EXHIBIT 10.2
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of August 3,
2004, by and among NewMarket Technology, Inc., a Nevada corporation ("NM"), and
Chell Group Corporation, a New York corporation ("CG") and Logicorp Data
Systems, Ltd., an Alberta corporation and a wholly-owned subsidiary of CG
("Logicorp");.
WHEREAS, NM wishes to purchase that number of shares of Logicorp common
stock ("Logicorp Shares") from Logicorp such that NM will hold 51% of the
outstanding securities of Logicorp;
WHEREAS, Logicorp wishes to sell and NM wishes to purchase the Logicorp
Shares for $2,100,000, $1,100,000 of which will be paid in cash at closing and
$1,000,000 of which will be paid by promissory note;
WHEREAS, twelve (12) months following the first anniversary of the 51%
purchase, provided Logicorp has achieved annual sales of at lease $18,000,000
with at least a break even profit (EBITA), the seller will have an option to
require the buyer to acquire the remaining 49% of the sellers remaining stock
for a purchase price of $1,900,000 to be paid in NM stock with piggyback
registration rights. The buyer will have an equal right to require the sale of
the sellers remaining 49% stock position under the same performance conditions.
NOW, THEREFORE, in consideration of the mutual covenants and other agreements
contained in this Agreement NM and CG hereby agree as follows:
1. Stock Purchase. Subject to the satisfaction (or waiver) of the
conditions to Closing set forth in this Agreement, NM shall purchase the
Logicorp Shares for $1,100,000 in cash and a promissory note with 10% the first
year and 5% in the second year due August 3, 2006 in the principal amount of
$1,000,000 ("Promissory Note").
2. Closing. The closing of the sale of Logicorp Shares shall take place at
the offices of Xxxxxxxxxx & Xxxxx LLP, 00000 Xxxxxxxx Xxxx., Xxxxx 000, Xxx
Xxxxxxx, Xxxxxxxxxx (the "Closing") at 10:00 a.m., California time (i) on or
before August 3, 2004; provided, that all of the conditions set forth in
Sections 5 and 6 and applicable to the Closing shall have been fulfilled or
waived in accordance herewith, or (ii) at such other time and place or on such
date as NM and CG may agree upon (the "Closing Date"). Subject to the terms and
conditions of this Agreement, at the Closing, NM shall deliver or cause to be
delivered to Logicorp (a) payment of $1.1 million in cash and (b) the Promissory
Note. At the Closing, Logicorp shall deliver a certificate registered in the
name of NM that number of Logicorp Shares such that NM holds 51% of the
outstanding common stock after the Closing.
3. Representations and Warranties of NM. NM hereby represents and warrants
to CG, as of the date hereof and the Closing Date (except as set forth on the
Schedule of Exceptions attached hereto with each numbered Schedule corresponding
to the section number herein), as follows:
(a) Organization, Good Standing and Power. NM is a corporation duly
incorporated, validly existing and in good standing under the laws of the
State of Nevada and has the requisite corporate power to own, lease and
operate its properties and assets and to conduct its business as it is now
being conducted. NM does not have any Subsidiaries or own securities of any
kind in any other entity except as set forth on Schedule 3(a) hereto. For
the purposes of this Agreement, "Subsidiary" of an entity shall mean any
corporation or other entity of which at least a majority of the securities
or other ownership interest having ordinary voting power (absolutely or
contingently) for the election of directors or other persons performing
similar functions are at the time owned directly or indirectly by such
entity and/or any of its other Subsidiaries. NM and each such Subsidiary is
duly qualified as a foreign corporation to do business and is in good
standing in every jurisdiction in which the nature of the business
conducted or property owned by it makes such qualification necessary except
for any jurisdiction(s) (alone or in the aggregate) in which the failure to
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be so qualified will not have a Material Adverse Effect. For the purposes
of this Agreement, "Material Adverse Effect" means any effect on the
business (including a material change in management), results of
operations, prospects, properties, assets or condition (financial or
otherwise) of NM or CG (as the case may be) that is material and adverse to
NM or CG, respectively, and its subsidiaries, taken as a whole, and/or any
condition, circumstance, factor or situation (including, without
limitation, an investigation by the Securities and Exchange Commission (the
"Commission")) that would prohibit or otherwise materially interfere with
the ability of NM from entering into and performing any of its obligations
under the Transaction Documents (as defined below) in any material respect.
(b) Authorization; Enforcement. NM has the requisite corporate power
and authority to enter into and perform this Agreement and the Shareholders
Agreement by and among NM and CG, dated as of the date hereof,
substantially in the form of Exhibit B attached hereto (the "Shareholders
Agreement" and, together with this Agreement, the "Transaction Documents")
and to issue and sell the NM Shares in accordance with the terms hereof.
The execution, delivery and performance of the Transaction Documents by NM
and the consummation by it of the transactions contemplated thereby have
been duly and validly authorized by all necessary corporate action, and,
except as set forth on Schedule 3(b), no further consent or authorization
of NM, its Board of Directors or stockholders is required. When executed
and delivered by NM, each of the Transaction Documents shall constitute a
valid and binding obligation of NM enforceable against NM in accordance
with its terms, except as such enforceability may be limited by applicable
bankruptcy, reorganization, moratorium, liquidation, conservatorship,
receivership or similar laws relating to, or affecting generally the
enforcement of, creditor's rights and remedies or by other equitable
principles of general application.
(c) Capitalization. The authorized capital stock of NM as of August 3,
2004 is set forth on Schedule 3(c) hereto. All of the outstanding shares of
the Common Stock and any other outstanding security of NM have been duly
and validly authorized. Except as set forth in this Agreement and as set
forth on Schedule 3(c) hereto, no shares of Common Stock or any other
security of NM are entitled to preemptive rights or registration rights and
there are no outstanding options, warrants, scrip, rights to subscribe to,
call or commitments of any character whatsoever relating to, or securities
or rights convertible into, any shares of capital stock of NM. Furthermore,
except as set forth in this Agreement and as set forth on Schedule 3(c)
hereto, there are no contracts, commitments, understandings, or
arrangements by which NM is or may become bound to issue additional shares
of the capital stock of NM or options, securities or rights convertible
into shares of capital stock of NM. Except for customary transfer
restrictions contained in agreements entered into by NM in order to sell
restricted securities or as provided on Schedule 3(c) hereto, NM is not a
party to or bound by any agreement or understanding granting registration
or anti-dilution rights to any person with respect to any of its equity or
debt securities. Except as set forth on Schedule 3(c), NM is not a party
to, and it has no knowledge of, any agreement or understanding restricting
the voting or transfer of any shares of the capital stock of NM.
(d) Issuance of Securities. The NM Shares to be issued at the Closing
have been duly authorized by all necessary corporate action and, when paid
for and issued in accordance with the terms hereof, the NM Shares will be
validly issued, fully paid and nonassessable and free and clear of all
liens, encumbrances and rights of refusal of any kind and the holders shall
be entitled to all rights accorded to a holder of NM Common Stock.
