ACQUISITION AGREEMENT
THIS ACQUISITION AGREEMENT (the "Agreement") is entered into this as of
this 11th day of November, 1999 by and among Thesseus International Asset Fund
N.V., a corporation formed under the laws of the Netherlands Antilles with a
place of business at Zeelandia Office Park, 16 Kaya W.F.G. (Jombi) Xxxxxxx,
Curacao, Netherlands Antilles (the "Fund"), Eikos Management LLC, a limited
liability company formed under the laws of the Isle of Man with a place of
business at X.X. Xxx 000, Xxxxxxx, XX 00 0XX, Isle of Man, British Isles
("Eikos"), Eikos Acquisition Limited, a corporation formed under the laws of the
Isle of Man with a place of business at X.X. Xxx 000, Xxxxxxx, XX 00 0XX, Isle
of Man, British Isles ("EAL"), and Shanecy, Inc. a corporation formed under the
laws of the State of Delaware with a place of business at 000 Xxxx Xxxxxx, Xxxxx
0000, Xxxxxxxxx, Xxxxxxx Xxxxxxxx X0X 0X0 (the "Acquiror").
RECITALS
WHEREAS, the Fund is a closed-end venture capital fund that engages
world-wide in the identification, analysis and acquisition of financial services
and related businesses emphasizing the application of information technology;
and
WHEREAS, the Fund is the sole owner of EAL, which in turn owns and
holds 49.5% of the outstanding equity of Eikos (the "Eikos Equity"), and Eikos
as its principal asset owns and holds all right and title in and to that certain
Mutual Business Development Agreement dated October 8, 1996 (the "MBDA") between
Eikos (as successor in interest to the O. Pappalimberis Trust) and The Credit
Store, Inc., a Delaware corporation ("The Credit Store") (as successor in
interest to Service One International Corporation ("Service One")), as amended
December 16, 1997 and September 1, 1998; and
WHEREAS, pursuant to the MBDA, Eikos was granted certain rights to use
proprietary technology developed at The Credit Store and other intellectual
property relating to the administration and information processing of databases
connected with consumer credit cards and electronic consumer credit business
generally; and
WHEREAS, under the MBDA Eikos is entitled to receive certain income
determined as a percentage of gross credit card receivable originations (as
defined in the MBDA) produced by The Credit Store, both in the form of cash and
performing credit card receivables; and
WHEREAS, Eikos is administered by Ionian Trust Company Limited, a
corporation formed under the laws of the Republic of Ireland with a place of
business at 00 Xxxxx Xxxx, Xxxxxxx, Xxxxxx Xxxxxxxxx, Xxxxxxxx of Ireland
("Ionian"), pursuant to that certain Administration Agreement dated August 31,
1998 among Eikos, the Fund and Ionian; and
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WHEREAS, the Acquiror has initiated a business plan to act as a
publicly traded venture capital company concentrating in the consumer financial
services business, with a particular focus on Internet-related businesses; and
WHEREAS, the Acquiror desires to expand the depth of management
required to execute its ongoing business plan as well as to provide its
stockholders enhanced access to the investment community through pre-existing
relationships of the principals of the Fund; and
WHEREAS, in addition to providing the Acquiror access to its
pre-existing professional relationships, the Fund is agreeable to utilizing its
expertise in making available to the Acquiror individuals and firms to assist it
in instituting and implementing financial and accounting controls required by
institutional investors, with a view to enhancing its overall value, stability
and liquidity; and
WHEREAS, in furtherance of the foregoing, the Fund has determined to
transfer all of its stock in EAL (the "EAL Stock") for common stock and
preferred stock of the Acquiror (the "Acquired Stock") in order to benefit the
net asset value of the Fund; and
WHEREAS, the Acquiror desires to acquire the EAL Stock from the Fund in
exchange for the Acquired Stock, and the Fund desires to acquire the Acquired
Stock from the Acquiror in consideration for the transfer of the EAL Stock, all
on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth below, it is therefore agreed as follows:
ARTICLE I
DEFINITIONS
1. Currency; Certain Definitions. All currency figures in this
Agreement are denominated in U.S. dollars. Capitalized terms used, but not
defined elsewhere, in this Agreement are defined as follows:
1.1 "Acquired Stock" means the (a) 1,500,000 shares of restricted
voting Common Stock, and (b) 8,500,000 shares of Preferred Stock that the
Acquiror shall authorize after shareholder approval and thereafter issue to the
Fund, all of which the Fund is purchasing in consideration for the sale of the
EAL Stock to the Acquiror pursuant to this Agreement.
Page 2 of 30
1.2 "Acquiror" means Shanecy, Inc., a Delaware corporation, and any
permitted successor thereto or Affiliate thereof.
1.3 "Articles of Association" means the articles of association, as
amended, of the Fund as filed with the Ministry of Justice of the Netherlands
Antilles.
1.4 "Administration Agreement" means that certain Administration
Agreement dated August 31, 1998 among the Fund, Eikos and Ionian (a true and
correct copy of which is attached hereto as Exhibit "A"), providing, among other
things, for the administration of Eikos, and to which the Acquiror will consent
at the Closing.
1.5 "Administrative Member" means Ionian, or any successor thereto,
as designated pursuant to Section 2.1 of the Operating Agreement.
1.6 "Affiliate" of a Person means another Person (a) directly or
indirectly controlling, controlled by, or under common control with, such Person
(for this purpose, "control" of a Person means the power (whether or not
exercised) to direct the policies, operations or activities of such Person by or
through the ownership of, or right to vote, or direct the manner of voting of,
securities of such Person, or pursuant to agreement or Law or otherwise) or (b)
who is a director or officer of a corporation, general partner of a partnership,
manager of a limited liability company, trustee of a trust or other Person who
exercises managerial authority with respect to the subject Person; or (c) who
owns (or has the discretionary right to acquire) 10% or more of the equity
interests (including without limitation capital stock or partnership, membership
or beneficial interests) of the subject Person.
1.7 "Closing" has the meaning set forth in Section 7.1 hereof.
1.8 "Closing Date" means the date of the Closing.
1.9 "Common Stock" means the shares of common stock of the
Acquiror, par value $0.001, of which, as of the date of this Agreement,
20,000,000 shares are authorized and 8,495,000 shares are issued and
outstanding.
1.10 "Consent" means any approval, authorization, consent or
ratification by, or on behalf of, any Person that is not a party to this
Agreement, or any waiver of, or exemption or variance from, any License or
Order.
1.11 "Contract" means any written or oral contract, agreement,
arrangement or understanding, including without limitation any loan agreement or
indenture, purchase, sales, supply or service order or agreement, real property,
equipment or other lease, or license of trade rights, to which Eikos, EAL or the
Acquiror is a party, by which Eikos, EAL or the Acquiror is bound or to which
the Eikos Equity or the Acquired Stock are or may be subject.
Page 3 of 30
1.12 "Credit Store, The" means The Credit Store, Inc., a Delaware
corporation with its principal place of business at 0000 X. Xxxxxx Xxxxxx, Xxxxx
Xxxxx, Xxxxx Xxxxxx, and any successor thereto.
1.13 "EAL" means Eikos Acquisition Limited, an Isle of Man
corporation, and any permitted successor thereto.
1.14 "EAL Stock" means the one hundred (100) shares of common stock
in EAL, par value (pound)1-00, comprising all of the issued and outstanding
common stock thereof, all of which is currently owned and held by the Fund.
1.15 "Eikos" means Eikos Management LLC, an Isle of Man limited
liability company, and any permitted successor thereto.
1.16 "Eikos Equity" means the 49 1/2 membership units representing
forty-nine and one-half percent (49.5%) of the equity of Eikos, all of which is
held by EAL pursuant to the Agreement dated September 22, 1999 between the Fund
and EAL (the "Fund - EAL Agreement"), a true and correct copy of which is
attached hereto as Exhibit "B".
1.17 "Exchange Act" means the Securities and Exchange Act of 1934.
1.18 "Fund" means Thesseus International Asset Fund N.V., a
Netherlands Antilles corporation, and any permitted successor thereto.
