EXHIBIT 10.1
SHARE EXCHANGE AGREEMENT
THIS SHARE EXCHANGE AGREEMENT, dated as of January 26, 2001, is by and
among HYDROX SALES CORP., a Delaware corporation (the "Company"); CARCORP USA,
INC., a Florida corporation ("CARCORP"); and the shareholders of CARCORP listed
on the signatures page (the "Sellers").
W I T N E S S E T H:
WHEREAS, the Sellers own 100% of the shares of common stock of CARCORP,
in the denominations as set forth opposite their respective names on Schedule I
to this Agreement which shares constitute all of the issued and outstanding
shares of capital stock of CARCORP (the "CARCORP Shares"); and
WHEREAS, the Company desires to acquire from the Sellers, and the
Sellers desire to sell to the Company, all of the CARCORP Shares in exchange for
the issuance by the Company of an aggregate of - Twenty Two Million, Six Hundred
Four Thousand, One Hundred Thirty Two (22,604,132) post reverse-split shares
(the "Company Shares") of the Company's common stock, par value $0.001 per share
(the "Company Common Stock"), on the terms and conditions set forth below; and
WHEREAS, the Shareholders of the Company will benefit from the
transactions contemplated herein, and
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties and agreements set forth herein, the parties hereto
agree as follows:
ARTICLE I
EXCHANGE OF SHARES
1.1 Exchange of Shares. Subject to the terms and conditions of this
Agreement, on the Closing Date (as hereinafter defined):
(a) the Company shall issue and deliver to each of the Sellers
the number of authorized but unissued shares of Company Common Stock set forth
opposite such Seller's name set forth on Schedule I hereto, and
(b) each Seller agrees to deliver to the Company, the number
of authorized and issued shares of Common Stock, par value $1.00 per share, of
CARCORP USA, INC. set forth opposite such Seller's name on Schedule I hereto
along with an appropriately executed stock power endorsed in favor of the
Company; and
(c) the Company currently has Five Million, Six Hundred Fifty
One Thousand, Thirty Three (5,651,033) shares of its $0.001 par value
post-reverse split common stock issued and outstanding. After giving effect to
the exchange of shares herein, the Company shall have Twenty Eight Million, Two
Hundred Fifty Five Thousand, One Hundred Sixty Five (28,255,165) post
reverse-split common stock shares issued and outstanding.
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1.2 Time and Place of Closing. The closing of the transactions
contemplated hereby (the "Closing") shall take place at the offices of CARCORP
USA, INC. on May 1, 200l (the "Closing Date") at 1:00 P.M., or at such other
place as the Company and the Sellers may agree.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SHAREHOLDER
The Company represents and warrants, to the best of its knowledge, to
each of the Sellers that now and/or as of the Closing:
2.1 Due Organization and Qualification; Subsidiaries; Due
Authorization.
(a) The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of its
jurisdiction of formation, with full corporate power and
authority to own, lease and operate its respective business
and properties and to carry on its respective business in the
places and in the manner as presently conducted or proposed to
be conducted. The Company is in good standing as a foreign
corporation in each jurisdiction in which the properties
owned, leased or operated, or the business conducted, by it
requires such qualification except for any such failure, which
when taken together with all other failures, is not likely to
have a material adverse effect on the business of the Company
and its Subsidiaries taken as a whole.
(b) The Company does not own, directly or indirectly, any capital
stock, equity or interest in any corporation, firm,
partnership, joint venture or other entity.
(c) The Company has all requisite corporate power and authority to
execute and deliver this Agreement, and to consummate the
transactions contemplated hereby and thereby. The Company has
taken all corporate action necessary for the execution and
delivery of this Agreement and the consummation of the
transactions contemplated hereby, and this Agreement
constitutes the valid and binding obligation of the Company,
enforceable against the Company in accordance with its
respective terms, except as may be affected by bankruptcy,
insolvency, moratoria or other similar laws affecting the
enforcement of creditors' rights generally and subject to the
qualification that the availability of equitable remedies is
subject to the discretion of the court before which any
proceeding therefore may be brought.
2.2 No Conflicts or Defaults. The execution and delivery of this
Agreement by the Company and the consummation of the transactions contemplated
hereby do not and shall not (a) contravene the Certificate of Incorporation or
Bylaws of the Company or (b) with or without the giving of notice or the passage
of time (i) violate, conflict with, or result in a breach of, or a default or
loss of rights under, any material covenant, agreement, mortgage, indenture,
lease, instrument, permit or license to which the Company is a party or by which
the Company is bound, or any judgment, order or decree, or any law, rule or
regulation to which the Company is subject, (ii) result in the creation of, or
give any party the right to create, any lien, charge, encumbrance or any other
right or adverse interest ("Liens") upon any of the assets of the Company, (iii)
terminate or give any party the right to terminate, amend, abandon or refuse to
perform, any material agreement, arrangement or commitment to which the Company
is a party or by which the Company's assets are bound, or (iv) accelerate or
modify, or give any party the right to accelerate or modify, the time within
which, or the terms under which, the Company is to perform any duties or
obligations or receive any rights or benefits under any material agreement,
arrangement or commitment to which it is a party.
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2.3 Capitalization. The authorized capital stock of the Company
immediately prior to giving effect to the transactions contemplated hereby
consists of One Hundred Million (100,000,000) shares of Common Stock of which
Five Million, Sixty Hundred Fifty One Thousand, Thirty Three (5,651,033) shares
of $0,001 par value Common Stock are issued and outstanding as of the date
hereof. All of the outstanding shares of Common Stock are, and the Company
Shares when issued in accordance with the terms hereof, will be, duly
authorized, validly issued, fully paid and non-assessable, and have not been or,
with respect to the Company Shares, will not be issued in violation of any
preemptive right of stockholders. The Company Shares are not subject to any
preemptive or subscription right, any voting trust agreement or other contract,
agreement, arrangement, option, warrant, call, commitment or other right of any
character obligating or entitling the Company to issue, sell, redeem or
repurchase any of its securities, and there is no outstanding security of any
kind convertible into or exchangeable for Common Stock. The Company has not
granted registration rights to any person.
