1
AGREEMENT OF STOCK EXCHANGE
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THIS AGREEMENT OF STOCK EXCHANGE ("Agreement") is made as of this 7th day
of August 2001, by and among Xxxxxxx Xxxxx Professional Haircare Inc, a New
York corporation (the "Company"), Xxxxxxx Xxxxx (''Booth''), the persons listed
as Stockholders on the signature page hereto (such persons, including Booth,
individually, a "Seller" and collectively, the "Sellers); and Triple S Parts,
Inc., a Nevada corporation ("Buyer").
WHEREAS, the Buyer is authorized to issue 50,000,000 shares of common stock
(the "Buyer Shares"), par value $.0005 per share, of which 2,806,500 shares are
presently issued and outstanding; and
WHEREAS, on the Closing Date, or within 45 days thereafter, it is expected
that Buyer will have received subscriptions to purchase a total of 500,000
additional Buyer Shares (the "Subscriptions"); and
WHEREAS, on the Closing Date, the Buyer shall issue the number of Buyer
Shares as hereinafter determined in return for all the issued and outstanding
shares of common stock of the Company ("Company Shares") owned by the Sellers
(this share exchange shall be referred to herein as the "Stock Exchange"), with
the result that: (a) Sellers will own 6,289,000 Buyer Shares, or 66% of the
outstanding Buyer Shares (after giving effect to the sale of Buyer Shares
pursuant to the Subscriptions), with the remaining 34% of the Buyer Shares
(3,306,500) being owned by the present shareholders of Buyer, purchasers in the
Subscriptions plus certain other shareholders to whom the Company is obligated;
and
WHEREAS, the Stock Exchange shall be effected as a tax-free exchange
pursuant to Section 351 and/or Section 368(a)(1)(B) of the Internal Revenue Code
of 1986, as amended (the "Code"); and
WHEREAS, on the Closing Date there shall be no warrants, options, or any
other rights, either authorized or outstanding, which are convertible or
exercisable into Company Shares or Buyer Shares except as specifically defined
herein.
NOW, THEREFORE, in consideration of the premises, the parties hereto do mutually
agree as follows:
ARTICLE I
EXCHANGE OF SHARES
1.1 EXCHANGE OF COMPANY SHARES FOR BUYER SHARES.
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1.1.1 On the Closing Date, Buyer shall issue such number of Buyer Shares to the
Sellers so that, after giving effect to such issuance and the sale of 500,000
Buyer Shares pursuant to the Subscriptions, Sellers will collectively own 66% of
the issued and outstanding stock of Buyer. Based on the representation and
warranties of Buyer hereafter set forth, it is expected that 6,289,000 Buyer
Shares will be issued to the Sellers. The Buyer Shares shall be issued to the
Sellers in the amounts set forth on Exhibit A. All Buyer Shares, when issued,
shall be fully-paid and non-assessable, and no preemptive rights of stockholders
shall exist with respect to such shares or the issue or sale thereof.
1.1.2 On the Closing Date, the Sellers shall deliver to Buyer all of the
outstanding Company Shares, duly endorsed for transfer or with stock powers
attached.
1.2 OUTSTANDING BUYER SHARES. Each share of Buyer Common Stock
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which is issued and outstanding immediately prior to the Closing Date shall, by
virtue of this Agreement, remain issued and outstanding thereafter.
1.3 RESTRICTIONS ON SHARES. The Buyer Shares being acquired by the
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Sellers are being acquired for investment only and not with a view to the
further sale or distribution thereof. Such Buyer Shares issued hereunder
constitute "restricted securities" as that term is defined under Rule 144 of the
Rules and Regulations promulgated under the Securities Act of 1933 (the
"Securities Act"). The Buyer Shares may not be sold, assigned or otherwise
disposed of unless registered or otherwise exempt from registration under the
Securities Act and such other state securities laws as may be applicable. The
certificates representing such shares shall contain an appropriate investment
legend. It is understood that Sellers intend to eventually register their
shares under an applicable registration filing; however, any such registered
shares shall agree to a leak out agreement over 2 years.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLERS
Each Seller, for such Seller but not on behalf of any other Seller, hereby
represents and warrants to Buyer as follows:
2.1 TITLE OF COMPANY SHARES. At the time of delivery of the Company Shares
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to Buyer hereunder, Sellers will be the lawful owners of the Company Shares in
the amounts set forth in Exhibit A attached hereto and will have good and
marketable title thereto, and upon delivery as provided hereunder, Buyer will
receive good and marketable title thereto, free and clear of all liens, pledges
and encumbrances with no personal liability attaching to the ownership thereof.
2.2 AUTHORITY TO EXECUTE AND PERFORM AGREEMENTS. Each Seller, which is a
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corporation or other type of legal entity, is, and on the Closing Date will be,
a duly organized and validly existing corporation (or other entity) in good
standing under the laws of its incorporation or organization. Each Seller has,
and on the Closing Date will have, the full legal right and power and all
authority and approval required to enter into, execute and deliver this
Agreement and to perform fully such Seller's respective obligations hereunder,
and this Agreement is the valid and binding obligation of each Seller
enforceable in accordance with its terms, except to the extent that: (a) the
enforceability hereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights and remedies generally, (b) the remedies of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and general principles of equity and to the discretion of the
court before which any proceeding therefor may be brought, and (c) rights to
indemnity and contribution hereunder, if any, may be limited by state and
federal laws or the public policy underlying such laws.
2.3 NO CONFLICT. Neither the execution and delivery of this Agreement,
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nor the consummation of the transactions contemplated by this Agreement will:
(a) conflict with, or result in a breach of, or constitute a default under (i)
in the case of any entity, its organizational documents; (ii) any instrument or
agreement to
which any Seller is a party, or by which any Seller is bound; or (iii) any
governmental decree, order, ruling, writ, permit or license to which any Seller
is a party or by which any Seller may be bound; (b) violate any law, statute,
rule or regulation applicable to any Seller or the transactions contemplated
hereby; or (c) require the consent of any governmental or administrative agency
or any party to any contract to which any Seller is a party or by which any
Seller may be bound.
2.4 BROKER'S FEES. None of the Sellers has employed any broker or finder or
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incurred any liability for any broker's fees, commissions or finder's fees in
connection with any of the transactions contemplated by this Agreement.
2.5 INVESTMENT INTENT. Each of the Sellers are acquiring Buyer Shares
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for investment
only and not with a view to further distribution and do not have, and will not
have on the Closing Date, any commitment for the sale of such shares.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Buyer as follows:
3.1 ORGANIZATION. The Company is, and on the Closing Date will be, a
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duly organized and validly existing corporation in good standing under the laws
of the State of New York.
3.2 CAPITALIZATION. The authorized capital stock of the Company
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consists of 200 Company Shares.
As of the date of this Agreement, 150 Company Shares are issued and
outstanding and no Company Shares are held in treasury. There are no Company
Shares reserved for issuance upon the exercise of outstanding stock options,
warrants or similar rights. All of the outstanding Company Shares have been duly
authorized and validly issued, are fully paid, non-assessable and free of
preemptive rights, and are registered in the names of the Sellers, free and
clear of all actual liens and encumbrances. There are no, and on the Closing
Date there will be no, issued or outstanding subscriptions, options, warrants,
calls, commitments or agreements of any character calling for the purchase or
issuance of any shares of Company Common Stock, or any other equity security of
the Company or any securities representing the right to purchase or otherwise
receive any shares of Company Common Stock or any other equity security of the
Company.
3.3 AGREEMENT:AUTHORITY. The Company has, and on the Closing Date will have,
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the power and authority to enter into this Agreement and to consummate the
transactions contemplated thereby. This Agreement and the transactions
contemplated hereby have been, or on or prior to the Closing Date will be, duly
approved by appropriate corporate action of the Company.
3.4 AGREEMENT: ENFORCEABILITY. This Agreement has been duly authorized,
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executed and delivered by the Company and is a legally valid and binding
agreement of the Company, enforceable against the Company in accordance with its
terms, except to the extent that: (a) the enforceability hereof may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar laws now
or hereafter in effect relating to creditors' rights and remedies generally, (b)
the remedies of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and general principles of equity and
to the discretion of the court before which any proceeding therefor may be
brought, and (c) rights to indemnity and contribution hereunder, if any, may be
limited by state and federal laws of the public policy underlying such laws.
