Exhibit 10.1
AGREEMENT AND PLAN OF ACQUISITION
THIS AGREEMENT AND PLAN OF ACQUISITION is made as of the 22nd day of April 2003
AMONG:
PALLADIUM COMMUNICATIONS, INC., a corporation formed
pursuant to the laws of the State of Nevada and having an office
for business located at 000 X. Xxxxxxxx Xxx Xxxx., Xxxxxxxxxx, XX
00000
("Palladium")
AND:
PEAK ENTERTAINMENT LTD., a body corporate formed pursuant to
the laws of the United Kingdom and having an office for business
located at 000 Xxxx Xxxxx Xxxxxx, Xxxxxxxx, XX 00000
("Peak")
AND:
Xxxxxxx and Xxxxx Xxxxxxxxx
(the "Peak Shareholders")
WHEREAS:
A. The Peak Shareholders, together with the remaining holders of Peak shares set
forth on Exhibit A hereto, own 19,071,684 Peak Shares, being 100% of the
presently issued and outstanding Peak Shares;
B. Palladium is a reporting company whose common stock is quoted on the OTC
Bulletin Board;
C . The respective Boards of Directors of Palladium and Peak deem it advisable
and in the best interests of Palladium and Peak that Palladium purchase all of
the issued and outstanding capital stock of Peak (the "Acquisition") pursuant to
this Agreement and the applicable provisions of the laws of the State of Nevada;
and
E. It is intended that the Acquisition shall qualify for United States federal
income tax purposes as a reorganization within the meaning of Section 368 of the
Internal Revenue Code of 1986, as amended.
NOW THEREFORE THIS AGREEMENT WITNESSETH THAT in consideration of the premises
and the mutual covenants, agreements, representations and warranties contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATION
Definitions
1.1 In this Agreement the following terms will have the following meanings:
(a) "Acquisition Shares" means the 19,071,684 Palladium Common
Shares to be issued to the Peak Shareholders at Closing
pursuant to the terms of the Acquisition;
(b) "Agreement" means this agreement and plan of Acquisition among
Palladium, Peak, and the Peak Shareholders;
(c) "Palladium Accounts Payable and Liabilities" means all
accounts payable and liabilities of Palladium, on a
consolidated basis, due and owing or otherwise constituting a
binding obligation of Palladium and its subsidiaries (other
than a Palladium Material Contract) as of December 31, 2002 as
set forth in Schedule "B" hereto;
(d) "Palladium Accounts Receivable" means all accounts receivable
and other debts owing to Palladium, on a consolidated basis,
as of December 31, 2002 as set forth in Schedule "C" hereto;
(e) "Palladium Assets" means the undertaking and all the property
and assets of the Palladium Business of every kind and
description wheresoever situated including, without
limitation, Palladium Equipment, Palladium Inventory,
Palladium Material Contracts, Palladium Accounts Receivable,
Palladium Cash, Palladium Intangible Assets and Palladium
Goodwill, and all credit cards, charge cards and banking cards
issued to Palladium ;
(f) "Palladium Bank Accounts" means all of the bank accounts, lock
boxes and safety deposit boxes of Palladium and its
subsidiaries or relating to the Palladium Business as set
forth in Schedule "D" hereto;
(g) "Palladium Business" means all aspects of any business
conducted by Palladium and its subsidiaries;
(h) "Palladium Cash" means all cash on hand or on deposit to the
credit of Palladium and its subsidiaries on the Closing Date;
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(i) "Palladium Common Shares" means the shares of common stock in
the capital of Palladium;
(j) "Palladium Debt to Related Parties" means the debts owed by
Palladium and its subsidiaries to any affiliate, director or
officer of Palladium as described in Schedule "E" hereto;
(k) "Palladium Equipment" means all machinery, equipment,
furniture, and furnishings used in the Palladium Business,
including, without limitation, the items more particularly
described in Schedule "F" hereto;
(l) "Palladium Financial Statements" means, collectively, the
audited consolidated financial statements of Palladium for the
fiscal year ended December 31, 2002, together with the
unqualified auditors' report thereon, true copies of which are
attached as Schedule "A" hereto;
(m) "Palladium Goodwill" means the goodwill of the Palladium
Business including the right to all corporate, operating and
trade names associated with the Palladium Business, or any
variations of such names as part of or in connection with the
Palladium Business, all books and records and other
information relating to the Palladium Business, all necessary
licenses and authorizations and any other rights used in
connection with the Palladium Business;
(n) "Palladium Insurance Policies" means the public liability
insurance and insurance against loss or damage to the
Palladium Assets and the Palladium Business as described in
Schedule "G" hereto;
(o) "Palladium Intangible Assets" means all of the intangible
assets of Palladium and its subsidiaries, including, without
limitation, Palladium Goodwill, all trademarks, logos,
copyrights, designs, and other intellectual and industrial
property of Palladium and its subsidiaries;
(p) "Palladium Inventory" means all inventory and supplies of the
Palladium Business as of December 31, 2003, as set forth in
Schedule "H" hereto;
(q) "Palladium Material Contracts" means the burden and
benefit of and the right, title and interest of Palladium
and its subsidiaries in, to and under all trade and
non-trade contracts, engagements or commitments, whether
written or oral, to which Palladium or its subsidiaries are
entitled whereunder Palladium or its subsidiaries are
obligated to pay or entitled to receive the sum of $10,000
or more including, without limitation, any pension plans,
profit sharing plans, bonus plans, loan agreements, security
agreements, indemnities and guarantees, any agreements with
employees, lessees, licensees, managers, accountants,
suppliers, agents, distributors, officers, directors,
attorneys or others which cannot be terminated without
liability on not more than one month's notice, and those
contracts listed in Schedule "I" hereto;
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(r) "Closing" means the completion, on the Closing Date, of the
transactions contemplated hereby in accordance with Article 9
hereof;
(s) "Closing Date" means the day on which all conditions precedent
to the completion of the transaction as contemplated hereby
have been satisfied or waived;
(t) "Effective Time" means the actual time that the Acquisition
shall become effective;
(u) "Acquisition" means the Acquisition, at the Effective Time, of
Peak pursuant to this Agreement and Plan of Acquisition;
(v) "Acquisition Consideration" means the Acquisition Shares;
(w) "Place of Closing" means the offices of Sichenzia Xxxx
Xxxxxxxx Xxxxxxx LLP, or such other place as Palladium and
Peak may mutually agree upon;
(x) "State Corporation Law" means the General Corporation Law of
the State of Nevada;
(y) "Peak Accounts Payable and Liabilities" means all accounts
payable and liabilities of Peak, due and owing or otherwise
constituting a binding obligation of Peak (other than a Peak
Material Contract) as of December 31, 2002, as set forth in
Schedule "K" hereto;
(z) "Peak Accounts Receivable" means all accounts receivable and
other debts owing to Peak, as of December 31, 2002, as set
forth in Schedule "L" hereto;
(aa) "Peak Assets" means the undertaking and all the property and
assets of the Peak Business of every kind and description
wheresoever situated including, without limitation, Peak
Equipment, Peak Inventory, Peak Material Contracts, Peak
Accounts Receivable, Peak Cash, Peak Intangible Assets and
Peak Goodwill, and all credit cards, charge cards and banking
cards issued to Peak;
(bb) "Peak Bank Accounts" means all of the bank accounts, lock
boxes and safety deposit boxes of Peak or relating to the Peak
Business as set forth in Schedule "M" hereto;
(cc) "Peak Business" means all aspects of the business conducted by
Peak;
(dd) "Peak Cash" means all cash on hand or on deposit to the credit
of Peak on the Closing Date;
(ee) "Peak Debt to Related Parties" means the debts owed by Peak
and its subsidiaries to the Peak Shareholder or to any family
member thereof, or to any affiliate, director or officer of
Peak or the Peak Shareholder as described in Schedule "N";
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(ff) "Peak Equipment" means all machinery, equipment, furniture,
and furnishings used in the Peak Business, including, without
limitation, the items more particularly described in Schedule
"O" hereto;
(gg) "Peak Financial Statements" means collectively, the
consolidated financial statements of Peak for the for the
period ended December 31, 2002, true copies of which are
attached as Schedule "J" hereto;
(hh) "Peak Goodwill" means the goodwill of the Peak Business
together with the exclusive right of Palladium to represent
itself as carrying on the Peak Business in succession of
Peak subject to the terms hereof, and the right to use any
words indicating that the Peak Business is so carried on
including the right to use the name "Peak" or "Peak
International" or any variation thereof as part of the name
of or in connection with the Peak Business or any part
thereof carried on or to be carried on by Peak, the right to