2.4 Financial Statements. Exhibit 2.4-EX to the Disclosure Schedule
contains copies of the consolidated balance sheets of the Company at March 10,
1999 and from inception on February 5, 1999, and the related statements of
operations, stockholders' equity and cash flows for the fiscal years then ended,
including the notes thereto, as audited by Xxxxxxxxx & Company, LLP, certified
public accountants (all such statements being the "Company Financial
Statements"). . The Financial Statements, together with the notes thereto, have
been prepared in accordance with U.S. generally accepted accounting principles
applied on a basis consistent throughout all periods presented, subject to audit
adjustments, which are not expected to be material. Such statements present
fairly the financial position of the Company as of the dates and for the periods
indicated. The books of account and other financial records of the Company have
been maintained in accordance with good business practices.
2.5 Further Financial Matters. The Company does not have any
liabilities or obligations, whether secured or unsecured, accrued, determined,
absolute or contingent, asserted or unasserted or otherwise, which are required
to be reflected or reserved in a balance sheet or the notes thereto under
generally accepted accounting principles, but which are not reflected in the
Financial Statements.
2.6 Taxes. The Company has filed all United States federal, state,
county, local and foreign national, provincial and local returns and reports
which were required to be filed on or prior to the date hereof in respect of all
income, withholding, franchise, payroll, excise, property, sales, use,
value-added or other taxes or levies, imposts, duties, license and registration
fees, charges, assessments or withholdings of any nature whatsoever (together,
"Taxes"), and has paid all Taxes (and any related penalties, fines and interest)
which have become due pursuant to such returns or reports or pursuant to any
assessment which has become payable, or, to the extent its liability for any
Taxes (and any related penalties, fines and interest) has not been fully
discharged, the same have been properly reflected as a liability on the books
and records of the Company and adequate reserves therefore have been
established. All such returns and reports filed on or prior to the date hereof
have been properly prepared and are true, correct (and to the extent such
returns reflect judgments made by the Company, as the case may be, such
judgments were reasonable under the circumstances) and complete in all material
respects. No tax return or tax return liability of the Company has been audited
or, presently under audit. The Company has not given or been requested to give
waivers of any statute of limitations relating to the payment of any Taxes (or
any related penalties, fines and interest). There are no claims pending or, to
the knowledge of the Company, threatened, against the Company for past due
Taxes. All payments for withholding taxes, unemployment insurance and other
amounts required to be paid for periods prior to the date hereof to any
governmental authority in respect of employment obligations of the Company,
including, without limitation, amounts payable pursuant to the Federal Insurance
Contributions Act, have been paid or shall be paid prior to the Closing and have
been duly provided for on the books and records of the Company and in the
Financial Statements.
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2.7 Indebtedness; Contracts; No Defaults.
(a) Item 2.7 of the Disclosure Schedule sets forth a true,
complete and correct list of all material instruments,
agreements, indentures, mortgages, guarantees, notes,
commitments, accommodations, letters of credit or other
arrangements or understandings, whether written or oral, to
which the Company or any Subsidiary is a party (collectively,
the "Operating Agreements").
(b) Except as disclosed in Item 2.7 of the Disclosure Schedule,
neither the Company, any Subsidiary, nor, to the Company's
knowledge, any other person or entity is in breach in any
material respect of, or in default in any material respect
under, any material contract, agreement, arrangement,
commitment or plan to which the Company is a party, and no
event or action has occurred, is pending or is threatened,
which, after the giving of notice, passage of time or
otherwise, would constitute or result in such a material
breach or material default by the Company or, to the knowledge
of the Company, any other person or entity. The Company has
not received any notice of default under any contract,
agreement, arrangement, commitment or plan to which it is a
party, which default has not been cured to the satisfaction
of, or duly waived by, the party claiming such default on or
before the date hereof.
2.8 Personal Property. The Company has good and marketable title to all
of its tangible personal property and assets, including, without limitation, all
of the assets reflected in the Financial Statements that have not been disposed
of in the ordinary course of business and such property is free and clear of all
Liens or mortgages.
2.9 Real Property. Item 2.9 of the Disclosure Schedule sets forth a
true and complete list of all real property owned by, or leased or subleased by
or to, the Company.
2.10 Compliance with Law. The Company is not conducting its respective
business or affairs in violation of any applicable federal, state or local law,
ordinance, rule, regulation, court or administrative order, decree or process,
or any requirement of insurance carriers. The Company has not received any
notice of violation or claimed violation of any such law, ordinance, rule,
regulation, order, decree, process or requirement.
(b) The Company is in compliance with all applicable federal,
state, local and foreign laws and regulations relating to the
protection of the environment and human health. There are no
claims, notices, actions, suits, hearings, investigations,
inquiries or proceedings pending or, to the knowledge of the
Company, threatened against the Company that are based on or
related to any environmental matters or the failure to have
any required environmental permits, and there are no past or
present conditions that the Company has reason to believe are
likely to give rise to any material liability or other
obligations of the Company or any Subsidiary under any
environmental laws.
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2.11 Permits and Licenses. The Company has all certificates of
occupancy, rights, permits, certificates, licenses, franchises, approvals and
other authorizations as are reasonably necessary to conduct its respective
business and to own, lease, use, operate and occupy its assets, at the places
and in the manner now conducted and operated, except those the absence of which
would not materially adversely affect its respective business. The Company has
not received any written or oral notice or claim pertaining to the failure to
obtain any material permit, certificate, license, approval or other
authorization required by any federal, state or local agency or other regulatory
body, the failure of which to obtain would materially and adversely affect its
business.
2.12 Ordinary Course. The Company has conducted its business,
maintained its real property and equipment and kept its books of account,
records and files, substantially in the same manner as previously conducted,
maintained or kept and solely in the ordinary course.
