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EXHIBIT 2.1
REORGANIZATION AGREEMENT
THIS REORGANIZATION AGREEMENT (the "Agreement") is made and entered
into by and among ENTER TECH CORPORATION, a publicly held Nevada corporation
(the "Corporation"); WAVEPOWER, INC, a Florida corporation (the "Subsidiary");
and XXXXXX X. XXXXXXXX, an individual ("Xxxxxxxx") (hereinafter referred to as
the "Subscribers"); and, the Corporation, the Subsidiary and the Subscribers
being collectively referred to as the "Parties" and each being sometimes
hereinafter generically referred to as a "Party").
PREAMBLE:
WHEREAS, the Subscribers own 5,000,000 shares of the Subsidiary's
common voting stock and no shares of the Subsidiary's preferred stock, such
securities being all of the authorized issued and outstanding shares of the
Subsidiary's capital stock (there being no other securities; the "Subsidiary
Stock"), a corporation engaged in the business more particularly described in
Exhibit 0.2 annexed hereto and made a part hereof; and
WHEREAS, the Subscribers desire to acquire 5,000,000 shares of the
Corporation's voting Common Stock, par value $0.001 per share (the "Stock"), in
consideration for their conveyance of shares of the Subsidiary Stock which will
constitute 80% of the Subsidiary's authorized, issued and outstanding
securities; provided that the transaction qualifies as a tax-free reorganization
under Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended:
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth, the Parties, intending to be legally bound, hereby agree as follows:
WITNESSETH:
ARTICLE ONE
EXCHANGE PROVISIONS
1.1 EXCHANGE
(a) Subject to the hereinafter described conditions and Performance
Criteria, the Corporation hereby agrees to exchange shares of its
voting Common Stock, $0.001 par value, in an amount equal to 5,000,000
shares, with the Subscribers for 4,000,000 voting shares of the
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Subsidiary Stock currently authorized, issued and outstanding
(consisting of 5,000,000 shares of voting Common Stock and no shares of
Preferred Stock of the Subsidiary) which, upon transfer, will
constitute 80% of the Subsidiary's reserved or issued and outstanding
securities.
(b) Concurrently with the execution of this Agreement and delivery of the
Subsidiary Stock to the Corporation, the Corporation shall cause its
transfer agent to issue the requisite number of shares of Stock to the
Subscribers, allocated to each Subscriber as follows:
Xxxxxx X. Xxxxxxxx 5,000,000 shares
(c) Performance Criteria: Nothing herein shall be construed to prevent the
Corporation from issuing the Subscribers additional shares or options
to purchase additional shares in connection with the Subsidiary having
obtained specified sums of gross income and net pre-tax profit under
the management of the Subscriber, which formula shall be agreed upon
and set forth in a formal employment agreement with the Subscriber.
1.2 EXEMPTION FROM REGISTRATION
(a) Each Subscriber hereby represents, warrants, covenants and acknowledges
that:
(1) (a) The Stock is being issued without registration under
the provisions of Section 5 of the Securities Act of
1933, as amended (the "Act") or of the applicable
securities regulations of the State of Nevada (the
"Nevada Securities Act") pursuant to exemptions
provided pursuant to Section 4(2) of the Act and
comparable provisions of the Nevada Securities Act;
(b) The Subscribers have represented and warranted that
any filings required in conjunction with the
transactions contemplated in this Agreement required
under the laws of the State of Nevada will be
promptly made.
(2) All of the Stock will bear legends restricting its transfer,
sale, conveyance or hypothecation unless such Stock is either
registered under the provisions of Section 5 of the Act and
under the Nevada Securities Act, or an opinion of legal
counsel, in form and substance satisfactory to legal counsel
to the Corporation is provided by the Subscribers to the
effect that such registration is not required as a result of
applicable exemptions therefrom;
(3) The Corporation's transfer agent shall be instructed not to
transfer any of the Stock unless the Corporation advises it
that such transfer is in compliance with all applicable laws
and has been approved by the Corporation;
(4) The Subscribers are acquiring the Stock for their own account,
for investment purposes only, and not with a view to further
sale or distribution; and
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(5) Each Subscriber or his or her advisors have examined the
Corporation's latest reports to the Securities and Exchange
Commission on Forms 10-KSB, 10-QSB and 8-K (collectively and
generically hereinafter referred to as "34 Act Reports"), have
been provided with access to all of the Corporation's books
and records and have questioned the Corporation's officers and
directors as to such matters involving the Corporation as the
Subscribers deemed appropriate.
(b) The Corporation hereby represents, warrants, covenants and acknowledges
that:
(1) The Stock is being transferred without registration under the
provisions of Section 5 of the Act or under the Nevada
Securities Act pursuant to the exemptions provided by Section
4(2) of the Act and comparable provisions of the Nevada
Securities Act;
(2) All of the Stock will bear legends restricting its transfer,
sale, conveyance or hypothecation within the jurisdictional
boundaries of the United States, unless such Stock is either
registered under the provisions of Section 5 of the Act and
under applicable state securities laws, or an opinion of legal
counsel is provided by the Corporation certifying that such
registration is not required as a result of applicable
exemptions therefrom;
(3) The Corporation shall not transfer any of the Subsidiary Stock
except in compliance with all applicable laws; and
(4) The Corporation is acquiring the Subsidiary Stock for its own
account, for investment purposes only and not with a view to
further sale or distribution.
1.3 LIABILITIES.
(a) Any liabilities in any manner encumbering or affecting the Subsidiary
or its assets are disclosed on Exhibit 1.3 annexed hereto and made a
part hereof (the "Disclosed Subsidiary Liabilities").
(b) The Subscribers hereby covenant and agree to indemnify and hold the
Corporation harmless from any liabilities of the Subsidiary or
affecting the Subsidiary's assets other than the Disclosed Subsidiary
Liabilities ("Undisclosed Subsidiary Liabilities") and the Corporation
may, in addition to all other legal or equitable remedies that may be
available, offset from any funds, securities or other things of value
due to the Subscribers or the Subscribers' affiliates (as that term is
most liberally defined for federal securities law purposes), such sums
as may be required to make the Corporation whole as a result of the
assertion of any Undisclosed Subsidiary Liability against the
Subsidiary or its assets.
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ARTICLE TWO
REPRESENTATIONS AND WARRANTIES
2.1 THE CORPORATION.
The Corporation hereby represents and warrants to each Subscriber, as a
material inducement to his, her or its entry into this Agreement, that, except
as disclosed in Exhibit 2.1 (the "Corporation's Warranty Exceptions") or in the
Corporation's 34 Act Reports filed prior to the date of this Agreement, the
following representations and warranties are, to the best of the Corporation's
knowledge, materially accurate:
(a) The Corporation owns or leases the assets described in the
Corporation's 34 Act Reports subject to such changes in inventory and
supplies as were required in the ordinary course of business;
(b) The Corporation has 100,000,000 shares of Common Stock $0.001 par
value, authorized, of which a total of 7,780,000 shares are currently
outstanding or reserved, there being no other outstanding securities of
any class or of any kind or character of the Corporation (except for
certain Preferred Stock described hereinafter), there being no
outstanding subscriptions, options, warrants or other agreements or
commitments obligating the Corporation to issue or sell any additional
shares of the Corporation's Stock or any options or rights with respect
thereto, or any securities convertible into any shares of Stock of any
class, except with reference to rights granted to the Corporation's
officers and certain officers of subsidiaries under employment
agreements for bonus awards based upon performance at year end. In
addition to the foregoing the Corporation shall have issued to its
existing management group as of the date of closing an additional
2,000,000 shares of Preferred Stock $0.001 par value, carrying voting
rights of 5 votes for each share of Preferred Stock and conversion
rights equal to 2 shares of Common Stock for each share of Preferred
Stock. To the extent all of such 2,000,000 shares of preferred stock
shall not have been issued by the Closing Date, notwithstanding
anything to the contrary herein or in any other agreements between the
Corporation and Subsidiary or Subscriber, the Corporation may issue the
balance of such 2,000,000 shares of preferred stock to its management.