1.19 "Governing Document" means (a) the articles of association or
certificate of incorporation (including any restatement, amendment or correction
thereof or any certificate of designation thereunder) and the by-laws of a
corporation, and any agreement between any shareholders thereof with respect to
the voting or disposition of, or right to receive dividends or other
distributions with respect to, the capital stock of such corporation; (b) the
articles or certificate and the partnership agreement of a partnership; (c) the
articles of organization and operating agreement of a limited liability company;
(d) the trust agreement of a trust; and (e) any similar agreement, certificate
or other document, whether or not filed or required to be filed with a
Governmental Authority, governing or relating to the organization, management or
ownership of any Person.
1.20 "Governmental Authority" means any federal, state, local or
foreign government or governmental authority, agency or instrumentality, or any
court of competent jurisdiction.
Page 4 of 30
1.21 "Ionian" means Ionian Trust Company Limited, a Republic of
Ireland corporation, and any successor thereto, which owns one percent (1%) of
the membership equity of Eikos, and which serves as the Administrative Member
pursuant to the Administration Agreement.
1.22 "Law" means any statute, rule, regulation or ordinance of any
Governmental Authority.
1.23 "Lease" means a lease of or pertaining to real and/or personal
property.
1.24 "License" means any license, permit, certification,
qualification or franchise issued or granted by any Governmental Authority.
1.25 "Lien" means any security interest, conditional sale or other
title retention agreement, mortgage, pledge, lien, charge, encumbrance or other
adverse claim or interest.
1.26 "Material," "materially" or "materiality" means, when
referring to the significance of any fact, condition, event or occurrence in
this Agreement or any Transaction Document delivered pursuant hereto, such level
of disclosure as required by the Laws of the United States, specifically the
Securities Act and/or the Exchange Act, as applied by the United States
Securities and Exchange Commission (the "Commission") and the Federal Courts of
the United States.
1.27 "MBDA" means that certain Mutual Business Development
Agreement dated October 6, 1996 between O. Pappalimberis Trust (as predecessor
in interest to Eikos) and Service One (as predecessor in interest to Credit
Store) (a true and correct copy of which is attached hereto as Exhibit "C"), as
amended December 16, 1997 (a true and correct copy of which is attached hereto
as Exhibit "D"), and as further amended September 1, 1998 (a true and correct
copy of which is attached hereto as Exhibit "E").
1.28 "NASDAQ" means the National Association of Securities Dealers,
Inc. Automated Quotation system, and any successor thereto.
1.29 "Operating Agreement" means that certain Operating Agreement
of Eikos dated December 7, 1997, by and among Eikos, the Fund and Ionian (a true
and correct copy of which is attached hereto as Exhibit "F"), as amended by the
Fund and Ionian on August 31, 1998 (a true and correct copy of which is attached
hereto as Exhibit "G"), and acknowledged and agreed to by EAL (as successor to
the Fund) at the Closing.
1.30 "OTCBB" means the Over-the-Counter Bulletin Board stock
quotation system, on which the Common Stock of the Acquiror is currently listed,
and any successor thereto
Page 5 of 30
1.31 "Order" means any judgment, order, writ, decree, award,
directive, ruling or decision of any Governmental Authority.
1.32 "Person" includes without limitation a natural person,
corporation, joint stock company, limited liability company, partnership, joint
venture, association, trust, Governmental Authority, or any group of the
foregoing acting in concert.
1.33 "Preferred Stock" means the preferred stock of the Acquiror,
par value $0.001 per share, which the Acquiror shall authorize upon shareholder
approval, and which shall have the rights and preferences substantially as set
forth in Exhibit "H" attached hereto.
1.34 "Proceeding" means any action, suit, investigation, audit or
other proceeding, at law or in equity, before or by any Taxing Authority or
Governmental Authority.
1.35 "Purchase Price" has the meaning set forth in Section 2.3
hereof.
1.36 "Regulations" means the regulations of the Securities and
Exchange Commission, the National Association of Securities Dealers, Inc. and/or
any other regulatory body with jurisdiction over the securities or business of
the Acquiror.
1.37 "Securities" means, collectively, the Acquired Stock, the
Common Stock, the Preferred Stock and any other authorized and outstanding
shares of stock in the Acquiror.
1.38 "Securities Act" means the Securities Act of 1933.
1.39 "Tax" means any tax, fee, levy, assessment or other
governmental charge imposed by any Taxing Authority (including without
limitation any income, franchise, gross receipts, property, sales, use, excise,
services, value added, ad valorem, withholding, social security, estimated,
accumulated earnings, transfer, gains, license, privilege, payroll, profits,
capital stock, employment, unemployment, severance, stamp, occupancy, customs or
occupation tax), and any interest, additions to tax and penalties in connection
therewith.
1.40 "Taxing Authority" means the U.S. Internal Revenue Service and
any other domestic or foreign Governmental Authority responsible for the
administration of any Tax.
1.41 "Tax Return" means any return, amended return, declaration,
report, estimate, information return or statement regarding Taxes which is filed
or required to be filed under applicable Law, whether on a consolidated,
combined, unitary or separate basis or otherwise.
Page 6 of 30
1.42 "Transaction Document" means this Agreement and each other
agreement, instrument or other document being entered into by the Acquiror or
the Fund or any related party at or in connection with the Closing.
ARTICLE II
ACQUISITION OF EAL STOCK AND ACQUIRED STOCK
2.1 Acquisition of EAL Stock. At the Closing, in consideration for the
transfer of the Acquired Stock by the Acquiror to the Fund and subject to the
terms and conditions set forth herein, the Fund shall sell, assign, transfer and
otherwise convey to the Acquiror, and the Acquiror shall acquire from the Fund,
all of the right, title and interest to the EAL Stock, which shall be duly
issued, fully paid, non-assessable, and free and clear of all liens, claims and
encumbrances.
2.2 Acquisition of Acquired Stock. At the Closing, in consideration for
the transfer of the EAL Stock by the Fund to the Acquiror and subject to the
terms and conditions set forth herein, the Acquiror shall sell, assign, transfer
and otherwise convey to the Fund, and the Fund shall acquire from the Acquiror,
the Acquired Stock, which shall be duly issued, fully paid and non-assessable,
free and clear of all liens, claims and encumbrances and not subject to any
pre-emptive rights.
2.3. Acquisition Price. The Acquisition Price (a) for the EAL Stock
shall be $6,690,000, and shall be satisfied by delivery of a duly executed stock
power for the EAL Stock to the Acquiror at the Closing, and (b) for the Acquired
Stock shall be $6,690,000, shall be satisfied by delivery of a duly executed
certificate for the Acquired Stock to the Fund at the Closing.
2.4 Transactions. All of the transactions contemplated by this
Agreement are to take place on the Closing Date, with the exception of those set
forth in Article IX hereof, and are intended by the parties to be consummated
concurrently; and if any such transaction is not consummated as provided herein,
the parties shall take all actions necessary to dissolve and invalidate all
other such transactions as if none of such transactions had been consummated.
Page 7 of 30
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE FUND, EIKOS AND EAL
The Fund, Eikos and EAL hereby individually and severally represent and
warrant to the Acquiror as follows:
3.1 Organization. The Fund is a corporation duly organized, validly
existing and in good standing under the laws of the Netherlands Antilles and has
full power and authority to own its assets and carry on its business in the
manner and places where such assets are now owned and such business is now being
conducted. Eikos is a limited liability company duly organized, validly existing
and in good standing under the laws of the Isle of Man, and has full power and
authority to own its assets and conduct its business in the manner and places
where such assets are now owned and such business is now being conducted. EAL is
a corporation duly organized, validly existing and in good standing under the
laws of the Isle of Man, and has full power and authority to own its assets and
conduct its business in the manner and places where such assets are now owned
and such business is now being conducted.
3.2 Power and Authority. The Fund, Eikos and EAL, as the case may be,
each have full legal capacity, power and authority to execute and deliver this
Agreement and each other Transaction Document to which it is a party and to
assume and perform its obligations hereunder and thereunder. This Agreement has
been, and on the Closing Date each other Transaction Document to which the Fund,
Eikos or EAL is a party will be, duly executed and delivered by each such party.
