EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (the "Agreement") is entered into
as of this 30th day of April, 1997, by and among MERCRISTO DEVELOPMENTS, INC., a
Delaware corporation ("MDI"), EGYPTIAN ARABIANS INC., an Ontario corporation
("EAI") and RESI CORP., an Ontario corporation ("RESI").
WITNESSETH:
WHEREAS, RESI owns, or will own, all of the issued and outstanding shares of
Common Stock of EAI (the "EAI Shares"); and
WHEREAS, MDI desires to acquire the EAI Shares solely in exchange for
8,450,000 authorized and unissued shares of Common Stock of MDI, $.001 par value
per share (the "MDI Shares"), which at the time of the exchange will represent
51.3% of the issued and outstanding shares of Common Stock of MDI (the
"Reorganization").
NOW, THEREFORE, in consideration of the premises, covenants,
representations, warranties and agreements herein contained, the parties agree
as follows:
ARTICLE I
TERMS OF THE REORGANIZATION
1.1 THE EXCHANGE OF SHARES. On the Closing Date, RESI shall deliver duly
issued stock certificates representing the EAI Shares to MDI, which certificates
shall be delivered free and clear of all liens, security interests, and
restrictions. The EAI Shares shall be duly and validly issued and fully paid
and non-assessable. Simultaneously with the delivery of the EAI Shares, MDI
will issue and deliver to RESI stock certificates representing the MDI Shares,
which certificates shall be delivered free and clear of all liens, security
interests, and restrictions (other than the standard Securities Act legend which
will appear on all such certificates). The MDI Shares shall be duly and validly
issued and fully paid and non-assessable.
1.2 CLOSING. The closing of the transactions contemplated hereby
("Closing") shall occur within ten days of the date on which MDI's Registration
Statement on Form 10 is declared effective by the United States Securities and
Exchange Commission (the "SEC") at the offices of Xxxxxx, Xxxxxxx & Xxxxx or at
a time or place mutually agreed to by the parties (the "Closing Date").
1.3 VOTING RIGHTS; DIVIDENDS. The MDI Shares issued to RESI pursuant to
this Agreement shall have the same rights and privileges as those shares of
MDI's Common Stock currently issued and outstanding, including without
limitation voting and dividend rights, and such shares shall not be subject to
call by MDI.
1.4 MDI STOCK. Each MDI Share which is outstanding immediately prior to
the Reorganization shall continue to remain outstanding.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF MDI
MDI hereby represents and warrants to EAI and RESI as follows:
2.1 ORGANIZATION AND QUALIFICATION. MDI is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
MDI has all requisite corporate power and authority to carry on its business as
it is now being conducted and to own or lease its properties and assets. MDI is
duly qualified or licensed to do business as a foreign corporation in good
standing in every jurisdiction where the failure to be so qualified or licensed
would have a material adverse effect on MDI taken as a whole. MDI has
heretofore delivered to EAI and RESI complete and correct copies of its
Certificate of Incorporation and By-laws, each as amended and currently in
effect.
2.2 CAPITALIZATION. The authorized capital stock of MDI consists of
100,000,000 shares of Common Stock, $.001 par value per share. As of the date
hereof, 8,110,519 shares of Common Stock are issued and outstanding. No shares
of Common Stock are held as treasury shares. The issued and outstanding shares
of Common Stock are validly issued, fully paid and non-assessable. MDI has
previously delivered to EAI and RESI true, correct and complete copies of its
stock record books, which stock record books accurately reflect the record and
beneficial ownership of the issued and outstanding shares of MDI Stock. There
is no outstanding option, warrant, right, call, subscription or other agreement
or commitment which (a) calls for the issuance, sale, pledge or other
disposition of any shares of Common Stock of MDI or any securities convertible
or exchangeable into, or other rights to acquire, any shares of Common Stock of
MDI, (b) obligates MDI to grant, offer or enter into any of the foregoing, or
(c) relates to the voting, transfer or control of such Common Stock, securities
or rights.
2.3 SUBSIDIARIES. MDI has no subsidiaries, nor does MDI own, directly or
indirectly, any of the outstanding capital stock or securities convertible into
capital stock of any corporation or have any direct or indirect equity or
ownership interest in any partnership, joint venture or other business
enterprise.
2.4 AUTHORIZATION. MDI has all requisite corporate power to enter into this
Agreement and to carry out its obligations hereunder. Subject to the approval
by the stockholders of MDI of this Agreement and the transactions contemplated
hereby, (a) the execution and delivery of this Agreement and the due
consummation by MDI of the transactions contemplated hereby, have been duly and
validly authorized by all necessary
- 2 -
corporate action on the part of MDI, and (b) this Agreement constitutes (and
each other document and instrument contemplated by this Agreement, when executed
and delivered in accordance with the provisions hereof, will constitute) a valid
and legally binding agreement of MDI enforceable in accordance with its terms,
except (i) as such enforcement may be limited by bankruptcy, reorganization,
insolvency or other laws and court decisions relating to or affecting the
enforcement of creditors' rights generally (including but not limited to
statutory or other law regarding fraudulent transfers), and (ii) as to the
availability of specific performance or other equitable remedies.
2.5 NO CONFLICTS. Except as disclosed on Schedule 2.5 attached hereto, the
execution, delivery and performance of this Agreement by MDI, and consummation
of the transactions contemplated hereby:
(a) will not constitute a conflict with, breach or violation of or
default (or an event which with notice or lapse of time or both would become a
default) under:
(i) either MDI's Certificate of Incorporation or By-laws, each
as amended to date, or
(ii) any agreement, instrument, license, franchise or permit to
which MDI is subject or by which MDI is bound, or
(iii) any order, writ, injunction or decree to which MDI is
subject or by which MDI is bound, or
(iv) to the best of MDI's knowledge, any law, rule or regulation
to which MDI is subject;
(b) will not result in or give rise to an adverse claim against any MDI
Shares; or
(c) will not result in the creation of any lien, claim, charge or
encumbrance on the properties or assets of MDI (other than resulting from this
Agreement).
2.6 FINANCIAL STATEMENTS. The books and records of MDI are complete and
correct in all material respects, have been maintained in accordance with sound
business practices, and fully and fairly reflect all of the transactions of MDI.
MDI has previously delivered to representatives of EAI true and complete copies
of the audited balance sheet of MDI as at January 31, 1997 and the related
statements of operations and cash flows and changes in stockholders' equity for
the annual period ended on such date, in each case accompanied by the report of
Xxxxxxxxx & Company, certified public accountants (collectively "MDI Financial
Statements"). The MDI Financial Statements have been derived from the
accounting books and records of MDI, fairly present the financial position,
results of
- 3 -
operations, stockholders' equity and changes in financial position of MDI as at
the dates and for the periods indicated and have been prepared in accordance
with generally-accepted accounting principles consistently applied.
2.7 LACK OF OPERATIONS. MDI is a shell company with no operations and has
no assets or liabilities other than those disclosed in the MDI Financial
Statements.
2.8 COMPLIANCE WITH LAWS.
(a) MDI is not acting, or permitting to exist a condition which is, in
contravention or violation of any applicable law, regulation, ordinance, order,
injunction or decree, or any other requirement of any governmental body, court
or self-regulatory authority, nor has MDI failed to remedy any such previously-
existing violation, which could have a material adverse effect on MDI. No
assertion of any such violation or noncompliance has been received by MDI. MDI
shall comply with all applicable securities laws both prior and subsequent to
the Closing Date.
