STOCK EXCHANGE AGREEMENT
THIS
STOCK EXCHANGE AGREEMENT (the
“Agreement”) is entered into this ___ day of August, 2006 by and among between
TRICELL, INC., a Nevada corporation (the “Company”), XXXXX XXXX, a United
Kingdom resident (“Xxxx”), XXXX XXXXXXX, a United Kingdom resident (“Xxxxxxx”),
XXXX XXXXXXX, a United Kingdom resident (“Sumnall”), XXXX XXXXXXX, a United
Kingdom resident (“Xxxxxxx”), (Reed, Pursell, Sumnall and Xxxxxxx shall be
collectively referred to as the “NJJ Shareholders” or individually as an “NJJ
Shareholder”).
WITNESSETH:
WHEREAS,
the Company is interested in acquiring 100% of the outstanding shares of NJJ
Holdings Limited, a United Kingdom company (“NJJ”), and the NJJ Shareholders are
interested in acquiring an equity interest in the Company in exchange for 100%
of their share ownership in NJJ, constituting all of the share ownership of
NJJ,
pursuant
to the terms and conditions described herein and for the consideration set
forth
herein;
and
WHEREAS,
NJJ owns all of the issued and outstanding capital stock of N2J Limited, a
United Kingdom company (“N2J”);
NOW,
THEREFORE, the parties hereby agree as follows:
1. Consideration
and Exchange of Shares.
(a) Transfer
of Shares.
The NJJ
Shareholders will, at the Closing, as hereinafter defined, assign, transfer
and
convey exclusively to Tricell one hundred thirty two (132) NJJ shares (the
“NJJ
Shares”), constituting 100% of the issued and outstanding capital shares of NJJ,
in exchange for the Purchase Price, as hereinafter defined, payable in the
manner provided in this Agreement. Each of the NJJ Shareholders holds thirty
three (33) shares of NJJ, and each NJJ Shareholder shall receive 25% of the
Purchase Price.
(b) Purchase
Price.
The
Purchase Price shall consist of a cash portion and an equity portion, as
provided in Sections 1(c) and 1(d), respectively.
(c) Cash
Portion of the Purchase Price.
The
cash portion of the purchase price shall be one million four hundred dollars
($1,400,000), payable three hundred fifty thousand dollars ($350,000) to each
of
the four NJJ Shareholders. Of the amount due to each of the NJJ Shareholders,
the Company will instruct the escrow agent with respect to the Company’s
proposed private placement to pay three hundred thirty seven thousand two
hundred fifty dollars ($337,250) to each of the NJJ Shareholders from the
proceeds of the Company’s proposed private placement, and the balance of twelve
thousand seven hundred fifty dollars ($12,750) by check from the Company within
two (2) business days after the Closing.
(d) Equity
Portion of the Purchase Price.
The
equity portion of the Purchase Price consisted of two hundred ten million
(210,000,000) shares (the “Tricell Shares”) of the common stock, par value $.001
per share (“Common Stock”) of the Company, which shares shall be issued and held
as follows:
(i) A
total
of ninety million (90,000,000) Tricell Shares shall be issued and delivered
to
the NJJ Shareholders, with twenty two million five hundred thousand (22,500,000)
Tricell Shares being delivered to each of the NJJ Shareholders. The Tricell
Shares issuable pursuant to this Section 1(d)(i) are referred to as the “Initial
Shares.”
(ii) A
total
of one hundred twenty million (120,000,000) Tricell Shares shall be issued
in
the names of the NJJ Shareholders and held by the Company subject to the
provisions of Section 3 of this Agreement, with thirty million (30,000,000)
Tricell Shares being issued to each of the NJJ Shareholders. The Tricell Shares
issuable pursuant to this Section 1(d)(ii) are referred to as the “Escrow
Shares.” At the Closing, each of the NJJ Shareholders shall execute and deliver
to the Company blank stock powers transferring the Escrow Shares to the
Company.
2. Restrictions
on Transfer.
(a) General
Restrictions.
(i) Each
NJJ
Shareholder acknowledges and agrees that:
(A) The
Tricell Shares are restricted securities, as defined by Rule 144 of the
Securities and Exchange Commission (the “Commission”) pursuant to the Securities
Act of 1933, as amended (the “Securities Act”), and he understands the meaning
of the term “restricted securities.” The certificates for the Tricell Shares
shall bear Tricell’s standard restricted stock legend as well as a legend to
reflect any restriction set forth in this Agreement.