This Agreement is, and each other Transaction Document to which the Fund, Eikos
or EAL is a party when so executed and delivered on the Closing Date will be, a
legally valid and binding obligation of each such party, enforceable in
accordance with its respective terms, subject to (a) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (b) equitable principles limiting
the availability of certain remedies.
3.3 The MBDA and EAL.
(a) The MBDA is the sole material asset of Eikos. The MBDA is in
full force and effect and there is no breach or default thereunder by Eikos or,
to the best knowledge of the Fund, any other party thereto. The copies of the
MBDA and the Amendments attached to this Agreement as Exhibits "C", "D" and "E"
respectively are true and correct copies thereof. Other than by the indicated
Amendments, the MBDA has not been modified or amended in any respect.
(b) EAL is newly formed, and has not engaged in business other than
its initial formation. The sole material asset of EAL consists of the Eikos
Page 8 of 30
Equity. EAL does not have any liabilities or obligations of any kind, whether
known or unknown, or whether absolute, accrued, contingent, matured or
otherwise, whether due or to become due except liabilities or obligations that
arose in the ordinary course of business in effecting its initial formation.
3.4 Absence of Conflict. The execution and delivery of this
Agreement do not, and the execution and delivery of each other Transaction
Document to which it is a party and the performance by the Fund, Eikos or EAL of
their respective obligations hereunder or thereunder, will not, (i) violate any
provision of the Governing Documents of the Fund, Eikos or EAL, or (ii) conflict
with or result in any breach of any condition or provision of, or constitute a
default under, or create or give rise to any adverse right of termination or
cancellation by, or excuse the performance of, any other Person under, or result
in the creation or imposition of any Lien upon the Fund, Eikos, EAL or the Eikos
Equity.
3.5 Consents. Other than the consent of the members of Eikos to the
admission of the Acquiror as a new member (which consent shall be given
substantially in the form attached hereto as Exhibit "I"), no Consent of, or
notice to, any Person is required as to the Fund, Eikos or EAL in connection
with the execution and delivery of this Agreement or any other Transaction
Document by the Fund, Eikos or EAL or the performance of its obligations
hereunder or thereunder, where the failure to obtain such Consent or give such
notice would have an adverse effect upon the Fund, Eikos, EAL or the Eikos
Equity or prohibit, invalidate, or make unlawful, in whole or in part, this
Agreement or any other Transaction Document, or the carrying out of the
provisions hereof or thereof or the transactions contemplated hereby or thereby.
3.6 Litigation. No Proceeding is pending or, to the best knowledge
of the Fund, Eikos or EAL, threatened against or affecting the Fund, Eikos or
EAL in which an unfavorable outcome would have a material adverse effect upon
the Fund, Eikos, EAL or the Eikos Equity or prohibit, invalidate, or make
unlawful, in whole or in part, this Agreement or any other Transaction Document,
or the carrying out of the provisions hereof or thereof or the transactions
contemplated hereby or thereby. Neither the Fund, Eikos nor EAL has received any
notice of or, to its respective knowledge, is in default in respect of any
Order, nor is there any such Order enjoining the Fund, Eikos or EAL in respect
of, or the effect of which is to prohibit or curtail the performance of, the
obligations of the Fund, Eikos or EAL hereunder or under any other Transaction
Document.
3.7 Title to Eikos Equity, EAL Stock. EAL is the legal and
beneficial owner of, and has good and marketable title to, all of the Eikos
Equity, and the Fund is transferring to the Acquiror the legal and beneficial
ownership of, and good and marketable title to, all of the EAL Stock, free and
clear of all liens, claims, security interests and other charges and
encumbrances and other types of preferential arrangements.
Page 9 of 30
3.8 Authorized Capital.
(a) The entire authorized capital of EAL consists of one
hundred (100) shares of common stock, par value $0.01, of which the Fund is the
sole owner. Such shares are duly authorized, validly issued, fully paid,
nonassessable and free and clear of all Liens whatsoever. No shares of EAL are
reserved for issuance, and there are no agreements, commitments or arrangements
providing for the issuance or sale of any shares or other interests in EAL
(other than this Agreement), or any issued or outstanding options, warrants or
rights to purchase, or any security or instrument convertible into or
exchangeable for, any capital stock or other interest of EAL.
(b) The entire authorized capital of Eikos consists of one
hundred (100) membership units, of which forty-nine and one-half (49.5) units
are owned by EAL, forty-nine and one half-unit (49.5) units are owned by
Consumer Union Finance Limited, a United Kingdom corporation ("Consumer Union")
and one (1) unit is owned by Ionian.
3.9 Financial Statements; No Undisclosed Liabilities; Books.
(a) Eikos has delivered to the Acquiror a copy of the
unaudited balance sheet of Eikos as of August 31, 1999 (the "Eikos Balance
Sheet"), a true and correct copy of which is attached hereto as Schedule 3.9(a).
The Eikos Balance Sheet presents fairly in all material respects the financial
position of Eikos at such date.
(b) The Fund has delivered to the Acquiror a copy of its
Consolidated Financial Statements for the year ending December 31, 1998 with
accompanying auditors' report of KPMG LLP, Chartered Accountants (the "Fund
Financial Statements"), a true and correct copy of which is attached hereto as
Schedule 3.9(b). The Fund Financial Statements presents fairly in all material
respects the financial position of the Fund at such date including, without
limitation, the book value of the investment of the Fund in Eikos.
(c) Except as set forth in the Eikos Balance Sheet, Eikos does
not have any material liabilities or obligations of any kind, whether known or
unknown, or whether absolute, accrued, contingent, matured or otherwise, whether
due or to become due except liabilities or obligations that arose in the
ordinary course of business.
(d) The books and financial records of Eikos made available to
the Acquiror constitute a complete record of its financial affairs and
accurately set forth all revenues, expenses, assets and liabilities.
3.10 No Adverse Change. Since the date of the Eikos Balance Sheet
there has been no material adverse change in the business, the assets or the
financial or other condition of Eikos, and Eikos has not:
Page 10 of 30
(a) incurred any damage, destruction or similar loss, whether
or not covered by insurance, materially adversely affecting its business or its
assets;
(b) other than in the ordinary course of business, sold,
assigned or transferred any of its assets or any interest therein;
(c) incurred any material obligation or liability (including
any guaranty, indemnity, make-whole agreement for or with respect to any
obligation or liability of another Person), or paid, satisfied or discharged any
material obligation or liability prior to the due date or maturity thereof,
except current obligations and liabilities in the ordinary course of business;
(d) other than in the ordinary course of business, created,
incurred, assumed, granted or suffered to exist any Lien on any of its assets;
(e) other than in the ordinary course of business, waived any
right of value or canceled, forgiven or discharged any debt owed to it or any
claim in its favor;
(f) declared, set aside or paid any dividend or made or
committed to make any other distribution in respect of any units of its
membership equity; or
(g) effected any material change in its business policies or
practices, accounting methods, conventions, principles or assumptions or any
material change in the nature of the business relationships with its clients; or
effected any material transaction not in the ordinary course of business.
3.11 Assets and Material Contracts. Other than the MBDA, Eikos
currently has no material contracts (including, without limitation, employment
or other labor agreements, benefits arrangements and policies of insurance)
except for the Administration Agreement, the Operating Agreement and the
amendment thereto, true and correct copies of which are attached hereto as
Exhibits "A", "F" and "G", respectively. Other than the assets acquired and to
be acquired under the MBDA (comprised of cash and credit card receivables, as
set forth on the Eikos Balance Sheet), Eikos has no other material assets.
3.12 Compliance with Law. Each of Eikos and EAL has all Licenses
and all Consents of Governmental Authorities required by applicable Law for it
to conduct its respective business. All such Licenses and Consents are in full
force and effect and neither Eikos, EAL nor the Fund has received notice of any
pending cancellation or suspension thereof nor, to the best of the each such
party's knowledge, is any pending cancellation or suspension thereof threatened.