(b) Neither MDI nor any officer, director or employee of MDI has been
the subject of any disciplinary proceeding or order of any governmental
authority or self-regulatory authority arising under securities laws and
regulations and no such disciplinary proceeding or order is pending or, to the
best of MDI's knowledge, contemplated; and neither MDI nor any officer, director
or employer of MDI has been permanently enjoined by any order, judgment or
decree of any court, governmental authority or self-regulatory authority from
engaging in or continuing any conduct or practice in connection with any
activity or in connection with the purchase or sale of any security.
2.9 CONTRACTS. MDI is not a party to nor bound by any oral or written
contract, commitment or arrangement that is material to MDI.
2.10 LITIGATION. There is no legal, equitable, administrative or
arbitration action, suit, proceeding or known investigation pending or, to MDI's
best knowledge, threatened against or affecting MDI or any of its assets which,
if adversely determined, could adversely affect the business, the operations or
properties, or the condition, financial or otherwise, of MDI or the ability of
MDI to consummate the transactions contemplated hereby. There is no judgment,
decree, injunction, rule or order of any court, governmental department,
commission, agency, instrumentality or arbitrator outstanding against MDI and,
to MDI's best knowledge, there is no basis for any action, suit, proceeding or
investigation against MDI. No such action, suit, proceeding, known
investigation, judgment, decree, injunction, rule or order arises out of the
employment of labor, equal employment opportunity, occupational health and
safety, economic stabilization or environmental protection. To the best of
MDI's knowledge, MDI is not in default with respect to any order, injunction or
decree of any court or governmental department, commission, board or agency, and
no such
- 4 -
order, injunction or decree is now in effect which restrains the operations or
the use of the properties of MDI.
2.11 BROKERS AND FINDERS. Neither MDI nor any officer, director or
employee of MDI has employed any broker or finder or incurred any liability for
any brokerage fees, commissions or finders' fees in connection with the
transactions contemplated hereby.
2.12 CONFLICTS OF INTEREST. Except as set forth on Schedule 2.12 attached
hereto, MDI is not a party to any contract with any officer, director or 5% (or
greater) stockholder of MDI, any relative of any of the foregoing, or any entity
controlling, controlled by or under common control with any of the foregoing.
2.13 ACCURACY AND COMPLETENESS OF REPRESENTATIONS AND WARRANTIES. No
representation or warranty made by MDI in this Agreement and no statement
contained in any document, instrument, Schedule or Exhibit referenced herein
prepared by MDI and to be delivered by MDI contains or will contain any untrue
statement of a material fact, or omits or will omit to state a material fact
necessary to make the statements contained therein, in the light of the
circumstances in which they are made, not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF EAI AND RESI
EAI, for itself and on behalf of its subsidiaries, 622291 Ontario Inc.
("622291") and Xxxxxxx Arabians Inc. ("Xxxxxxx"), and RESI hereby jointly and
severally represent and warrant to MDI as follows:
3.1 ORGANIZATION AND QUALIFICATION. Each of EAI, 622291 and Xxxxxxx is a
corporation duly organized, validly existing and in good standing under the laws
of the Province of Ontario, Canada. Each of EAI, 622291 and Xxxxxxx has all
requisite corporate power and authority to carry on its business as it is now
being conducted and to own or lease its properties and assets. Each of EAI,
622291 and Xxxxxxx is duly qualified or licensed to do business as an extra-
provincial foreign corporation in good standing in every jurisdiction where the
nature of its business or the location or character of its owned or leased
property requires it to be so qualified or licensed. Each of EAI, 622291 and
Xxxxxxx has heretofore delivered to MDI complete and correct copies of its
Certificate of Incorporation and By-laws, each as amended and currently in
effect.
3.2 CAPITALIZATION. The authorized capital stock of EAI consists of an
unlimited number of First Preferred Shares, Second Preferred Shares, Third
Preferred Shares and Common Shares, all as more particularly described in EAI's
Certificate of Incorporation. After giving effect to the reorganization of
622291, to be completed prior to or
- 5 -
contemporaneously with the Closing Date, 1,000 shares of EAI Common Stock will
be issued and outstanding, all of which will be owned by RESI, and no shares of
any class of Preferred Stock will be issued or outstanding. No shares of Common
Stock or Preferred Stock are held as treasury shares. The shares of EAI Common
Stock to be issued to RESI will be validly issued, fully paid and non-
assessable. EAI has previously delivered to MDI true, correct and complete
copies of its shareholders' ledger, which stock record books accurately reflect
the record and beneficial ownership of the issued and outstanding shares of EAI
Common Stock. There is no outstanding option, warrant, right, call,
subscription or other agreement or commitment which (a) calls for the issuance,
sale, pledge or other disposition of any shares of capital stock of EAI or any
securities convertible or exchangeable into, or other rights to acquire, any
shares of capital stock of EAI, (b) obligates EAI to grant, offer or enter into
any of the foregoing, or (c) relates to the voting, transfer or control of such
capital stock, securities or rights. All of the issued and outstanding shares
of capital stock of 622291, after giving effect to the reorganization of 622291,
will be owned by EAI, and all of the issued and outstanding shares of capital
stock of Xxxxxxx are and will be owned by 622291.
3.3 SUBSIDIARIES. Except for 622291 and Xxxxxxx, EAI has no subsidiaries,
nor does EAI own, directly or indirectly, any of the outstanding capital stock
or securities convertible into capital stock of any corporation or have any
direct or indirect equity or ownership interest in any partnership, joint
venture or other business enterprise.
3.4 AUTHORIZATION. Each of EAI and RESI has all requisite corporate power
to enter into this Agreement and to carry out its respective obligations
hereunder. The execution and delivery of this Agreement and the due
consummation by EAI and RESI of the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate action on the part of
each of EAI and RESI, and this Agreement constitutes (and each other document
and instrument contemplated by this Agreement, when executed and delivered in
accordance with the provisions hereof, will constitute) a valid and legally
binding agreement of EAI and RESI, enforceable in accordance with its terms,
except (i) as such enforcement may be limited by bankruptcy, reorganization,
insolvency or other laws and court decisions relating to or affecting the
enforcement of creditors' rights generally (including but not limited to
statutory or other law regarding fraudulent transfers), and (ii) as to the
availability of specific performance or other equitable remedies.
3.5 NO CONFLICTS. Except as disclosed on Schedule 3.5 attached hereto, the
execution, delivery and performance of this Agreement by EAI and RESI, and the
consummation of the transactions contemplated hereby:
(a) will not constitute a conflict with, breach or violation of or
default (or an event which with notice or lapse of time or both would become a
default) under: (i) either EAI's or RESI's Certificate of Incorporation or By-
laws, each as amended to date, or (ii) any agreement, instrument, license,
franchise or permit to which EAI, 622291, Xxxxxxx or RESI
- 6 -
is subject or by which EAI, 622291, Xxxxxxx or RESI is bound, or (iii) any
order, writ, injunction or decree to which EAI, 622291, Xxxxxxx or RESI is
subject or by which EAI, 622291, Xxxxxxx or RESI is bound, or (iv) to the best
of EAI's knowledge, any law, rule or regulation to which EAI, 622291, Xxxxxxx or
RESI is subject;
(b) will not result in or give rise to an adverse claim against any EAI
Shares; or
(c) will not result in the creation of any lien, claim, charge or
encumbrance on the properties or assets of EAI, 622291, Xxxxxxx or RESI (other
than resulting from this Agreement).