2.13 No Adverse Changes. There have not been (a) any material adverse
change in the business, prospects, the financial or other condition, or the
respective assets or liabilities of the Company as reflected in the Financial
Statements, (b) any material loss sustained by the Company, including, but not
limited to any loss on account of theft, fire, flood, explosion, accident or
other calamity, whether or not insured, which has materially and adversely
interfered, or may materially and adversely interfere, with the operation of the
Company's business, or (c) to the best knowledge of the Company, any event,
condition or state of facts, including, without limitation, the enactment,
adoption or promulgation of any law, rule or regulation, the occurrence of which
materially and adversely does or would affect the results of operations or the
business or financial condition of the Company.
2.14 Litigation. There is no claim, dispute, action, suit, proceeding
or investigation pending or, to the knowledge of the Company, threatened,
against or affecting the business of the Company, or challenging the validity or
propriety of the transactions contemplated by this Agreement, at law or in
equity or admiralty or before any federal, state, local, foreign or other
governmental authority, board, agency, commission or instrumentality, nor to the
knowledge of the Company, has any such claim, dispute, action, suit, proceeding
or investigation been pending or threatened, during the 12 month period
preceding the date hereof; (b) there is no outstanding judgment, order, writ,
ruling, injunction, stipulation or decree of any court, arbitrator or federal,
state, local, foreign or other governmental authority, board, agency, commission
or instrumentality, against or materially affecting the business of the Company
; and (c) the Company has not received any written or verbal inquiry from any
federal, state, local, foreign or other governmental authority, board, agency,
commission or instrumentality concerning the possible violation of any law, rule
or regulation or any matter disclosed in respect of its business.
2.15 Insurance. The Company does not currently maintain any form of
insurance.
2.16 Certificate of Incorporation and By-laws; Minute Books. The copies
of the Certificate of Incorporation and Bylaws (or similar governing documents)
of the Company, and all amendments to each are true, correct and complete. The
minute books of the Company contains true and complete records of all meetings
and consents in lieu of meetings of their respective Board of Directors (and any
committees thereof), or similar governing bodies, since the time of their
respective organization. The stock books of the Company are true, correct and
complete.
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2.17 Employee Benefit Plans. The Company does not maintain, nor has the
Company maintained in the past, any employee benefit plans ("as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), or any plans, programs, policies, practices, arrangements or
contracts (whether group or individual) providing for payments, benefits or
reimbursements to employees of the Company, former employees, their
beneficiaries and dependents under which such employees, former employees, their
beneficiaries and dependents are covered through an employment relationship with
the Company, any entity required to be aggregated in a controlled group or
affiliated service group with the Company for purposes of ERISA or the Internal
Revenue Code of 1986 (the "Code") (including, without limitation, under Section
414(b), (c), (m) or (o) of the Code or Section 4001 of ERISA, at any relevant
time ("Benefit Plans").
2.18 Patents; Trademarks and Intellectual Property Rights. The Company
does not own or possesses any patents, trademarks, service marks, trade names,
copyrights, trade secrets, licenses, information, Internet web site(s) or
proprietary rights of any nature.
2.19 Brokers. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out by the Company directly
with the Sellers without the intervention of any Person on behalf of the Company
in such a manner as to give rise to any valid claim by any Person against any
Seller for a finder's fee, brokerage commission or similar payment.
2.20 Affiliate Transactions. Except as disclosed in Item 2.20 of the
Disclosure Schedule neither the Company nor any officer, director or employee of
the Company (or any of the relatives or Affiliates of any of the aforementioned
Persons) is a party to any agreement, contract, commitment or transaction with
the Company or affecting the business of the Company, or has any interest in any
property, whether real, personal or mixed, or tangible or intangible, used in or
necessary to the Company which will subject the Sellers to any liability or
obligation from and after the Closing Date.
2.21 Trading. The Company Common Stock is currently not listed for
trading on the OTC Bulletin Board or any regional or national exchange, and the
Company has received no notice that its Common Stock is being listed on any
exchange.
2.22. Compliance. The Company has yet to file its Form 10SB and is
presently not a reporting company.
2.23. Filings. None of the filings made by the Company under the
Securities Act make any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Each of the Sellers represents and warrants, jointly and severally to
the Company that now and/or as of the Closing:
3.1 Due Organization and Qualification; Subsidiaries; Due
Authorization.
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(a) CARCORP and each Subsidiary of CARCORP is a corporation duly
incorporated, validly existing and in good standing under the
laws of its jurisdiction of formation, with full corporate
power and authority to own, lease and operate its respective
business and properties and to carry on its respective
business in the places and in the manner as presently
conducted or proposed to be conducted. CARCORP and each
Subsidiary is in good standing as a foreign corporation in
each jurisdiction in which the properties owned, leased or
operated, or the business conducted, by it requires such
qualification except for any such failure, which when taken
together with all other failures, is not likely to have a
material adverse effect on the business of CARCORP and its
Subsidiaries taken as a whole.
(b) CARCORP does not own, directly or indirectly, any capital
stock, equity or interest in any corporation, firm,
partnership, joint venture or other entity, other than those
(each, a "Subsidiary" and together, the "Subsidiaries") set
forth in Item 2.1 of the Disclosure Schedule of even date
herewith, which accompanies this Agreement and is incorporated
herein by reference (the "Disclosure Schedule"). Except as set
forth in Item 2.1 of the Disclosure Schedule, each Subsidiary
is wholly owned by CARCORP, all the outstanding shares of
capital stock of each Subsidiary are owned free and clear of
all Liens (as hereinafter defined), there is no contract,
agreement, arrangement, option, warrant, call, commitment or
other right of any character obligating or entitling any
Subsidiary to issue, sell, redeem or repurchase any of its
securities, and there is no outstanding security of any kind
convertible into or exchangeable for securities of any
Subsidiary.
(c) Each of the Sellers has all requisite power and authority to
execute and deliver this Agreement, and to consummate the
transactions contemplated hereby and thereby. Each of the
Sellers has taken all corporate action necessary for the
execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby, and this Agreement
constitutes the valid and binding obligation of each of the
Sellers, enforceable against each of the Sellers.