To the best knowledge of the Fund, Eikos and EAL, each such party is in
compliance in all material respects with each Law applicable to it, or the
ownership and administration of the MBDA, and neither the Fund, Eikos nor EAL
has received any notice of any violation of any Law or Order relating to the
business or affairs of Eikos or EAL.
Page 11 of 30
3.13 Taxes. No Taxing Authority has asserted any claim that could
result in the imposition of any Tax for which Eikos or EAL is or may be liable
or that could materially adversely affect the Tax liability of Eikos or EAL.
There is no pending Proceeding relating to any Tax for which Eikos or EAL is or
may be liable or that could materially adversely affect any Tax liability of
Eikos or EAL and, to the best knowledge of the Fund, Eikos and EAL, no Taxing
Authority is contemplating such a Proceeding or adjustment. Neither Eikos nor
EAL is a party to any Tax sharing or Tax allocation agreement, arrangement or
understanding.
3.14 Investment Intent. It is the intention of the Fund that its
acquisition of the Acquired Stock from the Acquiror be a transaction exempt from
the securities laws of the United States, the State of Delaware and any other
applicable jurisdiction and, as such, the Fund specifically represents as
follows:
(a) The Fund (i) has its place of business at the address set
forth above and has no current intention of becoming domiciled in any other
state or jurisdiction prior to the Closing Date; (ii) has adequate means of
providing for its current needs and possible contingencies, and has no need for
liquidity of its investment; (iii) can bear the economic risk of its investment
herein, including the possibility of losing its entire investment; (iv) has such
knowledge and experience in business and financial matters, alone or with its
representatives, that it is capable of evaluating the relative risks and merits
of this investment; and (v) understands the speculative nature and uncertainty
of the investment contemplated hereby.
(b) The Acquired Stock (i) is being acquired for the Fund's
own account, for investment purposes only and not with a view to resale or other
distribution thereof; and (ii) may be sold in the United States only if such
Shares are subsequently registered under the Act or an exemption from such
registration is available.
(c) The Fund (i) has reviewed this Agreement and has been
afforded the opportunity to ask questions of and receive answers from the
Acquiror concerning the terms and conditions of this Agreement and the business
of the Acquiror and to obtain any additional information which the Acquiror
possesses or could acquire without unreasonable effort or expense that is
necessary to verify the accuracy of information contained herein; (ii) desires
no additional information from the Acquiror; and (iii) has had the opportunity
to consult with such legal, accounting and other professional advisors as it has
deemed appropriate, and all such advisors have been given access to information
to the satisfaction of the Fund.
(d) The Fund (i) through its representatives and advisers, is
familiar with the definition of "Accredited Investor" as that term is defined in
Rule 501(a) of the Commission and, in light of such definition, is an
Page 12 of 30
"Accredited Investor" and (ii) has such knowledge and experience in financial
and business matters that it is capable of evaluating the risks and merits of
the purchase of the Acquired Stock.
(e) The Fund fully understands and agrees that (i) it must
bear the economic risk of its purchase of the Acquired Stock for an indefinite
period of time because, among all other reasons, the Acquired Stock has not been
registered under the Act, or the securities laws of any state, and therefore,
cannot be sold, pledged, assigned or otherwise disposed of unless subsequently
registered under the Act and/or qualified under applicable state securities laws
or an exemption from such registration and/or qualification is available, (ii)
the Acquiror will not honor any attempt by the Fund to sell, pledge, transfer or
otherwise dispose of the Acquired Stock, in the absence of an effective
registration statement for the Acquired Stock under the Act and/or qualification
under applicable state securities laws or an opinion of counsel to the effect
that there is an exemption available for sale of the Acquired Stock without such
registration and/or qualification, (iii) the information or conditions necessary
to permit routine sales of securities of the Acquiror under Rule 144 promulgated
under the Act may not now be available and no assurance has been given that it
or they will become available, and (iv) each of the certificates representing
the Acquired Stock pursuant hereto will bear in substance the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT"). THE
SECURITIES HAVE BEEN ACQUIRED SOLELY FOR INVESTMENT PURPOSES
AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF A CURRENT AND EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT WITH RESPECT TO SUCH
SHARES, OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER
AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED UNDER
THE ACT."
3.15 Brokers or Finders. Neither the Fund, Eikos, EAL nor any
Affiliate thereof has employed or engaged any Person to act as a broker, finder
or other intermediary in connection with the transactions contemplated hereby,
and no Person is entitled to any fee, commission or other compensation from the
Acquiror relating to any such employment or engagement by the Fund or any
Affiliate of the Fund.
3.16 No Misrepresentation by the Fund, Eikos or EAL. No
representation, warranty or statement by the Fund, Eikos or EAL in this
Agreement or in any certificate, exhibit, schedule or other Transaction Document
furnished pursuant hereto or in connection with the transactions contemplated
hereby contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements or facts contained herein or
therein not misleading.
Page 13 of 30
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE ACQUIROR
The Acquiror hereby represents and warrants to the Fund, Eikos and EAL
as follows:
4.1 Organization. The Acquiror is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, and has
full power and authority to own its assets and carry on its business in the
manner and places where such assets are now owned and such business is now being
conducted.
4.2 Power and Authority. The Acquiror has full legal capacity, power
and authority to execute and deliver this Agreement and each other Transaction
Document to which it is a party and to assume and perform its obligations
hereunder and thereunder. This Agreement has been, and on the Closing Date each
other Transaction Document to which the Acquiror is a party will be, duly
executed and delivered, and this Agreement is, and each other Transaction
Document to which the Acquiror is a party when so executed and delivered on the
Closing Date will be, a legally valid and binding obligation of the Acquiror,
enforceable against the Acquiror in accordance with its terms, subject to (a)
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and (b) equitable
principles limiting the availability of certain remedies.
4.3 Absence of Conflict. The execution and delivery of this Agreement
do not, and the execution and delivery of each other Transaction Document to
which it is a party and the performance by the Acquiror of its obligations
hereunder and thereunder will not, violate any provision of the Governing
Documents of the Acquiror and do not and will not conflict with or result in any
breach of any condition or provision of, or constitute a default under, or
create or give rise to any adverse right of termination or cancellation by, or
excuse the performance of, any other Person, or result in the creation or
imposition of any Lien upon the Acquiror or any of its assets or the
acceleration of the maturity or date of payment or other performance of any
obligation of the Acquiror by reason of the terms of, any agreement, indenture,
instrument, license, lease, Lien or Order to which the Acquiror is a party or is
subject or which is or purports to be binding upon either of them.
4.4 Consents. No Consent of, or notice to, any Person is required as to
the Acquiror in connection with the execution and delivery by the Acquiror of
this Agreement or any other Transaction Document or the performance of the
obligations of the Acquiror hereunder or thereunder, where the failure to obtain
Page 14 of 30
such Consent or give such notice would have an adverse effect upon the Acquiror,
or its assets or business or prohibit, invalidate, or make unlawful, in whole or
in part, this Agreement or any other Transaction Document, or the carrying out
of the provisions hereof or thereof or the transactions contemplated hereby or
thereby.
4.5 Litigation. No Proceeding is pending or, to the best of the
Acquiror's knowledge, threatened against or affecting the assets, operations or
financial or other condition of the Acquiror in which an unfavorable outcome
would have a material adverse effect upon the Acquiror or would prohibit,
invalidate, or make unlawful, in whole or in part, this Agreement or any other
Transaction Document, or the carrying out of the provisions hereof or thereof or
the transactions contemplated hereby or thereby. The Acquiror is not in default
in respect of any Order, nor is there any such Order enjoining the Acquiror in
respect of, or the effect of which is to prohibit or curtail the Acquiror's
performance of its obligations hereunder or under any other Transaction
Document.