3.6 CONSENTS AND APPROVALS. Neither EAI nor RESI is required to submit any
notice, report or other filing to or obtain any consent or approval from any
governmental authority or third party in connection with the execution and
delivery by EAI and RESI of this Agreement or the consummation of the
transactions contemplated hereby.
3.7 FINANCIAL STATEMENTS. The books and records of 622291 and Xxxxxxx are
complete and correct in all material respects, have been maintained in
accordance with sound business practices, and fully and fairly reflect all of
the transactions of 622291 and Xxxxxxx. EAI has previously delivered to MDI
true and complete copies of the audited consolidated balance sheets of 622291
and its subsidiaries as at January 31, 1997, 1996, 1995, 1994 and 1993, and the
related statements of operations and cash flows and changes in stockholders'
equity for the annual periods ended on such dates, in each case accompanied by
the reports of Xxxxx Xxxxx, Chartered Accountant (collectively the "EAI
Financial Statements"). The EAI Financial Statements have been derived from the
accounting books and records of 622291 and its consolidated subsidiaries, fairly
present the financial position, results of operations, stockholders' equity and
changes in financial position of 622291 and its consolidated subsidiaries as at
the dates and for the periods indicated and have been prepared in accordance
with generally accepted accounting principles and 622291's historical accounting
practices and principles, consistently applied.
3.8 RECEIVABLES. The accounts receivable of 622291 reflected in the EAI
Financial Statements as of January 31, 1997 are valid and created in the
ordinary course of business, except as set forth in the allowance for bad debts
in such EAI Financial Statements.
3.9 AMOUNTS DUE. The amounts due from partnerships and amounts due from
related parties as reflected in the EAI Financial Statements as of January 31,
1997 are, to the best of EAI's knowledge, collectible in the ordinary course of
business.
3.10 UNDISCLOSED LIABILITIES. To the best of EAI's knowledge, except for
liabilities incurred in the ordinary course of business subsequent to January
31, 1997, neither 622291 nor Xxxxxxx has any liability, obligation or expense
(whether due or to become due, known
- 7 -
or unknown, absolute, contingent or otherwise), including but not limited to
liabilities for taxes, other than (a) those liabilities fully and adequately
reflected or reserved against in the EAI Financial Statements and not paid or
discharged after the date thereof, or (b) those liabilities listed or described
on Schedule 3.10 attached hereto. Except as set forth on Schedule 3.10, to the
best of EAI's knowledge, neither 622291 nor Xxxxxxx has any obligation
(absolute, contingent or otherwise) to provide funds on behalf of, or to
guarantee or assume any debt, liability or obligation of any other corporation,
partnership, association, joint venture, individual or other person.
3.11 REAL PROPERTY.
(a) Attached hereto as Schedule 3.11(a) is a complete list or
description of all real property (the "Real Property") which is owned by 622291.
To the best of EAI's knowledge, 622291 has good and marketable title to the Real
Property owned by it, free and clear of liens, charges and encumbrances, except,
in each case, as otherwise specified in Schedule 3.11(a). To the best of EAI's
knowledge, 622291 is not in violation of any applicable zoning regulation,
ordinance or other law, order, regulation or requirement relating to the Real
Property or any operations conducted thereon.
(b) No proceedings for the taking of any of the Real Property by eminent
domain by any governmental authority are pending or, to the best of EAI's
knowledge, threatened.
(c) Attached hereto as Schedule 3.11(c) is a list of each lease of real
property (including amendments thereto) to which either 622291 or Xxxxxxx is a
party. There are no contractual obligations, agreements in principle or present
plans for either 622291 or Xxxxxxx to enter into new leases of real property or
to renew or amend existing leases of real property prior to the Closing Date.
3.12 ENVIRONMENTAL MATTERS. To the best of EAI's knowledge without
performing or causing to be performed any independent examination thereof,
except as disclosed on Schedule 3.12 attached hereto, (a) there has been no
release of any hazardous substance by 622291 or Xxxxxxx at or from any of the
Real Property or facilities owned or used by either 622291 or Xxxxxxx (b) there
has been no disposal of any hazardous substance by 622291 or Xxxxxxx at or on
any of the Real Property or facilities owned or used by either 622291 or Xxxxxxx
(c) neither 622291 nor Xxxxxxx has placed any hazardous substances in or on any
of the Real Property or facilities owned or used by either 622291 or Xxxxxxx (d)
neither 622291 nor Xxxxxxx has generated, treated or stored any hazardous
substances at or on any Real Property or facilities which it owns or uses, (e)
there has been no disposal or arrangement for disposal of hazardous substances
by either on any property not now owned or leased by either 622291 or Xxxxxxx,
and (f) neither 622291 nor Xxxxxxx has placed any underground storage tanks at
the Real Property or facilities owned or used by 622291 or Xxxxxxx.
- 8 -
3.13 PERSONAL PROPERTY.
(a) Each of 622291 and Xxxxxxx has the unconditional right to use all
properties, assets and rights set forth on the EAI Financial Statements and all
other properties, assets and rights owned or used by them, except for (i)
limitations imposed by the terms of the applicable lease, in the case of leased
property, (ii) defects in title, mortgages, liens, security interests, charges
and encumbrances disclosed in Schedule 3.13, and (iii) such restrictions on use
as do not materially impair the value of such properties, assets and rights or
the business of 622291 or Xxxxxxx ("Permitted Liens"). Each of 622291 and
Xxxxxxx has good and marketable title to all of the tangible personal
properties, assets and rights owned by it, free and clear of all mortgages,
liens, security interests, charges and encumbrances, except for Permitted Liens.
(b) All leases, subleases and other agreements under which each of
622291 and Xxxxxxx is lessee or lessor of any property, real or personal, are in
full force and effect and constitute legal, valid and binding obligations of the
respective parties thereto enforceable in accordance with their respective terms
(except as such enforcement may be limited by bankruptcy, reorganization,
insolvency or other laws and court decisions relating to or affecting the
enforcement of creditors' rights generally, including but not limited to
statutory or other law regarding fraudulent transfers, and except as to the
availability of specific performance or other equitable remedies), and grant the
leasehold estates they purport to grant free and clear of all mortgage, liens,
security interest, charges or encumbrances whatsoever, except for Permitted
Liens. There is not, under any of such instruments, any claimed default or any
event of default or event which with notice or lapse of time or both would
constitute an event of default.
(c) Except as disclosed on Schedule 3.13, all machinery, equipment and
other tangible personal property owned or used by each of 622291 and Xxxxxxx is
free from any material defect and is capable of being used in the ordinary and
usual course of business as presently conducted by each of 622291 and Xxxxxxx.