all corporate, operating and trade names associated with the
Peak Business, or any variations of such names as part of or
in connection with the Peak Business, all telephone listings
and telephone advertising contracts, all lists of customers,
books and records and other information relating to the Peak
Business, all necessary licenses and authorizations and any
other rights used in connection with the Peak Business;
(ii) "Peak Insurance Policies" means the public liability insurance
and insurance against loss or damage to Peak Assets and the
Peak Business as described in Schedule "P" hereto;
(jj) "Peak Intangible Assets" means all of the intangible assets of
Peak, including, without limitation, Peak Goodwill, all
trademarks, logos, copyrights, designs, and other intellectual
and industrial property of Peak and its subsidiaries;
(kk) "Peak Inventory" means all inventory and supplies of the Peak
Business as of December 31, 2002, as set forth in Schedule "Q"
hereto;
(ll) "Peak Material Contracts" means the burden and benefit
of and the right, title and interest of Peak in, to and
under all trade and non-trade contracts, engagements or
commitments, whether written or oral, to which Peak is
entitled in connection with the Peak Business whereunder
Peak is obligated to pay or entitled to receive the sum of
$10,000 or more including, without limitation, any pension
plans, profit sharing plans, bonus plans, loan agreements,
security agreements, indemnities and guarantees, any
agreements with employees, lessees, licensees, managers,
accountants, suppliers, agents, distributors, officers,
directors, attorneys or others which cannot be terminated
without liability on not more than one month's notice, and
those contracts listed in Schedule "R" hereto; and
(mm) "Peak Shares" means all of the issued and outstanding shares
of Peak's equity stock.
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Any other terms defined within the text of this Agreement will have the meanings
so ascribed to them.
Captions and Section Numbers
1.2 The headings and section references in this Agreement are for convenience of
reference only and do not form a part of this Agreement and are not intended to
interpret, define or limit the scope, extent or intent of this Agreement or any
provision thereof.
Section References and Schedules
1.3 Any reference to a particular "Article", "section", "paragraph", "clause" or
other subdivision is to the particular Article, section, clause or other
subdivision of this Agreement and any reference to a Schedule by letter will
mean the appropriate Schedule attached to this Agreement and by such reference
the appropriate Schedule is incorporated into and made part of this Agreement.
The Schedules to this Agreement are as follows:
Information concerning Palladium
Schedule "A" Palladium Financial Statements
Schedule "B" Palladium Accounts Payable and Liabilities
Schedule "C" Palladium Accounts Receivable
Schedule "D" Palladium Bank Accounts
Schedule "E" Palladium Debts to Related Parties
Schedule "F" Palladium Equipment
Schedule "G" Palladium Insurance Policies
Schedule "H" Palladium Inventory
Schedule "I" Palladium Material Contracts
Information concerning Peak
Schedule "J" Peak Financial Statements
Schedule "K" Peak Accounts Payable and Liabilities
Schedule "L" Peak Accounts Receivable
Schedule "M" Peak Bank Accounts
Schedule "N" Peak Debts to Related Parties
Schedule "O" Peak Equipment
Schedule "P" Peak Insurance Policies
Schedule "Q" Peak Inventory
Schedule "R" Peak Material Contracts
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Severability of Clauses
1.4 If any part of this Agreement is declared or held to be invalid for any
reason, such invalidity will not affect the validity of the remainder which will
continue in full force and effect and be construed as if this Agreement had been
executed without the invalid portion, and it is hereby declared the intention of
the parties that this Agreement would have been executed without reference to
any portion which may, for any reason, be hereafter declared or held to be
invalid.
ARTICLE 2
THE ACQUISITION
The Acquisition
2.1 At Closing, Palladium shall acquire and be the sole owner of all of the
issued and outstanding capital stock of Peak pursuant to this Agreement and Plan
of Acquisition.
Exchange of Securities
2.2 At the Effective Time, by virtue of the Acquisition and without any further
action on the part of Palladium, Peak or the Peak Shareholders, the shares of
capital stock of Peak shall be exchanged as follows:
Each Peak Share that is issued and outstanding at the Effective Time
shall automatically be exchanged for the right to receive one
Acquisition Share.
Adherence with Applicable Securities Laws
2.3 The Peak Shareholders agree that they are acquiring the Acquisition Shares
for investment purposes and will not offer, sell or otherwise transfer, pledge
or hypothecate any of the Acquisition Shares issued to them (other than pursuant
to an effective Registration Statement under the Securities Act of 1933, as
amended) directly or indirectly unless:
(a) the sale is to Palladium;
(b) the sale is made pursuant to the exemption from registration
under the Securities Act of 1933,as amended, provided by Rule
144 thereunder; or
(c) the Acquisition Shares are sold in a transaction that does not
require registration under the Securities Act of 1933, as
amended, or any applicable United States state laws and
regulations governing the offer and sale of securities, and
the vendor has furnished to Palladium an opinion of counsel to
that effect or such other written opinion as may be reasonably
required by Palladium .
The Peak Shareholders acknowledge that the certificates representing
the Acquisition Shares shall bear the following legend:
NO SALE, OFFER TO SELL, OR TRANSFER OF THE SHARES REPRESENTED
BY THIS CERTIFICATE SHALL BE MADE UNLESS A REGISTRATION
STATEMENT UNDER THE FEDERAL SECURITIES ACT OF 1933, AS
AMENDED, IN RESPECT OF SUCH SHARES IS THEN IN EFFECT OR AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SAID ACT IS
THEN IN FACT APPLICABLE TO SAID SHARES.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES
OF PALLADIUM
Representations and Warranties
3.1 Palladium represents and warrants in all material respects to Peak, with the
intent that Peak will rely thereon in entering into this Agreement and in
approving and completing the transactions contemplated hereby, that:
Palladium - Corporate Status and Capacity
(a) Incorporation. Palladium is a corporation duly incorporated
and validly subsisting under the laws of the State of Nevada,
and is in good standing with the office of the Secretary of
State for the State of Nevada and Kentucky;
(b) Carrying on Business. Palladium does not currently conduct
business, except for the actual operations of the corporation
which are carried on in Louisville, Kentucky, and does carry
on any other material business activity in any other
jurisdictions. Palladium is duly authorized to carry on such
business in Kentucky. The nature of the Palladium Business
does not require Palladium to register or otherwise be
qualified to carry on business in any other jurisdictions;
(c) Corporate Capacity. Palladium has the corporate power,
capacity and authority to own the Palladium Assets and to
enter into and complete this Agreement;
(d) Reporting Status; Listing. Palladium is required to file
current reports with the Securities and Exchange Commission
pursuant to section 15(d) of the Securities Exchange Act of
1934, the Palladium Common Shares are quoted on the OTC
Bulletin Board and all reports required to be filed by
Palladium with the Securities and Exchange Commission or NASD
have been timely filed;
Palladium - Capitalization
(e) Authorized Capital. The authorized capital of Palladium
consists of 900,000,000 Palladium Common Shares, $0.001 par
value, of which 2,119,076 Palladium Common Shares and
outstanding;
(f) No Option. No person, firm or corporation has any agreement or
option or any right capable of becoming an agreement or option
for the acquisition of Palladium Common Shares or for the
purchase, subscription or issuance of any of the unissued
shares in the capital of Palladium , except as set forth on
the Schedules;
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(g) Capacity. Palladium has the full right, power and authority to
enter into this Agreement on the terms and conditions
contained herein;
Palladium - Records and Financial Statements
(h) Charter Documents. The charter documents of Palladium
have not been altered since the incorporation, except as
filed in the record books of Palladium;
(i) Corporate Minute Books. The corporate minute books of
Palladium and its subsidiaries are complete and each of the
minutes contained therein accurately reflect the actions
that were taken at a duly called and held meeting or by
consent without a meeting. All actions by Palladium and its
subsidiaries which required director or shareholder approval
are reflected on the corporate minute books of Palladium and
its subsidiaries. Palladium and its subsidiaries are not in
violation or breach of, or in default with respect to, any
term of their respective Certificates of Incorporation (or
other charter documents) or by-laws.