4.6 Authorized Capital. The entire authorized capital of the Acquiror
currently consists of 20,000,000 shares of Common Stock, par value $0.001. All
such Securities are duly authorized, of which 8,495,000 shares of Common Stock
are currently outstanding, all of which are validly issued, fully paid and
nonassessable. No shares of preferred stock have been authorized and issued but
the Acquiror has agreed to seek shareholder approval of the amendment of its
articles of incorporation to permit the issuance of Preferred Stock with rights
and preferences substantially as set forth in Exhibit "H" attached hereto. The
Acquired Stock is and/or will be, at the time of issuance, duly authorized,
validly issued, fully paid and non-assessable, and free and clear of all Liens
whatsoever. None of the Securities are reserved for issuance, and there are no
agreements, commitments or arrangements providing for the issuance or sale of
any capital stock or other interest of the Acquiror, or any issued or
outstanding options, warrants or rights to purchase, or any security or
instrument convertible into or exchangeable for, any capital stock or other
interest of the Acquiror, except as set forth on Schedule 4.6 attached hereto.
4.7 Financial Statements; No Undisclosed Liabilities; Books.
(a) The Acquiror has delivered to the Fund a complete and correct
copy of its balance sheet and related statements of operations, stockholders'
deficit and cash flows for the year ending December 31, 1998, with the
accompanying report thereon of its certified public, together with its unaudited
comparative financial information for the six months ending June 30, 1999
(collectively, the "Acquiror Financial Statements"). A true and correct copy of
the Acquiror Financial Statements is attached hereto as Schedule 4.8(a). The
Acquiror Financial Statements present fairly in all material respects the
financial position of the Acquiror as at December 31, 1998 and June 30, 1999
without qualification except as set forth in the accompanying report and notes
of the Acquiror's Independent Auditors.
Page 15 of 30
(b) Except as set forth on the Acquiror Financial Statements or on
Schedule 4.8(b) attached hereto, the Acquiror does not have any material
liabilities or obligations of any kind, whether known or unknown, or whether
absolute, accrued, contingent, matured or otherwise, whether due or to become
due except liabilities or obligations that arose in the ordinary course of
business.
(c) The books and financial records of the Acquiror made available
to the Fund constitute a complete record of its financial affairs and accurately
set forth all revenues, expenses, assets and liabilities.
4.8 No Adverse Change. Since the date of the Acquiror Financial
Statements there has been no material adverse change in the business, the assets
or the financial or other condition of the Acquiror, and the Acquiror has not:
(a) incurred any damage, destruction or similar loss, whether or
not covered by insurance, materially adversely affecting its business or its
assets;
(b) other than in the ordinary course of business, sold, assigned
or transferred any of its assets or any interest therein;
(c) incurred any material obligation or liability (including any
guaranty, indemnity, make-whole agreement for or with respect to any obligation
or liability of another Person), or paid, satisfied or discharged any material
obligation or liability prior to the due date or maturity thereof;
(d) other than in the ordinary course of business, created,
incurred, assumed, granted or suffered to exist any Lien on any of its assets;
(e) other than in the ordinary course of business, waived any right
of value or canceled, forgiven or discharged any debt owed to it or any claim in
its favor;
(f) declared, set aside or paid any dividend or made or committed
to make any other distribution in respect of any shares of Common Stock; or
(g) effected any material change in its business policies or
practices, accounting methods, conventions, principles or assumptions or any
material change in the nature of the business relationships with its clients; or
effected any material transaction not in the ordinary course of business other
than as anticipated in the Mega-Micro Acquisition.
Page 16 of 30
4.9 Material Contracts. Set forth on Schedule 4.9 attached hereto is a
list of all contracts (including, without limitation, consulting, employment or
other labor agreements, benefits arrangements and policies of insurance) to
which the Acquiror is a party or its business or affairs are subject, or the
termination or cancellation of which would have a material adverse effect upon
its business or prospects.
4.10 Compliance with Law. The Acquiror has all Licenses and all
Consents of Governmental Authorities required by applicable Law for it to
conduct its business. All such Licenses and Consents are in full force and
effect and the Acquiror has not received notice of any pending cancellation or
suspension thereof nor, to the best of the its knowledge, is any pending
cancellation or suspension thereof threatened. To the best knowledge of the
Acquiror, it is in compliance in all material respects with each Law applicable
to it, and has not received any notice of any violation of any Law or Order
relating to its business or affairs.
4.11 Taxes. No Taxing Authority has asserted any claim that could
result in the imposition of any Tax for which the Acquiror is or may be liable
that could have a material adverse effect upon the business or prospects of the
Acquiror. There is no pending Proceeding relating to any Tax for which the
Acquiror is or may be liable or that could materially adversely affect any Tax
liability of the Acquiror and, to the best knowledge of the Acquiror, no Taxing
Authority is contemplating such a Proceeding or adjustment. The Acquiror is not
a party to any Tax sharing or Tax allocation agreement, arrangement or
understanding.
4.12 Investment Intent. It is the intention of the Acquiror that its
acquisition of the EAL Stock be a transaction exempt from the securities laws of
the United States, the State of Delaware and any other applicable jurisdiction
and, as such, the Acquiror specifically represents as follows:
(a) The Acquiror (i) has its place of business at the address set
forth above and has no current intention of becoming domiciled in any other
state or jurisdiction prior to the Closing Date; (ii) has adequate means of
providing for its current needs and possible contingencies, and has no need for
liquidity of its investment; (iii) can bear the economic risk of its investment
herein, including the possibility of losing its entire investment; (iv) has such
knowledge and experience in business and financial matters, alone or with its
representatives, that it is capable of evaluating the relative risks and merits
of this investment; and (v) understands the speculative nature and uncertainty
of the investment contemplated hereby.
(b) The EAL Stock (i) is being acquired for the Acquiror's own
account, for investment purposes only and not with a view to resale or other
distribution thereof; and (ii) may be sold in the United States only if it is
subsequently registered under the Act or an exemption from such registration is
available.
Page 17 of 30
(c) The Acquiror (i) has reviewed this Agreement and has been
afforded the opportunity to ask questions of and receive answers from the Fund
concerning the terms and conditions of this Agreement and the businesses of
Eikos and EAL and to obtain any additional information which the Fund, Eikos or
EAL possesses or could acquire without unreasonable effort or expense that is
necessary to verify the accuracy of information contained herein; (ii) desires
no additional information from the Fund, Eikos or EAL; and (iii) has had the
opportunity to consult with such legal, accounting and other professional
advisors as it has deemed appropriate, and all such advisors have been given
access to information to the satisfaction of the Acquiror.
(d) The Acquiror (i) through its representatives and advisers, is
familiar with the definition of "Accredited Investor" as that term is defined in
Rule 501(a) of the Commission and, in light of such definition, it is an
"Accredited Investor" and (ii) it has such knowledge and experience in financial
and business matters that it is capable of evaluating the risks and merits of
the purchase of EAL Stock.
(e) The Acquiror fully understands and agrees that (i) it must
bear the economic risk of its purchase for an indefinite period of time because,
among all other reasons, the EAL Stock has not been registered under the Act, or
the securities laws of any state, and therefore, cannot be sold, pledged,
assigned or otherwise disposed of unless subsequently registered under the Act
and/or qualified under applicable state securities laws or an exemption from
such registration and/or qualification is available, (ii) the information or
conditions necessary to permit routine sales of the EAL Stock under Rule 144
promulgated under the Act may not now be available and no assurance has been
given that it or they will become available, and (iii) each of the certificates
representing the EAL Stock to be acquired by the Acquiror pursuant hereto will
bear in substance the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT"). THE
SECURITIES HAVE BEEN ACQUIRED SOLELY FOR INVESTMENT PURPOSES AND
MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR OTHERWISE DISPOSED OF IN
THE ABSENCE OF A CURRENT AND EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT WITH RESPECT TO SUCH SHARES, OR AN OPINION OF
COUNSEL SATISFACTORY TO THE ISSUER AND ITS COUNSEL THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER THE ACT."
4.13 Brokers or Finders. Neither the Acquiror nor any Affiliate thereof
has employed or engaged any Person to act as a broker, finder or other
intermediary in connection with the transactions contemplated hereby, and no
Person is entitled to any fee, commission or other compensation from the Fund,
Eikos or EAL relating to any such employment or engagement by the Acquiror or
any Affiliate thereof.