3.14 INSURANCE. Schedule 3.14 contains a complete list of all policies of
insurance and fidelity and surety bonds now in force with respect to each of
622291 and Xxxxxxx and their respective Directors, officers and employees
(including the expiration date, premium amount and coverage under each such
policy and bond), and a complete list of all pending claims in excess of $5,000
under any of such policies or bonds. To the best of EAI's knowledge, each of
622291 and Xxxxxxx has complied in all material respects with the terms,
obligations and provisions of each such policy and bond.
3.15 COMPLIANCE WITH LAWS.
(a) All material permits, licenses, operating certificates, orders or
approvals of any federal, state, local or foreign governmental agency or self-
regulatory authority
- 9 -
(hereinafter collectively, "permits") currently held by each of 622291 and
Xxxxxxx or their officers, Directors, agents, or employees, as the case may be,
with respect to the assets, properties or business of 622291 and Xxxxxxx, are in
full force and effect. Such permits constitute all of the permits necessary to
(i) the ownership or use of the properties and assets of each of 622291 and
Xxxxxxx, (ii) the conduct of the businesses of each of 622291 and Xxxxxxx, and
(iii) the conduct of activities (as presently conducted) by the officers,
Directors, agents and employees (as the case may be) of each of 622291 and
Xxxxxxx, and the failure to obtain which could have a material adverse effect
upon EAI and its subsidiaries taken as a whole. To the best of EAI's knowledge,
all material permits with respect to the assets, properties or business of each
of 622291 and Xxxxxxx, are in full force and effect. To the best of EAI's
knowledge, no material violations are or have been recorded in respect of, and
no threat of revocation has been received with respect to, the foregoing permits
of 622291 and Xxxxxxx.
(b) Neither 622291 nor Xxxxxxx is acting, or permitting to exist a
condition which is in contravention or violation of any applicable law,
regulation, ordinance, order, injunction or decree, or any other requirement of
any governmental body, court or self-regulatory authority, nor has 622291 or
Xxxxxxx, to the best of EAI's knowledge, failed to remedy any such previously
existing violation, which could have a material adverse effect on the business
of EAI and its subsidiaries taken as a whole. No assertion of any such
violation or noncompliance has been received by either 622291 or Xxxxxxx.
(c) Except as disclosed on Schedule 3.15(c) attached hereto, neither
622291 nor Xxxxxxx nor any officer, Director or employee of 622291 or Xxxxxxx
has been the subject of any disciplinary proceeding or order of any governmental
authority or self-regulatory authority arising under securities laws and
regulations and no such disciplinary proceeding or order is pending or, to the
best of EAI's knowledge, contemplated; and neither 622291 nor Xxxxxxx nor any
officer, Director or employee of 622291 or Xxxxxxx has been permanently enjoined
by any order, judgment or decree of any court, governmental authority or self-
regulatory authority from engaging in or continuing any conduct or practice in
connection with any activity or in connection with the purchase or sale of any
security.
(d) Neither 622291 nor Xxxxxxx has failed to file any report or return
which is or may be required by law, rule, regulation or policy of any
governmental authority or self-regulatory authority, or failed to pay any dues,
fees or charges which are due or have been assessed against it in respect of
membership or registration with any governmental authority or self-regulatory
authority, which failure could have a material adverse effect upon 622291 or
Xxxxxxx.
3.16 TAXES. All federal, provincial and local tax returns, reports and
declarations (hereinafter collectively, "returns") required to be filed in
connection with the properties, assets, operations, income, expenses, net worth
and franchises (hereinafter the "business") of 622291 and Xxxxxxx have been
timely filed, and such returns are true, correct and complete;
- 10 -
and all taxes and governmental charges (including, without limitation, any
interest and penalties) due pursuant to such returns or otherwise due, levied or
assessed with respect to the businesses of 622291 and Xxxxxxx have been paid,
other than taxes or charges which (a) are not yet due, or if due, are not yet
delinquent, (b) are being contested in good faith, or (c) have not been finally
determined and, in each case, for which adequate reserves have been established
in the EAI Financial Statements in accordance with generally accepted accounting
principles, consistently applied. There is no agreement for the extension of
the time of any assessment of any tax with respect to the business of 622291 or
Xxxxxxx, and there are no audits of any tax return of 622291 or Xxxxxxx
currently in progress. There are no claims or proceedings pending with respect
to the business of 622291 or Xxxxxxx, for past-due taxes, and, to the best of
EAI's knowledge, no such claims or proceedings are threatened. Neither 622291
nor Xxxxxxx has received any notice of any tax lien with respect to its business
having been filed in any jurisdiction. The income tax returns of each of 622291
and Xxxxxxx have never been audited.
3.17 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since January 31, 1997, other
than changes in the ordinary course of business, there has been no material
adverse change in the business, results of operations, assets, financial
condition or prospects or in the manner of conducting the business of 622291 or
Xxxxxxx, or, to the best of EAI's knowledge, no fact or condition exists, is
contemplated or is threatened that might cause such a change in the future.
3.18 LITIGATION. There is no litigation, proceeding or governmental or
self-regulatory authority investigation pending, or any judgment, order,
injunction or decree outstanding, against or related to 622291 or Xxxxxxx or any
officer, Director or employee of 622291 or Xxxxxxx or, to the best of EAI's
knowledge, any partner, agent or employee of 622291 or Xxxxxxx, which if
determined adversely would materially and adversely affect 622291 or Xxxxxxx,
nor to the best of EAI's knowledge: (i) is any such litigation, proceeding or
investigation threatened, or (ii) does any specific basis for any such
litigation, proceeding or investigation exist.
3.19 BROKERS AND FINDERS. Neither 622291 nor Xxxxxxx nor any officer,
Director or employee of 622291 or Xxxxxxx has employed any broker or finder or
incurred any liability for any brokerage fees, commissions or finders' fees in
connection with the transactions contemplated hereby.
3.20 CONTRACTS. Except as set forth in Schedule 3.20 attached hereto,
neither 622291 nor Xxxxxxx is a party to nor bound by any oral or written
contract, commitment or arrangement (a "Contract") which is:
(a) for the employment of any officer or individual employee (not
including registered representatives);
- 11 -
(b) with any labor union;
(c) in the nature of a (i) confidentiality agreement, (ii) royalty,
(iii) license, or (iv) an agreement for the acquisition of intangible property
rights that is material to the conduct of the business of 622291 or Xxxxxxx, or
(v) any other agreement that is material to the conduct of the business of
622291 or Xxxxxxx;
(d) in the nature of a non-competition agreement which in any way
restricts the right of 622291 or Xxxxxxx to conduct business;
(e) in the nature of a management or consulting agreement (other than
financial or consulting agreements entered into in the ordinary course of
business);
(f) not performable within one calendar year; or
(g) not in the ordinary course of business.
Except as disclosed on Schedule 3.20, each Contract to which 622291 or Xxxxxxx
is a party is valid, binding and in full force and effect, and is enforceable in
accordance with its terms, except (i) as such enforcement may be limited by
bankruptcy, reorganization, insolvency or other laws and court decisions
relating to or affecting the enforcement of creditors' rights generally
(including but not limited to statutory or other law regarding fraudulent
transfers), and (ii) as to the availability of specific performance or other
equitable remedies. Each of 622291 and Xxxxxxx has been paid in full or accrued
all amounts due under each such Contract, has satisfied in full or provided for
all of its liabilities and obligations thereunder and, to the best of EAI's
knowledge, each of 622291 and Xxxxxxx is not in default under any such Contract,
nor is any other party thereto in default thereunder. Neither 622291 nor
Xxxxxxx is a party to or bound by any Contract which materially and adversely
affects the business, operations or financial condition of EAI and its
subsidiaries taken as a whole.
