Exhibit 2.1
PLAN AND AGREEMENT OF REORGANIZATION
BETWEEN
KAFUS ENVIRONMENTAL INDUSTRIES, INC.
AND
HYATON COMPANY INCORPORATED
DATED NOVEMBER 2, 1998
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TABLE OF CONTENTS
1. TRANSFER OF CAMDEN AGRO SHARES.............................................1
1.1 Transfer and Delivery of Camden Agro Shares.........................1
2. ISSUANCE OF HYATON SHARES..................................................1
2.1 Issuance and Delivery of Hyaton Shares to Kafus.....................1
2.2 Issuance of Additional Hyaton Shares to Kafus.......................1
2.3 Issuance and Delivery of Hyaton Shares to Securities
Trading Services, Inc...............................................2
3. CLOSING....................................................................2
3.1 Closing of Transaction; Closing Date................................2
3.2 Deliveries on the Closing Date by Hyaton............................2
3.3 Deliveries on the Closing Date by Kafus.............................3
3.4 Filings; Cooperation................................................3
4. REPRESENTATIONS AND WARRANTIES BY HYATON...................................3
4.1 Representations and Warranties of Hyaton............................3
a. Organization and Good Standing of Hyaton.....................3
b. Capitalization...............................................3
c. Subsidiaries.................................................4
d. Financial Statements.........................................4
e. Absence of Undisclosed Liabilities...........................4
f. Litigation...................................................4
g. Compliance with Laws.........................................4
h. Employees....................................................4
i. Assets.......................................................5
j. Tax Matters..................................................5
k. Contracts....................................................5
l. Operating Authorities........................................5
m. Books and Records............................................5
n. Authority to Execute Agreement...............................5
o. Finder's, Broker's, Consulting Fees..........................5
p. OTC Bulletin Board Listing...................................6
q. Validity of Hyaton Common Stock..............................6
4.2 Disclosure..........................................................6
5. REPRESENTATIONS AND WARRANTIES BY KAFUS....................................6
5.1 Representations and Warranties of Kafus............................6
a. Organization and Good Standing..............................6
b. No Lien or Encumbrances on Camden Agro Shares...............6
c. Authority to Execute Agreement..............................6
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6. REGISTRATION RIGHTS AND REGISTRATION STATEMENT UNDER THE
SECURITIES EXCHANGE ACT OF 1934........................................7
6.1 Registration....................................................7
6.3 Expenses of Registration........................................7
6.4 Registration Procedures.........................................7
6.5 Indemnification In Connection With Registration
Statement.......................................................7
7. CONDUCT OF PARTIES PENDING CLOSING.....................................8
7.1 Conduct of Hyaton Business Pending Closing......................8
8. CONDITIONS PRECEDENT TO CLOSING........................................9
8.1 Conditions Precedent to Closing.................................9
9. ADDITIONAL COVENANTS OF THE PARTIES....................................9
9.1 Cooperation.....................................................9
9.2 Expenses........................................................9
9.3 Publicity.......................................................9
9.4 Confidentiality................................................10
9.5 Indemnification................................................10
9.6 Post-Closing Covenants.........................................10
10. TERMINATION...........................................................11
10.1 Mutual Termination.............................................11
11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES............................11
11.1 As to Hyaton...................................................11
11.2 As to Kafus....................................................11
12. MISCELLANEOUS.........................................................11
12.1 Entire Agreement; Amendments...................................11
12.2 Binding Agreement..............................................12
12.3 Indemnification; Issuance of Additional Shares.................12
12.4 Attorney's Fees................................................12
12.5 Severability...................................................12
12.6 Governing Law..................................................12
12.7 Notices........................................................12
12.8 Counterparts; Signatures.......................................13
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PLAN AND AGREEMENT OF REORGANIZATION
This PLAN AND AGREEMENT OF REORGANIZATION ("Agreement") is entered into
as of this 2nd day of November, 1998, by and between Kafus Environmental
Industries, Ltd., a British Columbia corporation ("Kafus") and Hyaton Company
Incorporated, a Nevada corporation ("Hyaton").
