextPhase
Financial Statements.
"NextPhase Balance Sheet Date" shall mean March 31, 2004.
"NextPhase Common Stock" shall have the meaning ascribed to it in the
Recitals of this Agreement.
"NextPhase Financial Statements" shall mean the financial statements of
NextPhase as of the NextPhase Balance Sheet Date and for the year ended March
31, 2004.
"NextPhase Indemnified Parties" shall have the meaning ascribed to it in
Section 11.2.2 hereof.
28
"NextPhase Indemnifying Parties" shall have the meaning ascribed to it in
Section 11.2.1 hereof.
"NextPhase Listed Agreements" shall have the meaning ascribed to it in
Section 3.14 hereof.
"NextPhase Shareholders" shall have the meaning ascribed to it in the
heading of this Agreement.
"NextPhase Representative" shall have the meaning ascribed to it in Section
11.2.3(a) hereof.
"Intellectual Property" shall have the meaning ascribed to it in Section
3.10.2 hereof.
"Party" and "Parties" shall have the meanings ascribed to them in the
heading of this Agreement.
"Patents" shall mean all patents, patent applications, registered designs
and registered design applications.
"Permits" shall mean all licenses, permits, franchises, approvals,
authorizations, consents, decrees or orders of, or filings with, any and all
Bodies.
"Person" shall mean and include an individual, a partnership, a joint
venture, a corporation, a limited liability company, a limited liability
partnership, a trust, an unincorporated organization, any other business
organization and a government or other department or agency thereof.
"Proprietary Rights" shall mean Copyrights, Patents, Trademarks, other
technology rights and licenses, computer software (including, without
limitation, any source or object codes thereof or documentation relating
thereto), trade secrets, franchises, inventions, designs, specifications, plans,
drawings, data bases, know-how, domain names, world wide web addresses and other
intellectual property rights used or under development.
"SEC" shall mean the United States Securities and Exchange Commission.
"SEC Reports" shall have the meaning ascribed to it in Section 4.24 hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Trademarks" shall have the meaning ascribed to it in Section 3.10.2.
"Transaction" shall mean the share exchange of shares of NextPhase Common
Stock for Company Common Stock, and all other transactions contemplated by the
Agreement.
29
WITNESS the execution and delivery of this Agreement on the date first
above written.
EDISON RENEWABLES, INC.
By: /s/ Xxxx Xxxx
--------------------------
Name: Xxxx Xxxx
Title: President
NEXTPHASE SHAREHOLDERS
VIPER NETWORKS, INC.
By: /s/ Xxxxxxx X. Xxxxx /s/ XXXXX XXXXXXX XXXXXX XXXXX
----------------------------- ---------------------------
Xxxxxxx X. Xxxxx, Chairman XXXXX XXXXXXX XXXXXX XXXXX
of the Board
/s/ Xxxx Xxxxxxx /s/ Shaher F.M. Nadi
--------------------------------- ---------------------------
XXXX XXXXXXX SHAHER F.M. NADI
/s/ Xxxxx Xxxx /s/ Amrou Xxxxxxxxxx Xxxxx Zeweta
--------------------------------- ---------------------------
XXXXX XXXX AMROU XXXXXXXXXX XXXXX ZEWETA
/s/ Xxxxxxx Xxxxx /s/ Xxxx Xxxx
--------------------------------- ---------------------------
XXXXXXX XXXXX XXXX XXXX
/s/ Xxxxx Xxxx /s/ Xxxxx Xxx
--------------------------------- ---------------------------
XXXXX XXXX XXXXX XXX
/s/ Xxxx Xxxxxxxxx /s/ Xxxxxxx Xxxxx
--------------------------------- ---------------------------
XXXX XXXXXXXXX XX. XXXXXXX XXXXX
/s/ Xxxxx Xxxxxxxx
--------------------------------- ---------------------------
XXXXX XXXXXXXX XXXX X. XXXXXXX, c/f TD
Waterhouse Bank
/s/ Faisal X.X. Xx-Xxxxx /s/ Xxxxx Xxxxxxx
--------------------------------- ---------------------------
FAISAL X. X. XX-XXXXX XXXXX XXXXXXX
/s/ Xxxx Xxxxx Mohd Al-Ashawi
--------------------------------- [SIGNATURES CONTINUED ON NEXT PAGE]
XXXX XXXXX MOHD AL-ASHAWI
/s/ Xxxxxxx Xxxxxxxx
---------------------------------
XXXXXXX XXXXXXXX
30
WITH RESPECT TO SECTIONS 2.2,
10.2, ARTICLE XI, ARTICLE XIII, AND
ARTICLE XIV ONLY:
NEXTPHASE TECHNOLOGIES, INC.
By: /s/ Xxxxxxx X. Xxxxx
------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Chief Executive Officer
WITH RESPECT TO ARTICLE IV,
ARTICLE XI, ARTICLE XIII, AND
ARTICLE XIV ONLY
/s/ Xxxxx Xxxxxxxx
--------------------------------
XXXXX XXXXXXXX
31
NEXTPHASE SHAREHOLDERS CONTINUED:
/s/ Xxxxxxx X. Xxxxx
---------------------------------
XXXXXXX X. XXXXX
/s/ Xxxx Xxxxxxx
---------------------------------
XXXX XXXXXXX
/s/ Xxxxxxx Failing
---------------------------------
XXXXXXX FAILING
/s/ Xxxx XxXxxxxx
---------------------------------
XXXX XXXXXXXX
/s/ Xxxxxx XxXxxxxx
---------------------------------
XXXXXX XXXXXXXX
/s/ Xxxxxx XxXxxxxx
----------------------------------
XXXXXX XXXXXXXX
/s/ Xxxxxxx X. Xxxxxx
----------------------------------
XXXXXXX X. XXXXXX
32