(B) He
may
not sell, pledge, enlien, encumber or otherwise transfer (collectively,
“transfer”) any of the Tricell Shares except pursuant to an effective
registration statement under the Securities Act or an exemption from the
registration requirements thereof.
(C) He
is
acquiring the Tricell Shares for his own account and not with a view to the
sale
or distribution thereon.
(ii) Each
NJJ
Shareholder agrees that he will not sell any
shares of Common Stock owned by him, including all of the Tricell Shares, in
the
public market during the two (2) years following the Closing Date. The
restriction contained in this Section 2(a)(ii) shall apply to any transferee,
including any legatee or distributee, of the NJJ Shareholder This restriction
shall not, however, apply to shares issued pursuant to a stock option or
long-term incentive plans which may be approved by the Company’s compensation
committee provided that such committee is comprised of a majority of independent
directors.
(b) Additional
Restrictions on Transfer of the Initial Shares.
(i) Subject
to the restriction set forth in Section 2(a) of this Agreement, the NJJ
Shareholders shall have the right to sell or otherwise transfer their Initial
Shares, cumulatively, as follows, and they agree not to sell or otherwise
transfer any Initial Shares (except for the pledge of Initial Shares, which
is
not a prohibited transfer for purposes of this Section 2(b)(i)), except as
follows:
(A) 25%
of
each NJJ Shareholder’s shares may be sold commencing ten (10) months from the
date of this Agreement.
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(B) 25%
of
each NJJ Shareholder’s shares may be sold commencing twenty two (22) months from
the date of this Agreement.
(C) 25%
of
each NJJ Shareholder’s shares may be sold commencing thirty four (34) months
from the date of this Agreement.
(D) All
of
the NJJ Shareholder’s shares may be sold commencing forty six (46) months from
the date of this Agreement.
(ii) In
the
event of the death of any NJJ Shareholder or in the event that any NJJ
Shareholder shall be declared incompetent, the restrictions set forth in this
Section 2(b)(i) shall apply to such NJJ Shareholder’s legal representatives and
to his executors, administrators, heirs, legatees and devisees.
(c) Change
of Control.
(i) The
restrictions set forth in Section 2(b) of this Agreement shall terminate in
the
event of a Change of Control, as hereinafter defined. The restrictions set
forth
in Section 2(a) of this Agreement shall not be affected by a Change of
Control.
(ii) A
Change
of Control shall mean any of the following transactions except for transactions
described in Section 2(c)(iii):
(A) the
approval by the stockholders of the Company of a merger or consolidation of
the
Company into any other corporation, other than a merger or consolidation which
would result in the holders of the voting securities of the Company outstanding
immediately prior thereto continuing to own voting securities representing
fifty
percent (50%) or more of the total voting power represented by the voting
securities of the surviving entity outstanding immediately after such merger
or
consolidation; or
(B) any
approval by the stockholders of the Company of a plan of complete liquidation
of
the Company or an agreement for the sale or disposition by the Company of all
or
substantially all of the Company assets; or
(C) any
“person” (as that term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended) becoming the “beneficial owner” (as defined in
Rule 13d-3 under the Securities Exchange Act of 1934, as amended), directly
or
indirectly, of securities of Tricell representing 50% or more of the total
voting power represented by Tricell’s then outstanding voting securities;
or
(D) a
change
in the composition of the Company’s board of directors, as a result of which
fewer than a majority of the directors are Incumbent Directors. “Incumbent
Directors” shall mean directors who either: (a) are directors of the Company as
of the date of this Agreement; or (b) are elected or nominated for election
to
the Company’s board of directors with the affirmative votes of at least a
majority of those directors who either (x) are directors of the Company on
the
date of this Agreement or (y) whose election or nomination was not in connection
with any transaction described in Sections 2(c)(ii)(A), 2(c)(ii)(B) and
2(c)(ii)(C) of this Agreement, or in connection with an actual or threatened
proxy contest relating to the election of directors of the
Company.
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(iii) Notwithstanding
any provisions of Section 2(c)(ii), a Change of Control shall not occur as
a
result of (x) a private placement by the Company of its securities or (y) by
the
sale by a purchaser in the private placement of his or its shares or (z) by
a
public offering by the Company of its securities.
