STOCK EXCHANGE AGREEMENT
Exhibit
2.1
This
STOCK EXCHANGE AGREEMENT (“Agreement”) is made as of October 20, 2007, by
Serefex Corporation, a Delaware corporation (“Buyer”), and each person
identified on the signature page hereto (each, including successors and assigns,
a “Seller” and collectively, “Sellers”).
Sellers
and Buyer desire to exchange
all of the issued and outstanding shares of capital stock of X.X. Xxxxxxx
Systems, Inc, an Ohio corporation (the “Company”), owned by the Sellers
listed in Appendix A , (the “Company’s Shares”), for shares of
capital stock of Buyer (the “Buyer’s Shares”) on the terms and subject to
the conditions set forth in this Agreement.
The
parties, intending to be legally
bound, agree as follows:
ARTICLE
I
For
purposes of this Agreement, the
following terms have the meanings specified or referred to in this Article
1:
1.1 “Applicable
Contract” – any Contract (a) under which the Company has or may
acquire any rights, (b) under which the Company has or may become
subject to any obligation or liability, or (c) by which the Company or
any of the assets owned or used by it is or may become bound.
1.2 “Balance
Sheet” – as defined in Section 3.4.
1.3 “Balance
Sheet Date” – the date of the Balance Sheet.
1.4 “Breach”
– a “Breach” of a representation, warranty, covenant, obligation, or other
provision of this Agreement or any instrument delivered pursuant to this
Agreement will be deemed to have occurred if there is or has been any material
inaccuracy in or breach of, or any failure to perform or comply with, such
representation, warranty, covenant, obligation, or other provision.
1.5 “Buyer”
– as defined in the first paragraph of this Agreement.
1.6 “Buyer’s
Shares” – as defined in the Recitals of this Agreement.
1.7 “Closing”
– as defined in Section 2.2.
1
1.8 “Closing
Date” – the date and time as of which the Closing actually takes
place.
1.9 “Company”
– as defined in the Recitals of this Agreement.
1.10 “Company’s
Shares” – as defined in the Recitals of this Agreement.
1.11 “Confidentiality
Agreement”– shall mean the Confidentiality Agreement entered into between
the parties dated July 20, 2006.
1.12 “Consent”
– any approval, consent, ratification, waiver, or other authorization (including
any Governmental Authorization).
1.13 “Contemplated
Transactions” – all of the transactions contemplated by this Agreement,
including:
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1)
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The
exchange of the Company’s Shares for the Buyer’s Shares between Sellers
and Buyer.
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2)
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The
issuance of Buyer’s Shares to the
Sellers.
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3)
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The
execution and delivery of the Employment
Agreements.
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4)
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The
performance by Buyer and Sellers of their respective covenants and
obligations under this Agreement.
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1.14 “Contract”
– any agreement, contract, obligation, promise, or undertaking (whether written
or oral and whether express or implied) that is legally binding.
1.15 “Damages”
– shall be deemed to include any and all claims, losses, liabilities, costs,
expenses, judgments, assessments, penalties, damages, fines, deficiencies,
fees
and expenses of experts, and reasonable attorneys’ fees and
expenses. Damages shall be measured net of any insurance recovery or
retroactive insurance adjustment in respect of such Damages.
1.16 “Disclosure
Letter” – the disclosure letter delivered by Sellers to Buyer and Buyer to
Sellers concurrently with the execution and delivery of this Agreement or
shortly thereafter.
1.17 “Employment
Agreements” – Employment Agreements executed by Xxxxx X. D’Anza on behalf of
the Sellers and Xxxx Xxxxxxxx, Xxxxx Xxxxxxxx and Xxxxx Xxxx on behalf of the
Buyer within 15 days from the time of closing.
1.18 “Encumbrance”
– any charge, claim, community property interest, condition, equitable interest,
lien, option, pledge, security interest, right of first refusal, or restriction
of any kind, including any restriction on use, voting, transfer, receipt of
income, or exercise of any other attribute of ownership.
1.19 “Environment”
– soil, land surface or subsurface strata, surface waters (including navigable
waters, ocean waters, streams, ponds, drainage basins, and wetlands), ground
waters, drinking water supply, stream sediments, ambient air (including indoor
air), plant and animal life, and any other environmental medium or natural
resource.
2
1.20 “Environmental,
Health and Safety Liabilities” – any Damages, obligation or other
responsibility arising from or under Environmental Law or Occupational Safety
and Health Law and consisting of or relating to:
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1)
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Any
environmental, health, or safety matters or conditions (including
on-site
or off-site contamination, occupational safety and health, and regulation
of chemical substances or
products);
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2)
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Damages
arising under Environmental Law or Occupational Safety and Health
Law;
and
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3)
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Financial
responsibility under Environmental Law or Occupational Safety and
Health
Law for cleanup costs or corrective action, including any investigation,
cleanup, removal, containment, or other remediation or response actions
(“Cleanup”) required by applicable Environmental Law or
Occupational Safety and Health Law (whether or not such Cleanup has
been
required or requested by any Governmental Body or any other Person)
and
for any natural resource damages.
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The
terms “removal,”
“remedial,” and “response action,” include the types of activities
covered by the United States Comprehensive Environmental Response, Compensation,
and Liability Act, 42 U.S.C. § 9601 et seq., as amended
(“CERCLA”).
1.21 “Environmental
Law” – any Legal Requirement that requires or relates to:
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1)
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Advising
appropriate authorities, employees, and the public of intended or
actual
Releases of Hazardous Substances, violations of discharge limits,
or other
prohibitions and of the commencements of activities, such as resource
extraction or construction, that could have significant impact on
the
Environment;
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2)
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Preventing
or reducing to acceptable levels the Release of Hazardous Substances
into
the Environment;
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3)
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Reducing
the quantities, preventing the Release, or minimizing the hazardous
characteristics of Hazardous Substances that are
generated;
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4)
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Assuring
that products are designed, formulated, packaged, and used so that
they do
not present unreasonable risks to human health or the Environment
when
used or disposed of;
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5)
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Protecting
the Environment;
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6)
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Reducing
to acceptable levels the risks inherent in the transportation of
Hazardous
Substances;
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7)
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Cleaning
up Hazardous Substances that have been Released, preventing the Threat
of
Release, or paying the costs of such clean up or prevention;
or
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8)
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Making
responsible parties pay private parties, or groups of them, for damages
done to their health or the Environment, or permitting self-appointed
Representatives of the public interest to recover for injuries done
to
public assets.
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3
1.22 “ERISA”
– the Employee Retirement Income Security Act of 1974, as amended, or any
successor law, and regulations and rules issued pursuant to that Act or any
successor law.
1.23 “Facilities”
– any real property, leaseholds, or other interests currently or formerly owned
or operated by the Company or the Buyer and any buildings, plants, structures,
or equipment (including motor vehicles, tank cars, and rolling stock) currently
or formerly owned or operated by the Company or the Buyer.
1.24 “GAAP”
– generally accepted United States accounting principles, applied on a basis
consistent with the basis on which the applicable financial statements were
prepared.
1.25 “Governmental
Authorization” – any approval, consent, license, permit, waiver, or other
authorization issued, granted, given, or otherwise made available by or under
the authority of any Governmental Body or pursuant to any Legal
Requirement.
1.26 “Governmental
Body” – any:
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1)
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Nation,
state, county, city, town, village, district, or other jurisdiction
of any
nature;
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2)
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Federal,
state, local, municipal, foreign, or other
government;
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3)
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Governmental
or quasi-governmental authority of any nature (including any governmental
agency, branch, department, official, or entity and any court or
other
tribunal); or
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4)
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Body
exercising, or entitled to exercise, any administrative, executive,
judicial, legislative, police, regulatory, or taxing authority or
power of
any nature.