(e) No Conflicts. The execution, delivery and performance of the
Transaction Documents by NM and the consummation by NM of the transactions
contemplated hereby and thereby, and the issuance of the Securities as
contemplated hereby, do not and will not (i) violate or conflict with any
provision of NM's Articles of Incorporation (the "Articles") or Bylaws (the
"Bylaws"), each as amended to date, or any Subsidiary's comparable charter
documents, (ii) conflict with, or constitute a default (or an event which
with notice or lapse of time or both would become a default) under, or give
to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, mortgage, deed of trust, indenture, note,
bond, license, lease agreement, instrument or obligation to which NM or any
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of its Subsidiaries is a party or by which NM or any of its Subsidiaries'
respective properties or assets are bound, or (iii) result in a violation
of any federal, state, local or foreign statute, rule, regulation, order,
judgment or decree (including federal and state securities laws and
regulations) applicable to NM or any of its Subsidiaries or by which any
property or asset of NM or any of its Subsidiaries are bound or affected,
except, in all cases, for such conflicts, defaults, terminations,
amendments, acceleration, cancellations and violations as would not,
individually or in the aggregate, have a Material Adverse Effect (other
than violations pursuant to clauses (i) or (iii) (with respect to federal
and state securities laws)). Neither NM nor any of its Subsidiaries is
required under federal, state, foreign or local law, rule or regulation to
obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency in order for it to
execute, deliver or perform any of its obligations under the Transaction
Documents or issue and sell the Securities in accordance with the terms
hereof (other than any filings, consents and approvals which may be
required to be made by NM under applicable state and federal securities
laws, rules or regulations or any registration provisions provided in the
Registration Rights Agreement).
(f) Commission Documents, Financial Statements. The Common Stock of NM
is registered pursuant to Section 12(b) or 12(g) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and NM has timely filed all
reports, schedules, forms, statements and other documents required to be
filed by it with the Commission pursuant to the reporting requirements of
the Exchange Act (all of the foregoing including filings incorporated by
reference therein being referred to herein as the "Commission Documents").
At the times of their respective filings, the Form 10-QSB for the fiscal
quarters ended March 31, 2004, September 30, 2003 and June 30, 2003
(collectively, the "Form 10-QSB") and the Form 10-KSB for the fiscal year
ended December 31, 2003 (the "Form 10-KSB") complied in all material
respects with the requirements of the Exchange Act and the rules and
regulations of the Commission promulgated thereunder and other federal,
state and local laws, rules and regulations applicable to such documents,
and the Form 10-QSB and Form 10-KSB did not contain any untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. As of their
respective dates, the financial statements of NM included in the Commission
Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the
Commission or other applicable rules and regulations with respect thereto.
Such financial statements have been prepared in accordance with generally
accepted accounting principles ("GAAP") applied on a consistent basis
during the periods involved (except (i) as may be otherwise indicated in
such financial statements or the Notes thereto or (ii) in the case of
unaudited interim statements, to the extent they may not include footnotes
or may be condensed or summary statements), and fairly present in all
material respects the financial position of NM and its Subsidiaries as of
the dates thereof and the results of operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments).
(g) No Material Adverse Change. Since December 31, 2003, NM has not
experienced or suffered any Material Adverse Effect, except as disclosed on
Schedule 3(g) hereto.
(h) No Undisclosed Liabilities. Except as disclosed on Schedule 3(h)
hereto, since December 31, 2003, neither NM nor any of its Subsidiaries has
incurred any liabilities, obligations, claims or losses (whether liquidated
or unliquidated, secured or unsecured, absolute, accrued, contingent or
otherwise) other than those incurred in the ordinary course of NM's or its
Subsidiaries respective businesses or which, individually or in the
aggregate, are not reasonably likely to have a Material Adverse Effect.
(i) No Undisclosed Events or Circumstances. Since December 31, 2003,
except as disclosed on Schedule 3(i) hereto, no event or circumstance has
occurred or exists with respect to NM or its Subsidiaries or their
respective businesses, properties, prospects, operations or financial
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condition, which, under applicable law, rule or regulation, requires public
disclosure or announcement by NM but which has not been so publicly
announced or disclosed.
(j) Indebtedness. Schedule 3(j) hereto sets forth as of the date
hereof all outstanding secured and unsecured Indebtedness of NM or any
Subsidiary, or for which NM or any Subsidiary has commitments. For the
purposes of this Agreement, "Indebtedness" shall mean (a) any liabilities
for borrowed money or amounts owed in excess of $300,000 (other than trade
accounts payable incurred in the ordinary course of business), (b) all
guaranties, endorsements and other contingent obligations in respect of
Indebtedness of others, whether or not the same are or should be reflected
in NM's balance sheet (or the notes thereto), except guaranties by
endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business; and (c) the present value
of any lease payments in excess of $25,000 due under leases required to be
capitalized in accordance with GAAP. Neither NM nor any Subsidiary is in
default with respect to any Indebtedness.
(k) Title to Assets. Each of NM and the Subsidiaries has good and
valid title to all of its real and personal property reflected in the
Commission Documents, free and clear of any mortgages, pledges, charges,
liens, security interests or other encumbrances, except for those indicated
on Schedule 3(k) hereto or such that, individually or in the aggregate, do
not cause a Material Adverse Effect. All said leases of NM and each of its
Subsidiaries are valid and subsisting and in full force and effect.
(l) Actions Pending. There is no action, suit, claim, investigation,
arbitration, alternate dispute resolution proceeding or other proceeding
pending or, to the knowledge of NM, threatened against NM or any Subsidiary
which questions the validity of this Agreement or any of the other
Transaction Documents or any of the transactions contemplated hereby or
thereby or any action taken or to be taken pursuant hereto or thereto.
Except as set forth on Schedule 3(l) hereto, there is no action, suit,
claim, investigation, arbitration, alternate dispute resolution proceeding
or other proceeding pending or, to the knowledge of NM, threatened against
or involving NM, any Subsidiary or any of their respective properties or
assets, which individually or in the aggregate, would reasonably be
expected, if adversely determined, to have a Material Adverse Effect. There
are no outstanding orders, judgments, injunctions, awards or decrees of any
court, arbitrator or governmental or regulatory body against NM or any
Subsidiary or any officers or directors of NM or Subsidiary in their
capacities as such, which individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.