(d) No
Short Sale.
As long
as any NJJ Shareholders owns any Tricell Shares, including any Escrow Shares
which have not been transferred to the Company pursuant to Section 3 of this
Agreement, no NJJ Shareholder shall:
(i) Engage
in
any short sale, including a so-called sale against the box, of the Common Stock,
or
(ii) Lend
any
shares of Common Stock, or permit any shares of Common Stock to be used, for
the
purpose of enabling any other person to engage in any short sale or sale against
the box with respect to the Common Stock.
(e) Distribution
of N2J Net Profits.
Subsequent to the Closing, NJJ shall distribute to the NJJ Shareholders, in
equal shares, the net profit of N2J which shall have accrued through the day
preceding the Closing Date. Such net profits shall be paid from the proceeds
of
the accounts receivable generated through the day preceding the Closing Date.
Net profits shall mean the income before income taxes of N2J, determined in
accordance with generally accepted accounting principles as in effect in the
United Kingdom; provided, however, that in the event that N2J, NJJ or the
Company shall incur an income, gross receipts, excise or other tax for a period
subsequent to the Closing Date on any of the profits that are payable to the
NJJ
Shareholders on or after the Closing Date, then such taxes shall be deducted
in
determining the net profit of N2J for the period ended the day prior to the
Closing Date. The determination of N2J’s net profits shall be made on a
quarterly basis in connection with the preparation of the Company’s Form 10-Q or
Form 10-K, as the case may be, and shall be approved by the Company’s audit
committee, and, if the audit committee deems it necessary, by an independent
accounting firm engaged by the audit committee for such purpose. For reference
purposes only, the estimated net profits of N2J through July 31, 2006, were
approximately £6.6 GBP.
3. Purchase
of the Escrow Shares.
(a) Determination
of Net Profit.
(i) The
net
profit of N2J shall be determined for each of the Covered Periods. The Covered
Periods shall mean the period from the Closing Date to September 30, 2006,
the
quarters ending December 31, 2006, March 31, 2007 and June 30, 2006 and the
period from July 1, 2007 until the first anniversary of the Closing
Date.
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(ii) Net
profit shall mean the income before income taxes of N2J determined in accordance
with United States generally accepted accounting principles as reflected in
the
Company’s filings with the Securities and Exchange Commission (“GAAP”). A
determination of the net profit shall be made by the Company, subject to a
review by an independent accountant engaged by the Company and subject to the
approval of the Company’s Audit Committee. Such determination shall be final,
binding and conclusive on all parties. The accountant that is engaged to review
the computation pursuant to this Section 3(a)(ii) may be the Company’s regularly
engaged independent registered accounting firm if such firm is able to perform
such services without affecting its independence status. The determination
of
net profit shall be made in connection with the preparation of the Company’s
Form 10-QSB or Form 10-KSB ending on the last date of the Covered Period, except
that the net profit for the fourth of the Covered Periods shall be made in
connection with the preparation of the Company’s for the quarter ended September
30, 2006. Net profit shall be in United States dollars, and any conversion
of
Sterling or any other currency into United States dollars shall be made in
the
manner provided in the Company’s filings with the Commission.
(b) Purchase
of the Escrow Shares.
(i) The
Company shall purchase Escrow Shares from the NJJ Shareholders at a purchase
price per share (the “Purchase Price”) equal to twenty cents ($.20) per share,
subject to adjustment as hereinafter provided. The number of Escrow Shares
being
purchased shall be determined by dividing the Payment Amount by the Purchase
Price. Such purchase shall be made in the manner as hereinafter provided in
this
Section 3(b).
(ii) Within
five (5) business days after the determination of net profits for a Covered
Period is made, the Company shall make a payment in the total amount (the
“Payment Amount”) equal to the lesser of:
(A) Seventy
percent (70%) of net profit for the applicable Covered Period; or
(B) The
amount by which twenty four million dollars ($24,000,000) exceeds all payment
previously made pursuant to this Section 3(b)(i).
(iii) In
no
event shall the total of the payments made pursuant to this Section 3(b) exceed
twenty four million dollars ($24,000,000). Any Payment Amount which is for
a
fraction of a dollar shall be rounded to the next higher whole
dollar.