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1.27 “Hazardous
Activity” – the distribution, generation, handling, importing, management,
manufacturing, processing, production, refinement, Release, storage, transfer,
transportation, treatment, or use (including any withdrawal or other use of
groundwater) of Hazardous Substances in, on, under, about, or from the
Facilities or any part thereof into the Environment, and any other act,
business, operation, or thing that increases the danger, or risk of danger,
or
poses an unreasonable risk of harm to persons or property on or off the
Facilities, or that may affect the value of the Facilities, the Company or
the
Buyer.
1.28 “Hazardous
Substances” – any waste or other substance that is listed, defined,
designated, or classified as, or otherwise determined to be, hazardous,
radioactive, or toxic or a pollutant or a contaminant under or pursuant to
any
Environmental Law.
1.29 “Intellectual
Property” – as defined in Section 3.22.
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1.30
“Knowledge” and “Actual Knowledge” – an individual will be deemed
to have “Knowledge” of a particular fact or other matter if:
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1)
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Such
individual is actually aware of such fact or other matter (“Actual
Knowledge”); or
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2)
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A
prudent individual would investigate such fact or matter and would
be
expected to discover or otherwise become aware of such fact or other
matter in the course of conducting a reasonable investigation concerning
the existence of such fact or other
matter.
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A
Person (other than an individual)
will be deemed to have Knowledge of a particular fact or other matter if any
individual who is serving, or who had at the relevant time served, as a
director, officer, partner, executor or trustee of that Person (or in any
similar capacity) has Knowledge of that fact or other matter (as set forth
in
(1) and (2) above).
1.31 “Legal
Requirement” – any federal, state, local, municipal, foreign, international,
multinational, or other administrative order, constitution, law, ordinance,
principle of common law, regulation, statute, or treaty including, without
limitation, those of the United States Securities and Exchange
Commission.
1.32 “Material
Adverse Effect” – a Material Adverse Effect on the condition (financial or
otherwise), business, assets or results of operations of the Company or Buyer,
as the case may be, and their respective Subsidiaries, as a whole, or on the
ability of the Company or Buyer to consummate the transactions contemplated
by
this Agreement.
1.33 “Occupational
Safety and Health Law” – any Legal Requirement designed to provide safe and
healthful working conditions and to reduce occupational safety and health
hazards.
1.34 “Order”
– any award, decision, injunction, judgment, order, ruling, subpoena, or verdict
entered, issued, made, or rendered by any court, administrative agency, or
other
Governmental Body or by any arbitrator.
1.35 “Ordinary
Course of Business” – an action taken by a Person will be deemed to have
been taken in the “Ordinary Course of Business” only if:
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1)
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Such
action is consistent with the past practices of such Person and is
taken
in the ordinary course of the normal day-to-day operations of such
Person;
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2)
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Such
action is not required to be authorized by the board of directors
of such
Person (or by any Person or group of Persons exercising similar
authority); and
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3)
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Such
action is similar in nature and magnitude to actions customarily
taken,
without any authorization by the board of directors (or by any Person
or
group of Persons exercising similar authority), in the ordinary course
of
the normal day-to-day operations of other similarly situated Persons
that
are in the same line of business as such
Person.
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5
1.36 “Organizational
Documents” – (a) the articles or certificate of incorporation and the
bylaws of a corporation; (b) the partnership agreement and any statement of
partnership of a general partnership; (c) the limited partnership agreement
and the certificate of limited partnership of a limited partnership;
(d) any charter or similar document adopted or filed in connection with the
creation, formation, or organization of a Person; and (e) any amendment to
any of the foregoing.
1.37 “Person”
– any individual, corporation (including any non-profit corporation), general
or
limited partnership, limited liability company, joint venture, estate, trust,
association, organization, labor union, or other entity or Governmental
Body.
1.38 “Plan”
– as defined in Section 3.13.
1.39 “Proceeding”
– any action, arbitration, audit, hearing, investigation, litigation, or suit
(whether civil, criminal, administrative or investigative) commenced, brought,
conducted, or heard by or before, or otherwise involving, any Governmental
Body
or arbitrator.
1.40 “PCAOB”
– Public Companies Accounting Oversight Board which is a private-sector,
non-profit corporation, created by the Xxxxxxxx-Xxxxx Xxx 0000, to oversee
the
auditors of public companies in order to protect the interests of investors
and
further the public interest in the preparation of informative, fair, and
independent audit reports.
1.41 “Related
Person” – with respect to a particular individual:
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1)
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Each
other member of such individual’s
Family;
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2)
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Any
Person that is directly or indirectly controlled by such individual
or one
or more members of such individual’s
Family;
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3)
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Any
Person in which such individual or members of such individual’s Family
hold (individually or in the aggregate) a Material Interest;
and
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4)
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Any
Person with respect to which such individual or one or more members
of
such individual’s Family serves as a director, officer, partner, executor,
or trustee (or in a similar
capacity).
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With
respect to a specified Person other than an individual:
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(a)
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any
Person that directly or indirectly controls, is directly or indirectly
controlled by, or is directly or indirectly under common control
with such
specified Person;
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(b)
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any
Person that holds a Material Interest in such specified
Person;
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(c)
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each
Person that serves as a director, officer, partner, executor, or
trustee
of such specified Person (or in a similar
capacity);
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(d)
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any
Person in which such specified Person holds a Material
Interest;
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(e)
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any
Person with respect to which such specified Person serves as a general
partner or a trustee (or in a similar capacity);
and
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(f)
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any
Related Person of any individual described in clause (b) or
(c).
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6
For
purposes
of this definition, (a) the “Family” of an individual includes
(i) the individual, (ii) the individual’s spouse, parents,
children or siblings or those of the individual’s spouse and (iii) any
other natural Person who resides with such individual, and
(b)“Material Interest” means direct or indirect beneficial
ownership (as defined in Rule 13d-3 under the Securities Exchange Act of
1934) of voting securities or other voting interests representing at least
ten
percent (10%) of the outstanding equity securities or equity interests in a
Person, and (c)“Control” (including with correlative meaning,
the terms “controlling,” “controlled by” and “under common control with”) means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
1.42 “Release”
– any spilling, leaking, emitting, discharging, depositing, escaping, leaching,
dumping, or other releasing into the Environment, whether intentional or
unintentional.
1.43 “Representative”
– with respect to a particular Person, any director, officer, employee, agent,
consultant, advisor, or other representative of such Person, including legal
counsel, accountants, and financial advisors.
1.44 “Securities
Act” – the Securities Act of 1933 or any successor law, and regulations and
rules issued pursuant to that Act or any successor law.
1.45 “Sellers”
– as defined in the first paragraph of this Agreement.
1.46 “Subsidiary”
– with respect to any Person (the “Owner”), any corporation or other
Person of which securities or other interests having the power to elect a
majority of that corporation’s or other Person’s board of directors or similar
governing body, or otherwise having the power to direct the business and
policies of that corporation or other Person (other than securities or other
interests having such power only upon the happening of a contingency that has
not occurred) are held by the Owner or one or more of its Subsidiaries; when
used without reference to a particular Person, “Subsidiary” means a Subsidiary
of the Company.
1.47 “Tax”
or “Taxes” – any and all taxes (whether federal, state, local or foreign)
including without limitation, income, gross receipts, license, payroll,
employment, excise, severance, stamp, occupation, premium, environmental,
customs, vehicle or other title or registration, capital stock, franchise,
employees’ income withholding, foreign or domestic withholding, social security,
unemployment, disability, real property, personal property, sales, use,
transfer, value added, alternative, add-on minimum and other tax, fee,
assessment, levy, tariff, charge or duty of any kind whatsoever and any
interest, penalty, addition or additional amount thereon imposed, assessed
or
collected by or under the authority of any governmental authority or payable
under any tax-sharing agreement or any other contract.