3.21 LABOR. Except as disclosed on Schedule 3.21 attached hereto, each of
622291 and Xxxxxxx has complied in all material respects with all applicable
federal, provincial and local laws and ordinances relating to the employment of
labor, including the provisions thereof relating to wages, hours, employee
benefit plans and the payment of applicable taxes, and is not liable for any
arrears of wages or any tax relating thereto (except for currently accrued and
unpaid wages and except for currently accrued withholding, payroll, unemployment
and other applicable taxes, payment of which is not overdue) or penalties for
failure to comply with any of the foregoing, and has received no notice to the
contrary from any governmental agency. There have not been any disputes between
622291 or Xxxxxxx and their respective employees which have involved organized
labor strikes or work stoppages, proceedings before any court or agency alleging
any unfair labor practice, wage-hour violation, unlawful discrimination in
employment practices or other violation of labor law, or any grievance or
arbitration proceedings at any time since December 31, 1993.
- 12 -
3.22 INTANGIBLE PROPERTY. Except as set forth on Schedule 3.22 attached
hereto, each of 622291 and Xxxxxxx owns, or has valid, binding and enforceable
rights to use, any and all patents, trademarks, trade names, service marks,
service names, copyrights, applications therefor ("Intangible Property") used or
held for use in connection with its business, in each case free and clear of any
lien, security interest, charge or encumbrance, subject to no interference and
without any known conflict with the rights of others. Schedule 3.22 sets forth
a complete list of all such Intangible Property owned by or licensed to 622291
or Xxxxxxx where any such Intangible Property has been registered or filed with
the United States Patent or Trademark Office or the corresponding office of any
other jurisdictions. Neither 622291 or Xxxxxxx has infringed, misappropriated,
misused or been charged with (or, to the best of EAI's knowledge, been
threatened to be charged with), and neither 622291 nor Xxxxxxx has received any
notice with respect to, infringement, misappropriation or misuse of any
Intangible Property owned or claimed by another. Except as disclosed on
Schedule 3.22, neither 622291 nor Xxxxxxx has granted any outstanding licenses
or other rights, or obligated itself to grant licenses or other rights in or to
any of the Intangible Property owned, used by or licensed to 622291 or Xxxxxxx.
3.23 DIRECTORS, OFFICERS AND KEY EMPLOYEES. Schedule 3.23 sets forth the
names, addresses and salaries of the officers and Directors of 622291 and
Xxxxxxx and other key employees of 622291 and Xxxxxxx. Except as set forth on
Schedule 3.23, none of the persons listed thereon has received any wage or
salary increase or bonus since January 31, 1997 and there has not been any
accrual for or commitment or agreement by 622291 or Xxxxxxx to pay the same.
3.24 CONFLICTS OF INTEREST. Except as set forth on Schedule 3.24 attached
hereto, neither 622291 or Xxxxxxx is a party to any contract with any officer,
Director or 5% (or greater) shareholder of 622291 or Xxxxxxx, any relative of
any of the foregoing, or any entity controlling, controlled by or under common
control with any of the foregoing.
3.25 ACCURACY AND COMPLETENESS OF REPRESENTATIONS AND WARRANTIES. No
representation or warranty made by EAI and RESI in this Agreement and no
statement contained in any document, instrument, Schedule or Exhibit referenced
herein prepared by EAI and to be delivered by EAI contains or will contain any
untrue statement of a material fact, or omits or will omit to state a material
fact necessary to make the statements contained therein, in the light of the
circumstances in which they are made, not misleading.
ARTICLE IV
COVENANTS AND AGREEMENTS
4.1 MDI COVENANTS BETWEEN SIGNING AND THE CLOSING DATE. During the period
commencing on the date hereof and continuing until the Closing Date, MDI
covenants and
- 13 -
agrees that it will not issue any shares of its Common Stock, amend its
Certificate of Incorporation or By-laws except as contemplated hereby or enter
into any transaction the effect of which would be to dilute the ownership
interest in MDI to be received by RESI upon the consummation of the transactions
contemplated hereby.
4.2 EAI COVENANTS BETWEEN SIGNING AND THE CLOSING DATE. During the period
commencing on the date hereof and continuing until the Closing Date, EAI for
itself and on behalf of 622291 and Xxxxxxx, covenants and agrees as follows:
(a) 622291 and Xxxxxxx each shall conduct their businesses in, and only
in, the regular and ordinary course in substantially the same manner as
heretofore conducted, use their best efforts to preserve and protect their
businesses, rights, properties and assets, and, to the extent consistent with
such businesses, use their best efforts to preserve intact their present
business organizations, keep available the services of their present officers
and employees and preserve their relationships with customers, suppliers and
others having business dealings with them to the end that their good will and
business shall be unimpaired at the Closing Date. Without limiting the
generality of the foregoing, neither EAI, 62291 nor Xxxxxxx shall (without the
prior written consent of MDI):
(i) issue any shares of capital stock, except as contemplated in
connection with the reorganization of 622291 and capitalization of EAI;
(ii) amend its Certificate of Incorporation or By-laws;
(iii) adjust, split, combine or reclassify any shares of capital
stock;
(iv) make, declare or pay any dividend or make any other distribution
on, or directly or indirectly issue, redeem, purchase or otherwise acquire, any
shares of its capital stock or any securities or obligations convertible into or
exchangeable for any shares of its capital stock;
(v) except as otherwise provided herein, grant any stock appreciation
rights, stock options or other rights to share in the equity value of EAI, 62291
or Xxxxxxx;
(vi) sell, transfer, mortgage, encumber or otherwise dispose of any of
its properties or assets, or cancel, release or assign any indebtedness to it or
any claims held by it, except transactions in the ordinary course of its
business;
(vii) except for transactions in the ordinary course of its business,
make any material investment, either by purchase of stock or securities, loans,
contributions to capital, property transfers, or purchase of assets, of any
other person, corporation, partnership or other entity;
- 14 -
(viii) enter into any contract unrelated to employment with any
present or former shareholders, directors, officers, employees or consultants
involving the expenditure of more than $10,000 as to any one contract or
commitment or $50,000 in the aggregate as to all such contracts or commitments;
(ix) pay any pension or retirement allowance not required by any
existing plan or agreement to any employee, or become a party to, amend or
commit itself to any pension, retirement, profit-sharing or welfare plan or
agreement, or any other fringe benefit plan or arrangement, with or for the
benefit of any employee;
(x) increase the compensation of any executive officer or enter into
any employment agreements, understandings or arrangements with any other persons
which, in the aggregate, involve expenditures of more than $100,000;
(xi) agree to, or make any commitment to, take any of the actions
prohibited by this Section 4.2(a).