3.5 NO CONFLICT. Neither the execution and delivery of this Agreement, nor
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the consummation of the transactions contemplated by this Agreement will: (a)
conflict with, or result in a breach of, or constitute a default under (i) the
Company's charter or bylaws, (ii) any instrument or agreement to which the
Company is a party, or by which it is bound; or (iii) any governmental decree,
order, ruling, writ, permit or license to which the Company is a party or by
which the Company may be bound; (b) violate any law, statute, rule or regulation
applicable to the Company or the transactions contemplated hereby; (c) require
the consent of any governmental or administrative agency or any other person not
a party hereto; or (d) require the consent of any party to any contract,
agreement or commitment to which the Company is a party or by which the Company
may be bound, or result in a default under or an acceleration of any obligation
under any such contract, agreement or commitment.
3.6 SUBSIDIARIES. The Company has, and on the Closing Date will have,
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no subsidiaries.
3.7 DOING BUSINESS. The Company is, and on the Closing Dates will be,
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duly authorized, qualified and licensed under any and all applicable laws,
regulations, ordinances or orders of public authorities to carry on their
respective businesses in the places and in the manner as presently conducted or
as contemplated in this Agreement, except where the failure to be so authorized,
qualified or licensed would not have a materially adverse effect upon the
business of the Company.
3.8 FINANCIAL STATEMENTS. The financial statements of the Company,
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consisting of Balance Sheets as of December 31, 2000, (un-audited) and related
Statement of Operations, Statement of Cash Flows, and Statement of Changes in
Shareholders' Equity for the years ended December 31, 2000, (un-audited)
together with the accompanying notes, have been prepared by independent public
accountants. All such financial statements (collectively, the "Company Financial
Statements") were prepared in conformity with generally accepted accounting
principles, have been delivered to Buyer, and fairly present the financial
position and results of operations of the Company as of the dates and for the
periods shown.
3.9 NO ADVERSE CHANGE. Except as set forth in Schedule 3.9, since
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December 31, 2000, the business of the Company has only been operated in the
normal course. There has not been, and on the Closing Date there will not have
been, any material adverse change in the financial condition of the Company from
that set forth in the Company Financial Statements dated December 31, 2000.
3.10 LIABILITIES. Except as set forth on Schedule 3.10 hereof, there are,
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and on the Closing Date will be, no liabilities (including, but not limited to
tax liabilities) or claims against the Company (whether such liabilities or
claims are contingent or absolute, direct or indirect, matured or un-matured)
not appearing on the Company Financial Statements, other than liabilities
incurred in the ordinary course of business or taxes accrued or incurred with
regard to earnings since December 31, 2000 or liabilities for expenses incurred
in connection with this Agreement.
3.11 TAXES. Except as set forth on Schedule 3.11 hereof, all federal,
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state, county and local income, excise, property and other tax returns required
to be filed by the Company have been filed and all required taxes, fees or
assessments have been paid or an adequate reserve therefor has been set up in
the Company Financial Statements. No income tax returns of the Company have ever
been audited by any authority empowered to do so. There are no agreements or
waivers in effect that provide for an extension of time for the filing of any
tax returns by the Company or the assessment of any tax against the Company.
3.12 TITLE; PROPERTY; REAL PROPERTY. The Company has, and on the
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Closing Date will have, all legal and beneficial ownership of all of its
material real property, furniture, fixtures and equipment excluding any leased
real property, furniture, fixtures and equipment. Such assets (excluding leased
assets) are owned free and clear of all security interests, pledges, liens,
restrictions and encumbrances of every kind and nature, except as stated in the
Company Financial Statements. Company does not own any real property. All real
property under lease to or otherwise used by Company is in good condition,
ordinary wear and tear excepted, and is sufficient for the current operations of
Company. No such real property, nor the occupancy, maintenance or use thereof,
is in violation of, or breach or default under, any contract or law, and no
notice or threat from any lessor, governmental body or other Person has been
received by Company or served upon any such real property claiming any violation
of, or breach, default or liability under, any contract or law, or requiring or
calling attention to the need for any work, repairs, construction, alteration,
installations or environmental remediation. Company has not placed or caused to
be placed, and to the best knowledge and belief of Company there were not and/or
are not, any Hazardous Substances in, on, under or migrating from any of the
real property of Company. "Hazardous Substances" means any substance, waste,
contaminant, pollutant or material that has been determined by any United States
federal government authority, or any state or local government authority having
jurisdiction over the Real Property of Xxxxxxx Xxxxx, Inc., to be capable of
posing a risk of injury or damage to health, safety, property or the
environment, including, but not limited to, (a) all substances, wastes,
contaminants, pollutants and materials defined, designated or regulated as
hazardous, dangerous or toxic pursuant to any Law of any state in which any of
the leased or owned Real Property of Buyer or Company, as applicable, is located
or any United States Law, and (b) asbestos, polychlorinated biphenyls ("PCB's"),
petroleum, petroleum products and urea formaldehyde.
3.13 TITLE; INVENTOR. The Company has, and on the Closing Date will
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have, all legal and beneficial ownership of its inventory as set forth in the
Company Financial Statements, except for (a) inventory sold or leased in the
ordinary course of business since the date of the Company Financial Statements
and (b) inventory provided to the Company by certain suppliers under
arrangements pursuant to which title does not pass until the amounts owed to
such suppliers are paid in full. All of the Company's inventory is saleable in
the ordinary course of business.
3.14 ACCOUNTS RECEIVABLE. The accounts receivable as set forth in the
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Company Financial Statements, except to the extent already collected, represent
amounts due for goods sold or services rendered by the Company in the ordinary
course of business. Except to the extent of any reserve allowed therefor in the
Company Financial Statements, such accounts receivable, to the knowledge of the
Company, are fully collectible in the ordinary course of business.
3.15 CONTRACTS AND COMMITMENTS. The Company is not, and on the Closing Date
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will not be, and to the knowledge of the Company, each such other party to each
of such agreements, contracts or commitments is not, in default under any
material agreement, contract or commitment to which the Company is a party, the
result of which breach would have a materially adverse effect on the Company.
True and complete copies of all employment agreements or arrangements with
employees of the Company have been made available to Buyer.
3.16 LITIGATION.Except as disclosed in Schedule 3.16 hereof, there are,
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and on the Closing Date there will be, no material claims, actions, suits or
proceedings pending, or to the best knowledge of the Company, threatened against
the Company.
3.17 COMPENSATION AND LOANS. Except as disclosed in Schedule 3.17,
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since December 31, 2000 there have been, and on the Closing Date there will be
(i) no bonuses or unusual compensation to any of the officers or directors of
the Company which are inconsistent with past practices, (ii) no loans made to
any of the officers or directors of the Company, (iii) except as may be
consistent with past practices, no dividends or other distributions declared or
paid by the Company, and (iv) no repurchase by the Company of any of its shares
of capital stock.
3.18 ADDITIONAL ISSUANCES OF EQUITY. Except as set forth in Schedule
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3.18, since December 31, 2000 or as otherwise disclosed herein, the Company has
not issued or committed itself to issue, and to the Closing Date will not issue
or commit itself to issue, any additional common shares or any options, rights,
warrants or other securities or instruments convertible into or exchangeable for
common shares, except as disclosed in or contemplated by this Agreement.
3.19 BROKER'S FEES. Except as set forth on Schedule 3.19, neither the
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Company, nor any of its officers or directors, has employed any broker or finder
or incurred any liability for any broker's fees, commissions or finder's fees in
connection with any of the transactions contemplated by this Agreement.
3.20 INSURANCE. The Company has, and on the Closing Date will have,
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coverage (which to its knowledge is adequate) against accident, damage, injury,
third party loss (including product liability), loss of profits and other risks
normally insured by persons carrying on the same business as that carried on by
it.