(m) Compliance with Law. The business of NM and the Subsidiaries has
been and is presently being conducted in accordance with all applicable
federal, state and local governmental laws, rules, regulations and
ordinances, except as set forth in the Commission Documents or on Schedule
3(m) hereto or such that, individually or in the aggregate, the
noncompliance therewith could not reasonably be expected to have a Material
Adverse Effect. NM and each of its Subsidiaries have all franchises,
permits, licenses, consents and other governmental or regulatory
authorizations and approvals necessary for the conduct of its business as
now being conducted by it unless the failure to possess such franchises,
permits, licenses, consents and other governmental or regulatory
authorizations and approvals, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
(n) Taxes. NM and each of the Subsidiaries has accurately prepared and
filed all federal, state and other tax returns required by law to be filed
by it, has paid or made provisions for the payment of all taxes shown to be
due and all additional assessments, and adequate provisions have been and
are reflected in the financial statements of NM and the Subsidiaries for
all current taxes and other charges to which NM or any Subsidiary is
subject and which are not currently due and payable. Except as disclosed on
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Schedule 3(n) hereto, none of the federal income tax returns of NM or any
Subsidiary have been audited by the Internal Revenue Service. NM has no
knowledge of any additional assessments, adjustments or contingent tax
liability (whether federal or state) of any nature whatsoever, whether
pending or threatened against NM or any Subsidiary for any period, nor of
any basis for any such assessment, adjustment or contingency.
(o) Certain Fees. Except as set forth on Schedule 3(o) hereto, NM has
not employed any broker or finder or incurred any liability for any
brokerage or investment banking fees, commissions, finders' structuring
fees, financial advisory fees or other similar fees in connection with the
Transaction Documents.
(p) Disclosure. To the best of NM's knowledge, neither this Agreement
or the Schedules hereto nor any other documents, certificates or
instruments furnished to the Purchasers by or on behalf of NM or any
Subsidiary in connection with the transactions contemplated by this
Agreement contain any untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements made herein or
therein, in the light of the circumstances under which they were made
herein or therein, not misleading.
(q) Operation of Business. Except as set forth on Schedule 3(q)
hereto, NM and each of the Subsidiaries owns or possesses the rights to all
patents, trademarks, domain names (whether or not registered) and any
patentable improvements or copyrightable derivative works thereof, websites
and intellectual property rights relating thereto, service marks, trade
names, copyrights, licenses and authorizations which are necessary for the
conduct of its business as now conducted without any conflict with the
rights of others.
(r) Environmental Compliance. NM and each of its Subsidiaries have
obtained all material approvals, authorization, certificates, consents,
licenses, orders and permits or other similar authorizations of all
governmental authorities, or from any other person, that are required under
any Environmental Laws. "Environmental Laws" shall mean all applicable laws
relating to the protection of the environment including, without
limitation, all requirements pertaining to reporting, licensing,
permitting, controlling, investigating or remediating emissions,
discharges, releases or threatened releases of hazardous substances,
chemical substances, pollutants, contaminants or toxic substances,
materials or wastes, whether solid, liquid or gaseous in nature, into the
air, surface water, groundwater or land, or relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of hazardous substances, chemical substances, pollutants,
contaminants or toxic substances, material or wastes, whether solid, liquid
or gaseous in nature. To the best of NM's knowledge, NM has all necessary
governmental approvals required under all Environmental Laws as necessary
for NM's business or the business of any of its subsidiaries. To the best
of NM's knowledge, NM and each of its subsidiaries are also in compliance
with all other limitations, restrictions, conditions, standards,
requirements, schedules and timetables required or imposed under all
Environmental Laws. Except for such instances as would not individually or
in the aggregate have a Material Adverse Effect, there are no past or
present events, conditions, circumstances, incidents, actions or omissions
relating to or in any way affecting NM or its subsidiaries that violate or
may violate any Environmental Law after the Closing Date or that may give
rise to any environmental liability, or otherwise form the basis of any
claim, action, demand, suit, proceeding, hearing, study or investigation
(i) under any Environmental Law, or (ii) based on or related to the
manufacture, processing, distribution, use, treatment, storage (including
without limitation underground storage tanks), disposal, transport or
handling, or the emission, discharge, release or threatened release of any
hazardous substance.
(s) Books and Records; Internal Accounting Controls. The records and
documents of NM and its Subsidiaries accurately reflect in all material
respects the information relating to the business of NM and the
Subsidiaries, the location and collection of their assets, and the nature
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of all transactions giving rise to the obligations or accounts receivable
of NM or any Subsidiary. NM and each of its Subsidiaries maintain a system
of internal accounting controls sufficient, in the judgment of NM's board
of directors, to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management's general or
specific authorization and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate
actions are taken with respect to any differences.
(t) Material Agreements. Except for the Transaction Documents (with
respect to clause (i) only), as disclosed in the Commission Documents or as
set forth on Schedule 3(t) hereto, or as would not be reasonably likely to
have a Material Adverse Effect, (i) NM and each of its Subsidiaries have
performed all obligations required to be performed by them to date under
any written or oral contract, instrument, agreement, commitment,
obligation, plan or arrangement, filed or required to be filed with the
Commission (the "Material Agreements"), (ii) neither NM nor any of its
Subsidiaries has received any notice of default under any Material
Agreement and, (iii) to the best of NM's knowledge, neither NM nor any of
its Subsidiaries is in default under any Material Agreement now in effect.
(u) Transactions with Affiliates. Except as set forth on Schedule 3(u)
hereto and in the Commission Documents, there are no loans, leases,
agreements, contracts, royalty agreements, management contracts or
arrangements or other continuing transactions between (a) NM, any
Subsidiary or any of their respective customers or suppliers on the one
hand, and (b) on the other hand, any officer, employee, consultant or
director of NM, or any of its Subsidiaries, or any person owning at least
5% of the outstanding capital stock of NM or any Subsidiary or any member
of the immediate family of such officer, employee, consultant, director or
stockholder or any corporation or other entity controlled by such officer,
employee, consultant, director or stockholder, or a member of the immediate
family of such officer, employee, consultant, director or stockholder
which, in each case, is required to be disclosed in the Commission
Documents or in NM's most recently filed definitive proxy statement on
Schedule 14A, that is not so disclosed in the Commission Documents or in
such proxy statement.
(v) Securities Act of 1933. Based in material part upon the
representations herein of the Purchasers, NM has complied and will comply
with all applicable federal and state securities laws in connection with
the offer, issuance and sale of the Securities hereunder. Neither NM nor
anyone acting on its behalf, directly or indirectly, has or will sell,
offer to sell or solicit offers to buy any of the Securities or similar
securities to, or solicit offers with respect thereto from, or enter into
any negotiations relating thereto with, any person, or has taken or will
take any action so as to bring the issuance and sale of any of the
Securities under the registration provisions of the Securities Act and
applicable state securities laws, and neither NM nor any of its affiliates,
nor any person acting on its or their behalf, has engaged in any form of
general solicitation or general advertising (within the meaning of
Regulation D under the Securities Act) in connection with the offer or sale
of any of the Securities.