4.3 MUTUAL COVENANTS BETWEEN SIGNING AND CLOSING DATE.
(a) Each of MDI and EAI covenants and agrees to use its best efforts to
comply promptly with (and furnish information to the other parties in connection
with) any and all requirements that federal or state law may impose on it or
them, as the case may be, with respect to the Reorganization, including but not
limited to MDI's filing with the SEC a Registration Statement on Form 10.
(b) Each of MDI and EAI, covenants and agrees to afford to the other and
to the other's accountants, counsel and other representatives, full access,
during normal business hours during the period prior to the Closing Date or the
earlier termination of this Agreement, to all of the properties, books,
contracts, commitments and records (including the working papers of the
independent auditors in connection with their audits or other services
performed) of MDI or EAI (including 622291 and Xxxxxxx) as the case may be, and,
during such period, MDI and EAI each shall furnish promptly to the other (i) a
copy of each report, schedule and other document filed or received by any MDI
and EAI, as the case may be, during such period pursuant to the requirements of
applicable securities laws, and (ii) all other information concerning the
business, properties and personnel of MDI or EAI, as the case may be, as the
other may reasonably request. Such investigation shall not affect the
representations and warranties of MDI, EAI or RESI contained or provided for
herein.
(c) MDI and EAI each covenants and agrees to advise the other promptly,
both orally and in writing, of any change in the business, results of
operations, financial condition, assets, liabilities or prospects of MDI or EAI
(including 622291 and Xxxxxxx), as the case may be, that is or may be materially
adverse to the other.
- 15 -
(d) MDI and EAI each covenants and agrees that if any action, suit,
proceeding or investigation of any nature is commenced against either of them or
their subsidiaries, whether before or after the Closing Date, it shall cooperate
with the other and shall use its best efforts to defend against the same and
respond thereto.
4.4 EXPENSES. All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by EAI or
622291.
4.5 COMMUNICATIONS. From and after the date hereof, except as required by
law, neither MDI and EAI (including 622291 and Xxxxxxx), will, with respect to
the transactions contemplated hereby, issue any press release or make any public
statements or mail any communications or letters without the prior approval of
the other party and its counsel.
4.6 ADDITIONAL AGREEMENTS. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use its best efforts to take, or
cause to be taken, all action, and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by the
Reorganization and this Agreement, including but not limited to, using its best
efforts to obtain all necessary waivers, consents, authorizations and approvals
of or exemptions by any governmental authority, self-regulatory authority or
third party, and effecting all necessary registrations and filings. In case any
time after the Closing Date any further action is necessary or desirable to
carry out the purposes of this Agreement, the proper officers and Directors of
MDI or EAI (including 622291 and Xxxxxxx), as the case may be, shall take all
necessary action.
4.7 CLOSING CONDITIONS. MDI and EAI will use their best efforts to cause
the conditions set forth in Article V to occur; PROVIDED, HOWEVER, that this
provision shall not require any party to waive any condition.
4.8 INTERIM UNAUDITED BALANCE SHEETS. EAI shall deliver or cause to be
delivered to MDI, not later than the 30th day of each succeeding calendar month,
unaudited balance sheets as at the end of each calendar month subsequent to
January 31, 1997, and preceding the calendar month in which the Closing Date
occurs.
ARTICLE V
CONDITIONS
5.1 CONDITIONS TO OBLIGATIONS OF EAI TO PROCEED WITH THE REORGANIZATION.
Notwithstanding any other provision of this Agreement, each of the following
shall be a condition to the obligation of EAI to consummate the Reorganization:
- 16 -
(a) All of the representations and warranties made by MDI herein shall
have been true as of the date of this Agreement and shall be true as of the
Closing Date as though made on and as of the Closing Date, it being understood
that all representations and warranties made by MDI herein, if specifically
stated to be as of the date hereof, shall also be deemed to be made as of the
Closing Date;
(b) MDI shall have performed every obligation and complied with each
agreement, covenant and condition required by this Agreement to be performed or
complied with by it prior to or at the Closing Date, and MDI shall have
delivered to EAI a certificate dated the Closing Date and signed by its
President and its Secretary, certifying to the effect set forth in this Section
5.1(b) and in Section 5.1(a);
(c) EAI shall have received the following documents from MDI, all of
which shall be in a form and substance reasonably acceptable to EAI:
(i) a certified copy of the resolutions adopted by MDI's Board of
Directors approving this Agreement and the transactions contemplated hereby and
thereby;
(ii) a certified copy of the resolutions adopted by the MDI's
stockholders approving the transactions contemplated hereby;
(iii) a certificate of incumbency executed by the Secretary of MDI
indicating the current officers and Directors of MDI;
(iv) certificate of good standing of MDI, from the Secretary of State
of Delaware, dated not more than ten (10) days prior to the Closing Date;
(v) such other certificates, documents or instruments as EAI may
reasonably require.
(d) No material adverse change shall have occurred in the business,
results of operations, assets, financial condition, or prospect of MDI,
including any judgment, decree, injunction, ruling or order rendered in
connection with any pending litigation involving MDI which, in the opinion of
EAI, if not successfully appealed would result in such a material adverse
change; and
(e) EAI shall have received such other certificates, documents and
instruments as it shall have reasonably required.
5.2 CONDITIONS TO OBLIGATIONS OF MDI. Notwithstanding any other provisions
of this Agreement, each of the following shall be a condition to the obligation
of MDI to consummate the Reorganization:
- 17 -
(a) All of the representations and warranties made by EAI, for itself
and on behalf of 622291 and Xxxxxxx, and RESI herein shall have been true as of
the date of this Agreement and shall be true as of the Closing Date as though
made on and as of the Closing Date, it being understood that all representations
and warranties made by EAI, for itself and on behalf of 622291 and Xxxxxxx, and
RESI herein, if specifically stated to be as of the date hereof, shall also be
deemed to be made as of the Closing Date;
(b) EAI, for itself and on behalf of 622291 and Xxxxxxx, and RESI shall
each have performed every obligation and complied with each agreement, covenant
or condition required by this Agreement to be performed or complied with by them
prior to or at the Closing Date, and EAI shall have delivered to MDI a
certificate dated the Closing Date and signed by its President and its Secretary
certifying to the effect set forth in this Section 5.2(b) and in Section 5.2(a);
(c) MDI shall have received the following documents from EAI, all of
which shall be in a form and substance acceptable to MDI:
(i) a certified copy of the resolutions adopted by the Board of
Directors of EAI and RESI approving this Agreement and the transactions
contemplated hereby and thereby;
(ii) certified copies of the resolution adopted by RESI as the sole
shareholder of EAI approving the transactions contemplated hereby;
(iii) a certificate of incumbency executed by the Secretary EAI
indicating the current officers and directors of EAI, 622291 and Xxxxxxx;
(iv) certificates of good standing for RESI, 622291 and Xxxxxxx from
the appropriate authorities, dated not more than ten (10) days prior to the
Closing Date; and
(v) such other certificates, documents or instruments as MDI or its
counsel may reasonably require.