(j) Palladium Financial Statements. The Palladium Financial
Statements present fairly, in all material respects, the
assets and liabilities (whether accrued, absolute,
contingent or otherwise) of Palladium, on a consolidated
basis, as of the respective dates thereof, and the sales and
earnings of the Palladium Business during the periods
covered thereby, in all material respects and have been
prepared in substantial accordance with generally accepted
accounting principles consistently applied;
(k) Internal Accounting Controls. Palladium and its
subsidiaries maintain a system of internal accounting
controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's
general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting
principles and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with
management's general or specific authorization, and (iv) the
recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate
action is taken with respect to any differences. There are
no disagreements of any kind presently existing, or
reasonably anticipated by Palladium to arise, between the
accountants and lawyers formerly or presently employed by
Palladium, which could reasonably be expected to delay the
transactions contemplated hereby, including the filing of
Form 8-K following the Effective Date, and Palladium is
current with respect to any fees owed to its accountants and
lawyers. Palladium has established disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and
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15d-14) for Palladium and designed such disclosure controls
and procedures to ensure that material information relating
to Palladium, including its subsidiaries, is made known to
the certifying officers by others within those entities,
particularly during the period in which Palladium's Form
10-K (or 10-KSB) or 10-Q (or 10-QSB), as the case may be, is
being prepared. Palladium's certifying officers have
evaluated the effectiveness of Palladium's controls and
procedures as of a date within 90 days prior to the filing
date of the Form 10-KSB for the quarter ended December 31,
2002 (such date, the "Evaluation Date"). Palladium presented
in the Form 10-KSB for the year ended December 31, 2002 the
conclusions of the certifying officers about the
effectiveness of the disclosure controls and procedures
based on their evaluations as of the Evaluation Date. Since
the Evaluation Date, there have been no significant changes
in Palladium's internal controls (as such term is defined in
Item 307(b) of Regulation S-K under the Exchange Act) or, to
Palladium's knowledge, in other factors that could
significantly affect the Palladium's internal controls.
(l) Palladium Accounts Payable and Liabilities. There are
no material liabilities, contingent or otherwise, of
Palladium or its subsidiaries which are not disclosed in
Schedule "B" hereto or reflected in the Palladium Financial
Statements except those incurred in the ordinary course of
business since the date of the said schedule and the
Palladium Financial Statements, and neither Palladium nor
its subsidiaries have guaranteed or agreed to guarantee any
debt, liability or other obligation of any person, firm or
corporation. Without limiting the generality of the
foregoing, all accounts payable and liabilities of Palladium
and its subsidiaries as of December 31, 2002 are described
in Schedule "B" hereto;
(m) Palladium Accounts Receivable. All the Palladium
Accounts Receivable result from bona fide business
transactions and services actually rendered without, to the
knowledge and belief of Palladium , any claim by the obligor
for set-off or counterclaim;
(n) Palladium Bank Accounts. All of the Palladium Bank
Accounts, their location, numbers and the authorized
signatories thereto are as set forth in Schedule "D" hereto;
(o) No Debt to Related Parties. Except as disclosed in
Schedule "E" hereto, neither Palladium nor its subsidiaries
are, and on Closing will not be, materially indebted to any
affiliate, director or officer of Palladium except accounts
payable on account of bona fide business transactions of
Palladium incurred in normal course of the Palladium
Business, including employment agreements, none of which are
more than 30 days in arrears;
(p) No Related Party Debt to Palladium. No director or
officer or affiliate of Palladium is now indebted to or
under any financial obligation to Palladium or its
subsidiaries on any account whatsoever, except for advances
on account of travel and other expenses not exceeding $5,000
in total;
(q) No Dividends. No dividends or other distributions on
any shares in the capital of Palladium have been made,
declared or authorized since the date of Palladium Financial
Statements;
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(r) No Payments. No payments of any kind have been made or
authorized since the date of the Palladium Financial
Statements to or on behalf of officers, directors,
shareholders or employees of Palladium or its subsidiaries
or under any management agreements with Palladium or its
subsidiaries, except payments made in the ordinary course of
business and at the regular rates of salary or other
remuneration payable to them;
(s) No Pension Plans. There are no pension, profit sharing,
group insurance or similar plans or other deferred
compensation plans affecting Palladium or its subsidiaries;
(t) No Adverse Events. Since the date of the Palladium
Financial Statements
(i) there has not been any material adverse change in the
financial position or condition of Palladium , its
subsidiaries, its liabilities or the Palladium Assets
or any damage, loss or other change in circumstances
materially affecting Palladium , the Palladium
Business or the Palladium Assets or Palladium ' right
to carry on the Palladium Business, other than
changes in the ordinary course of business,
(ii) there has not been any damage, destruction, loss or
other event (whether or not covered by insurance)
materially and adversely affecting Palladium , its
subsidiaries, the Palladium Business or the Palladium
Assets,
(iii) there has not been any material increase in the
compensation payable or to become payable by
Palladium to any of Palladium ' officers, employees
or agents or any bonus, payment or arrangement made
to or with any of them,
(iv) the Palladium Business has been and continues to be
carried on in the ordinary course,
(v) Palladium has not waived or surrendered any right of
material value,
(vi) Neither Palladium nor its subsidiaries have
discharged or satisfied or paid any lien or
encumbrance or obligation or liability other than
current liabilities in the ordinary course of
business, and
(vii) no capital expenditures in excess of $10,000
individually or $30,000 in total have been
authorized or made.