An additional 3,000,000 shares of such Preferred Stock shall be subject
to options in favor of Xxxx Xxxxxxxx as described in his employment
agreement. Further, nothing herein shall preclude the Corporation from
issuing additional Common Stock or Options pursuant to a qualified
Employee Stock Option Plan, profit sharing plan or other bonus
arrangement as the parties may subsequently determine.
(c) The Corporation is not a party to any written or oral agreement which
grants an option or right of first refusal or other arrangement to
acquire any of its securities or to any agreement that affects the
voting rights of any of its securities, nor has the Corporation made
any commitment of any kind relating to the issuance of shares of any of
the Corporation's securities, whether by subscription, right of
conversion, option or
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otherwise; except that an employment agreement may be entered into with
the Subscriber which provides for issuance of stock and/or options
and/or warrants to the Subscriber.
(d) The Corporation is not a party to any agreement or understanding for
the sale or exchange of inventory or services for consideration other
than cash or at a discount in excess of normal discount for quantity or
cash payment;
(e) There are presently no contingent liabilities, factual circumstances,
threatened or pending litigation, contractually assumed obligations or
unasserted possible claims which might result in a material adverse
change in the future financial condition or operations of the
Corporation;
(f) The execution, delivery and performance of this Agreement and the
transactions contemplated hereby do not require the consent, authority
or approval of any other person or entity except such as have been
obtained;
(g) Except as otherwise disclosed herein no transactions have been entered
into either by or on behalf of the Corporation, other than in the
ordinary course of business nor have any acts been performed (including
within the definition of the term performed the failure to perform any
required acts) which would adversely affect the goodwill of the
Corporation;
(h) The entering into of this Agreement and the performance thereof has
been duly and validly authorized by all required corporate action;
(i) (1) The certified, consolidated financial statements of the
Corporation and its subsidiaries, including consolidated
statements of operations, stockholders investment and cash
flows and consolidated balance sheets for its last two fiscal
years, and unaudited consolidated financial statements for the
period from the last consolidated certified financial
statement until the end of the Corporation's fiscal quarter
closest to the date of this Agreement, all prepared in
accordance with generally accepted accounting principles,
consistently applied, are included in the Corporation's 34 Act
Reports (the "Corporation's Financial Statements").
(2) The Corporation's Financial Statements, as contained in its 34
Act Reports, fairly present the Corporation's financial
condition as of their respective dates and its results of
operations for their respective periods in accordance with
generally accepted accounting principles, consistently
applied;
(j) (1) Except as and to the extent reflected or reserved against in
the consolidated balance sheet of the Corporation and its
subsidiaries (the "Corporation's Interim Balance Sheet), as of
Dec. 31, 1999 the Corporation and its subsidiaries had no
liabilities or legal obligations of a nature required to be
reflected on a corporate balance sheet prepared in accordance
with generally accepted accounting principles or disclosed in
the notes thereto, whether absolute, accrued, contingent, or
otherwise and whether due or to become due (including, without
limitation,
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liabilities for taxes and interest, penalties, and other
charges payable with respect thereto in respect of or measured
by the income of the Corporation through such date, or arising
out of any transaction entered into prior thereto).
(2) There is no material reasonable basis for the assertion
against the Corporation or any of its subsidiaries of any
liability or obligation which is not fully reflected or
reserved against in the Corporation's various securities
filings or in the Corporation's Interim Balance Sheet or
disclosed in the notes thereto, except liabilities or
obligations incurred since Dec. 31, 1999 in the ordinary
course of Corporation business.
(k) Since the date of the Corporation's Financial Statements no events have
occurred nor have any facts been discovered which could have a material
adverse effect on the financial status, results of operations or
prospects of the Corporation;
(1) On the Closing Date of this Agreement, the Corporation's net
liabilities, excluding liabilities as a result of the
transaction contemplated hereby, shall not exceed those
disclosed in its annual financial report for the twelve month
period ended Dec. 31, 1999, by more than $25,000, and since
that date and such filing, there has not been any materially
adverse change in the financial condition, operations or
prospects of the Corporation;
(m) The Corporation and its subsidiaries do not have any liabilities which
constitute a lien or charge on their securities or assets;
(n) The Corporation and each of its subsidiaries has good, valid and
marketable title to all of its assets, subject to no mortgage, pledge,
lien, encumbrance, security interest or charge, except as disclosed in
the Corporation's Financial Statements, and can and will retain free
and clear title thereto after Closing on this transaction, free and
clear of any liens whatsoever;
(o) There are no claims, actions, suits, proceedings or investigations
pending or threatened against the Corporation or any of its
subsidiaries except as disclosed in the Corporation's securities
filings and the Corporation does not know of any basis for any such
claim, action, suit, proceeding or investigation;
(p) During the past 12 months neither the Corporation nor any of its
subsidiaries have disposed of any assets or contractual rights which
disposition, in the opinion of the Corporation's management, has had or
will in the future have a materially adverse impact on the business of
the Corporation and its subsidiaries taken as a whole;
(q) (1) The Corporation has filed with the appropriate governmental
agencies all tax returns and tax reports required to be filed;
all federal, state and local income, profits, franchise,
sales, use, occupation, property or other taxes due have been
fully paid, and, the Corporation is not a party to any action
or proceeding by any
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governmental authority for assessment or collection of taxes,
nor has any claim for assessments been asserted against the
Corporation or its assets, nor is the Corporation aware of any
facts or circumstances which could give rise to the assertion
of any viable, material claim; and
(2) All taxes that the Corporation is or was required to withhold
or collect have been duly withheld or collected and to the
extent required have been paid to the proper governmental
authority or person;
(r) The Corporation and each of its current, material operating
subsidiaries is, as of the date of this Agreement, a validly existing
corporation, organized pursuant to the laws of the their respective
jurisdictions of incorporation and qualified to do business in each
state where required to do so, with all legal and corporate authority
and power to conduct its business and to own its properties and
possesses all necessary permits and licenses required in connection
with the conduct of its business;
(s) The conduct of the Corporation's business is in material compliance
with applicable federal, state and local governmental statutes, rules,
regulations, ordinances and decrees;
(t) The execution and delivery of this Agreement, the consummation of the
transactions herein contemplated and compliance with the terms of this
Agreement will not conflict with or result in a breach in any of the
terms or provisions of, or constitute a default under, the certificate
of incorporation or bylaws of the Corporation; any indenture, contract,
other material agreement or instrument to which the Corporation or any
of its subsidiaries or their respective assets are bound; or, violate
any applicable regulation, judgment, order or decree of any
governmental instrumentality or court, domestic or foreign, having
jurisdiction over the Corporation, its securities, assets or
properties;
(u) This Agreement constitutes a binding obligation of the Corporation,
enforceable against it in accordance with the terms hereof, and has
been authorized by all required corporate action;
(v) (1) The Corporation has not experienced any material difficulties
with the management or recruiting of employees for its
business, nor does the Corporation have any reason to believe
that any such difficulties will arise in the future.