PLAN OF REORGANIZATION
The transaction contemplated by this Agreement is intended to be a "tax
free" exchange (the "Share Exchange") as contemplated by the provisions of
Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended. Hyaton
wishes to acquire and Kafus wishes to transfer all of its common shares, par
value $.01 per share, of Camden Agro-Systems, Inc., an Ontario corporation
("Camden Agro") which are currently held by Kafus (the "Camden Agro Shares"),
representing ninety percent (90%) of the outstanding common shares of Camden
Agro, in exchange for the issuance of 20 million shares of Hyaton's voting
common stock, par value $0.01 per share (the "Hyaton Common Stock" or the
"Hyaton Shares"). Unless otherwise stated, references to dollars ($) herein
shall mean United States dollars.
AGREEMENT
1. TRANSFER OF CAMDEN AGRO SHARES
1.1 Transfer and Delivery of Camden Agro Shares. Kafus agrees to
transfer and deliver to Hyaton on the Closing Date (as defined in Section 3.1
hereof ) all of its Camden Agro Shares, representing nine thousand (9,000)
common shares or ninety percent (90%) of all of the outstanding common shares of
Camden Agro, in exchange for twenty million (20,000,000) shares of Hyaton Common
Stock, to be issued to Kafus on the Closing Date, subject to subsequent increase
as provided in Sections 2.2 and 12.3 hereof.
2. ISSUANCE OF HYATON SHARES
2.1 Issuance and Delivery of Hyaton Shares to Kafus. As consideration
for the transfer, assignment, conveyance, and delivery of the Camden Agro Shares
hereunder, on the Closing Date, Hyaton shall issue and deliver to Kafus twenty
million (20,000,000) shares of Hyaton Common Stock valued, for the purposes of
this Agreement, at $1,000,000.
2.2 Issuance of Additional Hyaton Shares to Kafus. During the period
beginning on the Closing Date and ending upon the earlier of: (i) two (2) years
from the Closing Date, and (ii) eighteen (18) months from the commencement of
commercial operations by a Camden Agro plant (the "Measurement Period"), Hyaton
shall issue and deliver to Kafus one (1) additional share of Hyaton Common Stock
for each $.20 of aggregate earnings before interest, taxes, depreciation, and
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amortization accumulated during the Measurement Period, as determined in
accordance with generally accepted accounting principles consistently applied.
Any shares of Hyaton Common Stock to be issued and delivered to Kafus pursuant
to this provision shall be delivered to Kafus within ninety (90) days of the
conclusion of the Measurement Period.
2.3 Issuance and Delivery of Hyaton Shares to Securities Trading
Services, Inc. In connection with the Share Exchange and as a finder's fee, on
the Closing Date Hyaton shall issue and deliver 500,000 shares of Hyaton Common
Stock to Securities Trading Service, Inc. ("STS").
3. CLOSING
3.1 Closing of Transaction; Closing Date. The closing of the Share
Exchange (the "Closing") shall take place when all of the conditions precedent
provided for in Section 8.1 to the Closing shall have been satisfied or waived
and all deliveries provided for in Sections 3.2. and 3.3. have been made, which
shall occur on or before November __, 1998, at 11:00 a.m., Pacific Standard Time
(the "Closing Date"), unless another date shall be mutually agreed upon by the
parties. The Closing shall take place at the offices of Xxxxxx Eng Xxxx &
Xxxxxxxx, 000 Xxxxxxx Xxxx, Xxxxx 0000, Xxxxxxxxxx, Xxxxxxxxxx, and
simultaneously at such other places mutually agreed to by the parties.
3.2 Deliveries on the Closing Date by Hyaton. Provided that all of the
terms and conditions of this Agreement have been satisfied, Hyaton shall deliver
or cause to be delivered to Kafus the following on or before the Closing Date:
(a) a copy of the Board Minutes and/or Consent of Hyaton's Board
of Directors authorizing Hyaton to take the necessary steps toward closing the
transaction described by this Agreement;
(b) a copy of a Certificate of Good Standing for Hyaton issued
not more than ten (10) days prior to the Closing Date by the Nevada Secretary of
State;
(c) share certificates representing 20,000,000 shares of Hyaton
Common Stock in the name of Kafus pursuant to the terms and conditions of this
Agreement;
(d) a certificate signed by Hyaton's President dated as of the
Closing Date stating that all of Hyaton's representations and warranties set
forth in this Agreement are true and correct and that all of the conditions of
this Agreement applicable to the Closing Date have been satisfied or waived;
(e) letters of resignation from both Xxxxxx Xxxxxx and Xxxxx
Xxxxxxx, current members of the Board of Directors of Hyaton, and a consent
resolution appointing four new members to the Board of Directors of which three
members shall be nominated by Kafus and one member shall be nominated by Camden
Agro; and
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(f) share certificates representing 500,000 shares of Hyaton
Common Stock in the name of STS pursuant to the terms and conditions of this
Agreement.