(iv) The
payment with respect to first Covered Period shall be deposited by the Company
with a bank or other recognized institutional entity authorized by law to serve
as an escrow agent designated by the NJJ Shareholders and reasonably acceptable
to the Company (the “Escrow Agent”), and the payment with respect to the
remaining Covered Periods shall be paid by the Company to the NJJ Shareholders,
with twenty five percent (25%) of the total payments being paid to each of
the
NJJ Shareholders. If the payment with respect to the second Covered Period
would
be payable prior to six (6) months and one (1) day after the Closing Date,
such
payment shall be made to the Escrow Agent and not directly to the NJJ
Shareholders. All payments made pursuant to this Section 3(b) shall be made
on
account of the purchase of Escrow Shares. On each date on which a payment is
made to the NJJ Shareholders, whether by the Escrow Agent of by the Company,
the
Company shall cancel the Escrow Shares which have been purchased by the Company.
All Escrow Shares shall be deemed to be cancelled upon payment by the Escrow
Agent or the Company of the Purchase Price of such Escrow Shares, regardless
of
whether the shares have been formally delivered to the Company’s transfer agent
for cancellation.
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(v) The
payments held by the Escrow Agent shall be held until six (6) months and one
(1)
day after the Closing Date, at which time the Escrow Agent shall pay to each
NJJ
Shareholder twenty five percent (25%) of the amount held by it to each of the
NJJ Shareholders.
(vi) The
payments to be made to the Escrow Agent shall be paid to the Escrow Agent
pursuant to an escrow agreement among the Company, the NJJ Shareholders and
the
Escrow Agent satisfactory in form and substance to all parties. All funds held
by the Escrow Agent shall be invested in debt instruments that are issued by
or
guaranteed by the Government of the United Kingdom or, if the Escrow Agent
is a
bank, in interest-bearing securities issued by the Escrow Agent. To the extent
that the income generated from the funds held in escrow are sufficient to pay
the reasonable fees and expenses of the Escrow Agent, such funds shall be used
for such purpose. To the extent that such income is not sufficient to pay the
reasonable fees and expenses of the Escrow Agent, the Company, on the one hand,
and the NJJ Shareholders, on the other hand, shall each pay fifty percent (50%)
of the remaining fees and expenses of the Escrow Agent. All income generated
by
the funds and not used to pay the fees and expenses of the Escrow Agent shall
be
held for the account of the Company and shall be paid to the Company at such
time as the payment is made to the NJJ Shareholders pursuant to Section 3(b)(v)
or 3(d)(iii) is made, at which time the escrow agreement shall be
terminated.
(vii) The
Purchase Price per share, together with the number of Escrow Shares, shall
be
subject to adjustment in accordance with generally accepted accounting
principles in the connection with any stock dividend, split or other
distribution of shares of Common Stock payable with respect to the Common Stock,
any reverse split or other combination of shares and any recapitalization or
similar transaction. Thus, after giving effect to the contemplated one-for-eight
reverse split, (i) the Purchase Price would be one and 60/100 dollars ($1.60)
per share, (ii) the number to Escrow Shares would be fifteen million
(15,000,000) shares, and (iii) the number of Initial Shares would be eleven
million two hundred fifty thousand (11,250,000) shares.
(c) Right
to Vote the Escrow Shares.
As long
as the Escrow Shares are held in escrow, the NJJ Shareholders shall be entitled
to vote the Escrow Shares. The right to vote shall terminate with respect to
any
Escrow Shares which become cancelled on the date that such Escrow Shares become
cancelled, regardless of whether the stock certificate shall have been
physically cancelled or delivered to the transfer agent for
cancellation.
(d) Limitation
on Purchase of Escrow Shares.
(i) Notwithstanding
anything to the contrary set forth in this Section 3, the Company’s obligation
to purchase any Escrow Shares shall be limited to the extent that the Company
may not purchase Escrow Shares pursuant to applicable law, it being understood
that the Company shall not be required to purchase any Escrow Shares to the
extent that such purchase is prohibited by law. In this connection, the Escrow
Agent shall not make any payment pursuant to the Escrow Agreement to the extent
that the Escrow Agent is advised by the Company that such payment is prohibited
by law. The Escrow Agent shall hold the funds paid by the Company pursuant
to
Sections 3(b)(iv) and 3(d)(ii) of this Agreement as provided in Section
3(d)(iii) of this Agreement.