(2) None of the employees of the Corporation or its subsidiaries
are represented by labor unions, nor does the Corporation have
any reason to believe that any of its employees desire to be
represented by labor unions; and
(3) The Corporation has no reason to believe that any of its
employees have any potential claims against the Corporation,
its subsidiaries or their successors in interest based on
violations of equal employment laws, occupational health and
safety standards or any other legally protected rights;
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(w) (1) The Corporation has not generated any hazardous wastes or
engaged in activities which could be interpreted as potential
violations of laws, statutes, regulations ordinances or
judicial decrees in any manner regulating the generation or
disposal of hazardous waste.
(2) There are no on-site or off-site locations where the
Corporation or any of its subsidiaries has stored, disposed or
arranged for the disposal of chemicals, pollutants,
contaminants, wastes, toxic substances, petroleum or petroleum
products; there are no underground storage tanks located on
property owned or leased by the Corporation or any of its
subsidiaries; and, no polychlorinated hiphenyle are used or
stored at any property owned or leased by the Corporation or
any subsidiary;
(x) (1) The Corporation currently has in full force and effect
insurance policies of the kind and in coverage amounts
adequate to meet its current insurance requirements; and
(2) There are no impediments to obtaining hazard and liability
insurance covering all of the Corporation's assets and
operations, at commercially reasonable insurance rates, nor
does the Corporation have any basis for believing that such
insurance, at such rates, will not be obtainable by the
Corporation in the future;
(y) All of the information reflected in the foregoing representations and
warranties is complete and accurate, and does not omit any information
required to make the information provided non-misleading, accurate and
meaningful, in light of the nature of this transaction; and
(z) There is no material fact, development or threatened development that
materially adversely affects, or is likely to materially adversely
affect the business of the Corporation, which the Corporation has not
publicly disclosed or privately disclosed, either expressly or by
reasonable implication, to the Subscribers.
2.2 THE SUBSIDIARY.
The Subsidiary and each of the Subscribers, jointly and severally,
hereby represent and warrant to the Corporation, as a material inducement to the
Corporation's entry into this Agreement, that, except as specified on Exhibit
2.2 annexed hereto and made a part hereof (the "Subsidiary's Warranty
exceptions"), the following representations and warranties are, to the best of
their knowledge, materially accurate:
(a) (1) Exhibits 2.2(a) Subsidiary's Property Inventory (Real and
Personal), 2.2(a-1) Subsidiary Technology and Intellectual
Property, 2.2(a-2) Functional Specifications and 2.2(a-3)
Patents and Copyrights contain a complete and accurate list of
all real and all personal property owned by the Subsidiary,
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tangible, intangible and inchoate (the term Subsidiary in the
context of this Article being deemed to include all
subsidiaries of the Subsidiary and sibling corporation's of
the Subsidiary, the assets and operations of which are to be
included among the subjects of this Agreement), and the
principal terms of all patents, trademarks, copyrights, trade
names, domain names, service marks, other intellectual
property, franchises and licenses held by the Subsidiary for
use in manufacture and sale of computer related products,
including identification of the licensor, the formulae for
royalty or other payments thereunder, the expiration dates,
and other terms of any extensions or renewals permitted
thereunder. Except as disclosed on Exhibit 2.2 the Subsidiary
has good and defensible title to all of its material
properties and assets, including without limitation those
reflected in the Subsidiary's financial statements and those
used or located on property controlled by Subsidiary in its
business (except assets leased or sold in the ordinary course
of business), subject to no mortgage, pledge, lien, charge,
security interest, encumbrance or material restriction
(2) The operations of any affiliated entities which comprise the
total business of which the Subsidiary has been a part since
its inception have been consolidated as to ownership and
control under the Subsidiary, in a manner resulting in the
control and ownership thereof by the Subsidiary, and, as a
consequence of the transactions contemplated by this
Agreement, all such assets and operations shall become the
indirect property (through ownership of the Subsidiary's
capital stock) of the Corporation.
The Subsidiary owns or possesses legal rights to all patents,
trademarks, service marks, trade names, copyrights, trade secrets, and
other proprietary rights and processes necessary to complete its
business plan (together, the "Intellectual Property") without any known
infringement of the rights of others. There are no outstanding options,
licenses or agreements of any kind with respect to the Intellectual
Property of any other person or entity other than (i) such licenses or
agreements arising from the purchase of "off the shelf" or standard
products and (ii) licenses with customers for their use of Intellectual
Property entered into in the ordinary course of Subsidiary's business.
No employee of Subsidiary is obligated under any contract (including
licenses, covenants or commitments of any nature) other agreement, or
subject to any judgment, decree or order of any court or administrative
body, that would interfere with his duties to the Subsidiary or that
would conflict with the Subsidiary's business. The Subsidiary has taken
all reasonable and customary actions to protect and maintain the
confidentiality and secrecy of all Intellectual Property.
(b) (1) The Subsidiary has 20,000,000 shares of voting Common Stock,
$0.001 par value, authorized, 5,000,000 shares of which are
currently issued, and 5,000,000 shares of Preferred Stock,
$0.001 par value, no shares of which currently issued and
outstanding there being no other authorized or outstanding
securities of any class or of any kind or character of the
Subsidiary.
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(2) There are no outstanding subscriptions, options, warrants or
other agreements or commitments obligating the Subsidiary or
any Subscriber to issue or sell any additional shares of
Subsidiary Stock or any options or rights with respect
thereto, or any securities convertible into any shares of
Subsidiary Stock of any class;
(c) Upon conveyance of the Subsidiary Stock by the Subscribers, the
Corporation will become the owner of 80% of the Subsidiary's
authorized, issued and outstanding equity securities;
(d) As of the, Closing Date on this Agreement, the Subsidiary will not be a
party to any written or oral agreement which grants any option or right
of first refusal or other arrangement to acquire any of its securities
or to any agreement that will affect the voting rights of any of its
securities, nor have the Subscriber or the Subsidiary made any
commitment of any kind relating to the issuance of shares of any of the
Subsidiary's equity securities, whether by subscription, right of
conversion, option or otherwise;
(e) The Subsidiary is not a party to any agreement or understanding for the
sale or exchange of inventory or services for consideration other than
cash or at a discount in excess of normal discounts for quantity or
cash payment;
(f) There are presently no contingent liabilities, factual circumstances,
threatened or pending litigation, contractually assumed obligations or
unasserted possible claims known to the Subsidiary which might result
in a material adverse change in the future financial condition or
operations of the Subsidiary;
(g) The execution, delivery and performance of this Agreement and the
transactions contemplated hereby do not require the consent, authority
or approval of any other person or entity, except such as have been
obtained;
(h) No transactions have been entered into either by or on behalf of the
Subsidiary, other than in the ordinary course of business nor have any
acts been performed (including within the definition of the term
performed the failure to perform any required acts) which would
materially adversely affect the goodwill of the Subsidiary;
(i) The entering into of this Agreement and the performance required
hereunder has been duly and validly authorized by all required
corporate action;
(j) (1) Annexed hereto and made a part hereof as composite Exhibit
2.2(j) are: (a) an unaudited balance sheet of the Subsidiary
as of November 30, 1999, with the related statement of
operations and accumulated deficit and unaudited statements of
cash flows for the from inception to November 30, 1999 (such
balance sheets, statements of operations and other statements
are referred to herein as the "Subsidiary's Financial
Statements").