Page 18 of 30
4.14 No Misrepresentation by the Acquiror. No representation, warranty
or statement by the Acquiror in this Agreement or in any certificate, exhibit,
schedule or other Transaction Document furnished pursuant hereto or in
connection with the transactions contemplated hereby contains any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements or facts contained herein or therein not misleading.
ARTICLE V
COVENANTS
5.1 Best Efforts. From and after the date hereof and until the Closing,
the Fund, Eikos, EAL and the Acquiror shall use their respective best efforts,
and shall cooperate with each other, to cause the consummation of the
transactions contemplated hereby in accordance with the terms and conditions
hereof.
5.2 Eikos, EAL and the Acquiror to Conduct Business in the Ordinary
Course. From and after the date hereof and until the Closing, except as
otherwise provided elsewhere herein or as the relevant party may otherwise
consent (which consent shall not be unreasonably withheld), neither Eikos, EAL
nor the Acquiror shall:
(a) amend any of its Governing Documents;
(b) merge or consolidate with any other Person or effect any
capital reorganization (except, as to the Acquiror, the consummation of the
Mega-Micro Agreement);
(c) declare, set aside or pay any dividend or make or commit to
make any other distribution in respect of any shares of capital stock or other
equity interests;
(d) acquire the business or assets, substantially as a whole, of
any other Person or make any capital expenditure in excess of $25,000; or
(e) solicit or respond to any inquiry or proposal relating to any
sale of its business or assets from any Person.
5.3 Further Information. From and after the date hereof and until the
Closing, each party shall furnish to the other parties such information as may
from time to time be reasonably requested and shall permit the requesting party
and its authorized representatives access during regular business hours and upon
reasonable notice, at such party's sole expense, to examine the books and
Page 19 of 30
records of Eikos, EAL and/or the Acquiror, as the case may be (which the
relevant party shall assemble and maintain at its principal executive offices)
and to make inquiries of responsible Persons designated by such party with
respect thereto; provided, that any information so disclosed by such party shall
not constitute an additional representation or warranty beyond those expressly
set forth in Articles 3 and 4 hereof; and provided further that all such
information shall be subject to Section 5.5.
5.4 Public Announcements. From and after the date hereof and until the
Closing; neither the Fund, Eikos, EAL nor the Acquiror shall make or permit any
Affiliate thereof to make, any press release or other public announcement with
respect to this Agreement or the transactions contemplated hereby, without the
prior written consent of the other party (which consent shall not be
unreasonably withheld), unless such announcement is required by Law, in which
case the other parties shall be given notice of such requirement prior to such
announcement and the parties shall consult with each other as to the scope and
substance of such disclosure.
5.5 Confidentiality. Each party acknowledges that all information
relating to or concerned with the business and affairs of each other party,
including without limitation all product information, customer and supplier
lists, marketing and sales data, personnel and financing and Tax matters, is
proprietary and that its confidentiality is absolutely essential to the
operation of the business of the other party. Accordingly, from and after the
date hereof and until the Closing, no party shall use or disclose to any Person
any such information, without the relevant party's prior written consent, except
to counsel for, or other representatives or agents of, such party or prospective
lenders or other financing sources to such party as may be necessary or
appropriate in order to effect the transactions contemplated hereby (in which
case, any Person to whom any such information is disclosed shall be bound by the
provisions of this Section 5.5) or as may be required by Law (in which case,
such party shall promptly give notice to the other party of any demand,
subpoena, order or legal process requiring disclosure so that such other party
may seek a protective order or other confidential treatment of such
information), unless, with respect to disclosure of such information to a third
party, such party can demonstrate that such information was already known to
such Person without any breach or violation of any confidentiality agreement for
the benefit of the other party.
ARTICLE VI
CONDITIONS TO CLOSING
6.1 Conditions of the Obligation of the Fund to Close. The obligation
of the Fund to purchase the Acquired Stock in accordance herewith shall be
subject to the satisfaction (or waiver) prior to or at the Closing of each of
the following conditions:
Page 20 of 30
(a) the representations and warranties made by the Acquiror herein
shall be true in all material respects on and as of the Closing Date, except
those made as of a certain date which shall be true in all material respects as
of such date (provided that participation in the Closing by the Fund shall not
in any way be deemed to waive any claim it may have for breach of any
representation or warranty whether or not such breach was material);
(b) the Acquiror shall have performed and complied with all
obligations and conditions to be performed or complied with by it hereunder;
(c) no Order or Law shall be in effect which prohibits the Fund
from consummating the transactions contemplated hereby;
(d) each Consent of, or notice to, any Governmental Authority or
other Person required for the consummation of the purchase of the Acquired Stock
shall have been obtained or given;
(e) there shall not have been any adverse change in the business of
the Acquiror since the date hereof; and
(f) the Acquiror shall execute and/or deliver at the Closing all
the documents so to be executed and/or delivered by the Acquiror pursuant to
Section 7.2.
6.2 Conditions of the Obligation of the Acquiror to Close. The
obligation of the Acquiror to consummate the purchase of the EAL Stock in
accordance herewith shall be subject to the satisfaction (or waiver by the
Acquiror) prior to or at the Closing of each of the following conditions:
(a) the representations and warranties made by the Fund, Eikos and
EAL herein shall be true in all material respects on and as of the Closing Date,
except those made as of a certain date which shall be true in all material
respects as of such date (provided that the Acquiror's participation in the
Closing shall not in any way be deemed to waive any claim it may have for breach
of any representation or warranty whether or not such breach was material);
(b) each of the Fund, Eikos and EAL shall have performed and
complied with all obligations and conditions to be performed or complied with by
it hereunder;
(c) no Order or Law shall be in effect which prohibits the Fund,
Eikos or EAL from consummating the transactions contemplated hereby;
(d) each Consent of, or notice to, any Governmental Authority or
other Person required for the purchase of the EAL Stock; and
Page 21 of 30
(e) the Fund, Eikos and EAL shall execute and/or deliver at the
Closing all the documents so to be executed and/or delivered by the Fund
pursuant to Section 7.3.
ARTICLE VII
CLOSING MATTERS
7.1 The Closing. The closing of the transaction contemplated hereby
(the "Closing") shall be held at the offices of the Acquiror on November 11,
1999, or at such other place or on such other date, and at such time, as the
parties hereto may agree. The execution and/or delivery of each document to be
executed and/or delivered at the Closing and each other action to be taken at
the Closing shall be subject to the condition that every other document to be
executed and/or delivered at the Closing is so executed and/or delivered and
every other action to be taken at the Closing is so taken, and all such
documents and actions shall be deemed to be executed and/or delivered or taken,
as the case may be, simultaneously. When all such documents are so executed
and/or delivered and all such actions are so taken, the closing of the
transactions provided for herein shall be effective as of the opening of
business on the Closing Date.
7.2 Deliveries by the Acquiror. At the Closing, the Acquiror shall
deliver to the Fund:
(a) a certificate in the name of the Fund representing the Common
Stock;
(b) a certificate of the secretary of the Acquiror, substantially
in the form attached hereto as Exhibit "J", certified as of the date of the
Closing and attesting to the authenticity and correctness of (i) attached copies
of its articles of incorporation, by-laws and any other Governing Document
relevant to the rights of any of the Securities; (ii) an attached copy of the
resolutions adopted by its directors or similarly constituted authority
authorizing the execution, delivery and performance of this Agreement, the
transactions contemplated in connection herewith, and the execution, delivery
and performance of the other Transaction Documents; and (iii) the names and true
signatures of the each of its officers or directors authorized to execute this
Agreement and the other Transaction Documents to be delivered in connection
herewith, together with evidence of the incumbency of each such officer or
director; and
(c) a certificate, substantially in the form attached hereto as
Exhibit "K", of an authorized officer of the Acquiror to the effect that all the
conditions to closing set forth in Section 6.1 have been satisfied.