3.2 No Conflicts or Defaults. The execution and delivery of this
Agreement by each of the Sellers and the consummation of the transactions
contemplated hereby do not and shall not (a) contravene the Certificate of
Incorporation or By-laws of CARCORP or the governing documents of any Seller, if
applicable, or (b) with or without the giving of notice or the passage of time,
(i) violate, conflict with, or result in a breach of, or a default or loss of
rights under, any material covenant, agreement, mortgage, indenture, lease,
instrument, permit or license to which CARCORP, any of the Subsidiaries or any
Seller is a party or by which CARCORP, any of the Subsidiaries or any Seller or
any of their respective assets are bound, or any judgment, order or decree, or
any law, rule or regulation to which CARCORP, any of the Subsidiaries or any
Seller or any of their respective assets are subject, (ii) result in the
creation of, or give any party the right to create, any Lien upon any of the
assets of CARCORP or any of the Subsidiaries, (iii) terminate or give any party
the right to terminate, amend, abandon or refuse to perform, any material
agreement, arrangement or commitment to which CARCORP or any of the Subsidiaries
is a party or by which CARCORP or any of the Subsidiaries or any of their
respective assets are bound, or (iv) accelerate or modify, or give any party the
right to accelerate or modify, the time within which, or the terms under which,
or any of the Subsidiaries is to perform any duties or obligations or receive
any rights or benefits under any material agreement, arrangement or commitment
to which it is a party.
3.3 Capitalization. The authorized capital stock of CARCORP immediately
prior to giving effect to the transactions contemplated hereby consists of 100
shares of Common Stock, par value BLANK per share of which as of the date hereof
100 shares of Common Stock are issued and outstanding. Set forth in Item 2.3 of
the Disclosure Schedule is a list of all Stockholders of CARCORP, setting forth
their names, addresses and number of shares owned. All of the outstanding shares
of CARCORP Common Stock are, and CARCORP Shares when transferred in accordance
with the terms hereof, will be, duly authorized, validly issued, fully paid and
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non-assessable, and have not been or, with respect to CARCORP Shares, will not
be transferred in violation of any rights of third parties. The CARCORP Shares
are not subject to any preemptive or subscription right, any voting trust
agreement or other contract, agreement, arrangement, option, warrant, call,
commitment or other right of any character obligating or entitling CARCORP to
issue, sell, redeem or repurchase any of its securities, and there is no
outstanding security of any kind convertible into or exchangeable for Common
Stock.
3.4 Financial Statements. Exhibit 2 to the Disclosure Schedule contains
copies of the consolidated balance sheets of CARCORP at 12/31/00, and the
related statements of operations, stockholders' equity and cash flows for the
period then ended, including the notes thereto, as audited by Merdinger,
Fruchter, Xxxxx & Corso, P.C., certified public accountants (all such statements
being the "CARCORP" Financial Statements"). Such financial statements indicate
that CARCORP has gross sales and net profits in excess of $15,000,000 and
$150,000 respectively. The Financial Statements, together with the notes
thereto, have been prepared in accordance with U.S. generally accepted
accounting principles applied on a basis consistent throughout all periods
presented, subject to audit adjustments, which are not expected to be material.
Such statements present fairly the financial position of CARCORP as of the dates
and for the periods indicated. The books of account and other financial records
of CARCORP have been maintained in accordance with good business practices.
3.5 Further Financial Matters. Except as set forth in Item 3.5 to the
Disclosure Schedule, neither CARCORP nor any of the Subsidiaries has any
material liabilities or obligations, whether secured or unsecured, accrued,
determined, absolute or contingent, asserted or unasserted or otherwise, which
are required to be reflected or reserved in a balance sheet or the notes thereto
under generally accepted accounting principles, but which are not reflected in
the Financial Statements.
3.6 Taxes. Except as indicated in Item 3.6 of the Disclosure Schedule,
each of CARCORP - and the Subsidiaries has filed all United States federal,
state, county, local and foreign national, provincial and local tax returns and
reports which were required to be filed on or prior to the date hereof, and has
paid all Taxes (and any related penalties, fines and interest) which have become
due pursuant to such returns or reports or pursuant to any assessment which has
become payable, or, to the extent its liability for any Taxes (and any related
penalties, fines and interest) has not been fully discharged, the same have been
properly reflected as a liability on the books and records of CARCORP and
adequate reserves therefore have been established. All such returns and reports
filed on or prior to the date hereof have been properly prepared and are true,
correct (and to the extent such returns reflect judgments made by CARCORP or a
Subsidiary, as the case may be, such judgments were reasonable under the
circumstances) and complete in all material respects. Except as indicated in 3.6
of the Disclosure Schedule, no extension for the filing of any such return or
report is currently in effect. Except as indicated in Item 3.6 of the Disclosure
Schedule, no tax return or tax return liability of CARCORP or any Subsidiary has
been audited or, presently under audit. All taxes and any penalties, fines and
interest which have been asserted to be payable as a result of any audits have
been paid. Except as indicated in Item 3.6 of the Disclosure Schedule, neither
CARCORP nor any Subsidiary has given or been requested to give waivers of any
statute of limitations relating to the payment of any Taxes (or any related
penalties, fines and interest). There are no claims pending or, to the knowledge
of CARCORP, threatened, against CARCORP or any Subsidiary for past due Taxes.
Except as indicated in Item 3.6 of the Disclosure Statement, all payments for
withholding taxes, unemployment insurance and other amounts required to be paid
for periods prior to the date hereof to any governmental authority in respect of
employment obligations of CARCORP and each Subsidiary, including, without
limitation, amounts payable pursuant to the Federal Insurance Contributions Act,
have been paid or shall be paid prior to the Closing and have been duly provided
for on the books and records of CARCORP and in the Financial Statements.
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3.7 Indebtedness; Contracts; No Defaults.