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(2) The Subsidiary's Financial Statements fairly present the
financial condition of the Subsidiary as of the dates thereof,
and the results of operations of the Subsidiary for the
periods indicated, in each case in accordance with generally
accepted accounting principles applied on a consistent basis;
(3) Except as and to the extent reflected or reserved against in
the Subsidiary's Balance Sheet, the Subsidiary had no
liabilities or legal obligations of a nature required to be
reflected on a corporate balance sheet prepared in accordance
with generally accepted accounting principles or disclosed in
the notes thereto, whether absolute, accrued, contingent, or
otherwise and whether due or to become due (including, without
limitation, liabilities for taxes and interest, penalties, and
other charges payable with respect thereto (a) in respect of
or measured by the income of the Subsidiary through such date,
or (b) arising out of any transaction entered into prior
thereto).
(4) There is no basis for the assertion against the Subsidiary of
any liability or obligation which is not fully reflected or
reserved against in the Subsidiary's Interim Balance Sheet or
disclosed in the notes thereto, except liabilities or
obligations incurred since November 30, 1999 in the ordinary
course of the Subsidiary's business consistent with its past
practice.
(k) Except as reflected in the Subsidiary's Financial Statements, since
Nov. 30, 1999 the Subsidiary has not suffered any material adverse
change in its financial condition, assets, liabilities or business; or
suffered any material casualty loss (whether or not insured);
(1) On the Closing Date of this Agreement, the Subsidiary's aggregate
liabilities, whether accrued or inchoate, shall not exceed $25,000
(including liabilities owed to the Subscribers) and such liabilities
shall not require any payments, other than as specifically disclosed in
Exhibit 1.3, and the Subsidiary's unaudited Financial Statement shall
reflect paid-in capital of not less than $25,000.
(m) None of the properties or assets used in the business of the Subsidiary
are subject to any mortgage, pledge, lien, security interest,
conditional sale agreement, encumbrance, or charge of any kind, except
as disclosed in Exhibit 1.3;
(n) (1) There are no claims, actions, suits, proceedings or
investigations pending or threatened by or against the
Subsidiary and the Subsidiary does not know of any basis for
any such claim, action, suit, proceeding, or investigation;
(2) The Subsidiary is not subject to any liabilities or potential
liabilities that will subject the Corporation, or its
affiliates, stockholders, officers, directors, agents or
advisors to any claims or liabilities predicated or emanating
from product liability, torts or violations of law
attributable to the Subsidiary or for which the Subsidiary
assumed responsibility or which can in any manner be imputed
to the Subsidiary or its assets;
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(o) The Subsidiary has no liabilities involving expenses attributable
directly, indirectly or incidentally to any litigation;
(p) Except as otherwise disclosed in the Subsidiary's Financial Statements
the Subsidiary has good, valid, and marketable title to all its
properties, licenses, and assets, real, personal and mixed, tangible
and intangible;
(q) (1) Since its inception the Subsidiary has not disposed of any
assets or contractual rights which disposition has had or will
in the future have a materially adverse effect on the business
of the Subsidiary and no such disposition will be made by the
Subsidiary outside the ordinary course of business during the
interim between execution of this Agreement and the Closing,
unless this Agreement shall have been terminated, without the
prior written consent of the Corporation;
(2) Neither the Subsidiary nor its subsidiaries, if any, have,
during the six months proceeding the date of this Agreement,
distributed any unusual amounts of income to their
stockholders, agents, employees or any related parties.
(r) The Subsidiary has filed with the appropriate governmental agencies all
tax returns and tax reports required to be filed; all United States,
state and local income, profits, franchise, sales, use, occupation,
property or other taxes due have been fully paid, except as listed on
Exhibit 1.3; and, the Subsidiary is not a party to any action or
proceeding by any governmental authority for assessment or collection
of taxes, nor has any claim for assessments been asserted against the
Subsidiary or its assets;
(s) The Subsidiary is, as of the date of this Agreement, a validly existing
corporation, organized pursuant to the laws of the State of Florida
(and its subsidiaries and sibling corporations are validly organized
and in good standing under their laws of their corporate domiciles),
with all legal and corporate authority and power to conduct its
business and to own its properties and possesses all necessary permits
and licenses required in connection with the conduct of its business;
(t) The conduct of the Subsidiary's business is in material compliance with
all applicable federal, state and local governmental statutes, rules,
regulations, ordinances and decrees;
(u) The execution and delivery of this Agreement, the consummation of the
transactions herein contemplated and compliance with the terms of this
Agreement will not conflict with or result in a breach in any of the
terms or provisions of, or constitute a default under, the Articles of
Incorporation or By-Laws of the Subsidiary; any indenture, other
material agreement or instrument to which the Subsidiary or its
stockholders are a party or by which the Subsidiary or its assets are
bound; or, any applicable regulation, judgment, order or decree of any
governmental instrumentality or court, domestic or foreign, having
jurisdiction over the Subsidiary, its securities or its properties;
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(v) This Agreement constitutes the valid and binding agreement of the
Subsidiary and is enforceable in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, reorganization,
moratorium or similar laws affecting the enforcement of creditors'
rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law, no such
proceeding being anticipated or under consideration);
(w) (1) The Subsidiary has not experienced any material difficulties
with the management or recruiting of employees for its
business, nor does the Subsidiary have any reason to believe
that any such difficulties will arise in the future.
(2) Employees of the Subsidiary are not represented by labor
unions; and
(3) The Subsidiary has no reason to believe that any of its
employees have any potential claims against the Subsidiary or
its successors in interest based on violations of equal
employment laws, occupational health and safety standards or
any other legally protected rights;
(x) (1) The Subsidiary has no reason to believe that it has generated
any hazardous wastes or engaged in activities which violate or
could be interpreted as violating any laws, statutes,
regulations ordinances or judicial decrees in any manner
regulating the generation or disposal of hazardous waste.
(2) There are no on-site or off-site locations where the
Subsidiary has stored, disposed or arranged for the disposal
of chemicals, pollutants, contaminants, wastes, toxic
substances, petroleum or petroleum products; there are no
underground storage tanks located on property owned or leased
by the Subsidiary; and, no polychlorinated hiphenyle are used
or stored at any property owned or leased by the Subsidiary;
(y) All of the information reflected in the foregoing representations and
warranties is complete and accurate, and does not omit any information
required to make the information provided non-misleading, accurate and
meaningful, in light of the nature of this transaction.
There is no material fact, development or threatened development that
materially adversely affects, or is likely to materially adversely
affect the business of the Subsidiary, which the Subscriber has not
disclosed, either expressly or by reasonable implication, to the
Corporation.