Page 22 of 30
7.3 Deliveries by the Fund. At the Closing, the Fund shall deliver, or
cause to be delivered, to the Acquiror:
(a) the certificate representing the EAL Stock, together with a
duly endorsed stock power in favor of the Acquiror;
(b) a certificate of the secretary of the Fund, substantially in
the form attached hereto as Exhibit "L", certified as of the date of the Closing
and attesting to the authenticity and correctness of (i) attached copies of its
articles of association, and any other relevant Governing Document relevant;
(ii) an attached copy of the resolutions adopted by its directors or similarly
constituted authority authorizing the execution, delivery and performance by it
of this Agreement, the transactions contemplated in connection herewith, and the
execution, delivery and performance of the other Transaction Documents; and
(iii) the names and true signatures of each of its officers or directors
authorized to execute this Agreement and the other Transaction Documents to be
delivered in connection herewith, together with evidence of the incumbency of
each such officer or director; and
(c) a certificate, substantially in the form attached hereto as
Exhibit "M", of an authorized officer of the Fund to the effect that all the
conditions to closing set forth in Section 6.2 have been satisfied.
ARTICLE VIII
TERMINATION
8.1 Termination in General. This Agreement may be terminated at any
time prior to the Closing:
(a) by the mutual written agreement of the Fund, Eikos, EAL and the
Acquiror;
(b) by either the Fund or the Acquiror (if such party is not in
breach of or default under this Agreement) giving written notice to such effect
to the other party if the Closing shall not have occurred on or before December
31, 1999, or such later date as the parties shall have agreed upon prior to the
giving of such notice; or
(c) by either the Fund, Eikos and EAL in the event of a material
breach by or default of the Acquiror, or by the Acquiror in the event of a
material breach by or default of the Fund, Eikos or EAL.
8.2 Effect of Termination. Upon termination of this Agreement, all
obligations of the parties shall terminate except those under Section 5.5 and
Article X; provided, however, that no such termination shall relieve the
Page 23 of 30
Acquiror of any liability to the Fund, or the Fund of any liability to the
Acquiror, by reason of any breach of or default under this Agreement.
ARTICLE IX
POST-CLOSING COVENANTS
9.1 Confidentiality. From and after the date of the Closing, the
parties hereto shall keep absolutely confidential all information relating to or
concerned with Eikos, EAL, the investment of the Acquiror in EAL, or the
investment of the Fund in the Acquiror. The parties shall not, at any time after
the date hereof, use or disclose to any Person any such information without the
written consent of all other parties, except as may be required by Law (in which
case the party shall promptly give notice to the other parties of any demand,
subpoena, order or other legal process requiring disclosure, in order to permit
such parties to seek an appropriate protective order or other confidential
treatment of such information).
9.2 Keeping of Books and Records; Inspection thereof. Each of Eikos and
the Acquiror shall keep adequate records and books of account, with complete
entries made in accordance with generally accepted accounting principles
consistently applied, reflecting all of its financial transactions. Eikos shall
permit and direct the Acquiror and the Acquiror shall permit and direct the
Fund, as the case may be, or any agents or representatives thereof, at any
reasonable time and from time to time upon reasonable prior notice, to examine
and make copies of and abstracts from their respective records and books of
account, to visit and inspect their respective properties and to discuss the
their respective affairs, finances and accounts with any of the directors,
officers, employees or other representatives of the Acquiror or the Fund, as the
case may be.
9.3 Allocation of Portfolio Expenses. Consistent with past practice,
the Fund shall continue to allocate to Eikos, and shall commence to allocate to
the Acquiror, its respective proportionate share of legal, accounting,
administrative and other overhead expenses incurred in the general operation of
its business, and the Acquiror consents to such periodic allocations, subject to
its rights of review and inspection as set forth in Section 9.2 above.
9.4 Issuance of Preferred Stock. At the next annual meeting of its
shareholders, the Acquiror shall propose shareholder approval of the
authorization of not less than 8,500,000 shares of Preferred Stock, with the
rights and preferences thereof to be determined by the Board of Directors of the
Acquiror in accordance with the Statement of Rights and Preferences attached
hereto as Exhibit "H". Immediately following such shareholder approval, and the
effectiveness of any appropriate filings with the Secretary of State of Delaware
or otherwise, the Acquiror shall issue 8,500,000 shares of Preferred Stock to
the Fund.
Page 24 of 30
9.5 Auditors. The Acquiror shall continue engage such nationally
recognized certified public accountants and independent auditors having
comparable public company clients in order to facilitate (a) the maintenance of
its listing on the OTCBB, and (b) such other and further business and investment
activity as contemplated by its business plan.
ARTICLE X
INDEMNIFICATION
10.1 Indemnification by the Acquiror. From and after the Closing, the
Acquiror shall indemnify and defend the Fund, Eikos and/or EAL against, and hold
the Fund, Eikos and/or EAL harmless from, and will pay to the Fund, Eikos and/or
EAL the amount of, any loss, claim, liability, obligation, damage or expense
(including without limitation attorneys' and consultants' fees and disbursements
and expenses of investigating, defending and prosecuting) which the Fund, Eikos,
EAL or any shareholder, director, officer, member, manager, employee or agent
thereof may suffer or incur (including without limitation incidental to any
claim or any Proceeding against the Fund, Eikos, EAL or any shareholder,
director, officer, member, manager, employee or agent thereof) based upon or
resulting from:
(a) the breach or inaccuracy of any representation or warranty
made by the Acquiror herein or pursuant hereto; or
(b) the Acquiror's failure to perform or to comply with any
covenant or condition required of the Acquiror to be performed or complied with
hereunder.
10.2 Indemnification by the Fund, Eikos and EAL. From and after the
Closing, the Fund, Eikos and EAL shall each (as their respective liability shall
be apportioned) indemnify and defend the Acquiror against, and hold the Acquiror
harmless from, and will pay to the Acquiror the amount of, any loss, claim,
liability, obligation, damage or expense (including without limitation
attorneys' and consultants' fees and disbursements and expenses of
investigating, defending and prosecuting) which the Acquiror or any shareholder,
director, officer, member, manager, employee or agent thereof may suffer or
incur (including without limitation incidental to any claim or any Proceeding
against the Acquiror or any shareholder, director, officer, member, manager,
employee or agent thereof) based upon or resulting from:
(a) the breach or inaccuracy of any representation or warranty
made by the Fund or Eikos herein or pursuant hereto; or
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(b) the failure of the Fund or Eikos to perform or to comply with
any covenant or condition required of the Fund or Eikos to be performed or
complied with hereunder.
10.3 Indemnification Procedures.
(a) Promptly after notice to an indemnified party of any claim or
the commencement of any Proceeding by a third party subject to Sections 10.1,
10.2 or 10.3 above, such indemnified party shall, if a claim for indemnification
in respect thereof is to be made against an indemnifying party pursuant to this
Article X, give written notice to the latter of the commencement of such claim
or Proceeding, setting forth in reasonable detail the nature thereof and the
basis upon which such party seeks indemnification hereunder, provided, however,
that the failure of any indemnified party to give such notice shall not relieve
the indemnifying party of its obligations hereunder, except to the extent that
the indemnifying party is actually prejudiced by the failure to give such
notice.
(b) In case any Proceeding is brought against an indemnified
party, and provided that proper notice is duly given, the indemnifying party
shall assume the defense thereof insofar as such Proceeding involves any loss,
liability, claim, obligation, damage or expense in respect of which
indemnification may be sought hereunder, with counsel reasonably satisfactory to
such indemnified party and, after notice from the indemnifying party to the
indemnified party of its assumption of the defense thereof, the indemnifying
party shall not be liable to the indemnified party for any legal or other
expenses subsequently incurred by the latter in connection with the defense
thereof (but the indemnified party shall have the right, but not the obligation,
to participate at its own expense in such defense by counsel of its own choice)
or for any amounts paid or foregone by the latter as a result of the settlement
or compromise thereof (without the written consent of the indemnifying party).
If the indemnifying party shall assume the defense of a Proceeding, the
indemnified party shall cooperate fully with the indemnifying party and shall
appear and give testimony, produce documents and other tangible evidence, allow
the indemnifying party access to the books and records of the indemnified party
and otherwise assist the indemnifying party in conducting such defense.