(a) Item 3.7 of the Disclosure Schedule sets forth a true,
complete and correct list of all material instruments,
agreements, indentures, mortgages, guarantees, notes,
commitments, accommodations, letters of credit or other
arrangements or understandings, whether written or oral, to
which CARCORP or any Subsidiary is a party (collectively, the
"CARCORP" Operating Agreements"). An agreement shall not be
considered material for the purposes of this Section 3.7(a) if
it provides for expenditures or receipts of less than $10,000
and has been entered into by CARCORP or a Subsidiary in the
ordinary course of business. The CARCORP Operating Agreements
constitute all of the contracts, agreements, understandings
and arrangements required for the operation of the business of
CARCORP and the Subsidiaries or which have a material effect
thereon. Copies of all such material written CARCORP Operating
Agreements have previously been delivered or otherwise made
available to the Company and such copies are true, complete
and correct as of the date hereof.
(b) Except as disclosed in Item 3.7 of the Disclosure Schedule,
neither CARCORP, any Subsidiary, nor, to CARCORP's knowledge,
any other person or entity is in breach in any material
respect of, or in default in any material respect under, any
material contract, agreement, arrangement, commitment or plan
to which CARCORP or any Subsidiary is a party, and no event or
action has occurred, is pending or is threatened, which, after
the giving of notice, passage of time or otherwise, would
constitute or result in such a material breach or material
default by CARCORP or any Subsidiary or, to the knowledge of
CARCORP, any other person or entity. Neither CARCORP nor any
Subsidiary has received any notice of default under any
contract, agreement, arrangement, commitment or plan to which
it is a party, which default has not been cured to the
satisfaction of, or duly waived by, the party claiming such
default on or before the date hereof.
3.8 Personal Property. Except as set forth in Item 3.8 of the
Disclosure Schedule, each of and the Subsidiaries has good and marketable title
to all of its tangible personal property and assets, including, without
limitation, all of the assets reflected in the Financial Statements that have
not been disposed of in the ordinary course of business since the date of the
last financial statement are free and clear of all Liens or mortgages, except
for any Lien for current taxes not yet due and payable and such restrictions, if
any, on the disposition of securities as may be imposed by federal or applicable
state securities laws.
3.9 Real Property. (a) Item 3.9 of the Disclosure Schedule sets forth a
true and complete list of all real property owned by, or leased or subleased by
or to, CARCORP and its Subsidiaries (the "CARCORP" Real Property").
(b) Except as set forth in Item 3.9 of the Disclosure Statement,
each lease to which CARCORP is a party is valid, binding and
in full force and effect with respect to CARCORP or a
Subsidiary, as the case may be, and, to the knowledge of
CARCORP, all other parties thereto; no notice of default or
termination under any such lease is outstanding.
3.10 Compliance with Law. (a) Except as set forth in Item 3.10 of the
Disclosure Schedule, neither CARCORP nor any Subsidiary is conducting its
respective business or affairs in material violation of any applicable federal,
state or local law, ordinance, rule, regulation, court or administrative order,
decree or process, or any requirement of insurance carriers. Neither CARCORP nor
any Subsidiary has received any notice of violation or claimed violation of any
such law, ordinance, rule, regulation, order, decree, process or requirement.
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(b) Each of CARCORP and the Subsidiaries is in compliance in all
material respects with all applicable federal, state, local
and foreign laws and regulations relating to the protection of
the environment and human health. There are no claims,
notices, actions, suits, hearings, investigations, inquiries
or proceedings pending or, to the knowledge of, CARCORP
threatened against CARCORP or any of the Subsidiaries that are
based on or related to any environmental matters or the
failure to have any required environmental permits, and there
are no past or present conditions that CARCORP has reason to
believe are likely to give rise to any material liability or
other obligations of CARCORP or any Subsidiary under any
environmental laws.
3.11 Permits and Licenses. Except as set forth in Item 3.11 of the
Disclosure Schedule, each of CARCORP and the Subsidiaries has all certificates
of occupancy, rights, permits, certificates, licenses, franchises, approvals and
other authorizations as are reasonably necessary to conduct its respective
business and to own, lease, use, operate and occupy its assets, at the places
and in the manner now conducted and operated, except those the absence of which
would not materially adversely affect its respective business. Except as set
forth in Item 3.11 of the Disclosure Schedule, as of the date hereof, neither
CARCORP nor any Subsidiary has received any written or oral notice or claim
pertaining to the failure to obtain any material permit, certificate, license,
approval or other authorization required by any federal, state or local agency
or other regulatory body, the failure of which to obtain would materially and
adversely affect its business.
3.12 Ordinary Course. Except as set forth in Item 3.12 of the
Disclosure Schedule, since - BLANK -, each of CARCORP and the Subsidiaries has
conducted its business, maintained its real property and equipment and kept its
books of account, records and files, substantially in the same manner as
previously conducted, maintained or kept and solely in the ordinary course; it
being understood and acknowledged that CARCORP has been substantially increasing
its operations for some time.
3.13 No Adverse Changes. Except as set forth in Item 3.13 of the
Disclosure Schedule, since December 1, 2000, there has not been (a) any material
adverse change in the business, prospects, the financial or other condition, or
the respective assets or liabilities of CARCORP and the Subsidiaries as
reflected in the Financial Statements, (b) any material loss sustained by
CARCORP or any Subsidiary, including, but not limited to any loss on account of
theft, fire, flood, explosion, accident or other calamity, whether or not
insured, which has materially and adversely interfered, or may materially and
adversely interfere, with the operation of CARCORP's or any Subsidiary's
business, or (c) to the best knowledge of CARCORP, any event, condition or state
of facts, including, without limitation, the enactment, adoption or promulgation
of any law, rule or regulation, the occurrence of which materially and adversely
does or would affect the results of operations or the business or financial
condition of CARCORP or any Subsidiary; it being understood and acknowledged
that CARCORP has been substantially increasing its operations for some time.