1.48 “Tax
Return” – any return (including any information return), report, statement,
schedule, notice, form, or other document or information filed with or submitted
to, or required to be filed with or submitted to, any Governmental Body in
connection with the determination, assessment, collection, or payment of any
Tax
or in connection with the administration, implementation, or enforcement of
or
compliance with any Legal Requirement relating to any Tax.
1.49 “Threat
of Release” – a substantial likelihood of a Release that may require action
in order to prevent or mitigate damage to the Environment that may result from
such Release.
1.50 “Threatened”
– a claim, Proceeding, dispute or other matter will be deemed to have been
“Threatened” if any demand or statement has been made (orally or in writing) or
any notice has been given (orally or in writing), or if any other event has
occurred or any other circumstances exist, that would lead a prudent Person
to
conclude that such a claim, Proceeding, dispute or other matter is likely to
be
asserted, commenced, taken, or otherwise pursued in the future.
1.51 “Unaudited
Balance Sheet” – as defined in Section 3.4.
1.52 “Unaudited
Balance Sheet Date” – as defined in Section 3.4
All
capitalized terms used in this Agreement but not defined in this Article I
shall
have the meaning ascribed to them elsewhere in this Agreement.
7
ARTICLE
II
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1)
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Sellers
will deliver to Buyer (the “Sellers’ Closing
Documents”):
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(a)
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certificates
representing Company’s Shares, duly endorsed (or accompanied by duly
executed stock powers), for transfer to Buyer in the amounts set
forth in
Appendix A ;
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(b)
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a
certificate executed by Sellers representing and warranting to Buyer
that
Sellers’ representations and warranties in this Agreement were accurate in
all material respects as of the date of this Agreement and are accurate
in
all material respects as of the Closing Date as if made on the Closing
Date and that Seller has performed all of its covenants and obligations
pursuant to this Agreement; and
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(c)
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any
and all other documents, certificates, instruments and agreements
required
by this Agreement or reasonably requested by the Buyer in connection
with
the Contemplated Transactions.
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2)
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Buyer
will deliver to Sellers (the “Buyers’ Closing
Documents”):
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(a)
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certificates
representing a total of its authorized but unissued Shares as indicated
in
Appendix A ;
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(b)
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a
certificate executed by Buyer to the effect that Buyer’s representations
and warranties in this Agreement were accurate in all material respects
as
of the date of this Agreement and are accurate in all material respects
as
of the Closing Date as if made on the Closing Date and that Buyer
has
performed all of its covenants and obligations pursuant to this Agreement;
and
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(c)
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any
and all other documents, certificates, instruments and agreements
required
by this Agreement or reasonably requested by the Sellers in connection
with the Contemplated Transactions.
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8
ARTICLE
III
Except
as specifically disclosed by
Sellers to Buyer in this Agreement, the Exhibits attached hereto, the Disclosure
Letter set forth in Exhibit 3 hereto, and in any schedules or lists
referenced herein, Sellers, jointly and severally, represent and warrant to
Buyer that as of the date hereof:
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1)
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Schedule
3.1(1) of the Disclosure Letter contains a complete and accurate
list of
all of the Company's Subsidiaries, indicating the jurisdiction of
incorporation of each Subsidiary and the Company's equity interest
therein.
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2)
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The
Company has delivered or made available to Buyer a true and correct
copy
of the Articles of Incorporation and Bylaws of the Company and similar
governing instruments of each of its Subsidiaries, each as amended
to
date, and each such instrument is in full force and effect. Neither
the
Company nor any of its Subsidiaries is in violation of any of the
provisions of its Articles of Incorporation or Bylaws or equivalent
governing instruments except for any violation(s) which are not likely
to
result in a Company Material Adverse
Effect.
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3)
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Schedule
3.1(3) of the Disclosure Letter are copies of the Organizational
Documents
of the Company, as currently in
effect.
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1)
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This
Agreement constitutes the legal, valid, and binding obligation of
each
Seller, enforceable against each Seller in accordance with its
terms. The Sellers’ Closing Documents will constitute the
legal, valid, and binding obligations of each Seller, enforceable
against
each Seller in accordance with their respective terms. Each
Seller has the absolute and unrestricted right, power, authority,
and
capacity to execute and deliver this Agreement and the Sellers’ Closing
Documents and to perform his or her obligations under this Agreement
and
the Sellers’ Closing Documents.
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2)
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Except
as set forth in Schedule 3.2(2) of the Disclosure Letter, neither
the
execution and delivery of this Agreement nor the consummation or
performance of any of the Contemplated Transactions will, directly
or
indirectly (with or without notice or lapse of
time):
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(a)
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contravene,
conflict with, or result in a violation of (i) any provision
of the Organizational Documents of the Company, or (ii) any
resolution adopted by the board of directors or the stockholders
of the
Company;
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(b)
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contravene,
conflict with, or result in a violation of, or give any Governmental
Body
or other Person the right to prohibit any of the Contemplated Transactions
or to exercise any remedy or obtain any relief under, any Legal
Requirement or any Order to which the Company or any Seller, or any
of the
assets owned or used by the Company, may be
subject;
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(c)
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contravene,
conflict with, or result in a violation of any of the terms or
requirements of, or give any Governmental Body the right to revoke,
withdraw, suspend, cancel, terminate, or modify, any Governmental
Authorization that is held by the Company or that otherwise relates
to the
business of, or any of the assets owned or used by, the
Company;
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(d)
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contravene,
conflict with, or result in a violation or breach of any provision
of, or
give any Person the right to declare a default or exercise any remedy
under, or to accelerate the maturity or performance of, or to cancel,
terminate, or modify, any Applicable Contract;
or
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(e)
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result
in the imposition or creation of any Encumbrance upon or with respect
to
any of the assets owned or used by the
Company.
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Except
as set forth in
Schedule 3.2 of the Disclosure Letter, no Seller or the Company is or will
be required to give any notice to or obtain any Consent from any Person in
connection with the execution and delivery of this Agreement or the consummation
or performance of any of the Contemplated Transactions.
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1)
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The
authorized equity securities of the Company consists of Shares of
common
stock, with a par value per share, of which 1,097,161Shares are issued
and
outstanding. Sellers own in the aggregate, 741,344 of the Company’s
outstanding shares of common stock, which constitutes the Company’s
Shares, as listed in Appendix A. In addition, there are outstanding
options to purchase an additional 180,712 shares. Sellers are
and will be on the Closing Date the record and beneficial owners
and
holders of the Company’s Shares, free and clear of all Encumbrances,
except Encumbrances listed on Schedule 3.3. Schedule 3.3 of the
Disclosure Letter contains the complete name, address, social security
number, number of Company’s Shares owned and percentage of Company’s
Shares owned by each Seller. The Company’s Shares have been
duly authorized and validly issued and are fully paid and
non-assessable. There are no Contracts relating to the
issuance, sale, or transfer of any equity securities or other securities
of the Company, except as set forth on Schedule 3.3 of the Disclosure
Letter. None of the outstanding Company’s Shares was issued in
violation of the Securities Act or any other Legal
Requirement. The Company does not own, and has no Contract to
acquire, any equity securities or other securities of any Person
or any
direct or indirect equity or ownership interest in any other
business.
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2)
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The
Sellers have and on the Closing Date will have full power and authority
to
enter into this Agreement and to make the representations, warranties,
covenants and agreements made in this
Agreement.