(z) Exhibit 2.2 (aa) contains a list and description of material contracts
to which the Subsidiary is a party, whether written or oral. The
Subsidiary has not breached, or committed any default under, any
material contract to which it is a party. To the best of the knowledge
of the Subsidiary and the Subscriber, no other person has violated or
breached or committed any default under any material contract.
Furthermore, to the best of the Subsidiary and Subscriber's knowledge,
no event has occurred and no circumstance or condition exists that
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(with or without notice or lapse of time) will, or could be reasonably
expected to (a) result in a violation or breach of any of the
provisions of any such material contract (b) give any person the right
to declare a default or exercise any remedy under any material contract
(c) give any person the right to accelerate the maturity or performance
of any material contract or (d) give any person the right to cancel,
terminate or modify any such material contract. Subsidiary has not
waived any of its material rights under any material contract.
(aa) Exhibit 2.2 (bb) contains a list of each Employee, whether full or part
time and whether currently being paid or not, of Subsidiary, such
employees' beginning date, salary, position, description of material
duties, credentials, including educational background and experience, a
description of fringe benefits applicable to such employee, a copy of
written employment agreements and a description of any verbal
employment agreements. Subsidiary and Subscriber are not aware of any
verbal employment agreements. Subsidiary and Subscriber are not aware
of any circumstances or conditions which could lead to the loss of any
such employees. Such Exhibit also sets forth each salary, bonus,
deferred compensation, incentive compensation, medial termination pay
and/or other plan, program or agreement (collectively, the "Plan")
sponsored, maintained or contributed to or required to be contributed
to by Subsidiary for the benefit of any employee. Subsidiary is in
compliance in all medical respects with all presently applicable
provisions of the Employee Retirement Income Security Act of 1974, as
amended. Such Exhibit also contains a separate list, identified as
such, of employees Subsidiary anticipates hiring and their anticipated
start date and terms of employment. No employee or prospective employee
has been promised any compensation, raises, stock, options, fringe
benefits or other remuneration except as provided on Exhibit 2.2 (bb).
(bb) Subsidiary has in place procedures to insure that on a regular basis
software code and other Intellectual Property prepared by its employees
is available to and usable by the Subsidiary and is in accessible form
(i.e. such information is not contained in encrypted files, stored
offsite or otherwise under the control of any employee without access
thereto by the Subsidiary). All such procedures are described in detail
in Exhibit 2.2(cc). The Subsidiary has the legal right to all software
and other Intellectual Property produced by the employees in
connections with, relating to or arising out of any project or matter
of the Subsidiary. Each employee is bound to uphold the confidentiality
of any Intellectual Property of the Subsidiary and, is legally
prohibited from utilizing any of such Intellectual Property for any
other employer, person, firm, entity, venture or endeavor of any kind
or nature whatsoever.
(cc) Subsidiary is the lessee of a lease for its business premises, the
material terms and conditions of which (description and location of
premises, square footage rent, expense payments, term, options to renew
and to lease additional space, rent escalation factors and other
important matters) are set forth on Exhibit 2.2 (dd). A true copy of
such lease, and any amendments thereto, has been delivered to the
Company. Such lease is in full force and effect, there have been no
uncured defaults thereunder and there are no events which, upon lapse
of time or the giving of notice, would constitute a default by either
party to such lease.
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2.3 THE SUBSCRIBERS.
Each Subscriber hereby represents and warrants to the Corporation, as a
material inducement to the Corporation's entry into this Agreement, that, except
as specified on Exhibit 2.3 annexed hereto and made a part hereof (the
"Subscribers' Warranty exceptions"), the following representations and
warranties are, to the best of the Subscribers' knowledge, materially accurate;
(a) Each Subscriber will, on the Closing Date, own the Subsidiary stock,
registered in his her or its name and subject to no liens, pledges or
encumbrances, and will convey good title thereto to the Corporation,
there being no outstanding subscriptions, options, warrants or other
agreements or commitments obligating the Subscriber to sell any of his
shares of the Subsidiary's Stock or any options or rights with respect
thereto;
(c) All of the information reflected in the foregoing representations and
warranties and, the representations and warranties made by the
Subsidiary, are complete and accurate, and do not omit any information
required to make the information provided non-misleading, accurate and
meaningful, in light of the nature of this transaction;
(d) (1) Annexed hereto and made a part hereof as composite Exhibit
2.3(c) are completed officers and directors questionnaires
pertaining to each Subscriber and company questionnaires
pertaining to the Subsidiary, which each Subscriber has either
completed or reviewed, on forms provided by the Corporation's
legal counsel (collectively hereinafter referred to as the
Questionnaires"); and
(2) The Questionnaires have been completed and answered in an
accurate and complete fashion, and do not fail to disclose any
information necessary to render the information provided, not
misleading.
(d) Annexed hereto and made a part hereof as Exhibit 2.3(d) is a complete,
accurate and not misleading, narrative disclosure document providing
the information called for by Securities and Exchange Commission
Regulation SB with reference to the Subsidiary, its operations and
background.
ARTICLE THREE
CONDITIONS
3.1 CONDITION SUBSEQUENT
(a) The obligations of the Parties are subject to the condition subsequent
that the Subsidiary's Financial Statements comply or can within the 90
day period following the Closing on this Agreement be made to comply
with the requirements of Regulation S-B promulgated under the
Securities Exchange Act of 1934.
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(b) In the event that the Securities and Exchange Commission advises the
Corporation that the financial statements of the Subsidiary (excluding
pro forma financial statements) filed with the Form 8-K of the
Corporation relating to the acquisition of the Subsidiary, or an
amendment thereto, fail to comply in a material respect with generally
accepted accounting principals or the requirements of Regulation S-B
and the Securities and Exchange Commission is unwilling to waive such
deficiencies, the Corporation and the Subsidiary will use their best
efforts to correct the subject financial statements in such manner as
will satisfy the Securities and Exchange Commission's objections
thereto or cause the Securities and Exchange Commission to withdraw its
objections; provided that, if such corrections are not affected or such
objections withdrawn within three months after any deficiencies are
raised by the Securities and Exchange Commission, the Corporation may
elect to rescind this Agreement, ab initio, unless the Parties can, at
such time, agree on a restructuring of this transaction in a manner
meeting the applicable reporting requirements imposed by applicable
United States and state securities law requirements.
3.2 CONDITIONS TO THE CORPORATION'S OBLIGATIONS
The obligations of the Corporation under this Agreement are subject to
the Subsidiary's (the term Subsidiary in the context of this Article being
deemed to include all subsidiaries of the Subsidiary and sibling corporations of
the Subsidiary, the assets and operations of which are to be included among the
subjects of this Agreement) and Subscribers' satisfaction, or the written waiver
by the Corporation, of the following conditions prior to Closing (the
"Conditions Precedent"):
(a) That all covenants, agreements, actions, proceedings, instruments and
documents required to be carried out or delivered by a Subscriber or
the Subsidiary pursuant to this Agreement shall have been performed,
complied with or delivered to the Corporation in accordance with the
terms thereof.
(b) That the warranties and representations made by the Subscribers and the
Subsidiary in this Agreement shall be true and correct in all material
respects on and as of the date of Closing and shall be deemed to be
made on and as of such date.
(c) That there are no material violations of any laws, statutes,
ordinances, orders, regulations or requirements of any governmental
authority affecting the Subsidiary or its assets, nor will there be any
at the time of Closing.