Palladium - Income Tax Matters
(u) Tax Returns. All tax returns and reports of Palladium and its
subsidiaries required by law to be filed have been filed and
are true, complete and correct, and any taxes payable in
accordance with any return filed by Palladium and its
subsidiaries or in accordance with any notice of assessment or
reassessment issued by any taxing authority have been so paid;
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(v) Current Taxes. Adequate provisions have been made for taxes
payable for the current period for which tax returns are not
yet required to be filed and there are no agreements, waivers,
or other arrangements providing for an extension of time with
respect to the filing of any tax return by, or payment of, any
tax, governmental charge or deficiency by Palladium or its
subsidiaries. Palladium is not aware of any contingent tax
liabilities or any grounds which would prompt a reassessment
including aggressive treatment of income and expenses in
filing earlier tax returns;
Palladium - Applicable Laws and Legal Matters
(w) Licenses. Palladium and its subsidiaries hold all licenses and
permits as may be requisite for carrying on the Palladium
Business in the manner in which it has heretofore been carried
on, which licenses and permits have been maintained and
continue to be in good standing except where the failure to
obtain or maintain such licenses or permits would not have a
material adverse effect on the Palladium Business;
(x) Applicable Laws. Neither Palladium nor its subsidiaries have
been charged with or received notice of breach of any laws,
ordinances, statutes, regulations, by-laws, orders or decrees
to which they are subject or which apply to them the violation
of which would have a material adverse effect on the Palladium
Business, and to Palladium ' knowledge, neither Palladium nor
its subsidiaries are in breach of any laws, ordinances,
statutes, regulations, bylaws, orders or decrees the
contravention of which would result in a material adverse
impact on the Palladium Business;
(y) Pending or Threatened Litigation. There is no material
litigation or administrative or governmental proceeding
pending or threatened against or relating to Palladium , its
subsidiaries, the Palladium Business, or any of the Palladium
Assets nor does Palladium have any knowledge of any deliberate
act or omission of Palladium or its subsidiaries that would
form any material basis for any such action or proceeding;
(z) No Bankruptcy. Neither Palladium nor its subsidiaries have
made any voluntary assignment or proposal under applicable
laws relating to insolvency and bankruptcy and no bankruptcy
petition has been filed or presented against Palladium or its
subsidiaries and no order has been made or a resolution passed
for the winding-up, dissolution or liquidation of Palladium or
its subsidiaries;
(aa) Labor Matters. Neither Palladium nor its subsidiaries are
party to any collective agreement relating to the Palladium
Business with any labor union or other association of
employees and no part of the Palladium Business has been
certified as a unit appropriate for collective bargaining or,
to the knowledge of Palladium , has made any attempt in that
regard;
(bb) Finder's Fees. Neither Palladium nor its subsidiaries are
party to any agreement which provides for the payment of
finder's fees, brokerage fees, commissions or other fees or
amounts which are or may become payable to any third party in
connection with the execution and delivery of this Agreement
and the transactions contemplated herein;
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Execution and Performance of Agreement
(cc) Authorization and Enforceability. The execution and
delivery of this Agreement, and the completion of the
transactions contemplated hereby, have been duly and validly
authorized by all necessary corporate action on the part of
Palladium;
(dd) No Violation or Breach. The execution and performance
of this Agreement will not:
(i) violate the charter documents of Palladium or result
in any breach of, or default under, any loan
agreement, mortgage, deed of trust, or any other
agreement to which Palladium or its subsidiaries are
party,
(ii) give any person any right to terminate or cancel any
agreement including, without limitation, the
Palladium Material Contracts, or any right or rights
enjoyed by Palladium or its subsidiaries,
(iii) result in any alteration of Palladium ' or its
subsidiaries' obligations under any agreement to
which Palladium or its subsidiaries are party
including, without limitation, the Palladium Material
Contracts,
(iv) result in the creation or imposition of any lien,
encumbrance or restriction of any nature whatsoever
in favor of a third party upon or against the
Palladium Assets,
(v) result in the imposition of any tax liability to
Palladium or its subsidiaries relating to the
Palladium Assets, or
(vi) violate any court order or decree to which either
Palladium or its subsidiaries are subject;
The Palladium Assets - Ownership and Condition
(ee) Business Assets. The Palladium Assets comprise all of the
property and assets of the Palladium Business, and no other
person, firm or corporation owns any assets used by Palladium
or its subsidiaries in operating the Palladium Business,
whether under a lease, rental agreement or other arrangement,
other than as disclosed in Schedules "F" or "I" hereto;
(ff) Title. Palladium or its subsidiaries are the legal and
beneficial owner of the Palladium Assets, free and clear of
all mortgages, liens, charges, pledges, security interests,
encumbrances or other claims whatsoever, save and except as
disclosed in Schedules "F" or "I" hereto;
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(gg) No Option. No person, firm or corporation has any agreement or
option or a right capable of becoming an agreement for the
purchase of any of the Palladium Assets;
(hh) Palladium Insurance Policies. Palladium and its subsidiaries
maintain the public liability insurance and insurance against
loss or damage to the Palladium Assets and the Palladium
Business as described in Schedule "G" hereto;
(ii) Palladium Material Contracts. The Palladium Material Contracts
listed in Schedule "I" constitute all of the material
contracts of Palladium and its subsidiaries;
(jj) No Default. There has not been any default in any material
obligation of Palladium or any other party to be performed
under any of the Palladium Material Contracts, each of which
is in good standing and in full force and effect and unamended
(except as disclosed in Schedule "I" hereto), and Palladium is
not aware of any default in the obligations of any other party
to any of the Palladium Material Contracts;
(kk) No Compensation on Termination. There are no agreements,
commitments or understandings relating to severance pay or
separation allowances on termination of employment of any
employee of Palladium or its subsidiaries. Neither Palladium
nor its subsidiaries are obliged to pay benefits or share
profits with any employee after termination of employment
except as required by law;
Palladium Assets - Palladium Equipment
(ll) Palladium Equipment. The Palladium Equipment has been
maintained in a manner consistent with that of a reasonably
prudent owner and such equipment is in good working condition;
Palladium Assets - Palladium Goodwill and Other Assets
(mm) Palladium Goodwill. Palladium and its subsidiaries does not
carry on the Palladium Business under any other business or
trade names. Palladium does not have any knowledge of any
infringement by Palladium or its subsidiaries of any patent,
trademarks, copyright or trade secret;
The Palladium Business
(nn) Maintenance of Business. Since the date of the Palladium
Financial Statements, Palladium and its subsidiaries have not
entered into any material agreement or commitment except in
the ordinary course and except as disclosed herein;
(oo) Subsidiaries. Palladium does not own any subsidiaries and does
not otherwise own, directly or indirectly, any shares or
interest in any other corporation, partnership, joint venture
or firm; and
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Palladium - Acquisition Shares
(pp) Acquisition Shares. The Acquisition Shares when delivered to
the holders of Peak Shares pursuant to the Acquisition shall
be validly issued and outstanding as fully paid and
non-assessable shares and the Acquisition Shares shall be
transferable upon the books of Palladium, in all cases subject
to the provisions and restrictions of all applicable
securities laws.
Non-Acquisition and Survival
3.2 The representations and warranties of Palladium contained herein will be
true at and as of Closing in all material respects as though such
representations and warranties were made as of such time. Notwithstanding the
completion of the transactions contemplated hereby, the waiver of any condition
contained herein (unless such waiver expressly releases a party from any such
representation or warranty) or any investigation made by Peak or the Peak
Shareholders, the representations and warranties of Palladium shall survive the
Closing.
Indemnity
3.3 Palladium agrees to indemnify and save harmless Peak and the Peak
Shareholders from and against any and all claims, demands, actions, suits,
proceedings, assessments, judgments, damages, costs, losses and expenses,
including any payment made in good faith in settlement of any claim (subject to
the right of Palladium to defend any such claim), resulting from the breach by
it of any representation or warranty made under this Agreement or from any
misrepresentation in or omission from any certificate or other instrument
furnished or to be furnished by Palladium to Peak or the Peak Shareholders
hereunder.