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1)
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Schedule
3.14 of the Disclosure Letter contains a complete and accurate list
of
each Governmental Authorization that is held by the Company or that
otherwise relates to the business of, or to any of the assets owned
or
used by, the Company. Each Governmental Authorization listed or
required to be listed in Schedule 3.14 of the Disclosure Letter is
valid
and in full force and effect. Except as set forth in Schedule
3.14 of the Disclosure Letter;
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2)
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To
the Knowledge of the Sellers, the Company is, and at all times since
the
Balance Sheet Date has been, in compliance with all of the terms
and
requirements of each Governmental Authorization identified or required
to
be identified in Schedule 3.14 of the Disclosure Letter, except where
noncompliance is not likely to result in a Company Material Adverse
Effect;
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3)
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To
the Knowledge of the Sellers no event has occurred or circumstance
exists
that (with or without notice or lapse of time) is likely to constitute
or
result in a violation by the Company of, or a failure on the part
of the
Company to comply with, any Legal
Requirement;
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4)
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The
Company has not received, at any time since the Balance Sheet Date,
any
written notice from any Governmental Body or any other Person regarding
any actual, alleged, possible, or potential violation of, or failure
to
comply with, any Legal Requirement;
and
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5)
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All
applications required to have been filed for the renewal of the
Governmental Authorizations listed or required to be listed in Schedule
3.14 of the Disclosure Letter have been duly filed on a timely basis
with
the appropriate Governmental Bodies, and all other filings required
to
have been made with respect to such Governmental Authorizations have
been
duly made on a timely basis with the appropriate Governmental Bodies
except where the failure to do so is not likely to result in a Company
Material Adverse Effect.
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1)
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Change
in the authorized or issued capital stock of the Company; grant of
any
stock option or right to purchase shares of capital stock of the
Company;
issuance of any security convertible into such capital stock; grant
of any
registration rights; purchase, redemption, retirement, or other
acquisition by the Company of any shares of any such capital stock;
or
declaration or payment of any dividend or other distribution or payment
in
respect of shares of capital stock;
|
|
3)
|
Payment
or increase by the Company of any bonuses, salaries, or other compensation
to any stockholder, director, officer, or (except in the Ordinary
Course
of Business) employee or entry into any employment, severance, or
similar
Contract with any director, officer, or
employee;
|
|
4)
|
Adoption
of, or increase in the payments to or benefits under, any profit
sharing,
bonus, deferred compensation, savings, insurance, pension, retirement,
or
other employee benefit plan for or with any employees of the
Company;
|
|
5)
|
Damage
to or destruction or loss of any asset or property of the Company,
whether
or not covered by insurance, materially and adversely affecting the
properties, assets, business, financial condition, or prospects of
the
Company, taken as a whole;
|
|
6)
|
Entry
into, termination of, or receipt of written notice of termination
of any
Contract or transaction involving a total remaining commitment by
or to
the Company of at least $10,000;
|
|
7)
|
Sale
(other than sales of inventory, product and services in the Ordinary
Course of Business), lease, or other disposition of any asset or
property
of the Company or mortgage, pledge, or imposition of any Encumbrance
on
any material asset or property of the Company, including the sale,
lease,
or other disposition of any of the Intellectual
Property;
|
|
8)
|
Cancellation
or waiver of any claims or rights with a value to the Company in
excess of
$10,000;
|
|
9)
|
Material
change in the accounting methods used by the Company;
or
|
|
10)
|
Agreement,
whether oral or written, by the Company to do any of the
foregoing.
|
|
1)
|
Schedule
3.17 of the Disclosure Letter contains a complete and accurate list
of:
|
|
(a)
|
each
Applicable Contract that involves performance of services or delivery
of
goods or materials by the Company of an amount or value in excess
of
$100,000;
|
|
(b)
|
each
Applicable Contract that involves performance of services or delivery
of
goods or materials to the Company of an amount or value in excess
of
$100,000;
|
13
|
(c)
|
each
Applicable Contract that was not entered into in the Ordinary Course
of
Business and that involves expenditures by or receipts of the Company
in
excess of $50,000;
|
|
(d)
|
each
lease, rental or occupancy agreement, license, installment and conditional
sale agreement, and other Applicable Contract affecting the ownership
of,
leasing of, title to, use of, or any leasehold or other interest
in, any
real or personal property (except personal property leases and installment
and conditional sales agreements having a value per item or aggregate
payments of less than $10,000 and with terms of less than one
year);
|
|
(e)
|
each
licensing agreement or other Applicable Contract with respect to
patents,
trademarks, copyrights, or other intellectual property, including
agreements with current or former employees, consultants, or contractors
regarding the appropriation or the non-disclosure of any of the
Intellectual Property Assets;
|
|
(f)
|
each
collective bargaining agreement and other Applicable Contract to
or with
any labor union or other employee representative of a group of
employees;
|
|
(g)
|
each
joint venture, partnership, and other Applicable Contract (however
named)
involving a sharing of profits, losses, costs, or liabilities by
the
Company with any other Person;
|
|
(h)
|
each
Applicable Contract entered into other than in the Ordinary Course
of
Business that contains or provides for an express undertaking by
the
Company to be responsible for late or delayed performance penalties,
charges or, under any circumstances, consequential
damages;
|
|
(i)
|
each
Applicable Contract for capital expenditures in excess of $100,000;
and
|
|
(j)
|
each
written warranty, guaranty, and/or other similar undertaking and
disclaimer with respect to contractual performance extended by the
Company.
|
|
2)
|
Except
as set forth in Schedule 3.17(2) of the Disclosure Letter, each Contract
identified or required to be identified in Schedule 3.17(1) of the
Disclosure Letter is in full force and effect and is valid and enforceable
in accordance with its terms.
|
|
3)
|
Except
as set forth in Schedule 3.17(3) of the Disclosure
Letter:
|
|
(a)
|
to
the Knowledge of the Sellers, the Company is, and at all times since
the
Unaudited Balance Sheet Date has been, in full compliance with all
applicable terms and requirements of each Contract under which the
Company
has or had any obligation or liability or by which the Company or
any of
the assets owned or used by the Company is or was bound, except where
the
failure to be in compliance is not likely to result in a Company
Material
Adverse Effect;
|
|
(b)
|
to
the Knowledge of the Sellers, the Company has not given to or received
from any other Person, at any time since the Unaudited Balance Sheet
Date,
any written notice regarding any actual, alleged, possible, or potential
violation or breach of, or default under, any
Contract.
|
14
|
1)
|
To
the Knowledge of the Sellers, the Company is, and at all times has
been,
in full compliance with, and has not been and is not in violation
of or
liable under, any Environmental Law, except where the violation of
or
liability under any Environmental Law or the failure to be in compliance
with any Environmental Law is not likely to result in a Company Material
Adverse Effect. To Sellers’ Knowledge, the Company has not
received, any actual or Threatened Order or written notice from
(i) any Governmental Body or private citizen acting in the
public
interest, or (ii) the current or prior owner or operator of any
Facilities, of any actual or potential violation or failure to comply with
any Environmental Law, or of any actual or Threatened obligation
to
undertake or bear the cost of any Environmental, Health and Safety
Liabilities with respect to any of the Facilities or any other properties
or assets (whether real, personal, or mixed) in which Sellers or
the
Company has had an interest, or with respect to any property or Facility
at or to which Hazardous Substances were generated, manufactured,
refined,
transferred, imported, used, or processed by Sellers, the Company,
or any
other Person for whose conduct the Company is or may be held responsible,
or from which Hazardous Substances have been transported, treated,
stored,
handled, transferred, disposed, recycled, or received by or for the
Company.
|
|
2)
|
There
are no pending or, to the Knowledge of the Sellers, no Threatened
claims,
Encumbrances against the Company resulting from any Environmental,
Health,
and Safety Liabilities or arising under or pursuant to any Environmental
Law, with respect to or affecting any of the Facilities or any other
properties and assets (whether real, personal, or mixed) in which
Sellers
or the Company has or had an
interest.