(w) Employees. Neither NM nor any Subsidiary has any collective
bargaining arrangements or agreements covering any of its employees, except
as set forth on Schedule 3(w) hereto. Except as set forth on Schedule 3(x)
hereto, neither NM nor any Subsidiary has any employment contract,
agreement regarding proprietary information, non-competition agreement,
non-solicitation agreement, confidentiality agreement, or any other similar
contract or restrictive covenant, relating to the right of any officer,
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employee or consultant to be employed or engaged by NM or such Subsidiary
required to be disclosed in the Commission Documents that is not so
disclosed. Since December 31, 2003, no officer, consultant or key employee
of NM or any Subsidiary whose termination, either individually or in the
aggregate, would be reasonably likely to have a Material Adverse Effect,
has terminated or, to the knowledge of NM, has any present intention of
terminating his or her employment or engagement with NM or any Subsidiary.
(x) Absence of Certain Developments. Except as provided on Schedule
3(x) hereto, since December 31, 2003, neither NM nor any Subsidiary has:
(i) discharged or satisfied any lien or encumbrance in excess of
$250,000 or paid any obligation or liability (absolute or contingent)
in excess of $250,000, other than current liabilities paid in the
ordinary course of business;
(ii) sold, assigned or transferred any other tangible assets, or
canceled any debts or claims, in each case in excess of $250,000,
except in the ordinary course of business;
(iii) sold, assigned or transferred any patent rights,
trademarks, trade names, copyrights, trade secrets or other intangible
assets or intellectual property rights in excess of $250,000;
(iv) suffered any material losses or waived any rights of
material value, whether or not in the ordinary course of business, or
suffered the loss of any material amount of prospective business;
(v) made any changes in employee compensation except in the
ordinary course of business and consistent with past practices;
(vi) suffered any material damage, destruction or casualty loss,
whether or not covered by insurance;
(vii) experienced any material problems with labor or management
in connection with the terms and conditions of their employment; or
(viii) entered into an agreement, written or otherwise, to take
any of the foregoing actions.
(y) ERISA. No liability to the Pension Benefit Guaranty Corporation
has been incurred with respect to any Plan by NM or any of its Subsidiaries
which is or would be materially adverse to NM and its Subsidiaries. The
execution and delivery of this Agreement and the issuance and sale of the
Securities will not involve any transaction which is subject to the
prohibitions of Section 406 of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA") or in connection with which a tax could be
imposed pursuant to Section 4975 of the Internal Revenue Code of 1986, as
amended, provided that, if any of the Purchasers, or any person or entity
that owns a beneficial interest in any of the Purchasers, is an "employee
pension benefit plan" (within the meaning of Section 3(2) of ERISA) with
respect to which NM is a "party in interest" (within the meaning of Section
3(14) of ERISA), the requirements of Sections 407(d)(5) and 408(e) of
ERISA, if applicable, are met. As used in this Section 3(y), the term
"Plan" shall mean an "employee pension benefit plan" (as defined in Section
3 of ERISA) which is or has been established or maintained, or to which
contributions are or have been made, by NM or any Subsidiary or by any
trade or business, whether or not incorporated, which, together with NM or
any Subsidiary, is under common control, as described in Section 414(b) or
(c) of the Code.
(z) Purchase for Its Own Account. NM will acquire the Logicorp Shares
as principal for its own account and not with a view to any distribution
thereof. (aa) Compliance with Securities Act. NM understands and agrees
that the Logicorp Shares have not been registered under the 1933 Act or any
applicable state securities laws, by reason of their issuance in a
transaction that does not require registration under the 1933 Act (based in
part on the accuracy of the representations and warranties of CG contained
herein), and that Logicorp Shares must be held indefinitely unless a
subsequent disposition is registered under the 1933 Act or any applicable
state securities laws or is exempt from such registration. (bb) Shares
Legend. The Logicorp Shares shall bear the following or similar legend:
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"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THESE
SHARES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH
SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAW OR AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO LOGICORP THAT SUCH
REGISTRATION IS NOT REQUIRED."
4. Representations and Warranties of Logicorp.
(a) Organization, Good Standing and Power. Logicorp is a corporation
duly incorporated, validly existing and in good standing under the laws of
the Province of Alberta and has the requisite corporate power to own, lease
and operate its properties and assets and to conduct its business as it is
now being conducted. Logicorp does not have any Subsidiaries or own
securities of any kind in any other entity except as set forth on Schedule
4(a) hereto. Logicorp and each such Subsidiary is duly qualified as a
foreign corporation to do business and is in good standing in every
jurisdiction in which the nature of the business conducted or property
owned by it makes such qualification necessary except for any
jurisdiction(s) (alone or in the aggregate) in which the failure to be so
qualified will not have a Material Adverse Effect.
(b) Authorization; Enforcement. Logicorp has the requisite corporate
power and authority to enter into and perform the Transaction Documents and
to issue and sell the Logicorp Shares in accordance with the terms hereof.
The execution, delivery and performance of the Transaction Documents by
Logicorp and the consummation by it of the transactions contemplated
thereby have been duly and validly authorized by all necessary corporate
action, and, except as set forth on Schedule 4(b), no further consent or
authorization of Logicorp, its Board of Directors or stockholders is
required. When executed and delivered by Logicorp, each of the Transaction
Documents shall constitute a valid and binding obligation of Logicorp
enforceable against Logicorp in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, reorganization,
moratorium, liquidation, conservatorship, receivership or similar laws
relating to, or affecting generally the enforcement of, creditor's rights
and remedies or by other equitable principles of general application.
(c) Capitalization. The authorized capital stock of Logicorp as of
August 3, 2004 is set forth on Schedule 4(c) hereto. All of the outstanding
shares of the Common Stock and any other outstanding security of Logicorp
have been duly and validly authorized. Except as set forth in this
Agreement and as set forth on Schedule 4(c) hereto, no shares of Common
Stock or any other security of Logicorp are entitled to preemptive rights
or registration rights and there are no outstanding options, warrants,
scrip, rights to subscribe to, call or commitments of any character
whatsoever relating to, or securities or rights convertible into, any
shares of capital stock of Logicorp. Furthermore, except as set forth in
this Agreement and as set forth on Schedule 4(c) hereto, there are no
contracts, commitments, understandings, or arrangements by which Logicorp
is or may become bound to issue additional shares of the capital stock of
Logicorp or options, securities or rights convertible into shares of
capital stock of Logicorp. Except for customary transfer restrictions
contained in agreements entered into by Logicorp in order to sell
restricted securities or as provided on Schedule 4(c) hereto, Logicorp is
not a party to or bound by any agreement or understanding granting
registration or anti-dilution rights to any person with respect to any of
its equity or debt securities. Except as set forth on Schedule 4(c),
Logicorp is not a party to, and it has no knowledge of, any agreement or
understanding restricting the voting or transfer of any shares of the
capital stock of Logicorp.
(d) Issuance of Securities. The Logicorp Shares to be issued at the
Closing have been duly authorized by all necessary corporate action and,
when paid for and issued in accordance with the terms hereof, the Logicorp
Shares will be validly issued, fully paid and nonassessable and free and
clear of all liens, encumbrances and rights of refusal of any kind and the
holders shall be entitled to all rights accorded to a holder of Logicorp
Common Stock.