ARTICLE 4
COVENANTS OF PALLADIUM
Covenants
4.1 Palladium covenants and agrees with Peak that it will:
(a) Conduct of Business. Until the Closing, conduct its business
diligently and in the ordinary course consistent with the
manner in which it generally has been operated up to the date
of execution of this Agreement;
(b) Preservation of Business. Until the Closing, use its best
efforts to preserve the Palladium Business and the Palladium
Assets and, without limitation, preserve for Peak Palladium's
relationships with any third party having business relations
with them;
(c) Access. Until the Closing, give Peak, the Peak Shareholders,
and their representatives full access to all of the
properties, books, contracts, commitments and records of
Palladium, and furnish to Peak, the Peak Shareholders and
their representatives all such information as they may
reasonably request;
15
(d) Procure Consents. Until the Closing, take all reasonable steps
required to obtain, prior to Closing, any and all third party
consents required to permit the Acquisition and to preserve
and maintain the Palladium Assets notwithstanding the change
in control of Peak arising from the Acquisition; and
(e) Sale of Assets. Within five business days after the Closing of
the Acquisition, Palladium shall effect the sale of the
Palladium Assets to Palladium Consulting Group, LLC, in
accordance with the terms of the draft agreement provided to
the Peak Shareholders. Upon consummation of the sale to
Palladium Consulting Group, LLC, other than the Peak Shares,
Palladium shall not have any assets or liabilities other than
convertible debentures not to exceed $250,000.
Authorization
4.2 Palladium hereby agrees to authorize and direct any and all federal, state,
municipal, foreign and international governments and regulatory authorities
having jurisdiction respecting Palladium and its subsidiaries to release any and
all information in their possession respecting Palladium and its subsidiaries to
Peak. Palladium shall promptly execute and deliver to Peak any and all consents
to the release of information and specific authorizations which Peak reasonably
requires to gain access to any and all such information.
Survival
4.3 The covenants set forth in this Article shall survive the Closing for
the benefit of Peak and the Peak Shareholders.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF
PEAK
Representations and Warranties
5.1 Peak represents and warrants in all material respects to Palladium, with the
intent that it will rely thereon in entering into this Agreement and in
approving and completing the transactions contemplated hereby, that:
Peak - Corporate Status and Capacity
(a) Incorporation. Peak is a limited company duly incorporated and
validly subsisting under the laws of the United Kingdom, and
is in good standing thereunder;
(b) Carrying on Business. Peak carries on business primarily in
Derbyshire, England and does not carry on any material
business activity in any other jurisdiction. Peak has an
office in Derbyshire, England and Monrovia, California and in
no other locations. The nature of the Peak Business does not
require Peak to register or otherwise be qualified to carry on
business in any other jurisdiction;
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(c) Corporate Capacity. Peak has the corporate power, capacity and
authority to own Peak Assets, to carry on the Business of Peak
and to enter into and complete this Agreement;
Peak - Capitalization
(d) Authorized Capital. The authorized capital of Peak consists
of 19,071,684 shares of common stock, $.001 par value per
share;
(e) Ownership of Peak Shares. The issued and outstanding share
capital of Peak will on Closing consist of 19,071,684 common
shares (being the Peak Shares), which shares on Closing shall
be validly issued and outstanding as fully paid and
non-assessable shares. The Peak Shareholders will be at
Closing the registered and beneficial owner of 19,071,684 Peak
Shares. The Peak Shares owned by the Peak Shareholders will on
Closing be free and clear of any and all liens, charges,
pledges, encumbrances, restrictions on transfer and adverse
claims whatsoever;
(f) No Option. No person, firm or corporation has any agreement,
option, warrant, preemptive right or any other right capable
of becoming an agreement or option for the acquisition of Peak
Shares held by the Peak Shareholders or for the purchase,
subscription or issuance of any of the unissued shares in the
capital of Peak;
(g) No Restrictions. There are no restrictions on the transfer,
sale or other disposition of Peak Shares contained in the
charter documents of Peak or under any agreement;
Peak - Records and Financial Statements
(h) Charter Documents. The charter documents of Peak have
not been altered since its incorporation date, except as
filed in the record books of Peak;
(i) Corporate Minute Books. The corporate minute books of
Peak are complete and each of the minutes contained therein
accurately reflect the actions that were taken at a duly
called and held meeting or by consent without a meeting. All
actions by Peak which required director or shareholder
approval are reflected on the corporate minute books of
Peak. Peak is not in violation or breach of, or in default
with respect to, any term of its Certificates of
Incorporation (or other charter documents) or by-laws.
(j) Peak Financial Statements. The Peak Financial
Statements present fairly, in all material respects, the
assets and liabilities (whether accrued, absolute,
contingent or otherwise) of Peak, on consolidated basis, as
of the respective dates thereof, and the sales and earnings
of the Peak Business during the periods covered thereby, in
all material respects, and have been prepared in substantial
accordance with generally accepted accounting principles
consistently applied;
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(k) Peak Accounts Payable and Liabilities. There are no
material liabilities, contingent or otherwise, of Peak which
are not disclosed in Schedule "K" hereto or reflected in the
Peak Financial Statements except those incurred in the
ordinary course of business since the date of the said
schedule and the Peak Financial Statements, and Peak has not
guaranteed or agreed to guarantee any debt, liability or
other obligation of any person, firm or corporation. Without
limiting the generality of the foregoing, all accounts
payable and liabilities of Peak as of January 31, 2003 are
described in Schedule "K" hereto;
(l) Peak Accounts Receivable. All Peak Accounts Receivable
result from bona fide business transactions and services
actually rendered without, to the knowledge and belief of
Peak, any claim by the obligor for set-off or counterclaim;
(m) Peak Bank Accounts. All of the Peak Bank Accounts,
their location, numbers and the authorized signatories
thereto are as set forth in Schedule "M" hereto;
(n) No Debt to Related Parties. Except as disclosed in
Schedule "N" hereto, Peak is not, and on Closing will not
be, materially indebted to the Peak Shareholder nor to any
family member thereof, nor to any affiliate, director or
officer of Peak or the Peak Shareholder except accounts
payable on account of bona fide business transactions of
Peak incurred in normal course of Peak Business, including
employment agreements with the Peak Shareholder, none of
which are more than 30 days in arrears;
(o) No Related Party Debt to Peak. Neither the Peak
Shareholder nor any director, officer or affiliate of Peak
are now indebted to or under any financial obligation to
Peak on any account whatsoever, except for advances on
account of travel and other expenses not exceeding $5,000 in
total;
(p) No Dividends. No dividends or other distributions on
any shares in the capital of Peak have been made, declared
or authorized since the date of the Peak Financial
Statements;
(q) No Payments. No payments of any kind have been made or
authorized since the date of the Peak Financial Statements
to or on behalf of the Peak Shareholder or to or on behalf
of officers, directors, shareholders or employees of Peak or
under any management agreements with Peak, except payments
made in the ordinary course of business and at the regular
rates of salary or other remuneration payable to them;
(r) No Pension Plans. There are no pension, profit sharing,
group insurance or similar plans or other deferred
compensation plans affecting Peak;
(s) No Adverse Events. Since the date of the Peak Financial
Statements:
(i) there has not been any material adverse change in the
consolidated financial position or condition of Peak,
its liabilities or the Peak Assets or any damage,
loss or other change in circumstances materially
affecting Peak, the Peak Business or the Peak Assets
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or Peak's right to carry on the Peak Business, other
than changes in the ordinary course of business,
(ii) there has not been any damage, destruction, loss or
other event (whether or not covered by insurance)
materially and adversely affecting Peak, the Peak
Business or the Peak Assets,
(iii) there has not been any material increase in the
compensation payable or to become payable by Peak to
the Peak Shareholder or to any of Peak's officers,
employees or agents or any bonus, payment or
arrangement made to or with any of them,
(iv) the Peak Business has been and continues to be
carried on in the ordinary course,
(v) Peak has not waived or surrendered any right of
material value,
(vi) Peak has not discharged or satisfied or paid any lien
or encumbrance or obligation or liability other than
current liabilities in the ordinary course of
business, and
(vii) no capital expenditures in excess of $10,000
individually or $30,000 in total have been authorized
or made;
Peak - Income Tax Matters
(t) Tax Returns. All tax returns and reports of Peak required by
law to be filed have been filed and are true, complete and
correct, and any taxes payable in accordance with any return
filed by Peak or in accordance with any notice of assessment
or reassessment issued by any taxing authority have been so
paid;
(u) Current Taxes. Adequate provisions have been made for taxes
payable for the current period for which tax returns are not
yet required to be filed and there are no agreements, waivers,
or other arrangements providing for an extension of time with
respect to the filing of any tax return by, or payment of, any
tax, governmental charge or deficiency by Peak. Peak is not
aware of any contingent tax liabilities or any grounds which
would prompt a reassessment including aggressive treatment of
income and expenses in filing earlier tax returns;
Peak - Applicable Laws and Legal Matters
(v) Licenses. Peak holds all licenses and permits as may be
requisite for carrying on the Peak Business in the manner in
which it has heretofore been carried on, which licenses and
permits have been maintained and continue to be in good
standing except where the failure to obtain or maintain such
licenses or permits would not have a material adverse effect
on the Peak Business;
20
(w) Applicable Laws. Peak has not been charged with or received
notice of breach of any laws, ordinances, statutes,
regulations, by-laws, orders or decrees to which it is subject
or which applies to it the violation of which would have a
material adverse effect on the Peak Business, and, to Peak's
knowledge, Peak is not in breach of any laws, ordinances,
statutes, regulations, by-laws, orders or decrees the
contravention of which would result in a material adverse
impact on the Peak Business;
(x) Pending or Threatened Litigation. There is no material
litigation or administrative or governmental proceeding
pending or threatened against or relating to Peak, the Peak
Business, or any of the Peak Assets, nor does Peak have any
knowledge of any deliberate act or omission of Peak that would
form any material basis for any such action or proceeding;
(y) No Bankruptcy. Peak has not made any voluntary assignment or
proposal under applicable laws relating to insolvency and
bankruptcy and no bankruptcy petition has been filed or
presented against Peak and no order has been made or a
resolution passed for the winding-up, dissolution or
liquidation of Peak;
(z) Labor Matters. Peak is not a party to any collective agreement
relating to the Peak Business with any labor union or other
association of employees and no part of the Peak Business has
been certified as a unit appropriate for collective bargaining
or, to the knowledge of Peak, has made any attempt in that
regard and Peak has no reason to believe that any current
employees will leave Peak's employ as a result of this
Acquisition.