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(ii) If,
and
to the extent that, at a time when a payment is to be made by the Company
directly to the NJJ Shareholders pursuant to Section 3(b)(iv) of this Agreement
the Company is prohibited from purchasing any Escrow Shares pursuant to Section
3(d)(i) of this Agreement, the Company shall make the payment to the Escrow
Agent in lieu of paying the NJJ Shareholders to the extent that such payment
is
prohibited.
(iii) To
the
extent that payments are made to the Escrow Agent or continue to be held by
the
Escrow Agent as a result of the inability of the Company to purchase Escrow
Shares, as provided in Sections 3(d)(i) and 3(d)(ii), the Escrow Agent shall
continue to hold such shares until the earlier of:
(A) The
date
on which the Company shall advise the Escrow Agent that payment may be made
to
the NJJ Shareholders to purchase their Escrow Shares, in which event (I) the
Escrow Agent shall pay to the NJJ Shareholders the amount which the Company
advises the Escrow Agent may be paid, (II) the Company shall cancel the Escrow
Shares that are purchased with the funds paid by the Escrow Agent, (III) the
remaining funds shall be returned to the Company and (IV) the remaining Escrow
Shares shall be delivered to the NJJ Shareholders.
(B) Eighteen
(18) months from the Closing Date, at which time (I) the funds held by the
Escrow Agent shall be returned to the Company and (II) the unpurchased Escrow
Shares shall be delivered to the NJJ Shareholders.
(e) Distribution
of Escrow Shares.
If the
Company shall not have purchased all of the Escrow Shares pursuant to Section
3(b) of this Agreement or made payments to the Escrow Agent pursuant to Section
3(d) of this Agreement, the Company shall deliver to the NJJ Shareholders,
within five (5) business days after the determination of net profit for the
fifth Covered Period, all Escrow Shares for which payment has not been made.
The
number of shares to be so delivered shall be equal to the amount by which twenty
four million dollars ($24,000,000) exceed the total payments made pursuant
to
Sections 3(b) and 3(d) of this Agreement divided by the Purchase Price in effect
on such date, and the Company shall have no right or obligation to purchase
any
such Escrow Shares. Such Escrow Shares shall be distributed equally to the
NJJ
Shareholders.
(f) No
Fractional Shares.
No
fractional shares shall be purchased by the Company. In the event that the
number of shares being purchased is a fractional share. If the number of shares
being purchased is not divisible by four (4), the Company and the NJJ
Shareholders shall jointly determine the allocation of the shares remaining
after the number of shares to be purchased is divided by four (4).
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(g) No
Right to Encumber Escrow Shares.
The NJJ
Shareholders shall take all action necessary to keep the Escrow Shares free
and
clear from any liens or encumbrances.
4. Closing.
The
sale by the NJJ Shareholders of the NJJ Shares pursuant to this Agreement shall
take at a closing (the “Closing”) which shall take place, subject to the
satisfaction of the closing conditions set forth in Section 5 of this Agreement,
contemporaneously with the completion by the Company of its proposed private
placement at the offices of Sichenzia Xxxx Xxxxxxxx Xxxxxxx LLP, 0000 Xxxxxx
xx
xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000. The date on which the Closing takes
place is referred to as the Closing Date.
5. Conditions
Precedent to Closing.
(a) Conditions
to Obligations of the Company.
The
obligations of the Company under this Agreement are subject to the fulfillment
on or prior to Closing of the following conditions:
(i) Representations
and Warranties Correct; Performance of Obligations.
The
representations and warranties made by the NJJ Shareholders in this Agreement
shall be true and correct in all material respects when made, and shall be
true
and correct in all material respects on the Closing Date with the same force
and
effect as if they had been made on and as of Closing the Closing Date. NJJ
Shareholders shall have performed in all material respects all obligations
and
conditions herein required to be performed or observed by them pursuant to
this
Agreement.
(ii) Approval
by Board of Directors or Stockholders.
This
Agreement shall have been approved by the board of directors of the Company.
Stockholder approval shall not be required if this Agreement is approved by
a
board of directors consisting of at least a majority of disinterested directors.
For purpose of this Agreement, a disinterested director is a person who does
not
have an equity interest in B2J. If a majority of the Company’s directors are not
disinterested directors, stockholder approval shall be required.
(iii) No
Adverse Law or Proceeding.