3.3 Deliveries on the Closing Date by Kafus. Provided that all of the
terms and conditions of this Agreement have been satisfied, Kafus shall deliver,
or cause to be delivered, to Hyaton the following on or before the Closing Date:
(a) certificates representing the Camden Agro Shares sufficiently
endorsed by stock power for transfer in the name of Hyaton, or any nominee(s) as
may be designated by Hyaton, in the aggregate amount of 9,000 Common Shares;
(b) a copy of the Board Minutes and/or Consents of Kafus' Board
of Directors authorizing Kafus to take the necessary steps toward Closing the
transaction described by this Agreement;
(c) a certificate signed by Kafus' Chief Executive Officer dated
as of the Closing Date stating that all of Kafus's representations and
warranties set forth in this Agreement are true and correct and that all of the
conditions of this Agreement applicable to the Closing Date have been satisfied
or waived.
3.4 Filings; Cooperation. Hyaton and Kafus shall, on request and without
further consideration, cooperate with one another by furnishing or using their
best efforts to cause others to furnish any additional information and/or
executing and delivering or using their best efforts to cause others to execute
and deliver any additional documents and/or instruments, and doing or using
their best efforts to cause others to do any and all such other things as may be
reasonably required by the parties or their counsel to consummate or otherwise
implement the transaction contemplated by this Agreement.
4. REPRESENTATIONS AND WARRANTIES BY HYATON
4.1 Representations and Warranties of Hyaton. Subject to the schedules,
attached hereto and incorporated herein by this reference (which schedules shall
be acceptable to Kafus), as of the date of this Agreement, Hyaton represents and
warrants to Kafus as follows:
a. Organization and Good Standing of Hyaton. The Articles of
Incorporation of Hyaton and all amendments thereto as presently in effect, and
the Bylaws of Hyaton as presently in effect, have been delivered to Kafus and
are complete and correct, and since the date of such delivery, there has been no
amendment, modification, or other change thereto.
b. Capitalization. Hyaton's authorized capital stock currently
consists of 100,000,000 shares of voting common stock, of which 7,059,000 are
validly issued, fully paid, non-assessable, and outstanding, and 25,000,000
shares of Preferred Stock, of which none are issued and outstanding. All shares
that have been issued and are outstanding have been validly issued
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(including, without limitation, issued in compliance with all applicable federal
and state securities laws) and are fully paid and nonassessable. Hyaton has no
outstanding rights of first refusal, preemptive rights, or other rights,
warrants, options, conversion privileges, subscriptions, contracts, or other
rights or agreements obligating Hyaton either directly or indirectly to issue,
sell, purchase, or redeem any securities of Hyaton.
c. Subsidiaries. Hyaton has no subsidiaries and no other
investments, direct or indirect, or other financial interest in any other
corporation or business organization, joint venture, or partnership of any kind
whatsoever.
d. Financial Statements. Hyaton has delivered to Kafus its
financial statements at and for each of the fiscal years ended December 31, 1996
and 1997 and for the period ended April 30, 1998 ("collectively "Financial
Statements") as set forth as Schedule 4.1(d). The Financial Statements are
complete and correct in all material respects and have been prepared in
accordance with GAAP applied on a consistent basis throughout the periods
indicated. The Financial Statements accurately set out and describe the
financial condition and operating results of Hyaton as of the date and for the
periods indicated therein and do not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the Financial
Statements, in light of the circumstances under which they were made, not
misleading. Since the date of the Financial Statements, there has not been any
change in the business, properties, prospects, or financial condition of Hyaton
except, as of the date of this Agreement, Hyaton has less than $50 in cash.