(c) If both the indemnifying party and the indemnified party are
named as parties in or are subject to a Proceeding and either such party
determines with advice of counsel that there may be one or more legal defenses
available to it that are different from or additional to those available to the
other party or that a material conflict of interest between such parties may
exist in respect of such Proceeding, the indemnifying party may decline to
assume the defense on behalf of the indemnified party or the indemnified party
may retain the defense on its own behalf and, in either such case, after notice
to such effect is duly given hereunder to the other party, the indemnifying
party shall be relieved of its obligation to assume the defense on behalf of the
Page 26 of 30
indemnified party, but shall be required to pay any legal or other expenses,
including, without limitation, reasonable attorneys' fees and disbursements
incurred by the indemnified party in such defense; provided, however, that the
indemnifying party shall not be liable for such expense on account of more than
one separate firm of attorneys (and, if necessary, local counsel) at any time
representing such indemnified party in connection with any Proceeding or
separate Proceedings in the same jurisdiction arising out of or based upon
substantially the same allegations or circumstances.
(d) No indemnifying party shall, without the consent of the
indemnified party, consent to entry of any judgment or enter into any settlement
or compromise which does not include as an unconditional term thereof the giving
by the claimant or plaintiff to such indemnified party of a release from all
liability in respect of such Proceeding (but the indemnifying party shall have
the right to participate at its own cost and expense in such defense by counsel
of its own choice) and may make in good faith any compromise or settlement with
respect thereto, and recover the entire cost and expense thereof, including
without limitation reasonable attorneys' fees and disbursements and all amounts
paid and foregone as a result of such Proceeding, or the settlement or
compromise thereof, from the indemnifying party. The indemnification required
shall be made by periodic payments of the amount thereof during the course of
the investigation or defense, as and when bills or invoices are received or
loss, liability, obligation, damage or expense is actually suffered or incurred.
10.4 Survival of Representations and Warranties. The representations
and warranties of each party herein shall survive the Closing, notwithstanding
any investigation or inquiry made by the other party, and continue until the
later of three years after the Closing or until the expiration of the applicable
statute of limitations. Any claim for indemnification under Section 10.1(a) or
Section 10.2(a) shall be made within the applicable survival period set forth in
this Section 10.4.
ARTICLE XI
MISCELLANEOUS
11.1 Limitation of Authority. No provision hereof shall be deemed to
create any partnership, joint venture or joint enterprise or association between
the parties hereto, or to authorize or to empower either party hereto to act on
behalf of, obligate or bind the other party hereto.
11.2 Fees and Expenses. Each party hereto shall bear such costs, fees
and expenses as may be incurred by it in connection with this Agreement and the
transactions contemplated hereby (including but not limited to its fees and
expenses for legal, tax and accounting counsel and advisors).
Page 27 of 30
11.3 Notices. Any notice or demand required or permitted to be given or
made hereunder to or upon either party hereto shall be deemed to have been duly
given or made for all purposes if (a) in writing and sent by (i) messenger or an
overnight courier service against receipt, or (ii) certified or registered mail,
postage paid, return receipt requested, or (b) sent by telegram, facsimile
transmission, telex or similar electronic means, provided that a written copy
thereof is sent on the same day by postage paid first-class mail, to such party
at its address first set forth above, or such other address as either party
hereto may at any time, or from time to time, direct by notice given to the
other party in accordance with this Section. The date of giving or making of any
such notice or demand shall be, in the case of clause (a)(i), the date of the
receipt; in the case of clause (a)(ii), five business days after such notice or
demand is sent; and, in the case of clause (b), the business day next following
the date such notice or demand is sent.
11.4 Amendment. Except as otherwise provided herein, no amendment of
this Agreement shall be valid or effective, unless in writing and signing by or
on behalf of the parties hereto.
11.5 Waiver. No course of dealing or omission or delay on the part of
either party hereto in asserting or exercising any right hereunder shall
constitute or operate as a waiver of any such right. No waiver of any provision
hereof shall be effective, unless in writing and signed by or on behalf of the
party to be charged therewith. No waiver shall be deemed a continuing waiver or
waiver in respect of any other or subsequent breach or default, unless expressly
so stated in writing.
11.6 Governing Law. This Agreement shall be governed by, and
interpreted and enforced in accordance with, the laws of the State of Delaware,
without regard to principles of choice of law or conflict of laws.
11.7 Remedies. In the event of any actual or prospective breach or
default by either party hereto, the other party shall be entitled to equitable
relief, including remedies in the nature of rescission, injunction and specific
performance. All remedies hereunder are cumulative and not exclusive, and
nothing herein shall be deemed to prohibit or limit either party from pursuing
any other remedy or relief available at law or in equity for such actual or
prospective breach or default, including the recovery of damages; provided,
however, that the indemnification provisions of Article X shall be the sole and
exclusive remedy with respect to claims for monetary damages.
11.8 Severability. The provisions hereof are severable and in the event
that any provision of this Agreement shall be determined to be invalid or
unenforceable in any respect by a court of competent jurisdiction, the remaining
provisions hereof shall not be affected, but shall, subject to the discretion of
such court, remain in full force and effect, and any invalid or unenforceable
provision shall be deemed, without further action on the part of the parties
hereto, amended and limited to the extent necessary to render the same valid and
enforceable.
Page 28 of 30
11.9 Further Assurances. Each party hereto covenants and agrees
promptly to execute, deliver, file or record such agreements, instruments,
certificates and other documents and to perform such other and further acts as
the other party hereto may reasonably request or as may otherwise be necessary
or proper to consummate and perfect the transactions contemplated hereby.
11.10 Assignment. This Agreement, and each right, interest and
obligation hereunder, may not be assigned, whether by operation of law, merger,
consolidation or otherwise, by any party hereto without the prior written
consent of the other parties hereto, and any purported assignment without such
consent shall be void and without effect.
11.11 Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and permitted
assigns. This Agreement is not intended, and shall not be deemed, to create or
confer any right or interest for the benefit of any Person not a party hereto.
11.12 Incorporation by Reference. The Exhibits and Schedules hereto are
an integral part of this Agreement and are incorporated in their entirety herein
by this reference.
11.13 Counterparts; Facsimile Signatures. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which shall be deemed to be an original, but all
of which taken together shall constitute one and the same agreement. This
Agreement, and any Transaction Document, may be executed and delivered to the
Closing by facsimile, and shall constitute an original of any such document if
so executed and delivered to the Closing by the party responsible therefor.
Page 29 of 30
IN WITNESS WHEREOF, the parties have executed this Agreement by their
duly authorized representatives as of the date first above written.
THESSEUS INTERNATIONAL EIKOS MANAGEMENT LLC
ASSET FUND N.V. by Ionian Trust Company Limited
its Administrative Member
By:______________________________ By:______________________________
Xxxxx Xxxxxx Xxxxx Xxxxxxx
Its President Its President
EIKOS ACQUISITION LIMITED SHANECY, INC.
By:______________________________ By:______________________________
Xxxxx Xxxxxx Xxxxx Xxxxxxx
Its President Its President
ATTACHMENTS:
Schedule 3.9(a) Eikos Balance Sheet
Schedule 3.9(b) Fund Financial Statements
Schedule 4.7(a) Acquiror Financial Statements
Schedule 4.7(b) Acquiror Material Liabilities
Schedule 4.9 Acquiror Contracts
Exhibit "A" Administration Agreement
Exhibit "B" Fund - EAL Agreement
Exhibit "C" Mutual Business Development Agreement
Exhibit "D" Amendment to MBDA (December 16, 1997)
Exhibit "E" Amendment to MBDA (September 1, 1998)
Exhibit "F" Eikos Operating Agreement
Exhibit "G" Amendment to Eikos Operating Agreement
Exhibit "H" Statement of Rights and Preferences of Preferred Shares
Exhibit "I" Consent of Members of Eikos
Exhibit "J" Acquiror Secretary's Certificate
Exhibit "K" Acquiror Closing Certificate
Exhibit "L" Fund Secretary's Certificate
Exhibit "M" Fund Closing Certificate
Page 30 of 30