3.21 PATENTS, ETC. Except as set forth in Schedule 3.21: (a) the
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Company has the right to use all patents, patent applications, trademarks,
trademark registrations, or applications therefor, tradenames, copyrights,
copyright registrations or applications therefor, specialized knowledge and
trade secrets hereto (collectively "Company Intellectual Property") which it is
currently using in the manner in which it is currently being used; (b) to the
Company's knowledge, neither the Company Intellectual Property nor the current
uses thereof by the Company is violating or infringing upon any intellectual
property right of any person and no claim to such effect has been made to the
Company; and (c) to the Company's knowledge, no other person is violating or
infringing upon any of the Company Intellectual Property.
3.22 BUSINESS CONDUCT. The Company has, and on the Closing Date will
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have, operated its business and conducted its affairs in compliance with all
applicable laws, rules and regulations of the United States, the State of New
York and all jurisdictions in which it now carries on business, except where the
failure to so comply would not have a materially adverse effect on the Company.
3.23 AFFILIATED TRANSACTIONS. There are, and on the Closing Date there
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will be, no loans, leases or other contracts or arrangements outstanding between
(i) the Company, on the one hand, and (ii) any stockholder, officer, director or
key employee of the Company, or any person related to any of them, on the other
hand, except as set forth in Schedule 3.15 or Schedule 3.23 hereto or as
contemplated by the Agreement.
3.24 SANCTIONS. During the past five-year period, no officer or
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director of the Company, and no person whom Sellers shall appoint as a director
of Buyer pursuant to Section 5.1 hereof, has been the subject of:
3.24.1 a petition for bankruptcy or other relief under United States insolvency
or creditor's rights laws, nor has a receiver, fiscal agent or similar officer
been appointed by a court for the business or property of such person, or any
partnership in which he was a partner at or within two years before the time of
such filing or appointment, or any corporation or business association of which
he was an executive officer at or within two years before the time of such
filing or appointment;
3.24.2 a conviction in a criminal proceeding or a named subject of a pending
criminal proceeding (excluding traffic violations and other minor offenses);
3.24.3 any order, judgment or decree, not subsequently reversed,
suspended or vacated, of any court of competent jurisdiction, permanently or
temporarily enjoining him from, or otherwise limiting, the following activities:
(i) Acting as a futures commission merchant, introducing broker, commodity
trading advisor, commodity pool operator, floor broker, leverage transaction
merchant, any other person regulated by the United States Commodity Futures
Trading Commission or an associated person of any of the foregoing, or as an
investment adviser, underwriter, broker or dealer in securities, or as an
affiliated person, director or employee of any investment company, bank, savings
and loan association or insurance company, or engaging in or continuing any
conduct or practice in connection with activity;
(ii) Engaging in any type of business practice; or
(iii) Engaging in any activity in connection with the purchase or sale of any
security or commodity or in connection with any violation of federal, state or
other securities laws or commodities laws.
3.24.4 any order, judgment or decree, not subsequently reversed, suspended
or vacated, of any federal, state or local authority barring, suspending or
otherwise limiting for more than 60 days the right of such person to engage in
any activity described in the preceding sub-paragraph, or to be associated with
persons engaged in any such activity;
3.24.5 a finding by a court of competent jurisdiction in a civil action or by
the United States Securities and Exchange Commission to have violated any
securities law, and the judgment in such civil action or finding by such
Commission has not been subsequently reversed, suspended or vacated; or
3.24.6 a finding by a court of competent jurisdiction in a civil action or by
the Commodity Futures Trading Commission to have violated any federal
commodities law, and the judgment in such civil action or finding by the
Commodity Futures Trading Commission has not been subsequently reversed,
suspended or vacated.
3.25 EMPLOYEE BENEFIT PLANS. Except as set forth in Schedule 3.25, the
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Company has no pension plan, profit sharing or similar employee benefit plan.
3.26 QUESTIONABLE PAYMENTS. Neither the Company, nor any current or
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former shareholder, partner, director or officer of it has (a) used any
corporate funds for any illegal contributions, gifts, entertainment or other
unlawful expenses relating to political activity; (b) used any corporate funds
for any direct or indirect unlawful payments to any foreign or domestic
government officials or employees; (c) established or maintained any unlawful or
unrecorded fund of corporate monies or other assets; (d) made any false or
fictitious entries on such corporation's books and records; (e) made any bribe,
rebate, payoff, influence payment, kickback or other unlawful payment of any
nature using corporate funds or otherwise on behalf of the Company; (f) violated
any provision of the Foreign Corrupt Practices Act of 1977, if applicable; or
(g) made any material favor or gift that is not deductible for United States
income tax purposes using corporate funds or otherwise on behalf of the Company.
3.27 NON DILUTION. No action shall be taken by the Company or its
shareholders upon
their assumption of control of the Buyer which shall materially dilute the
existing shareholders of Buyer, except for bona-fide employee stock option
plans, for a period of eighteen months from the date the shares are eligible for
trading on the OTC Bulletin Board including specifically the issuance of shares
under any form of S-8 Registration without the prior written consent of current
company management through Xxxxxx Xxxxxxxxx and Xxxxx Xxxxx.
3.28 PUBLIC RELATIONS, INVESTOR RELATIONS. Buyer covenants and agrees
to retain Pathfinder Group as it investor relations and public relations firm
for a period of not less than 2 years, or, if the Company is dissatisfied with
Pathfinder Group after its initial contract term of one year, it shall retain
other suitable investor relations and public relations firm(s) to insure public
information is disseminated about the company.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to the Sellers and the Company as
follows:
4.1 ORGANIZATION. Buyer is, and on the Closing Date will be, a duly
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organized and validly existing corporation in good standing under the laws of
the State of Nevada.
4.2 CAPITALIZATION. The authorized capital stock of Buyer consists of
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50,000,000 Buyer Shares. As of the date of this Agreement, there are 2,806,500
Buyer Shares issued and outstanding, and no Buyer Shares are held in Buyer's
treasury. On the Closing Date (after giving effect to the Stock Exchange and the
Subscriptions) there will be 9,595,500 Buyer Shares issued and outstanding and
no Buyer Shares will be held in Buyer's treasury. There are no Buyer Shares
reserved for issuance upon the exercise of outstanding stock options, warrants
or similar rights. All issued and outstanding Buyer Shares have been duly
authorized and validly issued and are fully paid, non-assessable and free of
preemptive rights. There are no, and on the Closing Date there will be no,
issued or outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character calling for the purchase or issuance of any shares
of Buyer common stock or any other equity security of Buyer or any securities
representing the right to purchase or otherwise receive any shares of Buyer
common stock or any other equity security of Buyer. All outstanding Buyer Shares
have been issued in compliance with applicable Federal and state Securities
Laws. No shareholders of the Company have a right to receive dividends and no
unpaid dividends are due and owing with regard to the Buyer's capital stock.
4.3 AGREEMENT; AUTHORITY. Buyer has, and on the Closing Date will have,
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power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. This Agreement and the transactions
contemplated hereby have been, or on or prior to the Closing Date, will be duly
approved by appropriate corporate action of Buyer.
4.4 AGREEMENT: ENFORCEABILITY. This Agreement has been duly authorized,
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executed and delivered by Buyer and is a legally valid and binding agreement of
Buyer, enforceable against Buyer in accordance with its terms, except to the
extent that: (a) the enforceability hereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights and remedies generally, (b) the remedies of
specific performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and general principles of equity and to the
discretion of the court before which any proceeding therefor may be brought, and
(c) rights to indemnity and contribution hereunder, if any, may be limited by
state and federal laws of the public policy underlying such laws.
4.5 DOING BUSINESS. Buyer is, and on the Closing Date will be duly
----------------
authorized, qualified and licensed under any and all applicable laws,
regulations, ordinances or orders of public authorities to carry on its business
in the places and in the manner as presently conducted or as contemplated in
this Agreement, except where the failure to be so authorized, qualified or
licensed would not have a materially adverse effect upon the business of Buyer.
The business of Buyer does not require it to be registered as an Investment
Company or Investment Advisor as such terms are defined under the Investment
Company Act and the Investment Advisor Act of 1940, respectively.