|
|
3)
|
No
Seller has Knowledge or any basis to expect, nor has any Seller received,
any written citation, directive, inquiry, notice, Order, summons,
warning,
or other communication that relates to Hazardous Activity, Hazardous
Substances, or any alleged, actual, or potential violation or failure
to
comply with any Environmental Law, or of any alleged, actual, or
potential
obligation to undertake or bear the cost of any Environmental, Health,
and
Safety Liabilities with respect to any of the Facilities or any other
properties or assets (whether real, personal, or mixed) in which
Sellers
or the Company had an interest, or with respect to any property or
facility to which Hazardous Substances generated, manufactured, refined,
transferred, imported, used, or processed by Sellers or the Company,
have
been transported, treated, stored, handled, transferred, disposed,
recycled, or received by or for the
Company.
|
|
4)
|
There
are no Hazardous Substances present on or in the Environment at the
Facilities including any Hazardous Substances contained in barrels,
above
or underground storage tanks, landfills, land deposits, dumps, equipment
(whether moveable or fixed) or other containers, either temporary
or
permanent, and deposited or located in land, water, sumps, or any
other
part of the Facilities or incorporated into any structure therein
or
thereon. To Sellers’ Knowledge, no Seller, or the Company, has
permitted or conducted, or is aware of, any Hazardous Activity conducted
with respect to the Facilities or any other properties or assets
(whether
real, personal, or mixed) in which Sellers or the Company has or
had an
interest except in material compliance with applicable Environmental
Laws.
|
15
|
5)
|
There
has been no Release or, to Sellers’ Knowledge Threat of Release, of any
Hazardous Substances at or from the Facilities or at any other locations
where any Hazardous Substances were generated, manufactured, refined,
transferred, produced, imported, used, or processed from or by the
Facilities, or from or by any other properties and assets (whether
real,
personal, or mixed) in which Sellers or the Company has or had an
interest.
|
|
6)
|
Attached
to Schedule 3.19 of the Disclosure Letter are complete copies and
results
of any reports, studies, analyses, tests, or monitoring possessed
or
initiated by Sellers or the Company pertaining to Hazardous Substances
or
Hazardous Activities in, on, or under the Facilities, or concerning
compliance by Sellers or the Company, with Environmental
Laws.
|
16
|
1)
|
Sellers
are acquiring the Buyer’s Shares for their own account with the present
intention of holding such securities for purposes of investment,
and have
no intention of selling such securities in a public distribution
in
violation of the federal securities laws or any applicable state
securities laws. Sellers understand that the Buyer’s Shares are
“restricted securities” as defined in Rule 144 under the Securities Act,
and have not been registered pursuant to the provisions of the Securities
Act, inasmuch as the proposed purchase of the Shares is taking place
in a
transaction not to involving any public
offering.
|
|
2)
|
Sellers
are knowledgeable, experienced and sophisticated in financial and
business
matters and are able to evaluate the risks and benefits of the investment
in the Buyer’s Shares.
|
|
3)
|
Sellers
are able to bear the economic risk of the investment in the Buyers
Shares
for an indefinite period of time because the Buyer’s Shares have not been
registered under the Securities Act and, therefore, cannot be sold
unless
subsequently registered under the Securities Act or an exemption
from such
registration is available.
|
|
4)
|
Sellers
have been furnished or otherwise had full access to such other information
concerning Buyer as requested and that was necessary to enable them
to
evaluate the merits and risks of an investment in Buyer, and after
a
review of this information, has had an opportunity to ask questions
and
receive answers concerning the financial condition and business of
Buyer
and the terms and conditions of the securities purchased hereunder,
and
has had access to and has obtained such additional information concerning
Buyer and the securities as they deemed
necessary.
|
ARTICLE
IV
|
1)
|
The
Buyer does not have any
Subsidiaries.
|
|
2)
|
The
Buyer has delivered or made available to Sellers a true and correct
copy
of the Articles of Incorporation and Bylaws of the Buyer, and each
such
instrument is in full force and effect. The Buyer is not in
violation of any of the provisions of its Articles of Incorporation
or
Bylaws or equivalent governing
instruments.
|
|
3)
|
Attached
as Schedule 4.1(3) of the Disclosure Letter are copies of the
Organizational Documents of the Company, as currently in
effect.
|
17
|
1)
|
This
Agreement constitutes the legal, valid, and binding obligation of
Buyer,
enforceable against Buyer in accordance with its terms. Upon the
execution
and delivery by the Buyer of the Employment Agreements, the Buyers’
Closing Documents will constitute the legal, valid, and binding
obligations of each Buyer, enforceable against each Buyer in accordance
with their respective terms. Buyer has the absolute and
unrestricted right, power, authority, and capacity to execute and
deliver
this Agreement and the Buyer’s Closing Documents and to perform its
obligations under this Agreement and the Buyer’s Closing
Documents.
|
|
2)
|
Except
as set forth in Schedule 4.2(2) of the Disclosure Letter, neither
the
execution and delivery of this Agreement nor the consummation or
performance of any of the Contemplated Transactions will, directly
or
indirectly (with or without notice or lapse of
time):
|
|
(a)
|
contravene,
conflict with, or result in a violation of
(a) any provision of the
Organizational Documents of the Buyer, or
(b) any resolution adopted by
the board
of directors or the stockholders of the
Buyer;
|
|
(b)
|
contravene,
conflict with, or result in a violation of, or give any Governmental
Body
or other Person the right to prohibit any of the Contemplated Transactions
or to exercise any remedy or obtain any relief under, any Legal
Requirement or any Order to which the Buyer or any of the assets
owned or
used by the Buyer, may be subject;
|
|
(c)
|
contravene,
conflict with, or result in a violation of any of the terms or
requirements of, or give any Governmental Body the right to revoke,
withdraw, suspend, cancel, terminate, or modify any Governmental
Authorization that is held by the Buyer or that otherwise relates
to the
business of, or any of the assets owned or used by, the
Buyer;
|
|
(d)
|
contravene,
conflict with, or result in a violation or breach of any provision
of, or
give any Person the right to declare a default or exercise any remedy
under, or to accelerate the maturity or performance of, or to cancel,
terminate, or modify, any Applicable Contract;
or
|
|
(e)
|
result
in the imposition or creation of any Encumbrance upon or with respect
to
any of the assets owned or used by the
Buyer.
|
Except
as set forth in Schedule 4.2 of
the Disclosure Letter, Buyer is not nor will be required to give any notice
to
or obtain any Consent from any Person in connection with the execution and
delivery of this Agreement or the consummation or performance of any of the
Contemplated Transactions.
|
1)
|
The
authorized equity securities of the Buyer consist of 600 million
Shares of
common stock, par value $.0001 per share, of
which 160,634,844 Shares are issued and
outstanding. There are currently outstanding options to
purchase an additional 4,319,453 Shares of the Buyer’s common stock, which
options are described on Schedule 4.3(1) of the Disclosure
Letter. The outstanding Shares have been duly authorized and
validly issued and are fully paid and non-assessable. There are
no Contracts relating to the issuance, sale, or transfer of any equity
securities or other securities of the Buyer except for (i)
existing and future employment and (ii) shares issuable to
Cornell Capital Partners, LP, as noted in the Buyer’s Registration
Statement on Form SB-2 on file with the Securities and Exchange
Commission. None of the outstanding Shares was issued in
violation of the Securities Act or any other Legal
Requirement. The Buyer does not own, and has no Contract to
acquire, any equity securities or other securities of any Person
or any
direct or indirect equity or ownership interest in any other
business.
|
|
2)
|
The
Buyer has and on the Closing Date will have full power and authority
to
enter into this Agreement and to make the representations, warranties,
covenants and agreements made in this
Agreement.
|
18
Each
of the financial statements
(including, in each case, any related notes thereto) contained in the Buyer’s
SEC Reports (the “Buyer’s Financials”), including any Buyer’s SEC Reports
filed after the date hereof until the Closing, as of their respective dates,
(i) complied as to form in all material respects with the published
rules and regulations of the SEC with respect thereto, (ii) was
prepared in accordance with GAAP applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes thereto or, in the
case of unaudited interim financial statements, as may be permitted by the
SEC
on Form 10-QSB under the Exchange Act) and (iii) fairly presented the
financial position of the Buyer at the respective dates thereof and the results
of its operations and cash flows for the periods indicated, except that the
unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments which were not, or are not expected to be,
material in amount. The balance sheet of the Buyer as of June 30,
2007 is hereinafter referred to as the “Buyer’s Balance
Sheet.” Except as disclosed in the Buyer’s Financials, the Buyer has
no liabilities (absolute, accrued, contingent or otherwise) of a nature required
to be disclosed on a balance sheet or in the related notes to the financial
statements prepared in accordance with GAAP which are, individually or in the
aggregate, material to the business, results of operations or financial
condition of the Buyer, except liabilities (i) provided for in the
Buyer’s Balance Sheet, or (ii) incurred since the date of the Buyer’s
Balance Sheet in the Ordinary Course of Business consistent with past practices
and which would not reasonably be expected to have a Material Adverse
Effect.