e. Absence of Undisclosed Liabilities. Hyaton has no liabilities
as of the Closing Date.
f. Litigation. There are no outstanding orders, judgments,
injunctions, awards, or decrees of any court, governmental or regulatory body,
or arbitration tribunal, against Hyaton or its properties. There are no actions,
suits, or proceedings pending, or, to the knowledge of Hyaton, threatened
against or affecting Hyaton, any of its officers or directors relating to their
positions as such, or any of its properties, at law or in equity, or before or
by any federal, state, municipal, or other governmental department, commission,
board, bureau, agency, or instrumentality, domestic or foreign, in connection
with the business, operations, or affairs of Hyaton, which might result in any
adverse change in the operations or financial condition of Hyaton, or which
might prevent or impede the consummation of the transaction under this
Agreement.
g. Compliance with Laws. To the best of its knowledge, the
operations and affairs of Hyaton do not violate any law, ordinance, rule, or
regulation currently in effect, or any order, writ, injunction, or decree of any
court or governmental agency, the violation of which would substantially and
adversely affect the business, financial condition, or operations of Hyaton.
h. Employees. There are no collective bargaining, bonus, profit
sharing, compensation, or other plans, agreements, or arrangements between
Hyaton and any of its directors, officers, or employees, and there is no written
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employment, consulting, severance, or indemnification agreements between Hyaton
on the one hand, and any current or former directors, officers, or employees of
Hyaton on the other hand. Except for Xxxxxx Xxxxxx, the President of Hyaton, and
Xxxxx Xxxxxxx, the Secretary of Hyaton, Hyaton has no employees.
i. Assets. Hyaton has no assets other than cash of less than $50.
j. Tax Matters. All federal, foreign, state, and local tax
returns, reports, and information statements required to be filed by or with
respect to the activities of Hyaton have been timely filed. Such returns,
reports, and information statements are true and correct in all material
respects insofar as they relate to the activities of Hyaton.
k. Contracts. Hyaton is not a party to or is bound by any
contracts, agreements, or commitments.
l. Operating Authorities. To the best of its knowledge, Hyaton
has all material operating authorities, governmental certificates and licenses,
permits, authorizations, and approvals (collectively, the "Permits") required to
conduct its business as presently conducted. Since its inception, there has not
been any notice or adverse development regarding such Permits; such Permits are
in full force and effect; no material violations are or have been recorded in
respect of any Permit; and no proceeding is pending or threatened to revoke or
limit any Permit.
m. Books and Records. The books and records of Hyaton are
complete and correct, are maintained in accordance with good business practice,
and accurately present and reflect, in all material respects, all of the
transactions therein described, and there have been no transactions involving
Hyaton which properly should have been set forth therein and which have not been
accurately so set forth.
n. Authority to Execute Agreement. The Board of Directors of
Hyaton, pursuant to the power and authority legally vested in it, has duly
authorized the execution and delivery by Hyaton of this Agreement, and has duly
agreed to the transaction hereby contemplated. Hyaton has the power and
authority to execute and deliver this Agreement, to approve the transaction
hereby contemplated, and to take all other actions required to be taken by it
pursuant to the provisions hereof. Hyaton has taken all actions required by law,
its Articles of Incorporation, as amended, or otherwise, in order to authorize
the execution and delivery of this Agreement. This Agreement is valid and
binding upon Hyaton in accordance with its terms. Neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby will constitute a violation or breach of the Articles of Incorporation,
as amended, or the Bylaws, as amended, of Hyaton, or any agreement, stipulation,
order, writ, injunction, decree, law, rule, or regulation applicable to Hyaton.
o. Finder's, Broker's, Consulting Fees. Hyaton is not liable or
obligated to pay any finder's, agent's, broker's, or consultant's fee arising
out of or in connection with this Agreement or the transactions contemplated by
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this Agreement, other than a finder's fee to be paid to STS in an amount equal
to two-and-one-half percent (2 1/2 %) of the number of shares to be issued to
Kafus, or 500,000 total shares.