3.14 Litigation. (a) Except as set forth in Item 3.14 of the Disclosure
Schedule, there is no claim, dispute, action, suit, proceeding or investigation
pending or, to the knowledge of CARCORP, threatened, against or affecting the
business of CARCORP or any Subsidiary, or challenging the validity or propriety
of the transactions contemplated by this Agreement, at law or in equity or
admiralty or before any federal, state, local, foreign or other governmental
authority, board, agency, commission or instrumentality, nor to the knowledge of
CARCORP, has any such claim, dispute, action, suit, proceeding or investigation
been pending or threatened, during the 12 month period preceding the date
hereof; (b) there is no outstanding judgment, order, writ, ruling, injunction,
stipulation or decree of any court, arbitrator or federal, state, local, foreign
or other governmental authority, board, agency, commission or instrumentality,
against or materially affecting the business of CARCORP or any Subsidiary and
(c) neither CARCORP nor any Subsidiary has received any written or verbal
inquiry from any federal, state, local, foreign or other governmental authority,
board, agency, commission or instrumentality concerning the possible violation
of any law, rule or regulation or any matter disclosed in respect of its
business.
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3.15 Insurance. CARCORP and the Subsidiaries maintain insurance against
all risks customarily insured against by companies in its industry. All such
policies are in full force and effect, and neither CARCORP nor any Subsidiary
has received any notice from any insurance company suspending, revoking,
modifying or canceling (or threatening such action) any insurance policy issued
to CARCORP.
3.16 Certificate of Incorporation and By-laws; Minute Books. The copies
of the Certificate of Incorporation and By-laws (or similar governing documents)
of CARCORP and each Subsidiary, and all amendments to each are true, correct and
complete. The minute books of CARCORP and each Subsidiary contain true and
complete records of all meetings and consents in lieu of meetings of their
respective Board of Directors (and any committees thereof), or similar governing
bodies, since the time of their respective organization. The stock books of
CARCORP and each Subsidiary are true, correct and complete.
3.17 Employee Benefit Plans. Except as set forth in Item 3.17 of the
Disclosure Schedule, neither CARCORP nor any Subsidiary maintains, nor has
CARCORP or any Subsidiary maintained in the past, any employee benefit plans
("as defined in Section 3(3) of the "ERISA"), or any plans, programs, policies,
practices, arrangements or contracts (whether group or individual) providing for
payments, benefits or reimbursements to employees of CARCORP or any Subsidiary,
former employees, their beneficiaries and dependents under which such employees,
former employees, their beneficiaries and dependents are covered through an
employment relationship with CARCORP, any Subsidiary or any entity required to
be aggregated in a controlled group or affiliated service group with CARCORP for
purposes of ERISA or the Internal Revenue Code of 1986 (the "Code") (including,
without limitation, under Section 414(b), (c), (m) or (o) of the Code or Section
4001 of ERISA, at any relevant time ("CARCORP" Benefit Plans").
3.18 Patents; Trademarks and Intellectual Property Rights. Each of
CARCORP and the Subsidiaries owns or possesses sufficient legal rights to all
patents, trademarks, service marks, trade names, copyrights, trade secrets,
licenses, information, internet web site(s) proprietary rights and processes
necessary for its business as now conducted without any conflict with or
infringement of the rights of others. There are no outstanding options, licenses
or agreements of any kind relating to the foregoing, and neither CARCORP nor any
Subsidiary is bound by, or a party to, any options, licenses or agreements of
any kind with respect to the patents, trademarks, service marks, trade names,
copyrights, trade secrets, licenses, information, proprietary rights and
processes of any other person or entity.
3.19 Brokers. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out by CARCORP directly with
the Sellers without the intervention of any Person on behalf of in such a manner
as to give rise to any valid claim by any Person against any Seller for a
finder's fee, brokerage commission or similar payment.
3.20 Subsidiaries. Item 3.20 of the Disclosure Statements sets forth
all the Subsidiaries of . All the outstanding shares of capital stock of, or
other equity interests in, each such subsidiary have been validly issued and are
fully paid and nonassessable and are owned directly or indirectly by CARCORP,
free and clear of all Liens and free of any other restriction (including any
restriction on the right to vote, sell or otherwise dispose of such capital
stock or other ownership interests). Each Subsidiary of CARCORP is wholly owned
by CARCORP.
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3.21 Purchase for Investment.
(a) Such Seller is acquiring the Company Shares for investment for
such Seller's own account and not as a nominee or agent, and
not with a view to the resale or distribution of any part
thereof, and such Seller has no present intention of selling,
granting any participation in, or otherwise distributing the
same. Such Seller further represents that it does not have any
contract, undertaking, agreement or arrangement with any
person to sell, transfer or grant participation to such person
or to any third person, with respect to any of the Company
Shares.
(b) Such Seller understands that the Company Shares are not
registered under the Act on the ground that the sale and the
issuance of securities hereunder is exempt from registration
under the Act pursuant to Section 4(2) thereof, and that the
Company's reliance on such exemption is predicated on such
Seller's representations set forth herein. Such Seller is an
"accredited investor" as that term is defined in Rule 501(a)
of Regulation D under the Act.
3.22 Investment Experience. Such Seller acknowledges that it can bear
the economic risk of its investment, and has such knowledge and experience in
financial and business matters that it is capable of evaluating the merits and
risks of the investment in the Company Shares.
3.23 Information. The Sellers have carefully reviewed such information,
as each Seller deemed necessary to evaluate an investment in the Company Shares.
To the full satisfaction of each Seller, it has been furnished all materials
that it has requested relating to the Company and the issuance of the Company
Shares hereunder, and each Seller has been afforded the opportunity to ask
questions of representatives of the Company to obtain any information necessary
to verify the accuracy of any representations or information made or given to
the Sellers. Notwithstanding the foregoing, nothing herein shall derogate from
or otherwise modify the representations and warranties of the Company set forth
in this Agreement, on which each of the Sellers has relied in making an exchange
of the CARCORP Shares for the Company Shares.
3.24 Restricted Securities. Such Seller understands that the Company
Shares may not be sold, transferred, or otherwise disposed of without
registration under the Act or an exemption there from, and that in the absence
of an effective registration statement covering the Company Shares or any
available exemption from registration under the Act, the Company Shares must be
held indefinitely. Such Seller is aware that the Company Shares may not be sold
pursuant to Rule 144 promulgated under the Act unless all of the conditions of
that Rule are met. Among the conditions for use of Rule 144 may be the
availability of current information to the public about the Company.