4.6 NO CONFLICT. Neither the execution and delivery of this Agreement, nor
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the consummation of the transactions contemplated by this Agreement will: (a)
conflict with, or result in a breach of, or constitute a default under (i)
Buyer's charter or bylaws, (ii) any instrument or agreement to which Buyer is a
party, or by which it is bound; or (iii) any governmental decree, order, ruling,
writ, permit or license to which Buyer is a party or by which Buyer may be
bound; (b) violate any law, statute, rule or regulation applicable to Buyer or
the transactions contemplated hereby; (c) require the consent of any
governmental or administrative agency or any other person not a party hereto; or
(d) require the consent of any party to any contract, agreement or commitment to
which Buyer is a party or by which Buyer may be bound, or result in a default
under or an acceleration of any obligation under any such contract, agreement or
commitment.
4.7 SUBSIDIARIES. Buyer has, and on the Closing Date will have, no
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subsidiaries.
4.8 FINANCIAL STATEMENTS. The audited financial statements of Buyer,
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consisting of its
Balance Sheet as of December 31, 2000 and 1999, and its Statement of Income,
Statement of Stockholders' Equity and Statement of Cash Flows for the years
ended December 31, 2000 and 1999, together with accompanying notes, have been
audited by independent public accountants whose report thereon is without
qualification. The unaudited financial statements of Buyer, consisting of its
Balance Sheet as of June 30, 2001 its Statement of Income, Statement of
Stockholders' Equity and Statement of Cash Flows for the three months ended June
30, 2001, together with accompanying notes, have been prepared by the officers
of Buyer, and have been adjusted for all normal and recurring accruals necessary
for a fair presentation thereof. All such financial statements (collectively,
the "Buyer Financial Statements") have been prepared in accordance with
generally accepted accounting principles, have been delivered to the Company,
and fairly present the financial condition and results of operations of Buyer as
of the dates and for the periods shown.
4.9 NO ADVERSE CHANGE. Since December 31, 2000, the business of Buyer
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has only been operated in the normal course. There has not been, and on the
Closing Date there will not have been, any material adverse change in the
financial condition of Buyer from that set forth in the Buyer Financial
Statements dated December 31, 2000.
4.10 LIABILITIES. There are, and on the Closing Date will be, no
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liabilities (including, but not limited to tax liabilities) or claims against
Buyer (whether such liabilities or claims are contingent or absolute, direct or
indirect, matured or unmatured) not appearing on the Buyer Financial Statements,
other than liabilities incurred or made in the ordinary course of business,
taxes incurred with regard to earnings since December 31, 2000, or liabilities
for expenses incurred in connection with this Agreement.
4.11 TAXES. All federal, state, county and local income, excise,
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property and other tax returns required to be filed by Buyer have been filed and
all required taxes, fees or assessments have been paid or an adequate reserve
therefor has been set up in the Buyer Financial Statements. No income tax
returns of Buyer have ever been audited by any authority empowered to do so.
There are no agreements or waivers in effect that provide for an extension of
time for the filing of any tax returns by Buyer or the assessment of any tax
against Buyer.
4.12 TITLE; PROPERTY; REAL PROPERTY. Except as set forth on Schedule
---------------------------------
4.12 hereof, the Buyer has, and on the Closing Date will have, all legal and
beneficial ownership of all of its real property, furniture, fixtures and
equipment excluding any leased real property, furniture, fixtures and equipment.
Such assets (excluding leased assets) are owned free and clear of all security
interests, pledges, liens, restrictions and encumbrances of every kind and
nature, except as stated in the Buyer Financial Statements. Buyer does not own
any real property. Schedule 4.12 is a detailed list of all real property leased
by Buyer, showing location, rental cost and landlord. All real property under
lease to or otherwise used by Buyer is in good condition, ordinary wear and tear
excepted, and is sufficient for the current operations of Buyer. No such real
property, nor the occupancy, maintenance or use thereof, is in violation of, or
breach or default under, any contract or law, and no notice or threat from any
lessor, governmental body or other Person has been received by Buyer or served
upon any such real property claiming any violation of, or breach, default or
liability under, any contract or law, or requiring or calling attention to the
need for any work, repairs, construction, alteration, installations or
environmental remediation. Buyer has not placed or caused to be placed, and to
the best knowledge and belief of Buyer there were not and/or are not, any
Hazardous Substances in, on, under or migrating from any of the real property of
Buyer.
4.13 CONTRACTS AND COMMITMENTS. Buyer has, and on the Closing Date will
-------------------------
have, no agreements, contracts and commitments to which it is, or on the Closing
Date will be a party, except as described in Schedule 4.13. A true and correct
copy of each such agreement, contract or commitment has been delivered to the
Company. Buyer is not, and on the Closing Date will not be, and to the knowledge
of Buyer, each such other party to each of such agreements, contracts or
commitments is not, in default under any such agreement, contract or commitment,
the result of which breach would have a materially adverse effect on Buyer.
Buyer has delivered to Company a true and correct copy of the Joint Rescission
of Stock Purchase and Acquisition Agreement between Buyer and Telnet World
Communications, Inc. (''Telnet") dated August 10, 2000 pursuant to which Buyer
and Telnet rescinded the transactions contemplated by the Stock Purchase
Agreement and Plan of Reorganization dated April 19, 2000 between Buyer and
Telnet (the "Telnet Agreement") and have restored Buyer and Telnet to the status
quo as of immediately prior to entering into the Telnet Agreement. Buyer has no
claim, liability or obligation based upon or resulting from the Telnet
Agreement.
4.14 LITIGATION.There are, and on the Closing Date will be, no claims,
-----------
actions, suits or proceedings, pending, or to the best knowledge of Buyer,
threatened against Buyer.
4.15 COMPENSATION AND LOANS. Except as disclosed in Schedule 4.15, since
----------------------
December 31, 2000, there have been, and on the Closing Date will be, (i) no
salaried or otherwise compensated employees, officers or directors of Buyer,
(ii) no loans made to any officer or director of Buyer, (iii) no dividends or
other distributions declared or paid by Buyer, and (iv) no repurchase by Buyer
of any shares of capital stock.
4.16 ADDITIONAL ISSUANCES OF EQUITY. Except as set forth on Schedule
----------------------------------
4.16 hereof, since December 31, 2000, Buyer has not issued or committed itself
to issue, and to the Closing Date will not issue or commit itself to issue any
additional common shares or any options, rights, warrants or other securities or
instruments convertible into or exercisable for common shares, except as
contemplated by this Agreement.
4.17 INVESTMENT INTENT. Buyer is acquiring Company Shares for investment
-----------------
only and not with a view to further distribution and does not have, and will not
have on the Closing Date, any commitment for the disposition of such shares.
4.18 PATENTS, ETC. Buyer has no patents, patent applications, trademark,
-------------
trademark registrations, tradenames, copyrights, copyright registrations or
applications therefor. Buyer has not infringed and is not infringing upon any
intellectual property right of any person.
4.19 BUSINESS CONDUCT. The Company has, and on the Closing Date will
-----------------
have, operated its business and conducted its affairs in compliance with all
applicable laws, rules and regulations of the United States, the State of Nevada
and all jurisdictions in which it now carries on its business, except where the
failure to so comply would not have a materially adverse effect on Buyer.
4.20 AFFILIATED TRANSACTIONS. There are, and on the Closing Date there
------------------------
will be no loans, leases or other contracts outstanding between Buyer and any
officer or director of Buyer or any person related to any officer or director of
Buyer.
4.21 SANCTIONS. During the past five year period, except as set forth
---------
on Schedule 4.21, to the best of the knowledge, information and belief of
current officers and directors, no officer or director of Buyer has been the
subject of:
4.21.1 a petition under the federal bankruptcy laws or any other insolvency or
creditor's rights laws, nor has a receiver, fiscal agent or similar officer been
appointed by a court for the business or property of such person, or any
partnership in which he was a general partner at or within two years before the
time of such filing or appointment, or any corporation or business association
of which he was an executive officer at or within two years before the time of
such filing or appointment;
4.21.2 a conviction in a criminal proceeding or a named subject of a pending
criminal proceeding (excluding traffic violations and other minor offenses);
4.21.3 any order, judgment or decree, not subsequently reversed, suspended or
vacated, of any court of competent jurisdiction, permanently or temporarily
enjoining him from, or otherwise limiting, the following activities;
(i) Acting as a futures commission merchant, introducing broker, commodity
trading advisor, commodity pool operator, floor broker, leverage transaction
merchant, any other person regulated by the United States Commodity Futures
Trading Commission or an associated person of any of the foregoing, or as an
investment adviser, underwriter, broker or dealer in securities, or as an
affiliated person, director or employee of any investment company, bank, savings
and loan association or insurance company, or engaging in or continuing any
conduct or practice in connection with activity;
(ii) Engaging in any type of business practice; and
(iii) Engaging in any activity in connection with the purchase or sale of any
security or commodity or in connection with any violation of federal, state or
other
securities laws or commodities laws.