(aa) Finder's Fees. Peak is not a party to any agreement which
provides for the payment of finder's fees, brokerage fees,
commissions or other fees or amounts which are or may become
payable to any third party in connection with the execution
and delivery of this Agreement and the transactions
contemplated herein;
Execution and Performance of Agreement
(bb) Authorization and Enforceability. The execution and
delivery of this Agreement, and the completion of the
transactions contemplated hereby, have been duly and validly
authorized by all necessary corporate action on the part of
Peak;
(cc) No Violation or Breach. The execution and performance
of this Agreement will not
(i) violate the charter documents of Peak or result in
any breach of, or default under, any loan agreement,
mortgage, deed of trust, or any other agreement to
which Peak is a party,
(ii) give any person any right to terminate or cancel any
agreement including, without limitation, Peak
Material Contracts, or any right or rights enjoyed by
Peak,
20
(iii) result in any alteration of Peak's obligations under
any agreement to which Peak is a party including,
without limitation, the Peak Material Contracts,
(iv) result in the creation or imposition of any lien,
encumbrance or restriction of any nature whatsoever
in favor of a third party upon or against the Peak
Assets,
(v) result in the imposition of any tax liability to Peak
relating to Peak Assets or the Peak Shares, or
(vi) violate any court order or decree to which either
Peak is subject;
Peak Assets - Ownership and Condition
(dd) Business Assets. The Peak Assets comprise all of the property
and assets of the Peak Business, and neither the Peak
Shareholders nor any other person, firm or corporation owns
any assets used by Peak in operating the Peak Business,
whether under a lease, rental agreement or other arrangement,
other than as disclosed in Schedules "O" or "R" hereto;
(ee) Title. Peak is the legal and beneficial owner of the Peak
Assets, free and clear of all mortgages, liens, charges,
pledges, security interests, encumbrances or other claims
whatsoever, save and except as disclosed in Schedules "O" or
"R" hereto;
(ff) No Option. No person, firm or corporation has any agreement or
option or a right capable of becoming an agreement for the
purchase of any of the Peak Assets;
(gg) Peak Insurance Policies. Peak maintains the public liability
insurance and insurance against loss or damage to the Peak
Assets and the Peak Business as described in Schedule "P"
hereto;
(hh) Peak Material Contracts. The Peak Material Contracts listed in
Schedule "R" constitute all of the material contracts of Peak;
(ii) No Default. There has not been any default in any material
obligation of Peak or any other party to be performed under
any of Peak Material Contracts, each of which is in good
standing and in full force and effect and unamended (except as
disclosed in Schedule "R"), and Peak is not aware of any
default in the obligations of any other party to any of the
Peak Material Contracts;
(jj) No Compensation on Termination. There are no agreements,
commitments or understandings relating to severance pay or
separation allowances on termination of employment of any
employee of Peak. Peak is not obliged to pay benefits or share
profits with any employee after termination of employment
except as required by law;
21
Peak Assets - Peak Equipment
(kk) Peak Equipment. The Peak Equipment has been maintained in a
manner consistent with that of a reasonably prudent owner and
such equipment is in good working condition;
Peak Assets - Peak Goodwill and Other Assets
(ll) Peak Goodwill. Peak carries on the Peak Business only under
the name "Peak Incorporated" and variations thereof and under
no other business or trade names. Peak does not have any
knowledge of any infringement by Peak of any patent,
trademark, copyright or trade secret;
The Business of Peak
(mm) Maintenance of Business. Since the date of the Peak Financial
Statements, the Peak Business has been carried on in the
ordinary course and Peak has not entered into any material
agreement or commitment except in the ordinary course; and
(nn) Subsidiaries. Peak does not own any subsidiaries and does not
otherwise own, directly or indirectly, any shares or interest
in any other corporation, partnership, joint venture or firm
and Peak does not own any subsidiary and does not otherwise
own, directly or indirectly, any shares or interest in any
other corporation, partnership, joint venture or firm.
Non-Acquisition and Survival
5.2 The representations and warranties of Peak and the Peak Shareholders
contained herein will be true at and as of Closing in all material respects as
though such representations and warranties were made as of such time.
Notwithstanding the completion of the transactions contemplated hereby, the
waiver of any condition contained herein (unless such waiver expressly releases
a party from any such representation or warranty) or any investigation made by
Palladium, the representations and warranties of Peak and the Peak Shareholders
shall survive the Closing.
Indemnity
5.3 Peak agrees to indemnify and save harmless Palladium from and against any
and all claims, demands, actions, suits, proceedings, assessments, judgments,
damages, costs, losses and expenses, including any payment made in good faith in
settlement of any claim (subject to the right of Peak to defend any such claim),
resulting from the breach by any of them of any representation or warranty of
such party made under this Agreement or from any misrepresentation in or
omission from any certificate or other instrument furnished or to be furnished
by Peak to Palladium hereunder.