p. OTC Bulletin Board Listing. Hyaton has applied and its Common
Stock is qualified to be listed for quotation on the OTC Bulletin Board, and
Hyaton has not been informed or has no knowledge that its Common Stock will not
be eligible for continued quotation on the OTC Bulletin Board.
q. Validity of Hyaton Common Stock. The shares of Hyaton Common
Stock to be issued pursuant to this Agreement: (i) will be upon issuance, free
and clear of any security interest, liens, claims or other encumbrances created
by Hyaton or any other person; (ii) have been duly and validly authorized and,
when issued and paid for in accordance with the terms hereof, will be duly and
validly issued, fully paid, and non-assessable; (iii) will not have been issued
or sold in violation of any preemptive or similar rights; and (iv) will not be
subject the holder thereof to personal liability by reason of being such
holders.
4.2 Disclosure. As of the date of this Agreement, Hyaton has disclosed
all events, conditions, and facts affecting the business and prospects of
Hyaton. Hyaton has not withheld knowledge of any such events, conditions, or
facts which Hyaton knows, or has reasonable grounds to know, may affect Hyaton's
business and prospects. No representation or warranty by Hyaton in this
Agreement nor any certificate, exhibit, schedule, or other written document or
statement, furnished to Kafus by Hyaton in connection with the transactions
contemplated by this Agreement, contains or will contain any untrue statement of
a material fact or omits or will omit to state a material fact necessary to be
stated in order to make the statements contained herein or therein not
misleading.
5. REPRESENTATIONS AND WARRANTIES BY KAFUS
5.1 Representations and Warranties of Kafus. Kafus represents and
warrants to Hyaton as follows:
a. Organization and Good Standing. Kafus is a corporation duly
organized, validly existing, and in good standing under the laws of the province
of British Columbia.
b. No Lien or Encumbrances on Camden Agro Shares. The Camden
Agro Shares owned by Kafus and to be delivered to Hyaton shall be free and clear
of all liens, mortgages, pledges, encumbrances, or charges, whether disclosed
or undisclosed, except as Hyaton and Kafus shall have otherwise agreed in
writing.
c. Authority to Execute Agreement. The Board of Directors of
Kafus, pursuant to the power and authority legally vested in it, has duly
authorized the execution and delivery by Kafus of this Agreement, and has duly
agreed to the transaction hereby contemplated. Kafus has the power and authority
to execute and deliver this Agreement, to approve the transaction hereby
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contemplated, and to take all other actions required to be taken by it pursuant
to the provisions hereof. Kafus has taken all actions required by law, its
Articles of Incorporation, as amended, or otherwise, to authorize the execution
and delivery of this Agreement. This Agreement is valid and binding upon Kafus.
Neither the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will constitute a violation or breach of the
Articles of Incorporation, as amended, or the Bylaws, as amended, of Kafus, or
any agreement applicable to Kafus.
6. REGISTRATION RIGHTS AND REGISTRATION STATEMENT UNDER THE
SECURITIES EXCHANGE ACT OF 1934
6.1 Registration. Within ninety (90) days of the Closing Date, Hyaton
shall prepare and file a registration statement with the Securities and Exchange
Commission ("Commission") registering all twenty million (20,000,000) Hyaton
Shares issued to Kafus and five hundred thousand (500,000) shares of Common
Stock of Hyaton issue to STS pursuant to the this Agreement (hereinafter
referred to as the "Registrable Securities"). In this respect, and in connection
with all Registrable Securities, Hyaton will, as soon as practicable, use its
best efforts to have such registration statement declared effective.
Furthermore, within ninety days of the issuance of those additional Hyaton
Shares as provided in Section 2.2 hereof, Hyaton shall prepare and file a
registration statement with the Commission registering all such Hyaton Shares
issued to Kafus under Section 2.2.
In addition, Kafus shall have the right to one piggy-back
registration to register the Registrable Securities in the event Hyaton
subsequently files a registration statement registering its shares of Common
Stock.
6.2 Registration Statement Under the Securities Exchange Act of 1934. In
addition to the registration statement required by Section 6.1, within ninety
(90) days of the Closing Date, Hyaton shall prepare and file a registration
statement with the Commission registering Hyaton Common Stock under the
Securities Exchange Act of 1934.