ARTICLE IV
INDEMNIFICATION
4.1 Indemnity of the Company. The Company agree to defend, indemnify
and hold harmless each Seller from and against, and to reimburse each Seller
with respect to, all liabilities, losses, costs and expenses, including, without
limitation, reasonable attorneys' fees and disbursements, asserted against or
incurred by such Seller by reason of, arising out of, or in connection with any
material breach of any representation or warranty contained in this Agreement
made by the Company or in any document or certificate delivered by the Company
pursuant to the provisions of this Agreement or in connection with the
transactions contemplated thereby.
12
4.2 Indemnity of the Sellers. Each of the Sellers agrees to jointly and
severally defend, indemnify and hold harmless the Company from and against, and
to reimburse the Company with respect to, all liabilities, losses, costs and
expenses, including, without limitation, reasonable attorneys' fees and
disbursements, asserted against or incurred by Company by reason of, arising out
of, or in connection with any material breach of any representation or warranty
contained in this Agreement and made by the Sellers or in any document or
certificate delivered by the Sellers pursuant to the provisions of this
Agreement or in connection with the transactions contemplated thereby.
4.3 Indemnification Procedure.
A party (an "Indemnified Party") seeking indemnification shall give
prompt notice to the other party (the "Indemnifying Party") of any claim for
indemnification arising under this Article 4. The Indemnifying Party shall have
the right to assume and to control the defense of any such claim with counsel
reasonably acceptable to such Indemnified Party, at the Indemnifying Party's own
cost and expense, including the cost and expense of reasonable attorneys' fees
and disbursements in connection with such defense, in which event the
Indemnifying Party shall not be obligated to pay the fees and disbursements of
separate counsel for such in such action. In the event, however, that such
Indemnified Party's legal counsel shall determine that defenses may be available
to such Indemnified Party that are different from or in addition to those
available to the Indemnifying Party, in that there could reasonably be expected
to be a conflict of interest if such Indemnifying Party and the Indemnified
Party have common counsel in any such proceeding, or if the Indemnified Party
has not assumed the defense of the action or proceedings, then such Indemnifying
Party may employ separate counsel to represent or defend such Indemnified Party,
and the Indemnifying Party shall pay the reasonable fees and disbursements of
counsel for such Indemnified Party. No settlement of any such claim or payment
in connection with any such settlement shall be made without the prior consent
of the Indemnifying Party which consent shall not be unreasonably withheld.
ARTICLE V
DELIVERIES
5.1 Items to be delivered to CARCORP prior to or at Closing by the
Company.
(a) articles of incorporation and amendments thereto, bylaws and amendments
thereto, certificate of good standing in the Company's state of
incorporation;
(b) all applicable schedules hereto;
(c) all minutes and resolutions of board of director and shareholder
meetings in possession of the Company;
(d) shareholder list;
(e) all financial statements and tax returns in possession of the Company;
(f) copies of all SEC filings; if any,
(g) resolution from the Company's current directors appointing designees of
CARCORP to the Company's Board of Directors;
(h) letters of resignation from the Company's current officers and
directors to be effective upon Closing and after the appointments
described in this section;
(i) certificates representing Companies post reverse split shares of the
Company's $0.001 par value common stock issued in the denominations as
set forth opposite their respective names on Schedule I to this
Agreement, duly authorized, validly issued, fully paid for and
non-assessable;
(j) copies of board, and if applicable, shareholder resolutions approving
this transaction and authorizing the issuances of the shares hereto;
(k) any other document reasonably requested by CARCORP that it deems
necessary for the consummation of this transaction
13
5.2 Items to be delivered to the Company prior to or at Closing by
CARCORP.
(a) articles of incorporation and amendments thereto, bylaws and amendments
thereto, certificate of good standing in CARCORP'S state of
incorporation;
(b) all applicable schedules hereto;
(c) all minutes and resolutions of board of director and shareholder
meetings in possession of the CARCORP;
(d) shareholder list;
(e) all financial statements and tax returns in possession of the CARCORP;
(f) resolution from CARCORP current directors appointing designees of
CARCORP to the Company's Board of Directors;
(g) certificates representing 100% of CARCORP'S common stock as set forth
opposite their respective names on Schedule I to this Agreement, duly
authorized, validly issued, fully paid for and non-assessable;
(h) copies of board, and if applicable, shareholder resolutions approving
this transaction and authorizing the issuances of the shares hereto;
(i) any other document reasonably requested by the Company that it deems
necessary for the consummation of this transaction
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions Precedent to Closing. The obligations of the Parties
under this Agreement shall be and are subject to fulfillment, prior to or at the
Closing, of each of the following conditions:
(a) That each of the representations and warranties of the Parties
contained herein shall be true and correct at the time of the
Closing date as if such representations and warranties were
made at such time;
(b) That the Parties shall have performed or complied with all
agreements, terms and conditions required by this Agreement to
be performed or complied with by them prior to or at the time
of the Closing;
(c) That the Parties shall be satisfied with the results of their
due diligence and review of the other books and records.
14
6.2 Conditions to Obligations of Sellers. The obligations of Seller
shall be subject to fulfillment prior to or at the Closing, of each of the
following conditions:
(a) Sellers shall have paid all of the costs and expenses of the
Company and themselves associated with the acquisition of the
CARCORP Shares by the Company;
(b) As of the Closing, the Company shall have no assets and no
liabilities whatsoever, contingent or otherwise.
6.3 Conditions to the Obligations of Company. The obligations of the
Company shall be subject to fulfillment prior to or at the Closing, of each of
the following conditions:
(1) Sellers agreeing to employ the Company certified public
accountants for one (1) year after closing and retain the
Transfer Agent of the Company for a like period..
(2) Sellers shall cooperate with the current Shareholders of the
Company in removing restrictions from current Shareholder
Shares when minimum holding periods have passed.