(d) There is no action, suit or proceeding pending or threatened against or
affecting the Subsidiary or its assets in any court or before or by any
federal, provincial, state, county or municipal department, commission,
board, bureau, agency or other governmental instrumentality which would
affect the Subscriber's or the Subsidiary's ability to perform
hereunder or which could affect the business of the Subsidiary in a
materially adverse manner.
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(e) That the Subsidiary is in material compliance with all applicable
federal, state or local statutes, regulations, rules or ordinances
applicable to the it, its securities or assets and that the
transactions contemplated hereby will not result in any violations
thereof.
(f) That the issuance of the Stock and the transfer of the Subsidiary Stock
complies with the requirements for exemption from registration under
the statutes, regulations and rules applicable thereto and of
comparable provisions of the laws of the Corporation's and the
Subscriber's state of domicile.
(g) That all licenses, patents and intellectual property rights heretofore
held or owned by the Subsidiary continue to be in good standing and not
subject to legal or other challenges, and that after Closing on this
Agreement, they will continue to remain in full force, effect and
validity, and that the Subsidiary shall have had properly assigned to
it all patents, copyrights, trademarks, trade secrets, processes,
concepts, plans, working drawings and other intellectual property
rights of any nature developed by Xxxx X. Xxxxxxxx in connection with
the business of Subsidiary.
(h) That the operations of any affiliated entities which comprise the total
business of which the Subsidiary has been a part since its inception
have been consolidated as to ownership and control under the
Subsidiary, in a manner resulting in the control and ownership thereof
by the Subsidiary, and, that as a consequence of the transactions
contemplated by this Agreement, all such assets and operations shall
become the indirect property (through ownership of the Subsidiary's
capital stock) of the Corporation.
(i) That the Subsidiary and Subscriber shall have furnished to the
Corporation such books, records, minutes, documentation, information,
and data as the Corporation may have requested in order to complete its
due diligence investigation prior to closing and shall have permitted
the Corporation and its agents to inspect the business of the
Subsidiary and investigate its Intellectual Property.
3.3 CONDITIONS TO THE SUBSCRIBERS' OBLIGATIONS
The obligations of the Subscribers under this Agreement are subject to
the Subscriber's satisfaction, or the written waiver thereof by the Subscribers,
of the following conditions prior to Closing (the 'Subscribers' Conditions
Precedent"):
(a) That all covenants, agreements, actions, proceedings, instruments and
documents required to be carried out or delivered by the Corporation
pursuant to this Agreement shall have been performed, complied with or
delivered to the Subscriber in accordance with the terms thereof.
(b) That the warranties and representations made by the Corporation in this
Agreement shall be true and correct in all material respects on and as
of the date of Closing and shall be deemed to be made on and as of such
date.
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(c) That the issuance of the Stock and the transfer of the Subsidiary Stock
complies with the requirements for exemption from registration under
the statutes, regulations and rules applicable thereto, including,
without limitation, the provisions of Sections 4(l), 4(2) or 4(6) of
the Securities Act of 1933, as amended, of Regulation D promulgated
thereunder, and of comparable provisions of the laws of the
Corporation's and the Subscriber's state of domicile.
(d) That the Corporation shall have furnished to Subscriber such books,
records, minutes and other documents as it may reasonably request and
require to complete its due diligence investigation prior to closing.
(e) That the Corporation and the holders of 5,315,000 shares currently
owned and controlled by the current officers, directors, affiliates and
founders of the Corporation shall have entered into and executed a
Shareholder's Agreement with Subscriber providing (i) for continuity of
business operations; (ii) for the expansion of the current board of
directors to seven members, an additional two members of which shall be
appointed by Subscriber for three years, and (iii) that an affirmative
vote of 66 2/3% of all directors shall be required to dilute or reverse
the existing capital structure without equivalent consideration;
acquire subsidiaries in a manner which is unfairly dilutive to any
Corporation shareholders; or otherwise take action which materially
changes the existing corporate capital structure without equivalent
consideration or fundamental mission; all for a period of three years
from closing. A similar shareholders agreement shall have been entered
into with Subscriber re: the Subsidiary on the same terms.
Notwithstanding the foregoing, however, any supermajority provisions
contained in such shareholders agreements shall apply only during those
periods of time when Subsidiary's business performance and pre-tax
profits shall equal or better the performance schedule and standards
set forth in Exhibit 3.3(e).
ARTICLE FOUR
CLOSING
4.1 CLOSING DATE.
The effective date of the Closing on this transaction shall be April
19, 2000. Closing will be held by telephone conference arranged by the
Corporation at a mutually agreeable time but may be adjourned and reconvened at
a physical location, if required, at the request of either Party. If closing at
a physical location is required, it shall take place at the Corporation's
offices in Delray Beach, Florida, during normal business hours, at a mutually
convenient time within ten business days following the adjourned teleconference
closing session.
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4.2 ITEMS DELIVERED AT CLOSING BY THE SUBSIDIARY AND THE SUBSCRIBER.
Prior to the Closing, the Subscribers will deliver the following items
to the Corporation, which shall be held in escrow until completion of the
Closing
(a) Certificates for all of the Subsidiary Stock, duly endorsed or with
stock power attached with appropriate signature guarantees, in form and
substance adequate to permit immediate transfer thereof to the
Corporation;
(b) A certification from an officer of the Subsidiary to the effect that
after consulting with counsel to the Subsidiary or other legal counsel
acceptable to the Corporation, he or they reasonably believe that:
(1) The issuance of the Stock to the Subscribers will not require
any actions in the Subscriber's state of domicile, other than
such actions as have been taken no later than the fifth day
prior to Closing, in order to comply with such state's laws,
regulations and rules governing private placements, and that
such issuance will not violate any such laws, regulations or
rules; and
(2) The transfer of the Subsidiary Stock as contemplated by this
Agreement meets the requirements of the exemption from
registration requirements provided by Sections 4(l), 4(2) or
4(6) of the Securities Act of 1933, as amended.
(c) A certification from the Subsidiary's chief financial officer
indicating that, after a review of the Subsidiary's books and records
from the date of the Subsidiary's latest financial statements annexed
hereto until the fifth day prior to Closing, such review did not give
such officer cause to believe that any materially detrimental matters
have occurred, or that there have been any materially detrimental
changes in the financial condition of the Subsidiary, other than as
disclosed in this Agreement.
(d) An investment letter, in the form annexed hereto as Exhibit 4.2(d).
(e) An opinion letter, from Subsidiary's counsel, to the effect that no
person or entity has any prior legal right to acquire any portion of
the Subsidiary's assets, business or shares of stock pursuant to or
arising out of a certain Reorganization Agreement among Novus
Environmental, Inc., a Delaware Corporation, WavePower, Inc., a Florida
corporation and Xxxxxx X. Xxxxxxxx dated on or about January 20, 2000.
4.3 ITEMS DELIVERED AT CLOSING BY THE CORPORATION.
Prior to the Closing, the Corporation will deliver the following to the
Subscriber, which shall be held in escrow until completion of the Closing:
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(a) Certificates for the Stock, in denominations of 25,000 shares or
greater.