8
(e) No Conflicts. The execution, delivery and performance of the
Transaction Documents by Logicorp and the consummation by Logicorp of the
transactions contemplated hereby and thereby, and the transfer of the
Logicorp Shares as contemplated hereby, do not and will not (i) violate or
conflict with any provision of Logicorp's Articles of Incorporation (the
"Articles") or Bylaws (the "Bylaws"), each as amended to date, or any
Subsidiary's comparable charter documents, (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or
both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement,
mortgage, deed of trust, indenture, note, bond, license, lease agreement,
instrument or obligation to which Logicorp or any of its Subsidiaries is a
party or by which Logicorp or any of its Subsidiaries' respective
properties or assets are bound, or (iii) result in a violation of any
federal, state, local or foreign statute, rule, regulation, order, judgment
or decree (including federal and state securities laws and regulations)
applicable to Logicorp or any of its Subsidiaries or by which any property
or asset of Logicorp or any of its Subsidiaries are bound or affected,
except, in all cases, for such conflicts, defaults, terminations,
amendments, acceleration, cancellations and violations as would not,
individually or in the aggregate, have a Material Adverse Effect (other
than violations pursuant to clauses (i) or (iii) (with respect to federal
and state securities laws)). Neither Logicorp nor any of its Subsidiaries
is required under federal, state, foreign or local law, rule or regulation
to obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency in order for it to
execute, deliver or perform any of its obligations under the Transaction
Documents or issue and sell the Securities in accordance with the terms
hereof (other than any filings, consents and approvals which may be
required to be made by Logicorp under applicable state and federal
securities laws, rules or regulations or any registration provisions
provided in the Registration Rights Agreement).
(f) No Undisclosed Liabilities. Except as disclosed on Schedule 4(f)
hereto, since December 31, 2003, neither Logicorp nor any of its
Subsidiaries has incurred any liabilities, obligations, claims or losses
(whether liquidated or unliquidated, secured or unsecured, absolute,
accrued, contingent or otherwise) other than those incurred in the ordinary
course of Logicorp's or its Subsidiaries respective businesses or which,
individually or in the aggregate, are not reasonably likely to have a
Material Adverse Effect.
(g) Indebtedness. Schedule 4(g) hereto sets forth as of the date
hereof all outstanding secured and unsecured Indebtedness of Logicorp or
any Subsidiary, or for which Logicorp or any Subsidiary has commitments.
For the purposes of this Agreement, "Indebtedness" shall mean (a) any
liabilities for borrowed money or amounts owed in excess of $300,000 (other
than trade accounts payable incurred in the ordinary course of business),
(b) all guaranties, endorsements and other contingent obligations in
respect of Indebtedness of others, whether or not the same are or should be
reflected in Logicorp's balance sheet (or the notes thereto), except
guaranties by endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business; and
(c) the present value of any lease payments in excess of $25,000 due under
leases required to be capitalized in accordance with GAAP. Neither Logicorp
nor any Subsidiary is in default with respect to any Indebtedness.
(h) Title to Assets. Each of Logicorp and the Subsidiaries has good
and valid title to all of its real and personal property reflected in the
Commission Documents, free and clear of any mortgages, pledges, charges,
liens, security interests or other encumbrances, except for those indicated
on Schedule 4(h) hereto or such that, individually or in the aggregate, do
not cause a Material Adverse Effect. All said leases of Logicorp and each
of its Subsidiaries are valid and subsisting and in full force and effect.
9
(i) Actions Pending. There is no action, suit, claim, investigation,
arbitration, alternate dispute resolution proceeding or other proceeding
pending or, to the knowledge of Logicorp, threatened against Logicorp or
any Subsidiary which questions the validity of this Agreement or any of the
other Transaction Documents or any of the transactions contemplated hereby
or thereby or any action taken or to be taken pursuant hereto or thereto.
Except as set forth on Schedule 4(i) hereto, there is no action, suit,
claim, investigation, arbitration, alternate dispute resolution proceeding
or other proceeding pending or, to the knowledge of Logicorp, threatened
against or involving Logicorp, any Subsidiary or any of their respective
properties or assets, which individually or in the aggregate, would
reasonably be expected, if adversely determined, to have a Material Adverse
Effect. There are no outstanding orders, judgments, injunctions, awards or
decrees of any court, arbitrator or governmental or regulatory body against
Logicorp or any Subsidiary or any officers or directors of Logicorp or
Subsidiary in their capacities as such, which individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
(j) Compliance with Law. The business of Logicorp and the Subsidiaries
has been and is presently being conducted in accordance with all applicable
federal, state and local governmental laws, rules, regulations and
ordinances, except as set forth in the Commission Documents or on Schedule
4(j) hereto or such that, individually or in the aggregate, the
noncompliance therewith could not reasonably be expected to have a Material
Adverse Effect. Logicorp and each of its Subsidiaries have all franchises,
permits, licenses, consents and other governmental or regulatory
authorizations and approvals necessary for the conduct of its business as
now being conducted by it unless the failure to possess such franchises,
permits, licenses, consents and other governmental or regulatory
authorizations and approvals, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
(k) Taxes. Logicorp and each of the Subsidiaries has accurately
prepared and filed all federal, state and other tax returns required by law
to be filed by it, has paid or made provisions for the payment of all taxes
shown to be due and all additional assessments, and adequate provisions
have been and are reflected in the financial statements of Logicorp and the
Subsidiaries for all current taxes and other charges to which Logicorp or
any Subsidiary is subject and which are not currently due and payable.
Except as disclosed on Schedule 4(k) hereto, none of the federal income tax
returns of Logicorp or any Subsidiary have been audited by the Internal
Revenue Service. Logicorp has no knowledge of any additional assessments,
adjustments or contingent tax liability (whether federal or state) of any
nature whatsoever, whether pending or threatened against Logicorp or any
Subsidiary for any period, nor of any basis for any such assessment,
adjustment or contingency.
(l) Certain Fees. Except as set forth on Schedule 4(l) hereto,
Logicorp has not employed any broker or finder or incurred any liability
for any brokerage or investment banking fees, commissions, finders'
structuring fees, financial advisory fees or other similar fees in
connection with the Transaction Documents.
(m) Disclosure. To the best of Logicorp's knowledge, neither this
Agreement or the Schedules hereto nor any other documents, certificates or
instruments furnished to the Purchasers by or on behalf of Logicorp or any
Subsidiary in connection with the transactions contemplated by this
Agreement contain any untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements made herein or
therein, in the light of the circumstances under which they were made
herein or therein, not misleading.
(n) Operation of Business. Except as set forth on Schedule 4(n)
hereto, Logicorp and each of the Subsidiaries owns or possesses the rights
to all patents, trademarks, domain names (whether or not registered) and
any patentable improvements or copyrightable derivative works thereof,
10
websites and intellectual property rights relating thereto, service marks,
trade names, copyrights, licenses and authorizations which are necessary
for the conduct of its business as now conducted without any conflict with
the rights of others.