(3) CARCORP shall immediately be audited and show gross assets of
no less than Four Million Dollars ($4,000,000) and net assets
of no less than Two Million Dollars ($2,000,000).
ARTICLE VII
TERMINATION
7.1 Termination. This Agreement may be terminated at any time before
or, at Closing, by: (a) The mutual agreement of the Constituent Parties;
(b) Any party if:
(i) Any provision of this Agreement applicable to a party
shall be materially untrue or fail to be accomplished;
(ii) Any legal proceeding shall have been instituted or shall
be imminently threatening to delay, restrain or prevent the
consummation of this Agreement; or
(iii) The conditions precedence to Closing are not satisfied.
(c) Upon termination of this Agreement for any reason, in
accordance with the terms and conditions set forth in this
paragraph, each said party shall bear all costs and expenses
as each party has incurred and no party shall be liable to the
other.
ARTICLE VIII
MISCELLANEOUS
8.1 Survival of Representations, Warranties and Agreements. All
representations and warranties and statements made by a party to in
this Agreement or in any document or certificate delivered pursuant
hereto shall survive the Closing Date for so long as the applicable
statute of limitations shall remain open. Each of the parties hereto is
executing and carrying out the provisions of this agreement in reliance
upon the representations, warranties and covenants and agreements
contained in this agreement or at the closing of the transactions
herein provided for and not upon any investigation which it might have
made or any representations, warranty, agreement, promise or
information, written or oral, made by the other party or any other
person other than as specifically set forth herein.
8.2 Access to Books and Records. During the course of this transaction
through Closing, each party agrees to make available for inspection all
corporate books, records and assets, and otherwise afford to each other
and their respective representatives, reasonable access to all
documentation and other information concerning the business, financial
and legal conditions of each other for the purpose of conducting a due
diligence investigation thereof. Such due diligence investigation shall
be for the purpose of satisfying each party as to the business,
financial and legal condition of each other for the purpose of
determining the desirability of consummating the proposed transaction.
The Parties further agree to keep confidential and not use for their
own benefit, except in accordance with this Agreement any information
or documentation obtained in connection with any such investigation.
8.3 Further Assurances. If, at any time after the Closing, the parties
shall consider or be advised that any further deeds, assignments or
assurances in law or that any other things are necessary, desirable or
proper to complete the merger in accordance with the terms of this
agreement or to vest, perfect or confirm, of record or otherwise, the
title to any property or rights of the parties hereto, the Parties
agree that their proper officers and directors shall execute and
deliver all such proper deeds, assignments and assurances in law and do
all things necessary, desirable or proper to vest, perfect or confirm
title to such property or rights and otherwise to carry out the purpose
of this Agreement, and that the proper officers and directors the
parties are fully authorized to take any and all such action.
8.4 Notice. All communications, notices, requests, consents or demands
given or required under this Agreement shall be in writing and shall be
deemed to have been duly given when delivered to, or received by
prepaid registered or certified mail or recognized overnight courier
addressed to, or upon receipt of a facsimile sent to, the party for
whom intended, as follows, or to such other address or facsimile number
as may be furnished by such party by notice in the manner provided
herein:
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If to the Company:
Hydrox Sales Corp.
C/O Xxxxx X. Xxxxxxx, XX
0000-X Xxxxxxx XX
Xxxxx 000
Xxxxxxxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
If to the Sellers:
At the respective addresses of the Sellers set forth
on Schedule 1 hereto.
CARCORP, INC.
C/O Xxxxxxx X. XxXxx
0000 XX 00 Xxxxx, Xxxxx 000
Xx. Xxxxxxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
8.5 Entire Agreement. This Agreement, the Disclosure Schedule and any
instruments and agreements to be executed pursuant to this Agreement,
sets forth the entire understanding of the parties hereto with respect
to its subject matter, merges and supersedes all prior and
contemporaneous understandings with respect to its subject matter and
may not be waived or modified, in whole or in part, except by a writing
signed by each of the parties hereto. No waiver of any provision of
this Agreement in any instance shall be deemed to be a waiver of the
same or any other provision in any other instance. Failure of any party
to enforce any provision of this Agreement shall not be construed as a
waiver of its rights under such provision.
8.6 Successors and Assigns. This Agreement shall be binding upon,
enforceable against and inure to the benefit of, the parties hereto and
their respective heirs, administrators, executors, personal
representatives, successors and assigns, and nothing herein is intended
to confer any right, remedy or benefit upon any other person. This
Agreement may not be assigned by any party hereto except with the prior
written consent of the other parties, which consent shall not be
unreasonably withheld.
17
8.7 Governing Law. This Agreement shall in all respects be governed by
and construed in accordance with the laws of the State of Delaware
applicable to agreements made and fully to be performed in such state,
without giving effect to conflicts of law principles.
8.8 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
8.9 Construction. Headings contained in this Agreement are for
convenience only and shall not be used in the interpretation of this
Agreement. References herein to Articles, Sections and Exhibits are to
the articles, sections and exhibits, respectively, of this Agreement.
The Disclosure Schedule is hereby incorporated herein by reference and
made a part of this Agreement. As used herein, the singular includes
the plural, and the masculine, feminine and neuter gender each includes
the others where the context so indicates.
8.10 Severability. If any provision of this Agreement is held to be
invalid or unenforceable by a court of competent jurisdiction, this
Agreement shall be interpreted and enforceable as if such provision
were severed or limited, but only to the extent necessary to render
such provision and this Agreement enforceable.
IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement as of the date first set forth above.
HYDROX SALES CORP.
By: /S/ Xxxxx X. Xxxxxxx, XX
-------------------------------
XXXXX X. XXXXXXX, XX
Title: President
CARCORP USA,INC.
/s/ Xxxxxxx X. XxXxx
-------------------------------------
XXXXXXX X. XXXXX
Title: President
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Sellers:
----------------------------
----------------------------
----------------------------
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SCHEDULE I
Seller's Name and Address Number of CARCORP Shares Number of Company Shares
-------------------------------------------------
DISCLOSURE SCHEDULE
2.4 Financial Statements attached as Exhibit 2.4-EX