22
ARTICLE 6
COVENANTS OF PEAK
Covenants
6.1 Peak covenants and agree with Palladium that it will:
(a) Conduct of Business. Until the Closing, conduct the Peak
Business diligently and in the ordinary course consistent with
the manner in which the Peak Business generally has been
operated up to the date of execution of this Agreement;
(b) Preservation of Business. Until the Closing, use their best
efforts to preserve the Peak Business and the Peak Assets and,
without limitation, preserve for Palladium Peak's
relationships with their suppliers, customers and others
having business relations with them;
(c) Access. Until the Closing, give Palladium and its
representatives full access to all of the properties, books,
contracts, commitments and records of Peak relating to Peak,
the Peak Business and the Peak Assets, and furnish to
Palladium and its representatives all such information as they
may reasonably request;
(d) Procure Consents. Until the Closing, take all reasonable steps
required to obtain, prior to Closing, any and all third party
consents required to permit the Acquisition and to preserve
and maintain the Peak Assets, including the Peak Material
Contracts, notwithstanding the change in control of Peak
arising from the Acquisition;
(e) Reporting and Internal Controls. From and after the Effective
Time, the Peak Shareholder shall forthwith take all required
actions to implement internal controls on the business of the
Surviving Company to ensure that the Surviving Company and
Palladium comply with Section 13(b)(2) of the Securities and
Exchange Act of 1934;
Authorization
6.2 Peak hereby agrees to authorize and direct any and all federal, state,
municipal, foreign and international governments and regulatory authorities
having jurisdiction respecting Peak to release any and all information in their
possession respecting Peak to Palladium. Peak shall promptly execute and deliver
to Palladium any and all consents to the release of information and specific
authorizations which Palladium reasonably require to gain access to any and all
such information.
Survival
6.3 The covenants set forth in this Article shall survive the Closing for
the benefit of Palladium .
23
ARTICLE 7
CONDITIONS PRECEDENT
Conditions Precedent in favor of Palladium
7.1 Palladium's obligations to carry out the transactions contemplated hereby
are subject to the fulfillment of each of the following conditions precedent on
or before the Closing:
(a) all documents or copies of documents required to be executed
and delivered to Palladium hereunder will have been so
executed and delivered;
(b) all of the terms, covenants and conditions of this Agreement
to be complied with are performed by Peak or the Peak
Shareholder at or prior to the Closing will have been complied
with or performed;
(c) Palladium shall have completed its review and inspection of
the books and records of Peak and shall be satisfied with same
in all material respects;
(d) title to the Peak Shares held by the Peak Shareholders and to
the Peak Assets will be free and clear of all mortgages,
liens, charges, pledges, security interests, encumbrances or
other claims whatsoever, save and except as disclosed herein;
(e) subject to Article 8 hereof, there will not have occurred
(i) any material adverse change in the financial position
or condition of Peak, its liabilities or the Peak Assets or
any damage, loss or other change in circumstances materially
and adversely affecting the Peak Business or the Peak Assets
or Peak's right to carry on the Peak Business, other than
changes in the ordinary course of business, none of which
has been materially adverse, or
(ii)any damage, destruction, loss or other event, including
changes to any laws or statutes applicable to Peak or the
Peak Business (whether or not covered by insurance)
materially and adversely affecting Peak, the Peak Business
or the Peak Assets; and
(f) the transactions contemplated hereby shall have been approved
by all other regulatory authorities having jurisdiction over
the subject matter hereof, if any; an
Waiver by Palladium
7.2 The conditions precedent set out in the preceding section are inserted for
the exclusive benefit of Palladium and any such condition may be waived in whole
or in part by Palladium at or prior to Closing by delivering to Peak a written
waiver to that effect signed by Palladium. In the event that the conditions
precedent set out in the preceding section are not satisfied on or before the
Closing, Palladium shall be released from all obligations under this Agreement.
24
Conditions Precedent in Favor of Peak and the Peak Shareholders
7.3 The obligation of Peak and the Peak Shareholders to carry out the
transactions contemplated hereby is subject to the fulfillment of each of the
following conditions precedent on or before the Closing:
(a) all documents or copies of documents required to be executed
and delivered to Peak hereunder will have been so executed and
delivered;
(b) all of the terms, covenants and conditions of this Agreement
to be complied with or performed by Palladium at or prior to
the Closing will have been complied with or performed;
(c) Peak shall have completed its review and inspection of the
books and records of Palladium and its subsidiaries and shall
be satisfied with same in all material respects;
(d) Palladium will have delivered the Acquisition Shares to be
issued pursuant to the terms of the Acquisition to Peak at the
Closing and the Acquisition Shares will be registered on the
books of Palladium in the name of the holder of Peak Shares at
the Effective Time;
(e) title to the Acquisition Shares will be free and clear of all
mortgages, liens, charges, pledges, security interests,
encumbrances or other claims whatsoever;
(f) subject to Article 8 hereof, there will not have occurred
(i) any material adverse change in the financial position
or condition of Palladium , its subsidiaries, their
liabilities or the Palladium Assets or any damage, loss or
other change in circumstances materially and adversely
affecting Palladium , the Palladium Business or the
Palladium Assets or Palladium ' right to carry on the
Palladium Business, other than changes in the ordinary
course of business, none of which has been materially
adverse, or
(ii)any damage, destruction, loss or other event, including
changes to any laws or statutes applicable to Palladium or
the Palladium Business (whether or not covered by insurance)
materially and adversely affecting Palladium , its
subsidiaries, the Palladium Business or the Palladium
Assets;
(h) the transactions contemplated hereby shall have been approved
by all other regulatory authorities having jurisdiction over
the subject matter hereof, if any;
(i) for a period of twelve months from the Closing, the principal
shareholders of Palladium (Xxxxxxx X. Xxxxxxxxxx, Xx., Xxxxxxx
Xxxxxxxxx and X. Xxxxxxxx Xxxxxxxxx III), directly or through
25
their affiliates, agree not to dispose of any Palladium Shares
which they beneficially own, in excess of those shares which
an "Affiliate" of an issuer could dispose of pursuant to rule
144 under the Securities Act of 1933. Such individuals consent
to the placing of an appropriate legend on all Palladium
shares owned by such individuals; and
(j) the satisfaction of all liabilities of Palladium on or prior
to the Closing Date.
Waiver by Peak and the Peak Shareholders
7.4 The conditions precedent set out in the preceding section are inserted for
the exclusive benefit of Peak and the Peak Shareholders and any such condition
may be waived in whole or in part by Peak or the Peak Shareholders at or prior
to the Closing by delivering to Palladium a written waiver to that effect signed
by Peak and the Peak Shareholders. In the event that the conditions precedent
set out in the preceding section are not satisfied on or before the Closing Peak
and the Peak Shareholders shall be released from all obligations under this
Agreement.
Nature of Conditions Precedent
7.5 The conditions precedent set forth in this Article are conditions of
completion of the transactions contemplated by this Agreement and are not
conditions precedent to the existence of a binding agreement. Each party
acknowledges receipt of the sum of $1.00 and other good and valuable
consideration as separate and distinct consideration for agreeing to the
conditions of precedent in favor of the other party or parties set forth in this
Article.
Termination
7.6 Notwithstanding any provision herein to the contrary, if the Closing does
not occur on or before April 30, 2003, this Agreement will be at an end and will
have no further force or effect, unless otherwise agreed upon by the parties in
writing.
Confidentiality
7.7 Notwithstanding any provision herein to the contrary, the parties hereto
agree that the existence and terms of this Agreement are confidential and that
if this Agreement is terminated pursuant to the preceding section the parties
agree to return to one another any and all financial, technical and business
documents delivered to the other party or parties in connection with the
negotiation and execution of this Agreement and shall keep the terms of this
Agreement and all information and documents received from Peak and Palladium and
the contents thereof confidential and not utilize nor reveal or release same,
provided, however, that Palladium will be required to issue news releases
regarding the execution and consummation of this Agreement and file a Current
Report on Form 8-K with the Securities and Exchange Commission respecting the
proposed Acquisition contemplated hereby together with such other documents as
are required to maintain the currency of Palladium ' filings with the Securities
and Exchange Commission.