(o) Environmental Compliance. Logicorp and each of its Subsidiaries
have obtained all material approvals, authorization, certificates,
consents, licenses, orders and permits or other similar authorizations of
all governmental authorities, or from any other person, that are required
under any Environmental Laws. "Environmental Laws" shall mean all
applicable laws relating to the protection of the environment including,
without limitation, all requirements pertaining to reporting, licensing,
permitting, controlling, investigating or remediating emissions,
discharges, releases or threatened releases of hazardous substances,
chemical substances, pollutants, contaminants or toxic substances,
materials or wastes, whether solid, liquid or gaseous in nature, into the
air, surface water, groundwater or land, or relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of hazardous substances, chemical substances, pollutants,
contaminants or toxic substances, material or wastes, whether solid, liquid
or gaseous in nature. To the best of Logicorp's knowledge, Logicorp has all
necessary governmental approvals required under all Environmental Laws as
necessary for Logicorp's business or the business of any of its
subsidiaries. To the best of Logicorp's knowledge, Logicorp and each of its
subsidiaries are also in compliance with all other limitations,
restrictions, conditions, standards, requirements, schedules and timetables
required or imposed under all Environmental Laws. Except for such instances
as would not individually or in the aggregate have a Material Adverse
Effect, there are no past or present events, conditions, circumstances,
incidents, actions or omissions relating to or in any way affecting
Logicorp or its subsidiaries that violate or may violate any Environmental
Law after the Closing Date or that may give rise to any environmental
liability, or otherwise form the basis of any claim, action, demand, suit,
proceeding, hearing, study or investigation (i) under any Environmental
Law, or (ii) based on or related to the manufacture, processing,
distribution, use, treatment, storage (including without limitation
underground storage tanks), disposal, transport or handling, or the
emission, discharge, release or threatened release of any hazardous
substance.
(p) Books and Records; Internal Accounting Controls. The records and
documents of Logicorp and its Subsidiaries accurately reflect in all
material respects the information relating to the business of Logicorp and
the Subsidiaries, the location and collection of their assets, and the
nature of all transactions giving rise to the obligations or accounts
receivable of Logicorp or any Subsidiary. Logicorp and each of its
Subsidiaries maintain a system of internal accounting controls sufficient,
in the judgment of the Logicorp board of directors, to provide reasonable
assurance that (i) transactions are executed in accordance with
management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
asset accountability, (iii) access to assets is permitted only in
accordance with management's general or specific authorization and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate actions are taken with respect to any
differences.
(q) Material Agreements. Except for the Transaction Documents (with
respect to clause (i) only), as disclosed in the Commission Documents or as
set forth on Schedule 4(q) hereto, or as would not be reasonably likely to
have a Material Adverse Effect, (i) Logicorp and each of its Subsidiaries
have performed all obligations required to be performed by them to date
under any written or oral contract, instrument, agreement, commitment,
11
obligation, plan or arrangement, filed or required to be filed with the
Commission (the "Material Agreements"), (ii) neither Logicorp nor any of
its Subsidiaries has received any notice of default under any Material
Agreement and, (iii) to the best of Logicorp's knowledge, neither Logicorp
nor any of its Subsidiaries is in default under any Material Agreement now
in effect.
(r) Transactions with Affiliates. Except as set forth on Schedule 4(r)
hereto and in the Commission Documents, there are no loans, leases,
agreements, contracts, royalty agreements, management contracts or
arrangements or other continuing transactions between (a) Logicorp, any
Subsidiary or any of their respective customers or suppliers on the one
hand, and (b) on the other hand, any officer, employee, consultant or
director of Logicorp, or any of its Subsidiaries, or any person owning at
least 5% of the outstanding capital stock of Logicorp or any Subsidiary or
any member of the immediate family of such officer, employee, consultant,
director or stockholder or any corporation or other entity controlled by
such officer, employee, consultant, director or stockholder, or a member of
the immediate family of such officer, employee, consultant, director or
stockholder which, in each case, is required to be disclosed in the
Commission Documents or in Logicorp's most recently filed definitive proxy
statement on Schedule 14A, that is not so disclosed in the Commission
Documents or in such proxy statement.
(s) Employees. Neither Logicorp nor any Subsidiary has any collective
bargaining arrangements or agreements covering any of its employees, except
as set forth on Schedule 4(s) hereto. Except as set forth on Schedule 4(s)
hereto, neither Logicorp nor any Subsidiary has any employment contract,
agreement regarding proprietary information, non-competition agreement,
non-solicitation agreement, confidentiality agreement, or any other similar
contract or restrictive covenant, relating to the right of any officer,
employee or consultant to be employed or engaged by Logicorp or such
Subsidiary required to be disclosed in the Commission Documents that is not
so disclosed. Since December 31, 2003, no officer, consultant or key
employee of Logicorp or any Subsidiary whose termination, either
individually or in the aggregate, would be reasonably likely to have a
Material Adverse Effect, has terminated or, to the knowledge of Logicorp,
has any present intention of terminating his or her employment or
engagement with Logicorp or any Subsidiary.
(t) Absence of Certain Developments. Except as provided on Schedule
4(u) hereto, since December 31, 2003, neither Logicorp nor any Subsidiary
has:
(i) discharged or satisfied any lien or encumbrance in excess of
$250,000 or paid any obligation or liability (absolute or contingent)
in excess of $250,000, other than current liabilities paid in the
ordinary course of business;
(ii) sold, assigned or transferred any other tangible assets, or
canceled any debts or claims, in each case in excess of $250,000,
except in the ordinary course of business;
(iii) sold, assigned or transferred any patent rights,
trademarks, trade names, copyrights, trade secrets or other intangible
assets or intellectual property rights in excess of $250,000;
(iv) suffered any material losses or waived any rights of
material value, whether or not in the ordinary course of business, or
suffered the loss of any material amount of prospective business;
(v) made any changes in employee compensation except in the
ordinary course of business and consistent with past practices;
(vi) suffered any material damage, destruction or casualty loss,
whether or not covered by insurance;
(vii) experienced any material problems with labor or management
in connection with the terms and conditions of their employment; or
(viii) entered into an agreement, written or otherwise, to take
any of the foregoing actions.
6. Logicorp Closing Conditions. The obligation hereunder of Logicorp to
transfer the Logicorp Shares and consummate the transactions contemplated by
this Agreement is subject to the satisfaction or waiver, at or before the
12
Closing, of each of the conditions set forth below. These conditions are for
CG's sole benefit and may be waived by the Purchasers at any time in their sole
discretion.
(a) Accuracy of the NM Representations and Warranties. Each of the
representations and warranties of NM in this Agreement shall be true and
correct in all material respects as of the Closing Date, except for
representations and warranties that speak as of a particular date, which
shall be true and correct in all material respects as of such date.
(b) Performance by NM. NM shall have performed, satisfied and complied
in all material respects with all covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by
NM at or prior to the Closing Date.