4.21.4 any order, judgment or decree, not subsequently reversed, suspended
or vacated, of any federal, state or local authority barring, suspending or
otherwise limiting for more than 60 days the right of such person to engage in
any activity described in the preceding sub-paragraph, or to be associated with
persons engaged in any such activity;
4.21.5 a finding by a court of competent jurisdiction in a civil action or
by the United States Securities and Exchange Commission to have violated any
securities law, and the judgment in such civil action or finding by such
Commission has not been subsequently reversed, suspended or vacated; or
4.21.6 a finding by a court of competent jurisdiction in a civil action or by
the Commodity Futures Trading Commission to have violated any federal
commodities law, and the judgment in such civil action or finding by the
Commodity Futures Trading Commission has not been subsequently reversed,
suspended or vacated.
4.22 BUYER REPRESENTATION. Buyer has not taken and will not take, and to
--------------------
its knowledge, no officer, director or shareholder has taken, directly or
indirectly, any action designed to, or which has constituted, or which might
reasonably be expected to, cause or result in any violations of the federal
securities laws with regard to Buyer or its securities.
4.23 EMPLOYEE BENEFIT PLANS. Buyer has no pension plan, profit sharing
------------------------
or similar employee benefit plan.
4.24 BROKER'S FEES. Neither Buyer, nor any of its officers or directors,
-------------
has employed any broker or finder or incurred any liability for any broker's
fees, commissions or finder's fees in connection with any of the transactions
contemplated by this Agreement.
4.25 QUESTIONABLE PAYMENTS. Neither Buyer, nor any current or former
----------------------
shareholder, partner, director or officer of Buyer, has (a) used any corporate
funds for any illegal contributions, gifts, entertainment or other unlawful
expenses relating to political activity; (b) used any corporate funds for any
direct or indirect unlawful payments to any foreign or domestic government
officials or employees; (c) violated any provision of the Foreign Corrupt
Practices Act of 1977; (d) established or maintained any unlawful or unrecorded
fund of corporate monies or other assets; (e) made any false or fictitious
entries on such corporation's books and records; (f) made any bribe, rebate,
payoff, influence payment, kickback or other unlawful payment of any nature
using corporate funds or otherwise on behalf of Buyer; or (g) made any material
favor or gift that is not deductible for federal income tax purposes using
corporate funds or otherwise on behalf of Buyer.
4.26 EXCHANGE ACT REPRESENTATIONSAt Closing, the Buyer Shares will be
------------------------------
registered under the Securities Exchange Act of 1934, as amended ("Exchange
Act"). Buyer has previously delivered to the Company true and complete copies,
including exhibits and, as applicable, amendments thereto, of its (i)
Registration Statement on Form 10-SB filed under the Exchange Act; (ii)
Quarterly Reports on Form 10Q-SB for the quarter ended March 31, 2000 and June
30, 2000, and (iii) copies of all material correspondence with the Securities
and Exchange Commission, the NASD, the OTC and state blue sky commissions. All
such documents referred to herein, and the documents referred to in Section 5.2
(collectively, the "SEC Documents"), at the time filed with the Securities and
Exchange Commission ("SEC") complied, or will comply in the case of the SEC
Documents referred to in Section 5.2, with the Exchange Act and all applicable
rules and regulations of the SEC and were timely filed (except that the
Quarterly Reports on Form 10-Q for the quarters ended March 31, 2000 and June
30, 2000 were not timely filed), or will be timely filed in the case of the SEC
Documents referred to in Section 5.2. No SEC Document, as of the date of filing
or the effective date, as the case may be, or as of any subsequent date when
Buyer was required to amend, supplement or update any such document (regardless
of whether it did so), contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. Buyer represents and warrants that all 10-Q's
10-k's and other applicable SEC filings will be filed and up to date at Closing.
Buyer represents and warrants that the Seller is a fully reporting company, as
that term is commonly used and will be at the time of Closing.
ARTICLE V
COVENANTS OF THE PARTIES
5.1 BUYER SPECIAL BOARD MEETING. On the Closing Date, Buyer shall cause
----------------------------
a special meeting of the
Board of Directors of Buyer to be held, at which meeting: (i) the size of the
Board of Directors of Buyer shall be set at three (3) or more members, (ii)
three (3) designees of the Company including Xxxxxxx Xxxxx, Xxx Xxxxxx and a
party to be named later, shall be appointed as new directors of Buyer, (iii)
resignations from all of the present officers, directors and employees of Buyer
which shall have been tendered prior to the Closing Date shall be accepted, and
(iv) the name of Buyer shall be charged to "Xxxxxxx Xxxxx Inc." (the "Name
Change"), subject to shareholder approval. In addition, Xx. Xxxxx shall be
appointed as Chairman of the Board and Chief Executive Officer of Buyer. Buyer
shall solicit approval of the Name Change by consent of a majority of the
shareholders of Buyer without a meeting ("Shareholder Consent"). Buyer shall
prepare the information required by Rule 14f-1 and Regulation 14C promulgated
under the Exchange Act (the "Rule 14f-1 Statement"), subject to review and
approval by the Company, and at least ten days prior to the Closing Date shall
file the Rule 14f-1 Statement with the SEC and transmit the Rule 14f-1 Statement
to all stockholders of record.
5.2 SEC DOCUMENTS. Buyer covenants and agrees that prior to the Closing
-------------
Date, it shall file the Rule 14f-1 Statement, all reports and filings required
to be filed by Buyer under Sections 13, 14 and 15(d) of the Exchange Act,
together with all other reports and filings necessary to have available "current
public information" as defined in Rule 144 under the rules and regulations
promulgated under the Securities Act. Buyer knows of no reports or filings
required to be filed by officers, directors, shareholders or their affiliates
under the Exchange Act which have not been filed.
5.3 NEGATIVE COVENANTS OF BUYER. Buyer agrees that from the date hereof
---------------------------
to the Closing Date, without the prior written consent of Sellers, Buyer shall
not: (i) amend, modify, change or terminate any provision of its certificate of
incorporation or bylaws, (ii) create or assume any claim, lien or encumbrances
upon any of its business or assets, (iii) incur any debt, obligation or
liability, (iv) make any loan or advance, (v) assume, guarantee or otherwise
become liable for any debt, obligation or liability of any Person, (vi) commit
for any capital expenditure, (vii) purchase, lease, sell, abandon or otherwise
acquire or dispose of any business or assets, (viii) waive any right or cancel
any debt or claim, (ix) assume or enter into any contract or agreement other
than this Agreement (and any other agreement contemplated herein), (x) increase,
or authorize an increase in, the compensation or benefits paid or provided to
any of their directors, officers, employees, salesmen, agents or
representatives, (xi) permit or cause a breach or default under any of its
contracts, insurance policies, licenses or permits, (xii) adopt or enter into
any new employee benefit plan or modify any existing employee benefit plan,
(xiii) participate in any merger, consolidation or reorganization, (xiv) begin
to engage in any new type of business, (xv) acquire the business or any bulk
assets of any other Person, (xvi) completely or partially liquidate or dissolve,
(xvii) terminate any part of their business, (xviii) issue or sell any Buyer
Shares, redeem, retire or purchase any Buyer Shares, or create, grant or issue
any options, warrants or other contracts or Contract Rights with respect to, any
Buyer Shares, or any other capital stock or other securities of Buyer, or
create, grant or issue any stock options, stock appreciation rights, phantom
shares or other similar rights or (xviii) do anything else outside the ordinary
course of their business consistent with its past practices, whether or not
specifically described in any of the foregoing clauses.