(b) An opinion from the Corporation's legal counsel that the issuance of
the Stock as contemplated by this Agreement will meet the requirements
of the exemption from registration requirements provided by Section 4.2
of the Securities Act of 1933, as amended.
(c) A certification from the Corporation's chief financial officer
indicating that, after a review of the Corporation's books and records
from the date of the Corporation's latest financial statements annexed
hereto until the fifth day prior to Closing, such review did not give
such officer cause to believe that any materially detrimental matters
have occurred, or that there have been any materially detrimental
changes in the financial condition of the Corporation, other than as
disclosed in this Agreement.
4.4 CLOSING COSTS.
Except as expressly provided in this Agreement, each Party shall pay
their own Closing costs. This extends to all attorney's fees incurred prior to
closing, however all post closing attorneys fees shall be paid by the
Corporation insofar as any such fees have been incurred on the business of the
Corporation or the Subsidiary, however not on behalf of the Subscriber.
ARTICLE FIVE
BROKER
5.1 THE SUBSCRIBER.
The Subscribers and the Subsidiary represent and warrant to the
Corporation that it will not be subject to and will indemnify and hold it
harmless against any claims of brokers, "finders", or other intermediaries for
commissions or other compensation in connection with this Agreement and the
consummation of the transactions contemplated hereby.
5.2 THE CORPORATION.
The Corporation hereby represents and warrants that it has dealt with
no brokers, "finders", or other intermediaries in conjunction with his
contemplated purchase of the Subsidiary.
ARTICLE SIX
COVENANTS
6.1 MAINTENANCE OF SUBSIDIARY:
Except as approved by the Corporation's Chief Executive Officer:
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(b) The Subsidiary shall not sell or transfer any of the its material
assets, real, personal, tangible or intangible, other than in the
ordinary course of business, without the Corporation's explicit prior
written consent.
(c) The Subsidiary will keep all of its material assets in good standing,
order and repair and shall cause any and all necessary remedies and
repairs thereto to be made on or before the Closing.
(d) The Subsidiary shall preserve all of its contractual rights in good
standing.
(e) The operations of any affiliated entities which comprise the total
business of which the Subsidiary has been a part since its inception
will be consolidated as to ownership and control under the Subsidiary,
in a manner resulting in the control and ownership thereof by the
Subsidiary, and, as a consequence of the transactions contemplated by
this Agreement, all such assets and operations shall become the
indirect property (through ownership of the Subsidiary's capital stock)
of the Corporation.
6.2 COOPERATION.
The Corporation and the Subsidiary and their agents shall have
reasonable access to the premises and assets of the other for the purpose of
familiarizing themselves with the operations of each other's business. The
Subsidiary and the Corporation agree to cooperate with each other and to render
a reasonable amount of assistance in the orderly integration of the business of
the Subsidiary into the Corporation's operations and the familiarization of the
Parties therewith.
6.3 POST CLOSING LEGAL ACTIVITIES
(a) The Corporation's general counsel will prepare and file all required
reports of the transactions contemplated by this Agreement with the
Securities and Exchange Commission, such reports to include a detailed
report of special event on Form 8-K, any required proxy materials, and
such other matters as, in the opinion of management, may be required.
(b) The Parties hereby covenant and agree to fully cooperate with the
Corporation's general counsel in the timely preparation and filing of
all such materials and reports, which are due on or before the tenth
day following Closing.
6.4 EMPLOYMENT OF SUBSCRIBERS
(a) The Subscribers hereby covenant and agree that Xxxxxx X. Xxxxxxxx shall
remain in the employ of the Subsidiary, as its chief executive officer
and President, and that he shall remain as Chairman of the Board of
Directors of the Subsidiary for a period of at least 36 months
following Closing on this Agreement, and that he shall use his best
efforts and
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diligence to assure the success of the Subsidiary's business, and that
he shall serve in an official capacity with the Corporation if so
requested and appropriately compensated.
(b) The Parties hereby acknowledge that Xxxxxx X. Xxxxxxxx, who serves as
an executive officer of the Subsidiary shall be paid annual
compensation for their services to the Corporation and its
subsidiaries, including the Subsidiary, in a sum to be agreed upon for
his services to both the Corporation and the Subsidiary.
(c) The Parties hereby agree that Xxxxxx X. Xxxxxxxx shall execute an
Employment Agreement in form and substance as set forth in Exhibit
6.4(c) attached hereto.
6.5 SECONDARY OFFERING
The Corporation hereby covenants and agrees to use its best efforts to
effect a secondary offering of its securities of at least $5,000,000 within 180
days following the Closing on this Agreement, and to loan a portion of the
proceeds to the Subsidiary on a subordinated, long term basis.
6.6 PRIVATE PLACEMENT
Upon closing of this Agreement the Subscriber and the Corporation agree
to utilize their respective resources on a "best efforts" basis to assist the
Corporation to obtain an additional paid in capital of at least $2,000,000, for
a share price to be established by mutual agreement. To the extent funds raised
by the Corporation pursuant to a secondary offering of its securities exceeds $5
million, the Corporation's obligations under this paragraph shall be deemed
satisfied.
ARTICLE SEVEN
MISCELLANEOUS
7.1 AMENDMENT.
No modification, waiver, amendment, discharge or change of this
Agreement shall be valid unless the same is evinced by a written instrument,
subscribed by the Party against which such modification, waiver, amendment,
discharge or change is sought.
7.2 NOTICE.
All notices, demands or other communications given hereunder shall be
in writing and shall be deemed to have been duly given on the first business day
after mailing by registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
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To the Corporation:
Enter Tech Corporation
Attention: Xxx Xxxxxxx, President
000 X. 0xx Xxxxxx
Xxxxxxxx, XX. 00000
To the Subsidiary:
WavePower, Inc.
Attention: Xxxxxx X Xxxxxxxx, President
00 X.X. 0xx Xxx. Xxxxxx Xxxxx, Xx. 00000
or such other address or to such other person as any Party shall designate to
the other for such purpose in the manner hereinafter set forth. Copies of any
notice shall also be sent to Xxx X. Xxxxxx, Xx. Esq., General Counsel to the
Subsidiary, by facsimile to (000) 000-0000.
7.3 ENTIRE AGREEMENT.
This instrument, together with the instruments referred to herein,
contain all of the understandings and agreements of the Parties with respect to
the subject matter discussed herein. All prior agreements whether written or
oral are merged herein and shall be of no force or effect.
7.4 SURVIVAL.
The several representations, warranties and covenants of the Parties
contained herein shall survive the execution hereof and Closing hereon and shall
be effective regardless of any investigation that may have been made or may be
made by or on behalf of any Party.
7.5 SEVERABILITY.
If any provision or any portion of any provision of this Agreement,
other than one of the conditions precedent or subsequent, or the application of
such provision or any portion thereof to any person or circumstance shall be
held invalid or unenforceable, the remaining portions of such provision and the
remaining provisions of this Agreement or the application of such provision or
portion of such provision as is held invalid or unenforceable to persons or
circumstances other than those to which it is held invalid or unenforceable,
shall not be affected thereby.
7.6 GOVERNING LAW.
This Agreement shall be construed in accordance with the laws of the
State of Colorado and any legal proceedings pertaining directly or indirectly to
the rights or obligations of the Parties hereunder shall, to the extent legally
permitted, be held in a Court of competent
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jurisdiction in the Larimer County, City of Loveland, State of Colorado, and
shall be subject to the mediation procedures of such Court.