(c) No Suspension, Etc. Trading in the NM Common Stock shall not have
been suspended by the Commission or the OTC Bulletin Board (except for any
suspension of trading of limited duration agreed to by NM, which suspension
shall be terminated prior to the Closing), and, at any time prior to the
Closing Date, trading in securities generally as reported by Bloomberg
Financial Markets ("Bloomberg") shall not have been suspended or limited,
or minimum prices shall not have been established on securities whose
trades are reported by Bloomberg, or on the New York Stock Exchange, nor
shall a banking moratorium have been declared either by the United States
or New York State authorities.
(d) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated
or endorsed by any court or governmental authority of competent
jurisdiction which prohibits the consummation of any of the transactions
contemplated by this Agreement.
(e) No Proceedings or Litigation. No action, suit or proceeding before
any arbitrator or any governmental authority shall have been commenced, and
no investigation by any governmental authority shall have been threatened,
against NM or any Subsidiary, or any of the officers, directors or
affiliates of NM or any Subsidiary seeking to restrain, prevent or change
the transactions contemplated by this Agreement, or seeking damages in
connection with such transactions.
(f) Working Capital Contribution. At or prior to the Closing, NM shall
have delivered $1.1 million to Logicorp for working capital purposes.
(h) Secretary's Certificate. NM shall have delivered to CG a
secretary's certificate, dated as of the Closing Date, as to (i) the
resolutions adopted by the Board of Directors approving the transactions
contemplated hereby, (ii) the Articles, (iii) the Bylaws, each as in effect
at the Closing, and (iv) the authority and incumbency of the officers of NM
executing the Transaction Documents and any other documents required to be
executed or delivered in connection therewith.
(i) Officer's Certificate. On the Closing Date, NM shall have
delivered CG a certificate signed by an executive officer on behalf of NM,
dated as of the Closing Date, confirming the accuracy of NM's
representations, warranties and covenants as of the Closing Date and
confirming the compliance by NM with the conditions precedent set forth in
paragraphs (b) and (c) of this Section 6.
(j) Material Adverse Effect. No Material Adverse Effect shall have
occurred at or before the Closing Date.
(k) Ancillary Agreements. On the Closing Date, NM shall have executed
and delivered the Shareholders Agreement and Earnout Agreement to CG.
7. NM Closing Conditions.
(a) [Litigation Release. Each of [the two Logicorp founders] shall
have released Logicorp from any past liability resulting from such person's
13
employment at Logicorp.] CG will provide an indemnity with respect to the
third shareholder, Xxxx Xxxxxxxxxx and the ongoing lawsuit between
Logicorp/GC vs. Xxxx Johansenn, Xxxx Johannseen family trust, __________
Xxxxxxxxxx, (Fred's Wife). Any settlement and costs in favor or against
Logicorp and or CG with respect to this matter will be the benefit or
liability of CG. More input from CG's litigation counsel on this matter]
(b) Accuracy of the Logicorp Representations and Warranties. Each of
the representations and warranties of Logicorp in this Agreement shall be
true and correct in all material respects as of the Closing Date, except
for representations and warranties that speak as of a particular date,
which shall be true and correct in all material respects as of such date.
(c) Performance by Logicorp. Logicorp shall have performed, satisfied
and complied in all material respects with all covenants, agreements and
conditions required by this Agreement to be performed, satisfied or
complied with by Logicorp at or prior to the Closing Date.
(d) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated
or endorsed by any court or governmental authority of competent
jurisdiction which prohibits the consummation of any of the transactions
contemplated by this Agreement.
(e) No Proceedings or Litigation. No action, suit or proceeding before
any arbitrator or any governmental authority shall have been commenced, and
no investigation by any governmental authority shall have been threatened,
against Logicorp or any Subsidiary, or any of the officers, directors or
affiliates of Logicorp or any Subsidiary seeking to restrain, prevent or
change the transactions contemplated by this Agreement, or seeking damages
in connection with such transactions.
(f) Stock Certificate Delivery. At or prior to the Closing, or within
30 days Logicorp shall have delivered to NM a certificate representing the
Logicorp Shares.
(g) Secretary's Certificate. Logicorp shall have delivered to NM a
secretary's certificate, dated as of the Closing Date, as to (i) the
resolutions adopted by the Board of Directors approving the transactions
contemplated hereby, (ii) the Articles, (iii) the Bylaws, each as in effect
at the Closing, and (iv) the authority and incumbency of the officers of
Logicorp executing the Transaction Documents and any other documents
required to be executed or delivered in connection therewith.
(h) Officer's Certificate. On the Closing Date, Logicorp shall have
delivered NM a certificate signed by an executive officer on behalf of NM,
dated as of the Closing Date, confirming the accuracy of Logicorp's
representations, warranties and covenants as of the Closing Date and
confirming the compliance by Logicorp with the conditions precedent set
forth in paragraphs (b) and (c) of this Section 7 as of the Closing Date.
(i) Material Adverse Effect. No Material Adverse Effect shall have
occurred at or before the Closing Date.
(j) Ancillary Agreements. On the Closing Date, CG shall have executed
and delivered the Shareholders Agreement and Earnout Agreement to NM.
8. NM Covenants. NM covenants and agrees with CG as follows:
(a) Reporting Requirements. From the date of this Agreement and until
two (2) years after the Closing Date, NM will (v) cause its Common Stock to
continue to be registered under Section 12(b) or 12(g) of the 1934 Act, (x)
comply in all respects with its reporting and filing obligations under the
1934 Act, (y) comply with all reporting requirements that are applicable to
an issuer with a class of shares registered pursuant to Section 12(b) or
14
12(g) of the 1934 Act, as applicable, and (z) comply with all requirements
related to any registration statement filed pursuant to this Agreement. NM
will use its best efforts not to take any action or file any document
(whether or not permitted by the 1933 Act or the 1934 Act or the rules
thereunder) to terminate or suspend such registration or to terminate or
suspend its reporting and filing obligations under said acts until two (2)
years after the Closing Date.
(b) Shareholders Agreement. NM agrees that until all amounts due and
payable under the Promissory Note have been paid, and while any existing
personal guarantees remain in place with respect to any banking and or
supplier debts of Logicorp, NM shall vote all of its Logicorp Shares in
accordance with a Shareholders Agreement entered into as of the Closing
Date between CG and NM in which NM agrees to vote all of its Logicorp
shares to elect the directors and appoint the officers nominated by CG and
to approve any action proposed by Logicorp directors except for any action
(i) involving a merger of Logicorp with a third party or any sale of all or
substantially all of Logicorp's assets or (ii) which materially and
adversely affects NM in a disproportionate manner from other shareholders
(i.e., in a disproportionate manner caused by something other than
ownership of approximately 51% of the outstanding shares of Logicorp).