6.3 Expenses of Registration. All registration expenses relating to the
Registrable Securities incurred in connection with any registration,
qualification, or compliance pursuant to this Sections 6.1 and 6.2 shall be
borne by Hyaton.
6.4 Registration Procedures. Hyaton will keep Kafus advised in writing
as to the initiation of registration and as to the completion thereof including
without limitation all filings with and all correspondence from the Commission.
6.5 Indemnification In Connection With Registration Statement.
a. Hyaton will indemnify and hold harmless Kafus and each of its
directors and officers against all claims, losses, damages, and liabilities (or
actions in respect thereof) arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any registration
statement, prospectus, offering circular, or other document, or any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and will reimburse
Kafus and its directors and officers for any legal or any other expenses
reasonably incurred in connection with investigating or defending any such
claim, loss, damage, liability, or action.
b. If Kafus is entitled to indemnification under this Section
6.5, Kafus shall give notice to Hyaton after Kafus has actual knowledge of any
claim as to which indemnity may be sought, and shall permit Hyaton to assume the
defense of any such claim or any litigation resulting therefrom, provided that
counsel for Hyaton, who shall conduct the defense of such claim or any
litigation resulting therefrom, shall be approved by Kafus (whose approval shall
not unreasonably be withheld or delayed), and Kafus may participate in such
defense at its own expense (except in the event Kafus may not be represented by
the counsel retained by Hyaton due to a conflict of interest, in which case
Hyaton shall pay the counsel fees incurred by Kafus), and provided further that
the failure of Kafus to give notice as provided herein shall not relieve Hyaton
of its obligations under this Section 6.5. Hyaton, in the defense of any such
claim or litigation, shall not, except with the consent of Kafus, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to Kafus of a
release from all liability in respect to such claim or litigation alleged by
such claimant or plaintiff. Kafus shall furnish such information regarding
itself or the claim in question as Hyaton may reasonably request in writing and
as shall be reasonably required in connection with defense of such claim and
litigation resulting therefrom.
c. The indemnification provided for under this Agreement will
survive the transfer of Registrable Securities by Kafus.
7. CONDUCT OF PARTIES PENDING CLOSING
7.1 Conduct of Hyaton Business Pending Closing. Hyaton covenants that
pending the Closing Date:
a. Hyaton's business will be conducted only in the ordinary course.
b. No change will be made in Hyaton's Articles of Incorporation
or Bylaws other than such changes as may be first approved in writing by Kafus.
c. Hyaton will not consider any inquiries or proposals relating
to the possible merger or reorganization of Hyaton or its assets, except to the
extent that they may be legally obligated to do so in which case Kafus would be
notified in writing.
d. No contract or commitment will be entered into by or on behalf
of Hyaton or indebtedness otherwise incurred, except with the prior written
approval by Kafus.
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e. No dividends shall be declared, no stock bonuses or options
shall be granted, and no increases in compensation to employees, including
officers, shall be declared and no new employment agreements shall be entered
into with officers or directors of Hyaton, except with prior written approval by
Kafus.
f. Subject to the protection provided by Section 9.4 herein,
Hyaton has given or will give to Kafus, its accountants, attorneys, and other
representatives, full access during normal business hours throughout the period
prior to the Closing Date, to all of Hyaton's properties, books, contracts,
commitments, and records, and has furnished Kafus during such period with all
such information concerning Hyaton's affairs as Kafus may reasonably request.
8. CONDITIONS PRECEDENT TO CLOSING
8.1 Conditions Precedent to Closing. All obligations of Kafus and Hyaton
under this Agreement are subject to the fulfillment, prior to or at the Closing
Date, of all conditions set forth herein, including, but not limited to, receipt
by the appropriate party of all deliveries required by Section 3 herein, and
fulfillment, prior to the Closing Date, of each of the following conditions:
a. Each of Hyaton's, and Kafus' representations, warranties, and
covenants contained in this Agreement shall be true at the time of the Closing
Date as though such representations, warranties, and covenants were made at such
time.
b. Hyaton shall have performed and complied with all agreements
and conditions required by this Agreement to be performed or complied with prior
to or at the Closing Date.