7.7 INDEMNIFICATION.
Each Party hereby irrevocably agrees to indemnify and hold the other
Parties harmless from any and all liabilities and damages (including legal or
other expenses incidental thereto), contingent, current, or inchoate to which
they or any one of them may become subject as a direct, indirect or incidental
consequence of any action by the indemnifying Party or as a consequence of the
failure of the indemnifying Party to act, whether pursuant to requirements of
this Agreement or otherwise. Such indemnification shall include, but shall not
be limited to, loss, damage or expense, including reasonable attorneys fees
relating to or arising out of the failure or inaccuracy of any representation,
warranty or covenant made by such party pursuant to such agreement. In the event
it becomes necessary to enforce this indemnity through an attorney, with or
without litigation, the successful Party shall be entitled to recover from the
indemnifying Party, all costs incurred including reasonable attorneys' fees
throughout any negotiations, trials or appeals, whether or not any suit is
instituted.
7.8 LITIGATION.
(a) In any action between the Parties to enforce any of the terms of this
Agreement or any other matter arising from this Agreement, the
prevailing Party shall be entitled to recover its costs and expenses,
including reasonable attorneys' fees up to and including all
negotiations, trials and appeals, whether or not litigation is
initiated.
(b) In the event of any dispute arising under this Agreement, or the
negotiation thereof or inducements to enter into the Agreement, the
dispute shall, at the request of any Party, be exclusively resolved
through the following procedures:
(1) First, the issue shall be submitted to mediation before a
mediation service in Denver, Colorado to be selected by lot from
four alternatives to be provided two by each Party. The mediation
efforts shall be concluded within ten business days after their
initiation unless the Parties unanimously agree to an extended
mediation period;
(2) In the event that mediation does not lead to a resolution of the
dispute then at the request of any Party, the Parties shall
submit the dispute to binding arbitration before an arbitration
service located in Denver, Colorado to be selected by lot, from
four alternatives to be provided; and
(3) Expenses of mediation shall be borne by the Subsidiary, if
successful. Expenses of mediation, if unsuccessful and of
arbitration shall be borne by the Party or Parties against whom
the arbitration decision is rendered. If the terms of the
arbitral award do not establish a prevailing Party, then the
expenses of unsuccessful mediation and arbitration shall be borne
equally by the Parties.
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7.9 BENEFIT OF AGREEMENT.
The terms and provisions of this Agreement shall be binding upon and
inure to the benefit of the Parties, their successors, assigns, personal
representatives, estate, heirs and legatees.
7.10 CAPTIONS.
The captions in this Agreement are for convenience and reference only
and in no way define, describe, extend or limit the scope of this Agreement or
the intent of any provisions hereof.
7.11 NUMBER AND GENDER.
All pronouns and any variations thereof shall be deemed to refer to the
masculine, feminine, neuter, singular or plural, as the identity of the Party or
Parties, or their personal representatives, successors and assigns may require.
7.12 FURTHER ASSURANCES.
The Parties agree to do, execute, acknowledge and deliver or cause to
be done, executed, acknowledged or delivered and to perform all such acts and
deliver all such deeds, assignments, transfers, conveyances, powers of attorney,
assurances, stock certificates and other documents, as may, from time to time
hereafter, be required herein to effect the intent and purpose of this
Agreement.
7.13 STATUS.
Nothing in this Agreement shall be construed or shall constitute a
partnership, joint venture, employer-employee relationship, lessor-lessee
relationship, or principal-agent relationship; rather, the relationships
established hereby are those of purchaser and seller.
7.14 COUNTERPARTS.
This Agreement may be executed in any number of counterparts. All
executed counterparts shall constitute one Agreement notwithstanding that all
signatories are not signatories to the original or the same counterpart.
Execution by exchange of facsimile transmission shall be deemed legally
sufficient to bind the signatory; however, the Parties shall, for aesthetic
purposes, prepare a fully executed original version of this Agreement, which
shall be the document filed with the Securities and Exchange Commission.
7.15 LICENSE.
This Agreement is the property of Xxx X. Xxxxxx, Xx., Esq. for use
hereof by the Parties is authorized hereby solely for purposes of this
transaction and, the use of this form of agreement or of any derivation thereof
without Xxx X. Xxxxxx, Xx. Esq.'s prior written permission is prohibited.
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7.16 EXHIBIT INDEX.
Exhibit Description
------- -----------
0.2 Business Description
1.3 Disclosed Subsidiary Liabilities
2.1 Corporation's Warranty Exceptions
2.2 Subsidiary's Warranty Exceptions
2.2(a) Subsidiary Property Inventory (Real and Personal)
2.2(a-1) Subsidiary Technology and Intellectual Property
2.2(a-2) Functional Specifications
2.2(a-3) Patents and Copyrights
2.2(j) Subsidiary's Financial Statements
2.2(aa) Subsidiary's Contracts
2.2(bb) Subsidiary's Employee Matters
2.2(cc) Subsidiary's Software Security Procedures
2.2(dd) Subsidiary's Lease Terms
2.3 Subscriber's Warranty Exceptions
2.3(c) Questionnaires
2.3(d) Regulation SB Narrative Disclosure
3.3(e) Subscriber's Performance Standards
4.2 Subscriber's Deliveries at Closing
4.2(d) Investment Letter (Subsidiary)
6.4(c) Employment Agreement
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed effective as of the 19th day of April, 2000.
SIGNED, SEALED AND DELIVERED
IN OUR PRESENCE:
ENTER TECH CORPORATION
-----------------------------------
By: /s/ XXX XXXXXXX
----------------------------------- ----------------------------------
Xxx Xxxxxxx, President
(CORPORATE SEAL)
Attest:
------------------------------
Secretary
WAVEPOWER, INC.
-----------------------------------
By: /s/ XXXXXX X. XXXXXXXX
----------------------------------- ----------------------------------
Xxxxxx X. Xxxxxxxx, President
(CORPORATE SEAL)
Attest:
------------------------------
Secretary
SUBSCRIBERS
/s/ XXXXXX X. XXXXXXXX
-----------------------------------
----------------------------------- ----------------------------------
Xxxxxx X. Xxxxxxxx, Subscriber
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EXHIBITS
Exhibit Description
------- -----------
0.2 Business Description
1.3 Disclosed Subsidiary Liabilities
2.1 Corporation's Warranty Exceptions
2.2 Subsidiary's Warranty Exceptions
2.2(a) Subsidiary Property Inventory (Real and Personal)
2.2(a-1) Subsidiary Technology and Intellectual Property
2.2(a-2) Functional Specifications
2.2(a-3) Patents and Copyrights
2.2(j) Subsidiary's Financial Statements
2.2(aa) Subsidiary's Contracts
2.2(bb) Subsidiary's Employee Matters
2.2(cc) Subsidiary's Software Security Procedures
2.2(dd) Subsidiary's Lease Terms
2.3 Subscriber's Warranty Exceptions
2.3(c) Questionnaires
2.3(d) Regulation SB Narrative Disclosure
3.3(e) Subscriber's Performance Standards
4.2 Subscriber's Deliveries at Closing
4.2(d) Investment Letter (Subsidiary)
6.4(c) Employment Agreement
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