5.4 ACCESS TO RECORDS; CONFIDENTIALITY.
-------------------------------------
5.4.1 During the period from the date of this Agreement to the Closing
Date, Buyer and the Company shall each permit the other party and its respective
representatives, agents and designees reasonable access to its properties and
those of its subsidiaries, and shall disclose and make available to them all
books, papers and records relating to the assets, stock, ownership, properties,
operations, obligations and liabilities of it and its subsidiaries, including,
but not limited to, all books of accounts (including the general ledger), tax
records, minute books of directors' and stockholders' meetings, organizational
documents, bylaws, material contracts and agreements, filings with any
regulatory authority, accountants' work papers, litigation files, plans
affecting employees, and any other business activities or prospects in which
Buyer or the Company, as the case may be, may have an interest.
5.4.2 All information furnished by Buyer to the Company and by the Company
to Buyer pursuant hereto shall be treated as the sole property of the party
furnishing the information and, if the Stock Exchange shall not occur, the party
receiving the information shall return to the party furnishing the information,
all documents (in whatever form, including electronic) or other materials
containing, reflecting or referring to such information, shall use its best
efforts to keep confidential all such information, and shall not directly or
indirectly use such information for any competitive or other commercial purpose.
The obligation to keep such information confidential shall not apply to (i) any
information which: (w) the party receiving the information can establish was
already in its possession prior to the disclosure thereof by the party
furnishing the information; (x) was then generally known to the public; (y)
became known to the public through no fault of the party receiving the
information; or (z) was disclosed to the party receiving the information by a
third party not bound by an obligation of confidentiality or (ii) disclosures in
accordance with an order of a court of competent jurisdictions.
5.5 NO SOLICITATION. So long as this Agreement remains in effect, Buyer
----------------
shall not and Buyer shall not authorize or permit any of its directors,
officers, employees or agents, to directly or indirectly (i) respond to,
solicit, initiate or encourage any inquiries relating to, or the making of any
proposal which relates to, an Acquisition Transaction (as defined below), (ii)
recommend or endorse an Acquisition Transaction, (iii) participate in any
discussions or negotiations regarding an Acquisition Transaction, (iv) provide
any third party (other than the Company or an affiliate of the Company) with any
non-public information in connection with any inquiry or proposal relating to an
Acquisition Transaction or (v) enter into an agreement with any other party with
respect to an Acquisition Transaction. Buyer will immediately cease and cause to
be terminated any existing activities, discussions or negotiations previously
conducted with any parties other than the Company with respect to any of the
foregoing, and will take all actions necessary or advisable to inform the
appropriate individuals or entities referred to in the first sentence hereof of
the obligations undertaken in this Section 5.5. Buyer will notify the Company
orally (within one day) and in writing (as promptly as practicable) if any
inquiries or proposals relating to an Acquisition Transaction are received by,
any such information is requested from, or any such negotiations or discussions
are sought to be initiated or continued with Buyer. As used in this Agreement,
"Acquisition Transaction" shall mean one of the following transactions with a
party other than the Company of an affiliate of the Company (i) a merger,
consolidation, share exchange, or any similar transaction, involving Buyer, (ii)
a purchase, lease or other acquisition of all or a substantial portion of the
assets or liabilities of Buyer or, (iii) a purchase or other acquisition
(including by way of share exchange, tender offer, exchange offer or otherwise)
of a substantial interest in any class or series of equity securities of Buyer.
5.6 FURTHER ASSURANCES. In case at any time after the Closing Date any
-------------------
further action is necessary or desirable to carry out the purposes of this
Agreement, each party to this Agreement shall take all such necessary action,
including but not limited to responding to SEC comments on any filings made with
the SEC and working to have such filings cleared by the SEC.
ARTICLE VI
CLOSING CONDITIONS
6.1 CONDITIONS TO THE OBLIGATIONS OF BUYER UNDER THE AGREEMENT. The
obligations of Buyer to perform this Agreement shall be further subject to the
satisfaction, at or prior to the Closing Date, of the following
conditions, any one or more of which may be waived by Buyer:
6.1.1 Each of the obligations of the Sellers and the Company required to be
performed at or prior to the Closing Date pursuant to the terms of this
Agreement shall have been performed and complied with in all material respects
and the representations and warranties of Sellers and the Company contained in
this Agreement shall be true and correct in all material respects as of the date
of this Agreement and as of the Closing Date as though made at and as of the
Closing Date, except with respect to changes permitted hereby and for any such
representations and warranties made as of a specific date which shall be true
and correct as of such date. Buyer shall have received a certificate to the
foregoing effect signed by an executive officer of the Company.
6.1.2 There shall have been no material adverse change in the financial
condition of the Company, since the date of this Agreement, whether or not in
the ordinary course of business.
6.1.3 All action required to be taken by, or on the part of, the Company to
authorize the execution, delivery and performance of this Agreement and the
consummation by the Company of the transactions contemplated hereby shall have
been duly and validly taken by the Company and Buyer shall have received
certified copies of the resolutions evidencing such authorization.
6.1.4 Any and all permits, consents, waivers, clearances, approvals and
authorizations of all third parties which are necessary in connection with the
consummation of the transactions contemplated hereby shall have been obtained.
6.1.5 The Company shall not have suffered a loss on account of fire, flood,
accident or other calamity of such a character as to interfere materially with
the continuous operation of its business or materially adversely affect their
aggregate financial condition, regardless of whether or not such loss shall have
been insured.
6.1.6 Except as disclosed in Schedule 6.1.6 hereto, no material
transactions shall have been entered into by the Company other than transactions
in the ordinary course of business since June 30, 2001 or other than as referred
to in this Agreement, except with the written consent of Buyer.
6.1.7 That none of the properties or assets of the Company shall have been
sold or otherwise disposed of other than in the ordinary course of business
since June 30, 2001, where such has had a materially adverse affect on the
Company, except with the written consent of Buyer.
6.1.8 That Buyer shall have received an opinion from counsel to the Company in
form reasonably satisfactory to Buyer's counsel, that:
(a) The Company has been duly incorporated and is a validly existing
corporation under the laws of the State of New York with a capitalization as
represented in this Agreement.
(b) All of the outstanding Company Shares have been duly authorized by
appropriate corporate action of the Company, as applicable, and are validly
issued and represent fully paid and non-assessable shares of the Company, free
of preemptive rights.
(c) This Agreement and the transactions contemplated hereby have been duly
authorized by necessary corporate action of the Company.
(d) Upon delivery of the certificates and duly executed stock transfer forms
representing the Company Shares pursuant to the terms of this Agreement, Buyer
will acquire legal and beneficial ownership of such securities free and clear of
all liens, pledges and encumbrances; and, upon the completion of the
transactions contemplated by this Agreement, Buyer shall be the owner of all of
the Outstanding Company Shares and, to the knowledge of counsel, there shall be
no outstanding options or warrants to purchase any shares of the Company nor any
outstanding securities of any nature convertible into such shares.
6.1.9 The Parties designated on Schedule 4.16 shall have received duly
executed warrants totaling 2 million shares of common capital stock priced at
$1.00 per share which warrants shall be non-cancelable for a period of three (3)
years from the date of issuance.
6.2 CONDITIONS TO THE OBLIGATIONS OF SELLERS AND THE COMPANY UNDER THE
------------------------------------------------------------------
AGREEMENT. The obligations of Sellers and the Company to perform this Agreement
---------
shall be further subject to the satisfaction, at or prior to the Closing Date,
of following conditions any one or more of which may be waived by Sellers and
the Company:
6.2.1. Each of the obligations of Buyer required to be performed by it at or
prior to the Closing pursuant to the terms of this Agreement shall have been
performed and complied with in all material respects and the representations and
warranties of Buyer contained in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and as of the Closing Date as
though made at and as of the Closing Date, except with respect to changes
permitted hereby and for any such representations and warranties made as of a
specific date which will be true and correct as of such date. The Sellers and
the Company shall have received a certificate to the foregoing effect signed by
an executive officer of Buyer.
6.2.2 There shall have been no material adverse change in the financial
condition of Buyer since the date of this Agreement, whether or not in the
ordinary course of business.