(d) MDI shall have received copies of consents of all third parties
necessary for XXX, XXXX, 000000 and Xxxxxxx to execute, deliver and perform this
Agreement, and consents of all third parties having material business
relationships with EAI, 622291 and Xxxxxxx if consent to or approval of
transactions of the nature herein contemplated is or may be required in order to
prevent a material adverse change in such business relationship, including but
not limited to the acceleration of indebtedness by a lender or a declaration of
default by a landlord;
(e) All permits, approvals and consents which MDI deems reasonably
necessary in connection with the Reorganization shall have been obtained;
- 18 -
(f) No material adverse change shall have occurred in the business,
results of operations, assets, financial condition, or prospects of EAI, 622291
and Xxxxxxx, including any judgment, decree, injunction, ruling or order
rendered in connection with any pending litigation involving EAI, 622291 or
Xxxxxxx which, in the opinion of MDI, if not successfully appealed would result
in such a material adverse change; and
(g) MDI shall have received such other certificates, documents and
instruments as it shall have reasonably requested.
5.3 MUTUAL CONDITIONS. Each of the following shall be a condition to the
obligations of each of the parties to consummate the Reorganization:
(a) Prior to the Closing Date, no preliminary or permanent injunction or
other order by any federal or state court or other agency or body which prevents
the consummation of the Reorganization shall have been issued and remain in
effect, and there shall not have been instituted to be pending any action or
proceeding by any appropriate federal, provincial, state government or
governmental agency or instrumentality or court or any other person or entity
(i) challenging or seeking to restrain or prohibit the consummation of the
Reorganization or seeking material damages in connection with the
Reorganization; (ii) seeking to prohibit MDI's ownership or operation of all or
a material portion of EAI's, or 62291's or Xxxxxxx' business or assets;
(b) Prior to the Closing Date, there shall not have been any action
taken, or any statute, rule, regulation or order enacted, promulgated or issued
or deemed applicable to the Reorganization by any appropriate federal,
provincial or state government or governmental agency or instrumentality or
court which would (i) prohibit MDI's ownership or operation of all or a material
portion of EAI's, or 62291's or Xxxxxxx' business or assets, (ii) render any
party unable to consummate the Reorganization or (iii) make such consummation
illegal;
(c) Prior to the Closing Date, MDI shall have had its Registration
Statement on Form 10 declared effective by the SEC and shall have had its Common
Stock accepted for listing and trading on the NASDAQ SmallCap Market.
ARTICLE VI
TERMINATION, AMENDMENT AND WAIVER
6.1 TERMINATION. This Agreement may be terminated at any time prior to the
Closing Date:
(a) by mutual consent of the Boards of Directors of MDI and EAI; or
- 19 -
(b) by MDI or EAI if the Reorganization shall not have been consummated
on or before September 30, 1997; or
(c) by MDI by notice to EAI if there has been a material breach by EAI
or RESI of the representations and warranties of EAI and RESI set forth herein;
or
(d) by MDI by notice to EAI if any of the conditions set forth in
Sections 5.2 or 5.3 have not been fulfilled at or prior to the Closing.
(e) by EAI by notice to MDI if there has been a material breach by MDI
of the representations and warranties of MDI set forth herein; or
(f) by EAI by notice to MDI if any of the conditions set forth in
Sections 5.1 or 5.3 have not been fulfilled at or prior to Closing.
6.2 EFFECT OF TERMINATION. In the event of termination of this Agreement by
either MDI or EAI as provided above, this Agreement shall forthwith become void
and, except for a willful breach, fraud or a breach of the various
representations, warranties and covenants contained herein, there shall be no
liability hereunder on the part of MDI, EAI, RESI or their respective officers
or Directors.
6.3 AMENDMENT. This Agreement may be amended by the parties hereto at any
time. This Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties hereto.
6.4 WAIVER. At any time prior to the Closing Date, the parties hereto, by
action taken by their respective Boards of Directors, may (a) extend the time
for the performance of any of the obligations or other acts of the other parties
hereto, (b) waive any inaccuracies in the representations and warranties of the
other parties contained herein or in any document delivered pursuant hereto, and
(c) waive compliance with any of the agreements of the other parties or
satisfaction of any of the conditions to its obligations contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid if set forth in an instrument in writing signed on behalf of such party.
- 20 -
ARTICLE VII
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
7.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The parties agree that the
representations and warranties in this Agreement or in any exhibit, disclosure
schedule, certificate or other instrument delivered pursuant to this Agreement
shall survive the consummation of the Reorganization on the Closing Date for a
period of three years subsequent to the Closing Date and shall be effective
regardless of any investigation which may have been or may be made at the time
by or on behalf of the party to whom such representations and warranties are
made. In the event that a fact or matter is discovered which the discovering
party determines to be a breach of a representation or warranty, it shall
promptly notify the other parties hereto in writing.
7.2 INDEMNIFICATION BY MDI.
(a) MDI shall be responsible for and hereby indemnifies EAI and RESI and
holds them and their respective agents, successors and assigns harmless, at all
times from and after the Closing Date of the Reorganization from, against and in
respect of:
(i) all losses, damages and deficiencies resulting from any failure or
breach of any representation or warranty, or any breach or non-fulfillment of
any covenant or agreement, of MDI made in this Agreement; and
(ii) all actions, suits, proceedings, claims, demands, assessments,
judgments, fines, penalties, amounts paid in settlement costs and expenses
(including reasonable attorneys' fees and expenses) incident to any of the
foregoing.
(b) EAI and RESI shall give notice to MDI of any demand for
indemnification under this Section 7.2, stating in reasonable detail the nature
thereof. If any such demand arises out of a claim made against EAI and RESI by
any person or entity not a party to this Agreement or affiliated with a party to
this Agreement, such notice shall also state whether EAI or RESI disputes the
claim and intends to defend against it. If EAI or RESI shall defend against the
claim, MDI shall cooperate with them in such defense, shall make available to
them all records and other materials reasonably required by them in such
defense, and shall have the right to participate in such defense, but EAI and
RESI shall at all times control such defense. If EAI or RESI do not intend to
defend against the claim, then within fifteen (15) days after their notice is
given, MDI shall, either (i) make payment in full of the claim, (ii) compromise
and make payment of the compromised claim, or (iii) notify EAI and RESI that it
disputes the claim and intends to defend against it. If MDI shall defend
against the claim, EAI and RESI shall cooperate with MDI in such defense, shall
make available to MDI all records and other materials reasonably required by MDI
in such
- 21 -
defense, and shall have the right to participate in such defense, but MDI shall
at all times control such defense.
7.3 INDEMNIFICATION BY EAI .
(a) EAI shall be responsible for and hereby indemnifies MDI and holds it
and its agents, successors and assigns harmless, at all times from and after the
Closing Date of the Reorganization from, against and in respect of:
(i) all losses, damages and deficiencies resulting from any failure or
breach of any representation or warranty, or any breach or non-fulfillment of
any covenant or agreement, of EAI or RESI made in this Agreement; and
(ii) all actions, suits, proceedings, claims, demands, assessments,
judgments, fines, penalties, amounts paid in settlement costs and expenses
(including reasonable attorneys' fees and expenses) incident to any of the
foregoing.