9. ADDITIONAL COVENANTS OF THE PARTIES
9.1 Cooperation. Hyaton and Kafus will cooperate with each other and
their respective agents in carrying out the transactions contemplated by this
Agreement, and in delivering all documents and instruments deemed reasonably
necessary or useful by the other party.
9.2 Expenses. Each of the parties hereto shall pay all of its respective
costs and expenses (including attorneys' and accountants' fees, finder's and
consultant's fees, costs and expenses) incurred in connection with this
Agreement and the consummation of the transactions contemplated herein.
9.3 Publicity. Prior to the Closing Date, any written news releases
and/or other shareholder communication by any party pertaining to this Agreement
or the transactions contemplated herein shall be submitted to the other parties
for their review and approval prior to such news release and/or other
shareholder communication provided, however, that (a) such approval shall not be
unreasonably withheld, and (b) such review and approval shall not be required of
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disclosures required to comply, in the judgment of counsel, with federal or
state securities or corporate laws or policies.
9.4 Confidentiality. While each party is obligated to provide access to
and furnish information in accordance with this Agreement, it is understood and
agreed that such disclosure and information obtained as a result of such
disclosures are proprietary and confidential in nature. Each party agrees to
hold such information in confidence and not to reveal any such information to
any person who is not a party to this Agreement, or an officer, director, or key
employee thereof, and not to use the information obtained for any purpose other
than assisting in its due diligence inquiry. This Section 9.4 shall survive the
execution and delivery of this Agreement, the Closing, and the consummation of
the transaction called for by this Agreement and shall be limited to the time
period of three (3) years.
9.5 Indemnification.
a. Xxxxxx X. Xxxxxx shall personally indemnify and hold harmless
Hyaton and Kafus and each of their directors and officers against all claims,
losses, damages, and liabilities (or actions in respect thereof) arising out of
or based on any claims, acts, breaches, omissions, debts, contracts, torts,
judgments, liabilities, or causes of action of every kind and nature, which
relate to or arise out of any act, event, or omission of Hyaton or their
directors or officers prior to the Closing Date, and shall reimburse Hyaton and
Kafus and their directors and officers for any legal or any other expenses
reasonably incurred in connection with investigating or defending any such
claim, loss, damage, liability, or action.
b. Hyaton shall indemnify and hold harmless Xxxxxx against all
claims, losses, damages, and liabilities (or actions in respect thereof) arising
out of or based on any claims, acts, breaches, omissions, debts, contracts,
torts, judgments, liabilities, or causes of action of every kind and nature,
which relate to or arise out of any act, event, or omission of Hyaton occurring
subsequent to the Closing Date, and shall reimburse Xxxxxx for any legal or any
other expenses reasonably incurred in connection with investigating or defending
any such claim, loss, damage, liability or action.
9.6 Post-Closing Covenants. The parties hereto agree to the following
covenants to be performed after the Closing:
a. Within 30 days after the Closing, Hyaton shall conduct a
private placement of Hyaton Common Stock at market prices in order to raise in
the aggregate up to one million dollars ($1,000,000). Kafus and Hyaton shall use
reasonable efforts in finding potential investors to invest in the private
placement. The remaining terms and conditions with respect to the issuance of
additional Hyaton shares of common stock shall be subject to approval by the
newly constituted board of directors. The proceeds from the private placement
shall be used for general corporate and working capital purposes.
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b. Effective as of the Closing Date, the current members of
Hyaton's board of directors shall take all steps necessary to set the authorized
number of directors to four (4), of which one (1) director shall be nominated by
Camden Agro, and three (3) directors shall be nominated by Kafus.
c. In accordance with the terms of Section 2.2 hereof, and on the
date designated therein, Hyaton shall issue and deliver to Kafus such number of
shares of Hyaton Common Stock as provided under Section 2.2.
10. TERMINATION
10.1 Mutual Termination. Hyaton and Kafus may agree to mutually
terminate this Agreement prior to the Closing without any liability to each
other.
10.2 Termination for Breach or Misrepresentation. If either party
breaches any of its obligations hereunder, or if either party's representations
are discovered to be materially false prior to the Closing, the non-breaching
party may, at its sole option, terminate the transactions proposed to be
effected under this Agreement.