The
Buyer has heretofore made available
to Sellers complete and correct copies of any amendments or modifications
to the Buyer’s SEC Reports, if any, which have not yet been filed with the SEC
but which will be required to be filed, to agreements, documents or other
instruments which previously had been filed by the Buyer with the SEC pursuant
to the Securities Act or the Exchange Act.
The
Buyer has on file with the
Securities and Exchange Commission a Registration Statement filed on Form SB-2
which has become effective.
19
|
1)
|
Schedule
4.9 of the Disclosure Letter contains a complete and accurate list
of each
Governmental Authorization that is held by the Buyer or that otherwise
relates to the business of, or to any of the assets owned or used
by, the
Buyer. Each Governmental Authorization listed or required to be listed
in
Schedule 4.9 of the Disclosure Letter is valid and in full force
and
effect. Except as set forth in Schedule 4.9 of the Disclosure
Letter.
|
|
2)
|
The
Buyer is, and at all times since the Balance Sheet Date has been,
in full
compliance with all of the terms and requirements of each Governmental
Authorization identified or required to be identified in Schedule
4.9 of
the Disclosure Letter, except where noncompliance is not likely to
result
in a Buyers Material Adverse
Effect.
|
|
3)
|
No
event has occurred or circumstance exists that (with or without notice
or
lapse of time) (A) may constitute or
result in a violation by the Buyer of, or a failure on the part of
the
Buyer to comply with, any Legal Requirement, or
(B) may give rise to any obligation
on
the part of the Buyer to undertake, or to bear all or any portion
of the
cost of, any remedial action of any
nature.
|
|
4)
|
The
Buyer has not received, at any time since the Buyer’s Balance Sheet Date,
any written notice from any Governmental Body or any other Person
regarding (A) any actual, alleged,
possible, or potential violation of, or failure to comply with, any
Legal
Requirement, or (B) any actual, alleged,
possible, or potential obligation on the part of the Buyer to undertake,
or to bear all or any portion of the cost of, any remedial action
of any
nature. To the Knowledge of Buyer there are no circumstances
that are likely to give rise to any such
notice.
|
|
5)
|
All
applications required to have been filed for the renewal of the
Governmental Authorizations listed or required to be listed in Section
4.9
of the Disclosure Letter have been duly filed on a timely basis with
the
appropriate Governmental Bodies, and all other filings required to
have
been made with respect to such Governmental Authorizations have been
duly
made on a timely basis with the appropriate Governmental Bodies,
except
where noncompliance is not likely to result in a Buyers Material
Adverse
Effect.
|
The
Governmental Authorizations listed
in Schedule 4.9 of the Disclosure Letter collectively constitute all of the
Governmental Authorizations necessary to permit the Buyer to lawfully conduct
and operate its business in the manner it currently conducts and operates such
business and to permit the Buyer to own and use its assets in the manner in
which it currently owns and uses such assets.
20
|
1)
|
Change
in the authorized or issued capital stock of the Buyer; grant of
any stock
option or right to purchase shares of capital stock of the Buyer;
issuance
of any security convertible into such capital stock; grant of any
registration rights; purchase, redemption, retirement, or other
acquisition by the Buyer of any shares of any such capital stock;
or
declaration or payment of any dividend or other distribution or payment
in
respect of shares of capital stock;
|
|
2)
|
Amendment
to the Organizational Documents of the
Buyer;
|
|
3)
|
Payment
or increase by the Buyer of any bonuses, salaries, or other compensation
to any stockholder, director, officer, or (except in the Ordinary
Course
of Business) employee or entry into any employment, severance, or
similar
Contract with any director, officer, or
employee;
|
|
4)
|
Adoption
of, or increase in the payments to or benefits under, any profit
sharing
bonus, deferred compensation, savings, insurance, pension, retirement,
or
other employee benefit plan for or with any employees of the
Buyer;
|
|
5)
|
Cancellation
or waiver of any claims or rights with a value to the Buyer in excess
of
$10,000;
|
|
6)
|
Entry
into, termination of, or receipt of written notice of termination
of any
Contract or transaction involving a total remaining commitment by
or to
the Buyer of at least $10,000;
|
|
7)
|
Material
change in the accounting methods used by the
Buyer;
|
|
8)
|
Sale
(other than sales of inventory, products and services in the Ordinary
Course of Business), lease, or other disposition of any asset or
property
of the Buyer or mortgage, pledge, or imposition of any Encumbrance
on any
material asset or property of the Buyer, including the sale, lease
or
other disposition of any of the Intellectual
Property;
|
|
9)
|
Agreement,
whether oral or written, by the Buyer to do any of the
foregoing.
|
21
|
1)
|
Except
as set forth in Schedule 4.14 of the Disclosure Letter, each Contract
to
which the Buyer is a party is in full force and effect and is valid
and
enforceable in accordance with its
terms.
|
|
2)
|
Except
as set forth in Schedule 4.14 of the Disclosure
Letter:
|
|
(a)
|
to
the Knowledge of the Buyer, the Buyer is, and at all times since
the
Balance Sheet Date has been, in compliance with all applicable terms
and
requirements of each Contract under which the Buyer has or had any
obligation or liability or by which the Buyer or any of the assets
owned
or used by the Buyer is or was bound, except where the failure to
be in
compliance is not likely to result in a Buyer Material Adverse
Effect;
|
|
(b)
|
to
the Knowledge of the Buyer, the Buyer has not given to or received
from
any other Person, at any time since the Balance Sheet Date, any written
notice regarding any actual, alleged, possible, or potential violation
or
breach of, or default under, any
Contract.
|
|
1)
|
To
Buyer’s Knowledge, the Buyer is, and at all times has been, in full
compliance with, and has not been and is not in violation of or liable
under, any Environmental Law, except where the violation of or liability
under any Environmental Law or the failure to be in compliance with
any
Environmental Law is not likely to result in a Buyer Material Adverse
Effect. To Buyer’s Knowledge, the Buyer has no basis to expect,
nor has it received, any actual or Threatened Order or written notice
from
(i) any Governmental Body or private citizen acting in the
public
interest, or (ii) the current or prior owner or operator of any
Facilities, of any actual or potential violation or failure to comply
with
any Environmental Law, or of any actual or Threatened obligation
to
undertake or bear the cost of any Environmental, Health, and Safety
Liabilities with respect to any of the Facilities or any other properties
or assets (whether real, personal, or mixed) in which Buyer has had
an
interest, or with respect to any property or Facility at or to which
Hazardous Substances were generated, manufactured, refined, transferred,
imported, used, or processed by Buyer, or any other Person for whose
conduct it are or may be held responsible, or from which Hazardous
Substances have been transported, treated, stored, handled, transferred,
disposed, recycled, or received.