9. CG Covenants.
(a) Banking and Supplier Relationships. NM agrees that until all
amounts due and payable under the Promissory Note have been paid, and while
any existing personal guarantees remain in place with respect to any
banking and or supplier debts of Logicorp, CG shall cause Logicorp
management maintain all banking and supplier relationships and CG shall
maintain any corporate guarantees regarding any Logicorp debt and shall use
its best efforts to cause existing personal guarantees to remain in effect.
10. Indemnification. Each party ("Indemnifying Party") agrees to indemnify,
hold harmless, reimburse and defend the other party and its officers, directors,
agents, affiliates, control persons, and principal shareholders ("Indemnified
Persons"), against any claim, cost, expense, liability, obligation, loss or
damage (including reasonable legal fees) of any nature, incurred by or imposed
upon the Indemnified Person which results, arises out of or is based upon (i)
any material misrepresentation by the Indemnifying Party or breach of any
warranty by Indemnifying Party in this Agreement or in any Exhibits or Schedules
attached hereto, or other agreement delivered pursuant hereto; or (ii) after any
applicable notice and/or cure periods, any breach or default in performance by
the Indemnifying Party of any covenant or undertaking to be performed by
Indemnifying Party hereunder, or any other agreement entered into by
Indemnifying Party and Indemnified Person relating hereto.
11. Rights upon Default. NM agrees that upon failure to repay the
Promissory Note when due and payable, Logicorp may redeem or CG may cause
Logicorp to redeem the % back of the company which is equivalent to the amount
of the outstanding promissory note. For example if none of the one million
dollar note is paid then NM will surrender back to CG 25% of the total Logicorp
company and its subsidiaries, if five hundred thousand of the note is not paid
the NM will surrender back 12.5% of the total Logicorp company and its
subsidiaries.
12. Miscellaneous.
(a) Notices. All notices, demands, requests, consents, approvals, and
other communications required or permitted hereunder shall be in writing
and, unless otherwise specified herein, shall be (i) personally served,
(ii) deposited in the mail, registered or certified, return receipt
requested, postage prepaid, (iii) delivered by reputable air courier
service with charges prepaid, or (iv) transmitted by hand delivery,
telegram, or facsimile, addressed as set forth below or to such other
address as such party shall have specified most recently by written notice.
15
Any notice or other communication required or permitted to be given
hereunder shall be deemed effective (a) upon hand delivery or delivery by
facsimile, with accurate confirmation generated by the transmitting
facsimile machine, at the address or number designated below (if delivered
on a business day during normal business hours where such notice is to be
received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice
is to be received) or (b) on the second business day following the date of
mailing by express courier service, fully prepaid, addressed to such
address, or upon actual receipt of such mailing, whichever shall first
occur. The addresses for such communications shall be:
if to NM to: NewMarkets Technology, Inc.
00000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention:Chief Executive Officer
telecopier: (____) _________
with a copy by telecopier only to:
if to CG or Logicorp to:
Chell Group Corporation
123 0000 Xxxxxxx Xxx XX
Xxxxxxx XX, X0X 0X0
Attention: Chief Executive Officer
telecopier: (____) __________
with an additional copy by telecopier only to:
Xxxxxxxxxx & Xxxxx LLP
00000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxx Xxxxxxx, XX 00000
Attn : Xxxx X. Hong, Esq.,
telecopier: (000) 000-0000,
(c) Entire Agreement; Assignment. This Agreement and other documents
delivered in connection herewith represent the entire agreement between the
parties hereto with respect to the subject matter hereof and may be amended
only by a writing executed by both parties. Neither NM nor CG have relied
on any representations not contained or referred to in this Agreement and
the documents delivered herewith. No right or obligation of either party
shall be assigned by that party without prior notice to and the written
consent of the other party.
(d) Counterparts/Execution. This Agreement may be executed in any
number of counterparts and by the different signatories hereto on separate
counterparts, each of which, when so executed, shall be deemed an original,
but all such counterparts shall constitute but one and the same instrument.
This Agreement may be executed by facsimile signature and delivered by
facsimile transmission.
(e) Law Governing this Agreement. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York without
regard to principles of conflicts of laws. Any action brought by either
party against the other concerning the transactions contemplated by this
Agreement shall be brought only in the state courts of New York or in the
federal courts located in the state of New York. THE PARTIES AND THE
INDIVIDUALS EXECUTING THIS AGREEMENT AND OTHER AGREEMENTS REFERRED TO
HEREIN OR DELIVERED IN CONNECTION HEREWITH ON BEHALF OF THE COMPANY AGREE
TO SUBMIT TO THE JURISDICTION OF SUCH COURTS AND WAIVE TRIAL BY JURY. The
prevailing party shall be entitled to recover from the other party its
16
reasonable attorney's fees and costs. In the event that any provision of
this Agreement or any other agreement delivered in connection herewith is
invalid or unenforceable under any applicable statute or rule of law, then
such provision shall be deemed inoperative to the extent that it may
conflict therewith and shall be deemed modified to conform with such
statute or rule of law. Any such provision which may prove invalid or
unenforceable under any law shall not affect the validity or enforceability
of any other provision of any agreement.
(f) Specific Enforcement, Consent to Jurisdiction. NM and CG
acknowledge and agree that irreparable damage would occur in the event that
any of the provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached. It is accordingly
agreed that the parties shall be entitled to an injunction or injunctions
to prevent or cure breaches of the provisions of this Agreement and to
enforce specifically the terms and provisions hereof, this being in
addition to any other remedy to which any of them may be entitled by law or
equity. Subject to Section 12(e) hereof, each of NM, CG and any signator
hereto in his personal capacity hereby waives, and agrees not to assert in
any such suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction in New York of such court, that the suit,
action or proceeding is brought in an inconvenient forum or that the venue
of the suit, action or proceeding is improper. Nothing in this Section
shall affect or limit any right to serve process in any other manner
permitted by law.
(g) Equitable Adjustment. The Logicorp Shares and the purchase prices
thereof shall be equitably adjusted to offset the effect of stock splits,
stock dividends, and distributions of property or equity interests of NM
and CG to its shareholders.
(h) Denomination. All references to dollar or money amounts in this
Agreement shall refer to dollars of the United States of America.
[THIS SPACE INTENTIONALLY LEFT BLANK]
17
SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT
Please acknowledge your acceptance of the foregoing Stock Purchase
Agreement by signing and returning a copy to the undersigned whereupon it shall
become a binding agreement between us.
CG:
CHELL GROUP CORPORATION
a New York corporation
By:/s/ Xxxx Xxxxx
-------------------------------------
Name: Xxxx Xxxxxx
Title: Chief Executive Officer
Logicorp:
LOGICORP DATA SYSTEMS, LTD.
an Alberta corporation
By:/s/ Xxxx Xxxxx
-------------------------------------
Name: Xxxx Xxxxxx
Title: Chief Executive Officer
NM:
NEWMARKET TECHNOLOGY, INC.
a Nevada corporation
By:/s/Xxxxxx Xxxxxx
-------------------------------------
Name: Xxxxxx Xxxxxx
Title: Chief Executive Officer
18