11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
11.1 As to Hyaton. The representations and warranties of Hyaton
contained herein shall survive the execution and delivery of this Agreement, the
Closing, and the consummation of the transaction called for by this Agreement
for a period of 2 years from the date of this Agreement, unless a lesser time
period is specified.
11.2 As to Kafus. The representations and warranties of Kafus contained
herein shall survive the execution and delivery of this Agreement, the Closing,
and the consummation of the transaction called for by this Agreement for a
period of 2 years from the date of this Agreement unless a lesser time period is
specified.
12. MISCELLANEOUS
12.1 Entire Agreement; Amendments. This Agreement (including the
Exhibits and Schedules hereto) contains the entire agreement between the parties
with respect to the transactions contemplated hereby, and supersedes all
negotiations, representations, warranties, commitments, offers, contracts, and
writings prior to the date hereof. No waiver and no modification or amendment of
any provision of this Agreement shall be effective unless specifically made in
writing and duly signed by the parties to this Agreement.
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12.2 Binding Agreement. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective assigns and successors
in interest; provided, that neither this Agreement nor any right hereunder shall
be assignable by Kafus or Hyaton without the prior written consent of the other
parties.
12.3 Indemnification; Issuance of Additional Shares. Notwithstanding
Section 9.5 hereof, Hyaton covenants and agrees to defend, indemnify, and hold
harmless each of the officers, directors, employees, agents, and advisors of
Kafus, as such persons existed prior to the Closing Date (collectively, the
"Kafus Indemnitees") from and against any loss, liability, damage, or expense
(including reasonable attorney's fees and costs) which the Kafus Indemnitees may
suffer, sustain or become subject to, as a result of a breach of any
representation, warranty, or covenant by Hyaton contained in this Agreement. In
recognition that after the consummation of this Agreement that Kafus shall be
the controlling shareholder of Hyaton and may not be adequately compensated for
any loss, liability, damage, or expense which the Kafus Indemnitees may suffer
as a result of any breach of any representation warranty, or covenant by Hyaton,
at the sole election of Kafus, Kafus may unwind the transactions effected
pursuant to this Agreement, or Kafus may require Hyaton to issue to Kafus,
without further consideration, additional shares of Hyaton Common Stock in a
number equal to the loss, liability, damage or expense incurred by Kafus divided
by five cents ($.05).
12.4 Attorney's Fees. Except as otherwise provided for in Section 12.3
above, in the event of any controversy, claim, or dispute among the parties to
this Agreement arising out of or relating to this Agreement or breach thereof,
each party hereto shall pay its own legal expenses, attorney's fees, and costs.
12.5 Severability. If any provision hereof shall be held invalid or
unenforceable by any court of competent jurisdiction or as a result of future
legislative action, such holding or action shall be strictly construed and shall
not affect the validity or effect on any other provisions hereof.
12.6 Governing Law. In any action or proceeding arising out of or
related to this Agreement, the laws of British Columbia shall be followed,
without regard to the application of conflicts of laws provisions.
12.7 Notices. All notices or other communications required hereunder
shall be in writing and shall be sufficient in all respects and shall be deemed
delivered after five (5) days if sent via mail, postage prepaid; the next day if
sent by overnight courier service; or upon completion of transmission if sent by
facsimile to the following:
If to Hyaton:
Xx. Xxxxxx X. Xxxxxx, President
Hyaton Company Incorporated
0000 Xxxxx Xxxxxx Xxxxx
Xxxxxx, Xxxxxxx 00000
Fax: 000-000-0000
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If to Kafus:
Mr. Xxxx XxXxxx, President
Kafus Environmental Industries, Inc.
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Fax: 000-000-0000
12.8 Counterparts; Signatures. This Agreement may be executed in one or
more counterparts, each of which may be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement may be
executed by a party and sent to the other parties via facsimile transmission and
the facsimile transmitted copy shall have the same integrity, force and effect
as an original document.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
KAFUS ENVIRONMENTAL INDUSTRIES, INC.
By:____________________________________________
Its:___________________________________________
HYATON COMPANY INCORPORATED
By:____________________________________________
Its:___________________________________________
XXXXXX X. XXXXXX (with respect to Section 9.5(a) hereof)
Xxxxxx X. Xxxxxx