26
ARTICLE 8
RISK
Material Change in the Business of Peak
8.1 If any material loss or damage to the Peak Business occurs prior to Closing
and such loss or damage, in Palladium's reasonable opinion, cannot be
substantially repaired or replaced within sixty (60) days, Palladium shall,
within two (2) days following any such loss or damage, by notice in writing to
Peak, at its option, either:
(a) terminate this Agreement, in which case no party will be under
any further obligation to any other party; or
(b) elect to complete the Acquisition and the other transactions
contemplated hereby, in which case the proceeds and the rights
to receive the proceeds of all insurance covering such loss or
damage will, as a condition precedent to Palladium '
obligations to carry out the transactions contemplated hereby,
be vested in Peak or otherwise adequately secured to the
satisfaction of Palladium on or before the Closing Date.
Material Change in the Palladium Business
8.2 If any material loss or damage to the Palladium Business occurs prior to
Closing and such loss or damage, in Peak's reasonable opinion, cannot be
substantially repaired or replaced within sixty (60) days, Peak shall, within
two (2) days following any such loss or damage, by notice in writing to
Palladium, at its option, either:
(a) terminate this Agreement, in which case no party will be under
any further obligation to any other party; or
(b) elect to complete the Acquisition and the other transactions
contemplated hereby, in which case the proceeds and the rights
to receive the proceeds of all insurance covering such loss or
damage will, as a condition precedent to Peak's obligations to
carry out the transactions contemplated hereby, be vested in
Palladium or otherwise adequately secured to the satisfaction
of Peak on or before the Closing Date.
ARTICLE 9
CLOSING
Closing
9.1 The Acquisition and the other transactions contemplated by this Agreement
will be closed at the Place of Closing in accordance with the closing procedure
set out in this Article.
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Documents to be Delivered by Peak
9.2 On or before the Closing, Peak and the Peak Shareholder will deliver or
cause to be delivered to Palladium:
(a) the original or certified copies of the charter documents of
Peak and all corporate records documents and instruments of
Peak, the corporate seal of Peak and all books and accounts of
Peak;
(b) all reasonable consents or approvals required to be obtained
by Peak for the purposes of completing the Acquisition and
preserving and maintaining the interests of Peak under any and
all Peak Material Contracts and in relation to Peak Assets;
(c) certified copies of such resolutions of the shareholder and
director of Peak as are required to be passed to authorize the
execution, delivery and implementation of this Agreement;
(d) an acknowledgement from Peak and the Peak Shareholders of the
satisfaction of the conditions precedent set forth in section
7.3 hereof; and
(e) such other documents as Palladium may reasonably require to
give effect to the terms and intention of this Agreement.
Documents to be Delivered by Palladium
9.3 On or before the Closing, Palladium shall deliver or cause to be
delivered to Peak and the Peak Shareholders:
(a) share certificates representing the Acquisition Shares duly
registered in the names of the holders of shares of Peak
Common Stock;
(b) certified copies of such resolutions of the directors of
Palladium as are required to be passed to authorize the
execution, delivery and implementation of this Agreement;
(c) a certified copy of a resolution of the directors of Palladium
dated as of the Closing Date appointing the nominees of Peak
as officers and directors of Palladium;
(d) an acknowledgement from Palladium of the satisfaction of the
conditions precedent set forth in section 7.1 hereof; and
(e) such other documents as Peak may reasonably require to give
effect to the terms and intention of this Agreement.
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ARTICLE 10
POST-CLOSING MATTERS
Forthwith after the Closing, Palladium , Peak and the Peak
Shareholders agree to use all their best efforts to:
(a) issue a news release reporting the Closing;
(b) file a Form 8-K with the Securities and Exchange Commission
disclosing the terms of this Agreement and, not more than 60
days following the filing of such Form 8-K, to file and
amended Form 8-K which includes audited financial statements
of Peak as well as pro forma financial information of Peak and
Palladium as required by Regulation SB as promulgated by the
Securities and Exchange Commission;
(c) file reports on Forms 13D and 3 with the Securities and
Exchange Commission disclosing the acquisition of the
Acquisition Shares by the Peak Shareholders, as may be
required.
ARTICLE 11
GENERAL PROVISIONS
Arbitration
11.1 The parties hereto shall attempt to resolve any dispute, controversy,
difference or claim arising out of or relating to this Agreement by negotiation
in good faith. If such good negotiation fails to resolve such dispute,
controversy, difference or claim within fifteen (15) days after any party
delivers to any other party a notice of its intent to submit such matter to
arbitration, then any party to such dispute, controversy, difference or claim
may submit such matter to arbitration in the City of New York, New York.
Notice
11.2 Any notice required or permitted to be given by any party will be deemed to
be given when in writing and delivered to the address for notice of the intended
recipient by personal delivery, prepaid single certified or registered mail, or
telecopier. Any notice delivered by mail shall be deemed to have been received
on the fourth business day after and excluding the date of mailing, except in
the event of a disruption in regular postal service in which event such notice
shall be deemed to be delivered on the actual date of receipt. Any notice
delivered personally or by telecopier shall be deemed to have been received on
the actual date of delivery.
Addresses for Service
11.3 The address for service of notice of each of the parties hereto is as
follows:
(a) Palladium:
Palladium Communications, Inc.
000 X. Xxxxxxxx Xxx Xxxxxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxxxx, Xx., President
Phone: (000) 000-0000
Telecopier:
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(b) Peak or the Peak Shareholders
Peak Entertainment Ltd.
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Wilf Shorrocks, CEO
Phone: 000 000 0000
Telecopier: 000 000 0000
Change of Address
11.4 Any party may, by notice to the other parties change its address for notice
to some other address in North America and will so change its address for notice
whenever the existing address or notice ceases to be adequate for delivery by
hand. A post office box may not be used as an address for service.
Further Assurances
11.5 Each of the parties will execute and deliver such further and other
documents and do and perform such further and other acts as any other party may
reasonably require to carry out and give effect to the terms and intention of
this Agreement.
Time of the Essence
11.6 Time is expressly declared to be the essence of this Agreement.
Entire Agreement
11.7 The provisions contained herein constitute the entire agreement among Peak,
the Peak Shareholders and Palladium respecting the subject matter hereof and
supersede all previous communications, representations and agreements, whether
verbal or written, among Peak, the Peak Shareholders and Palladium with respect
to the subject matter hereof.
Enurement
11.8 This Agreement will enure to the benefit of and be binding upon the parties
hereto and their respective heirs, executors, administrators, successors and
permitted assigns.
Assignment
11.9 This Agreement is not assignable without the prior written consent of
the parties hereto.
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Counterparts
11.10 This Agreement may be executed in counterparts, each of which when
executed by any party will be deemed to be an original and all of which
counterparts will together constitute one and the same Agreement. Delivery of
executed copies of this Agreement by telecopier will constitute proper delivery,
provided that originally executed counterparts are delivered to the parties
within a reasonable time thereafter.
Applicable Law
11.11 This Agreement is subject to the laws of the State of New York.
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF the parties have executed this Agreement effective as of the
day and year first above written.
PALLADIUM COMMUNICATIONS, INC.
By: XXXXXXX X. XXXXXXXXXX, XX.
Name: Xxxxxxx X. Xxxxxxxxxx
Title: President
Solely with respect to Section
7.3(i) above:
XXXXXXX X. XXXXXXXXXX, XX.
Xxxxxxx X. Xxxxxxxxxx, Xx.
XXXXXXX X. XXXXXXXXX
Xxxxxxx X. Xxxxxxxxx
X. XXXXXXXX XXXXXXXXX III
X. Xxxxxxxx Xxxxxxxxx III
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PEAK ENTERTAINMENT LTD.
By: XXXXXXX XXXXXXXXX
Xxxxxxx Xxxxxxxxx
XXXXXXX XXXXXXXXX
Xxxxxxx Xxxxxxxxx
XXXXX XXXXXXXXX
Xxxxx Xxxxxxxxx
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