6.2.3 All action required to be taken by, or on the part of, Buyer to authorize
the execution, delivery and performance of this Agreement by Buyer and the
consummation by Buyer of the transactions contemplated hereby shall have been
duly and validly taken by the Board of Directors and stockholders of Buyer and
Sellers and the Company shall have received certified copies of the resolutions
evidencing such authorization.
6.2.4 Any and all permits, consents, waivers, clearances, approvals and
authorizations of all third parties which are necessary in connection with the
consummation of the transactions contemplated hereby shall have been obtained.
6.2.5 The Sellers and the Company shall have received an opinion of counsel
or independent auditors to the effect that the Stock Exchange qualifies as a
tax-free exchange pursuant to Section 351 and or Section 368(a)(1)(B) of the
Code.
6.2.6 Buyer shall not have suffered any loss on account of fire, flood, accident
or other calamity of such a character as to interfere materially with the
continuous operation of its business or materially adversely affect its
financial condition, regardless of whether or not such loss shall have been
insured.
6.2.7 No material transactions shall have been entered into by Buyer other than
transactions in the ordinary course of business between December 31, 1999 and
the Closing Date, other than as contemplated by this Agreement, except with the
written consent of the Company.
6.2.8 That none of the properties or assets of Buyer shall have been sold or
otherwise disposed of other than in the ordinary course of business since
December 31, 1999, except with the written consent of the Company.
6.2.9 That the Sellers shall be satisfied, in their sole discretion, as to the
financial statements and financial condition of the Buyer.
6.2.10 That Sellers and the Company shall have received an opinion from counsel
to Buyer in form satisfactory to the Company's counsel, that:
(a) Buyer has been duly incorporated and is a validly existing corporation in
good standing under the laws of the State of Nevada with a capitalization as
represented in this Agreement.
(b) All of the outstanding Buyer Shares have been duly authorized by appropriate
corporate action of Buyer, are validly issued and represent fully paid and
nonassessable capital shares of Buyer and the outstanding Buyer Shares have been
registered under the Securities Exchange Act of 1934 and have been issued in
compliance with applicable Federal and state securities laws.
(c) This Agreement and the transactions contemplated hereby have been duly
authorized by appropriate action of Buyer and, under applicable law and Buyer
stockholder approval is not required under applicable law.
(d) The issuance of the Buyer Shares to Sellers on the Closing Date pursuant to
this Agreement have been duly authorized by appropriate corporate action of
Buyer, and when issued, shall be fully paid and non-assessable common shares of
Buyer free of preemptive rights.
(e) To such counsel's knowledge, after due inquiry, Buyer has not been or is not
required to be registered as an investment company or an investment adviser
under the Investment Company Act of 1940 or the Investment Advisers Act of 1940,
respectively.
6.2.11 Buyer shall have received Subscriptions, or a commitment for
subscriptions, in form and substance acceptable to the Company, from accredited
investors (as defined in Regulation D promulgated under the Securities Act) (the
"Investors") to purchase 500,000 Buyer Shares for an aggregate purchase price of
$250,000. The costs of the PPM anticipated to be approximately $25,000 together
with payment of shareholders loans and other Company expenses in the amount of
$75,000 shall be deducted from the PPM with the balance retained in the Company
treasury after the closing.
6.2.12 The Buyer's three largest stockholders prior to the Stock
Exchange, the Consultant and the Investors must have entered into lock-up
agreements satisfactory to the Company pursuant to which they will agree not to
sell or transfer more than 1/24 of their Buyer's Shares for a period of 24
months after closing of the transactions, subject to modification if market
conditions warrant in the reasonable discretion of Buyer. These restrictions
shall be in addition to any restrictions under federal or state securities laws.
6.2.13 Buyer shall not have any obligations or liabilities as of the Closing
Date in excess of $2,500 in the aggregate.
6.2.14 Buyer shall have entered into Employment Agreements ("Employment
Agreements") with Xxxxxxx Xxxxx in form acceptable to Buyer and Seller.
6.2.15 At Closing, Buyer shall deliver to Company and Seller a list showing
Buyer's shareholders of record as of the date prior to the Closing Date
certified by Buyer's transfer agent.
6.2.16 Buyer and Sellers shall be in full compliance with the representations
and warranties contained in Sections 3.26 and 4.26, respectively herein.
ARTICLE VII
CLOSING AND POST-CLOSING OBLIGATIONS
7.1 TIME AND PLACE. Subject to the provisions of Articles 6 and 8
----------------
hereof, the Closing of the transactions contemplated hereby shall take place at
the offices of Xxxxxxx Xxxxx, Inc. in New York City at 9:00 A.M., local time, on
the second (2nd) business day after the date on which all of the conditions
contained in Article 6, to the extent not waived, are satisfied; or at such
other place, at such other time, or on such other date as the Company and Buyer
may mutually agree upon for the Closing to take place.
7.2 DELIVERIES AT THE CLOSING. Subject to the provisions of Articles 6
--------------------------
and 8 hereof, at the Closing there shall be delivered to Sellers, the Company
and Buyer the opinions, certificates, and other documents and instruments
required to be delivered under Article 6 hereof. All such opinions,
certificates, and other documents and instruments (collectively, the "Escrowed
Delivery Documents") required to be delivered under Article 6 shall be delivered
to and held by Escrow Agent (as defined in Section 7.3) in escrow.
7.3 OTC BULLETIN BOARD. The parties shall use their commercially
--------------------
reasonable efforts to have all the Buyer's shares listed for trading on the OTC
Bulletin Board.
7.4 BUYER STOCK CERTIFICATES. After Closing, Buyer shall send a letter of
--------------------------
transmittal to its shareholders requesting that they transmit their stock
certificates to the Buyer in exchange for a stock certificate bearing a new
CUSIP number which Buyer shall obtain and bearing the legends required by the
agreements referenced in Section 6.2.12.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.1 Termination. This Agreement may be terminated at any time prior to
-----------
the Closing Date:
8.1.1 by mutual written consent of Sellers, the Company and Buyer, properly
authorized;
8.1.2 by Sellers or the Company or Buyer, (i) if the Closing Date shall not have
occurred on or prior to October 31, 2001, unless the failure of such occurrence
shall be due to the failure of the party seeking to terminate this Agreement to
perform or observe its agreements and conditions set forth herein to be
performed or observed by such party at or before the Closing Date; or (ii) if it
has become reasonably certain that any condition specified in Article 6 of this
Agreement will not be satisfied and such condition has not been waived by the
party having the power to waive such condition;
8.1.3 by Sellers or the Company, if there shall have been any material breach of
any obligation of Buyer hereunder and such breach shall have not been remedied
within 10 days after receipt by Buyer of notice in writing from Sellers or the
Company specifying the nature of such breach and requesting that it be remedied;
and
8.1.4 by Buyer, if there shall have been any material breach of any obligation
of Sellers or the Company hereunder and such default shall not have been
remedied within 10 days after receipt by the defaulting Seller(s) or the
Company, as the case may be, of notice in writing from Buyer specifying the
nature of such breach and requesting that it be remedied.
8.2 EFFECT OF TERMINATION. In the event of termination of this
-----------------------
Agreement by either Buyer, Sellers or the Company as provided above or in
Section 8.4, this Agreement shall forthwith become void (other than Section
5.4.2 and 9.1 hereof which shall remain in full force and effect), there shall
be no further liability on the part of Sellers, the Company or Buyer, except for
liability under Section 5.4.2 and 9.1. Nothing contained in this Section 8.2
shall relieve any party hereto from liability for any breach of this Agreement.
8.3 AMENDMENT. EXTENSION AND WAIVER. Subject to applicable law, at any
--------------------------------
time prior to the consummation of the transactions contemplated herein, Sellers,
the Company and Buyer may, (a) amend this Agreement, (b) extend the time for the
performance of any of the obligations or other acts of the other, (c) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto, or (d) waive compliance with any of the
covenants, agreements or conditions contained in Articles 5 and 6 hereof. This
Agreement may not be amended, except by an instrument in writing signed on
behalf of each of the parties hereto. Any agreement on the part of a party
hereto to any extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party, but such waiver or failure
to insist on strict compliance with such obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure.