|
22
|
2)
|
There
are no pending or, to Buyer’s Knowledge, Threatened claims, Encumbrances,
or other restrictions of any nature, resulting from any Environmental,
Health, and Safety Liabilities or arising under or pursuant to any
Environmental Law, with respect to or affecting any of the Facilities
or
any other properties and assets (whether real, personal, or mixed)
in
which Buyer has or had an interest.
|
|
3)
|
The
Buyer has no Knowledge of any basis to expect, nor has Buyer received,
any
written citation, directive, inquiry, notice, Order, summons, warning,
or
other communication that relates to Hazardous Activity, Hazardous
Substances, or any alleged, actual, or potential violation or failure
to
comply with any Environmental Law, or of any alleged, actual, or
potential
obligation to undertake or bear the cost of any Environmental, Health,
and
Safety Liabilities with respect to any of the Facilities or any other
properties or assets (whether real, personal, or mixed) in which
Buyer had
an interest, or with respect to any property or facility to which
Hazardous Substances generated, manufactured, refined, transferred,
imported, used, or processed by Buyer, have been transported, treated,
stored, handled, transferred, disposed, recycled, or
received.
|
|
4)
|
There
are no Hazardous Substances present on or in the Environment at the
Facilities including any Hazardous Substances contained in barrels,
above
or underground storage tanks, landfills, land deposits, dumps, equipment
(whether moveable or fixed) or other containers, either temporary
or
permanent, and deposited or located in land, water, sumps, or any
other
part of the Facilities or incorporated into any structure therein
or
thereon. The Buyer has not permitted or conducted, or is aware
of, any Hazardous Activity conducted with respect to the Facilities
or any
other properties or assets (whether real, personal, or mixed) in
which
Buyer has or had an interest except in material compliance with applicable
Environmental Laws.
|
|
5)
|
There
has been no Release or, to Sellers’ Knowledge Threat of Release, of any
Hazardous Substances at or from the Facilities or at any other locations
where any Hazardous Substances were generated, manufactured, refined,
transferred, produced, imported, used, or processed from or by the
Facilities, or from or by any other properties and assets (whether
real,
personal, or mixed) in which Sellers or the Company has or had an
interest.
|
|
6)
|
Attached
to Schedule 4.16 of the Disclosure Letter are complete copies and
results
of any reports, studies, analyses, tests, or monitoring possessed
or
initiated by Buyer pertaining to Hazardous Substances or Hazardous
Activities in, on, or under the Facilities, or concerning compliance
by
Buyer, with Environmental Laws.
|
23
|
1)
|
Buyer
is acquiring the Company’s Shares for its own account with the present
intention of holding such securities for purposes of investment,
and has
no intention of selling such securities in a public distribution
in
violation of the federal securities laws or any applicable state
securities laws. Buyer understands that the Company’s Shares
are “restricted securities” as defined in Rule 144 under the Securities
Act, and have not been registered pursuant to the provisions of the
Securities Act, inasmuch as the proposed purchase of the Shares is
taking
place in a transaction not to involving any public
offering.
|
|
2)
|
Buyer
is knowledgeable, experienced and sophisticated in financial and
business
matters and is able to evaluate the risks and benefits of the investment
in the Company’s Shares.
|
|
3)
|
Buyer
is able to bear the economic risk of the investment in the Company’s
Shares for an indefinite period of time because the Company’s Shares have
not been registered under the Securities Act and, therefore, cannot
be
sold unless subsequently registered under the Securities Act or an
exemption from such registration is
available.
|
|
4)
|
Buyer
has been furnished or otherwise had full access to such other information
concerning the Company as requested and that was necessary to enable
them
to evaluate the merits and risks of an investment in the Company,
and
after a review of this information, has had an opportunity to ask
questions and receive answers concerning the financial condition
and
business of the Company and the terms and conditions of the securities
purchased hereunder, and has had access to and has obtained such
additional information concerning the Company and the securities
as they
deemed necessary.
|
24
ARTICLE
V
|
1)
|
Conduct
the business of the Company only in the Ordinary Course of
Business.
|
|
2)
|
Use
their commercially reasonable efforts to preserve intact the current
business organization of the Company, keep available the services
of the
current officers, employees, and agents of the Company, and maintain
the
relations and good will with suppliers, customers, landlords, creditors,
employees, agents, and others having business relationships with
the
Company.
|
25
ARTICLE
VI
|
1)
|
Conduct
the business of the Buyer only in the Ordinary Course of
Business;
|
|
2)
|
Use
its commercially reasonable efforts to preserve intact the current
business organization of the Buyer, keep available the services of
the
current officers, employees, and agents of the Buyer, and maintain
the
relations and good will with suppliers, customers, landlords, creditors,
employees, agents, and others having business relationships with
the
Buyer; and
|
|
3)
|
Otherwise
report periodically to Sellers concerning the status of the business,
operations, and finances of the
Buyer.
|
26
ARTICLE
VII
Buyer’s
obligation to issue the Buyer’s
Shares in exchange for the Company’s Shares and to take the other actions
required to be taken by Buyer at the Closing is subject to the satisfaction,
at
or prior to the Closing, of each of the following conditions (any of which
may
be waived by Buyer, in whole or in part):
|
1)
|
Each
and every covenant and obligation that Sellers are required to perform
or
to comply with pursuant to this Agreement at or prior to the Closing
(considered collectively), and each of these covenants and obligations
(considered individually), must have been duly performed and complied
with
in all material respects.
|
|
2)
|
Each
document required to be delivered by Sellers pursuant to Section 2.3
must have been delivered.
|
27
ARTICLE
VIII
Sellers’
obligation
to transfer the
Company’s Shares in exchange for the Buyer’s Shares and to take the other
actions required to be taken by Sellers at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by Sellers, in whole or in part):
|
1)
|
Each
and every covenant and obligation that Buyer is required to perform
or to
comply with pursuant to this Agreement, at or prior to the Closing,
must
have been performed and complied with in all material
respects.
|
|
2)
|
Buyer
must have delivered each of the documents required to be delivered
by
Buyer pursuant to Section 2.3.
|
28
ARTICLE
IX
|
1)
|
By
either Buyer or Sellers if a material Breach of any provision of
this
Agreement has been committed by the other party and such Breach has
not
been waived;
|
|
2)
|
(i)
By Buyer if any of the conditions in Article 7 has not been satisfied
as
of the Closing Date or if satisfaction of such a condition is or
becomes
impossible (other than through the failure of Buyer to comply with
its
obligations under this Agreement) and Buyer has not waived such condition
on or before the Closing Date; or (ii) by Sellers, if any of the
conditions in Article 8 has not been satisfied as of the Closing
Date and
Sellers have not waived such condition on or before the Closing
Date;
|
|
3)
|
by
mutual consent of Buyer and
Sellers;
|
|
4)
|
By
either Buyer or Sellers if the Closing has not occurred (other than
through the failure of any party seeking to terminate this Agreement
to
comply fully with its obligations under this Agreement) on or before
October 31, 2007, or such later date as the parties may agree
upon.
|
|
5)
|
By
Buyer pursuant to Section 10.1;
|
ARTICLE
X
29
ARTICLE
XI
|
1)
|
By
Sellers.. The Sellers , from the date of this signed
agreement, jointly, severally and individually, agree to indemnify,
defend
and hold harmless the Buyer from and against any and all Damages,
claims,
deficiencies, assessments, losses, suits, Proceedings, actions,
investigations, penalties, interest, costs and expenses including,
without
limitation, reasonable fees and expenses of counsel, amounts paid
in
settlement and reasonable costs of investigation (whether suit is
instituted or not and, if instituted, whether at the trial or appellate
level) (collectively, the “Liabilities”), whether in law or equity,
arising from or in connection with (a) the failure of any
representation of the Sellers contained in this Agreement or in any
document delivered in connection herewith to be true and correct
or
(b) any breach or violation of any of the warranties, covenants
or agreements of the Sellers contained in this Agreement or in any
document delivered in connection herewith. Notwithstanding
anything in this Agreement to the contrary (or which could be construed
as
such), the maximum under this Agreement shall be Ten Million Dollars
($10,000,000) (the “Aggregate Liability
Amount”).