(b) MDI shall give notice to EAI and RESI of any demand for
indemnification under this Section 7.3, stating in reasonable detail the nature
thereof. If any such demand arises out of a claim made against MDI by any
person or entity not a party to this Agreement or affiliated with a party to
this Agreement, such notice shall also state whether MDI disputes the claim and
intends to defend against it. If MDI shall defend against the claim, EAI and
RESI shall cooperate with MDI in such defense, shall make available to MDI all
records and other materials reasonably required by MDI in such defense, and
shall have the right to participate in such defense, but MDI shall at all times
control such defense. If MDI does not intend to defend against the claim, then
within fifteen (15) days after notice is given, EAI shall either (i) make
payment in full of the claim, (ii) compromise and make payment of the
compromised claim, or (iii) notify MDI that it disputes the claim and intends to
defend against it. If EAI shall defend against the claim, MDI shall cooperate
with EAI in such defense, shall make available to EAI all records and other
materials reasonably required by EAI in such defense, and shall have the right
to participate in such defense, but EAI shall at all times control such defense.
For the purposes of this Section 7.3, MDI shall have the right to enforce its
indemnification rights against EAI, RESI, 622291 or Xxxxxxx.
ARTICLE VIII
GENERAL PROVISIONS
8.1 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given when delivered personally or when mailed by
registered or certified mail (return receipt requested and postage prepaid) to
the addresses which the parties provide
- 22 -
each in accordance with the provisions of this Section 8.1 (or at such other
address for a party as shall be specified by like notice).
8.2 GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Delaware, in all respects, including validity, interpretation and
effect.
8.3 HEADINGS. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
8.4 SEVERABILITY. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or other authority to be
invalid, void, unenforceable or against its regulatory policy, the remainder of
the terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect to the maximum extent permitted by law and shall in no
way be affected, impaired or invalidated.
8.5 MISCELLANEOUS. This Agreement (including the documents and instruments
referred to herein) (a) constitutes the entire agreement and supersedes all
prior agreements and understanding, both written and oral, among the parties, or
any of them, with respect to the subject matter hereof; (b) is not intended to
confer upon any third parties any rights or remedies hereunder; (c) shall not be
assigned by operation of law or otherwise; and (e) may be executed in
counterparts which together shall constitute a single agreement.
- 23 -
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective officers thereunto duly authorized all as of the date
first-above written.
EGYPTIAN ARABIANS INC.
By: /s/ Xxxxx Xxxxxxx
---------------------------------
Its: President
RESI CORP.
By: /s/ Xxxxx Xxxxxxx
---------------------------------
Its: President
MERCRISTO DEVELOPMENTS, INC.
By: /s/ Xxxxx Xxxxxxx
---------------------------------
Its: President
- 24 -
THIS AGREEMENT made as of the 30th day of April, 1997, is made
BETWEEN
MERCRISTO DEVELOPMENTS, INC.
(hereinafter called "MDI")
AND
EGYPTIAN ARABIANS INC.
(hereinafter called "EAI")
AND
RESI CORP.
(hereinafter called "RESI")
WHEREAS it is intended that pursuant to an agreement of purchase and sale dated
as of April 10, 1997 between E.S.I. Holdings Limited ("Holdings") and E.S.I.
Securities Inc. ("Securities"), Holdings will agree to sell and Securities will
agree to purchase certain land known municipally as 000 Xxxxxx Xxxxxx, Xxxxxx,
Xxxxxxx (the "Land") on the terms and conditions as set out in the agreement of
purchase and sale (the "Securities Transaction");
AND WHEREAS it is intended that pursuant to an agreement of purchase and sale
dated as of April 10, 1997 between Securities and 622291 Ontario Limited
("622291"), Securities will agree to sell and 622291 will agree to purchase the
Land on the terms and conditions as set out in the agreement of purchase and
sale (the "622291 Transaction");
AND WHEREAS it is intended that the Securities Transaction and the 622291
Transaction shall take place prior to (i) the sale of shares in the capital
stock of 622291 from Xxxxx Xxxxxxx, Xxxxxxxx Xxxxxxx and The Xxxxxxx Children's
Trust to RESI and from RESI to EAI (the "Xxxxxxx Reorganization") and (ii) the
sale of shares in the capital stock of EAI from RESI to MDI pursuant to an
Agreement and Plan of Reorganization dated as of April 30, 1997 among MDI, EAI
and RESI (the "Mercristo Transaction");
AND WHEREAS it is intended that the Mercristo Transaction shall close in escrow
pending fulfillment of the following conditions: acceptance of the common shares
in the capital stock of MDI for trading on NASDAQ; registration of MDI Common
Stock with the Securities
Exchange Commission; and any other conditions as may be agreed to between the
parties (the "Escrow Conditions:);
AND WHEREAS it is intended that the Securities Transaction, the 622291
Transaction, the Xxxxxxx Reorganization and the Mercristo Transaction are
interrelated and that the parties intend that no Transaction shall be finally
completed unless all Transactions are finally completed;
NOW THEREFORE in consideration of the premises and of the covenants contained
herein, the sum of $1 paid by each of the parties to the other parties hereto
and other good and valuable consideration (the receipt and sufficiency of which
are hereby acknowledged), the parties hereto agree as follows:
1. The Mercristo Transaction shall close in escrow effective April 30, 1997,
pending satisfaction of the parties that the Escrow Conditions will be
fulfilled. Until such time, it is the intention of the parties that all
documentation and payments relating to the Mercristo Transaction shall not be
delivered to the other parties entitled thereto but shall remain in the
possession of the attorneys for MDI, Xxxxxx, Xxxxxxx & Xxxxx (the "Escrow
Agent"). The parties agree that if they are satisfied that the Escrow
Conditions will be fulfilled, they shall provide a joint written direction to
the Escrow Agent that all documentation and payments relating to the Mercristo
Transaction shall be delivered to the parties entitled thereto so that the
escrow shall be lifted and the Mercristo Transaction shall be finally closed.
The parties agree that if they are not satisfied that the Escrow Conditions will
be fulfilled, they shall provide a joint written direction to the Escrow Agent
that all documentation and payments relating to the Mercristo Transaction be
returned to the parties who executed the same so that the Mercristo Transaction
shall be null and void. Until such time as the written direction to the Escrow
Agent shall be made, RESI shall not be deemed to have delivered any shares of
EAI to MDI and MDI shall not be deemed to have issued any shares of MDI to RESI.
2. The parties hereto agree that each shall with reasonable diligence proceed
to take all action to do all things and provide reasonable assurances as may be
required to consummate the transaction contemplated herein, and the parties
agree to provide such further documents or instructions required by the other
parties as may be necessary to effect the purpose of this Agreement and carry
out its provisions, whether prior to or after closing.
3. This Agreement will be governed by the laws of the State of Delaware.
4. This Agreement represents the entire understanding of the parties and no
modifications thereof or additions thereto will be binding unless in writing,
having direct reference to this Agreement and executed by all the parties.
5. This Agreement shall enure to the benefit of and be binding upon the parties
hereto, their successors and assigns.
- 2 -
IN WITNESS WHEREOF the parties hereto have executed this agreement.
MERCRISTO DEVELOPMENTS, INC.
/s/ Xxxxx Xxxxxxx
--------------------------------
Name: Xxxxx Xxxxxxx
Title: President
EGYPTIAN ARABIANS, INC.
/s/ Xxxxx Xxxxxxx
--------------------------------
Name: Xxxxx Xxxxxxx
Title: President
RESI CORP.
/s/ Xxxxx Xxxxxxx
--------------------------------
Name: Xxxxx Xxxxxxx
Title: President
- 3 -