8.4 RESCISSION. Sellers and/or Buyers, shall have the right to
----------
terminate this Agreement and rescind the transactions contemplated hereby in the
event that: (i) any of the representations or warranties of Buyer or Sellers
respectively is false or misleading in any material respect;
ARTICLE IX
MISCELLANEOUS
9.1 EXPENSES. All costs and expenses incurred in connection with this
--------
Agreement and the transactions contemplated hereby (including legal, accounting,
printing and investment banking fees and expenses) shall be borne by the party
incurring such costs and expenses. Buyer's costs and expenses shall be paid
prior to the Closing Date.
9.2 SURVIVALThe respective representations and warranties of the
--------
Company and Seller shall not survive the Closing Date. The representations and
warranties of the Buyer shall survive the Closing Date for a period of two
years.
9.3 NOTICES. All notices or other communications hereunder shall be in
-------
writing and shall be deemed given if delivered personally or mailed by prepaid
registered or certified mail (return receipt requested) or by cable, telegram or
telex addressed as follows:
(a) If to Sellers, to their respective addresses set forth on Exhibit
"A" hereto.
Copy to: Xxxxxx X. Xxxxxx, Esq.
Law Offices of Xxxxxx X. Xxxxxx, P.C.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
(b) If to Buyer, to:TRIPLE S. PARTS, INC.
0000 Xxxxx Xxxx Xx. Xxxxx 0X
Xxxxxxxxxx, Xxxxxxxx 00000
Copy to: Xxxxxx Xxxxxxx, Esquire
0000 Xxxxxx Xxxx - Xxxxx #000
Xxxxxxxx, XX 00000
or such other address as shall be furnished in writing by a party, and any such
notice or communication shall be deemed to have been given as of the date so
mailed.
9.4 PARTIES IN INTEREST; ASSIGNMENT. This Agreement shall be binding
----------------------------------
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns. Neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by any party hereto without the prior
written consent of the other parties.
9.5 COMPLETE AGREEMENT. This Agreement, including the documents and
-------------------
other writings referred to herein or delivered pursuant hereto, contains the
entire agreement and understanding of the parties with respect to its subject
matter. There are no restrictions, agreements, promises, warranties, covenants
or undertakings between the parties other than as expressly set forth herein.
This Agreement supersedes prior agreements and understandings between the
parties, both written and oral, with respect to its subject matter.
9.6 NEUTRAL CONSTRUCTION. The parties have negotiated this Agreement
---------------------
and all of the terms and conditions contained in this Agreement in good faith
and at arms' length, and each party has been represented by counsel during such
negotiations. No term, condition, or provision contained in this Agreement shall
be construed against any party or in favor of any party (i) because such party
or such party's counsel drafted, revised, commented upon, or did not comment
upon, such term, condition, or provision; or (ii) because of any presumption as
to any inequality of bargaining power between nor among the parties.
Furthermore, all terms, conditions, and provisions contained in this Agreement
shall be construed and interpreted in a manner which is consistent with all
other terms, conditions, and provisions contained in this Agreement.
9.7 COUNTERPARTS. This Agreement may be executed in one or more
------------
counterparts all of which shall be considered one and the same agreement and
each of which shall be deemed an original.
9.8 GOVERNING LAW. This Agreement shall be governed by the laws of the
--------------
State of New York, without giving effect to the principles of conflicts of laws
--------
thereof.
9.9 ARBITRATION. All claims, demands, disputes, controversies,
-----------
differences, or misunderstandings between the parties arising out of, or by
virtue of, this Agreement shall be submitted to and determined by arbitration in
accordance with this Section. In the event of such a claim, demand, dispute,
controversy, difference, or misunderstanding, Buyer on the one hand, and the
Company and the Sellers, on the other hand, shall each select one arbitrator and
shall together select a third arbitrator who is neutral unbiased, and who shall
serve as the chairman of the panel. If the parties are unable to agree upon the
third arbitrator, or if one of the parties is unable to or fails to select an
arbitrator in accordance with this Section, the American Arbitration Association
("AAA') shall be designated by either party to appoint such arbitrator(s) to
arbitrate the matter in accordance with this Section. The matter shall be
arbitrated under the rules of the AAA applicable to commercial arbitrations then
obtaining, such arbitration to be held in New York City, New York. At any time
before a decision of the arbitration panel has been rendered, the parties may
resolve the dispute by settlement. The decision of a majority of arbitrator(s)
shall be the award of the panel of arbitrators and shall be made in writing
setting forth the award and the award shall be binding and conclusive on all
parties; shall not be appealable and shall include a finding for payment of the
costs of such arbitration. Judgment of a court of competent jurisdiction may be
entered upon the award and may be enforced as such in accordance with the
provisions of the award. This agreement to arbitrate is specifically enforceable
by the parties to this Agreement.
The prevailing party in such Arbitration shall be entitled to all costs and a
reasonable attorney fees.
9.10 HEADINGS. The Article and Schedule headings contained in this
--------
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, individual Sellers have executed, and the Company and
Buyer have caused this Agreement to be executed by their duly authorized
officers, all as of the day and year first above written.
Company: Buyer:
XXXXXXX XXXXX PROFESSIONAL TRIPLE S PARTS, INC.
HAIR CARE , INC.
By:_________________________ _____________________________
Name Name:
Title: Title
EXHIBIT" A"
-----------
NUMBER OF NUMBER OF BUYER
SELLER NAME AND ADDRESS COMPANY-OWNED SHARES SHARES TO BE RECEIVED
------------- ------------------------
Xxxxxxx Xxxxx
--------------
Xxxxx Xxxx
-----------
Xxx Xxxxxx
COMPANY SCHEDULES
------
Schedule
3.9 NO ADVERSE CHANGE NONE
----------------------------------------- ----
Schedule 3.10 LIABILITIES NONE
-------------- ----------- ----
Schedule 3.11 TAXES NONE
-------------- ----- ----
Schedule
3.16 LITIGATION NONE
------------------------------ ----
Schedule 3.17 COMPENSATION AND LOANS NONE
-------------- ------------------------ ----
Schedule 3.18 ADDITIONAL ISSUANCES OF EQUITY NONE
-------------- --------------------------------- ----
Schedule 3.19 BROKER'S FEES NONE
-------------- -------------- ----
Schedule 3.21 COMPANY INTELLECTUAL PROPERTY
-------------- -------------------------------
Schedule 3.23 AFFILIATED TRANSACTIONS SEE BELOW
-------------- ------------------------ ----------
Schedule 3.25 EMPLOYEE BENEFIT PLANS NONE
-------------- ------------------------ ----
------
COMPANY SCHEDULES
------------------
Schedule 3.9 NO ADVERSE CHANGE NONE
------------- ------------------- ----
Schedule 3.10 LIABILITIES NONE
-------------- ----------- ----
Schedule 3.11 TAXES NONE
-------------- ----- ----
Schedule 3.16 LITIGATION NONE
-------------- ---------- ----
Schedule 3.17 COMPENSATION AND LOANS NONE
-------------- ------------------------ ----
Schedule 3.18 ADDITIONAL ISSUANCES OF EQUITY NONE
-------------- --------------------------------- ----
Schedule 3.19 BROKER'S FEES NONE
-------------- -------------- ----
Schedule 3.21 COMPANY INTELLECTUAL PROPERTY NONE
-------------- ------------------------------- ----
Schedule 3.23 AFFILIATED TRANSACTIONS SEE BELOW
-------------- ------------------------ ----------
Schedule 3.25 EMPLOYEE BENEFIT PLANS NONE
-------------- ------------------------ ----
Schedules Pursuant to Contract for Sale and Purchase of Shares
Xxxxxxx Xxxxx, lnc. / Triple S. Parts, Inc.
Schedule 4.12 Title; Property; Real Property: NONE
Schedule 4.13 Contracts and Commitments: NONE
Schedule 4.14 Litigation: NONE
Schedule 4.15 Compensation and Loans: NONE- Note payable listed on prior
10QSB now paid. Note marked paid has been delivered.
Schedule 4.16 Additional lssuances of Equity: NONE
Schedule 4.21 Sanctions: NONE as to all subsections
under 4.21, including 4.21.1 through 4.2 1.6
