EXHIBIT 10.2
AGREEMENT OF STOCK EXCHANGE
THIS AGREEMENT OF STOCK EXCHANGE ("Agreement") is made as of this 8th day
of August 2001, by and among Xxxxxxx Xxxxx, 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.
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 which
is issued and outstanding immediately prior to the Closing Date shall, by
virtue of this Agreement, remain issued and outstanding thereafter.
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1.3 Restrictions on Shares. The Buyer Shares being acquired by the
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 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 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, 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 incurred any liability for any broker's fees, commissions or
finder's fees in connection with any of the transactions contemplated by this
Agreement.
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2.5 Investment Intent. Each of the Sellers are acquiring Buyer Shares
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
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
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, 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, 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 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.
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3.6 Subsidiaries. The Company has, and on the Closing Date will have,
no subsidiaries.
3.7 Doing Business. The Company is, and on the Closing Dates will be,
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,
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
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, 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,
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
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.
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3.13 Title; Inventor. The Company has, and on the Closing Date will
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
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 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, 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,
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
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
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.
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3.20 Insurance. The Company has, and on the Closing Date will have,
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
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
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 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
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;
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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 Company has no pension plan, profit sharing or similar employee benefit
plan.
3.26 Questionable Payments. Neither the Company, nor any current or
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
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
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
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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, 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, 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 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
subsidiaries.
4.8 Financial Statements. The audited financial statements of Buyer,
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
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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
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
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,
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
9
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
10
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 Representations At 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
11
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, ______________ and _______________, 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
12
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.
13
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.
14
(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.
15
(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.
16
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.
17
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 Survival The 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.
18
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, INC. TRIPLE S PARTS, INC.
By:__________________________ By:___________________________
Name: Name:
Title: Title:
19
EXHIBIT "A"
SELLER NAME AND ADDRESS NUMBER OF NUMBER OF BUYER
COMPANY OWNED SHARES TO BE RECEIVED
SHARES
------------------------------- ------------------- ---------------------
Xxxxxxx Xxxxx
Xxxxx Xxxx
Xxx Xxxxxx
20
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
21
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
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