|
|
2)
|
By
Buyer. The Buyer agrees to indemnify, defend and hold
harmless each of the Sellers from and against any and all Liabilities,
whether in law or equity, arising from or in connection with (a)
the failure of any representation of the Buyer contained in this
Agreement
or in any document delivered in connection herewith to be true and
correct, or (b) any breach or violation of any of the
warranties, covenants or agreements of the Buyer contained in this
Agreement or in any document delivered in connection
herewith. Notwithstanding anything in this Agreement to the
contrary (or which could be construed as such), the maximum under
this
Agreement shall be Twenty Five Million (25,000,000) shares of the
company’s restricted common stock. (the “Aggregate Liability
Amount”).
|
30
|
1)
|
Notice. In
the event that an Indemnified Party believes that it is entitled
to
indemnification by an indemnifying party against or in respect of
Damages
under Section 11.2, notice of a claim for indemnification shall be
given
by the Indemnified Party as
follows:
|
|
(a)
|
Buyer,
as the indemnified party, shall assert such claim in the manner and
within
the applicable period of limitations;
and
|
|
(b)
|
Sellers,
as the indemnified party, shall assert such claim in the manner and
within
the applicable period of limitations;
and
|
|
(c)
|
any
such claims shall be in writing, shall set forth the amount or estimated
amount of Damages and the basis for such claim set forth in reasonable
detail.
|
|
2)
|
Attempt
to Agree. The indemnified party and the indemnifying party
shall proceed, in good faith, and using reasonable efforts, to agree
upon
the amount of such Damages. If they are unable to agree on the
amount of such Damages within thirty (30) days after giving the notice
of
such claim, then the provisions of Section 11.4(3) shall become
effective.
|
|
3)
|
Arbitration. Each
and every controversy or claim arising out of or relating to
indemnification for Damages pursuant to Section 11.2 of this Agreement
which the indemnified party and indemnifying party (“Parties”) have
not resolved pursuant to Section 11.4(2) shall be submitted to binding
arbitration before the American Arbitration Association. The
arbitration proceedings will be conducted in Xxxxxxx County, Florida,
using the commercial arbitration procedures of the American Arbitration
Association. Any arbitration award or determination will be
final, non-appealable, and conclusive, and may be submitted to a
court of
competent jurisdiction for confirmation and entry of a judgment enforcing
the arbitration award.
|
31
ARTICLE
XII
(a)
|
Terminate
this Agreement, and receive 560,000 shares of X.X. Xxxxxxx Systems
Inc
common stock of the sellers as liquidated damages and receive immediate
reimbursement of all Buyer’s third party
costs;
|
(b)
|
Seek
specific performance of Seller’s obligations;
and/or
|
(c)
|
Seek
any other remedy available to
Buyer.
|
ARTICLE
XIII
12.1
|
Upon
Closing, the Board of Directors of the Company shall consist of the
following:
|
Xxxxx
D’Anza
Xxxxx
Xxxx
Xxxx
Xxxxxxxx
Xxxxxx
XxXxx
D.
Xxx
Xxxxx
Xxxxxx
Xxxxx
Xxxxxxx
Xxxxxx, Xx.
Xxxxx
Xxxxxxx
12.2
|
Upon
Closing, the Officers of the Company shall consist of the
following:
|
Chief
Executive Officer and or President: Xxxxx X. D’Anza
Secretary/Treasurer: Xxxxx
Xxxxxx
12.3
|
Upon
Closing, the Officers of the Buyer shall consist of the
following:
|
President/Secretary: Xxxxx
Xxxx
Vice
President of Operations: Xxxxx Xxxxxxxx
Treasurer/CFO: Xxxx
Xxxxxxxx
12.4 The
parties agree that the terms of the Employment Agreements shall be acceptable
to
Xxxx Xxxxxxxx, Xxxxx Xxxxxxxx and Xxxxx Xxxx and they shall be executed within
fifteen (15) days from the time of the closing.
32
ARTICLE
XIII
13.1 Expenses. Each
party to this Agreement will bear its respective expenses incurred in connection
with the preparation, execution, and performance of this Agreement and the
Contemplated Transactions, including all fees and expenses of agents,
representatives, counsel, and accountants. All such expenses shall be
paid in full prior to the Closing.
13.2 Public
Announcements. Any public announcement or similar publicity with
respect to this Agreement or the Contemplated Transactions will be issued,
if at
all, at such time and in such manner as the Company determines. Prior
to the Closing, Buyer and Sellers shall cause the Company to keep this Agreement
strictly confidential and may not make any disclosure of this Agreement to
any
Person. Sellers and Buyer will consult with each other concerning the
means by which the employees, customers, and suppliers and others having
dealings with the Company will be informed of the Contemplated Transactions,
and
Sellers and the Company will make any such communication.
13.3 Notices. All
notices, consents, waivers, and other communications under this Agreement must
be in writing and will be deemed to have been duly given when (a)
delivered by hand (with written confirmation of receipt), (b) sent by
telecopier (with written confirmation
of receipt), provided
that a copy is mailed by certified mail, return receipt requested, or
(c) when received by the addressee, if sent by a nationally recognized
overnight delivery service (receipt requested), in each case to the appropriate
addresses and telecopier numbers set forth below (or to such other addresses
and
telecopier numbers as a party may designate by notice to the other
parties):
Sellers:
|
D’Anza
Family Trust, Xxxxxxx Holdings, LP,
.
|
Title:
Trustee, General
Partner
Address:
0000 Xxxx Xxxxx
Xxxx
Xxxxxx,
Xxxx 00000
Fax
Number: (000)
000-0000
Buyer: Xxxxx
X. Xxxx
President
Serefex
Corporation
0000
Xxxxxxxxx Xxxxxx, Xxxxx
X
Xxxxxx,
Xxxxxxx 00000
Facsimile: (000)
000-0000
with
a
copy
to: Xxxxxxx
X. Xxxxxxxx, Xx., Esq.
Xxxxxxxx
Schifino Xxxxxxxx &
Steady, P.A.
Xxx
Xxxxx Xxxx Xxxxxx, Xxxxx
0000
Xxxxx,
Xxxxxxx 00000
Facsimile: (000)
000-0000
33
13.4 Further
Assurances. Buyer and Sellers agree (a) to furnish
upon request to each other such further information, (b) to execute and
deliver to each other such other documents, and (c) to do such
other acts and things, all as the other party may reasonably request for the
purpose of carrying out the intent of this Agreement and the Contemplated
Transactions.
Signature
Page Follows
34
BUYER:
WITNESS: SEREFEX
CORPORATION
______________________________ By: __________________________
Xxxxx
X.
D’Anza Xxxxx
X. Xxxx, President, Secretary
SELLERS:
WITNESS: XXXXXXX
HOLDINGS, LP
_______________________________
By: __________________________
Xxxxx
X.
D’Anza Xxxxx
X. D’Anza, General Partner
WITNESS: D’ANZA
FAMILY TRUST
_______________________________
By:
___________________________
Xxxxxxxxxxx
X.
D’Anza Xxxxx
X. D’Anza, Trustee
35
APPENDIX
A
Shareholder
|
Number
of Shares
of
Xxxxxxx Owned
|
Number
of Shares
of
Serefex to Receive
|
Xxxxxxx
Holdings, LP
|
450,514
|
104,817,547
|
D’Anza
Family Trust
|
290,830
|
67,665,119
|
36