There
shall not be in effect on the Closing Date any order of any court or
administrative body or law or regulation restraining, enjoining or otherwise
prohibiting or making illegal the consummation of any of the transactions
contemplated by this Agreement, and there shall not be pending or threatened
on
the Closing Date any action or proceeding in, before or by any governmental
or
regulatory authority or any court which seeks to enjoin or restrain the
consummation of the transaction contemplated by this Agreement or which could
otherwise have, if adversely determined, a material adverse effect upon the
business, financial condition or prospects of NJJ.
(iv) Transfer
by NJJ of Unrelated Businesses.
NJJ
shall have transferred to the NJJ Shareholders all of the issued and outstanding
capital stock of NJJ Homes Limited, Giant Star Limited and Giant Star Leisure
Limited (collectively, the “Unrelated Subsidiaries”). The Unrelated Subsidiaries
shall not be engaged in any business in which N2J is engaged, either directly
or
indirectly, and shall have executed a non-competition covenant acceptable to
the
Company. Neither NJJ nor N2J shall have any direct or indirect or contingent
liability or obligations with respect to, or indemnity, guarantee or hold
harmless obligation with respect to, the Unrelated Subsidiaries or their
businesses, including any obligations imposed by law whether or not NJJ or
the
NJJ Shareholders had any knowledge of the obligations.
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(b) Conditions
to Obligations of the NJJ Shareholders.
The
obligations of the NJJ Shareholders under this Agreement are subject to the
fulfillment on or prior to Closing of the following conditions:
(i) Representations
and Warranties Correct; Performance of Obligations.
The
representations and warranties made by the Company in this Agreement shall
be
true and correct in all material respects when made, and shall be true and
correct in all material respects on the Closing Date with the same force and
effect as if they had been made on and as of Closing the Closing Date. The
Company shall have performed in all material respects all obligations and
conditions herein required to be performed or observed by it pursuant to this
Agreement.
(ii) No
Adverse Law or Proceeding.
There
shall not be in effect on the Closing Date any order of any court or
administrative body or law or regulation restraining, enjoining or otherwise
prohibiting or making illegal the consummation of any of the transactions
contemplated by this Agreement, and there shall not be pending or threatened
on
the Closing Date any action or proceeding in, before or by any governmental
or
regulatory authority or any court which seeks to enjoin or restrain the
consummation of the transaction contemplated by this Agreement.
6. Representations
and Warranties of the NJJ Shareholders.
The NJJ
Shareholders jointly and severally (except as hereinafter expressly provided
in
Section 6(a)) make the following warranties and representations to the
Company.
(a) Several
Representations and Warranties of the NJJ Shareholders.
Each
NJJ Shareholder severally represents and warrants that:
(i) He
has
good title to the NJJ Shares being conveyed to the Company pursuant to this
Agreement, and such NJJ Shares are not subject to any pledge, lien, option,
encumbrance or other right of any person.
(ii) He
has
all requisite legal authority to sell and deliver the NJJ Shares to the
Company.
(iii) The
NJJ
Shares being transferred to the Company pursuant to this Agreement constitute
all of the NJJ Shareholder’s interests in NJJ, and he has no other equity or
debt interest in NJJ, or any right to acquire any equity or debt interest in
NJJ, or any other right in NJJ.
(iv) No
consent, approval, order, or authorization of, or registration, qualification,
designation, declaration, or filing of or with any governmental authority or
third party is required in connection with the sale of his NJJ Shares to the
Company.
(b) Authorized
Capital.
NJJ is
a limited company duly incorporated and in good standing as a corporation under
the laws of the United Kingdom, and NJJ has all necessary corporate power and
authority to engage in the business in which it is presently engaged. NJJ is
authorized to issue one thousand (1,000) shares of capital stock, of which
one
hundred thirty two (132) shares are issued and outstanding and owned by the
NJJ
Shareholders. NJJ has one subsidiary, namely, N2J, and does not have any debt
or
equity investments or other interest in any other corporation, partnership,
limited liability company, trust or other entity.
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(c) No
Claims.
There
are no claims, demands, proceedings, defaults, obligations, suits or threats
or
suit, seizure, or foreclosure against NJJ or N2J and that there is no suit,
action, or legal, administrative, arbitration, or other proceeding pending
or
threatened which could adversely affect either (i) the Company’s ownership of
the NJJ Shares acquired pursuant to this Agreement or NJJ’s ownership of the
capital stock of N2J and (ii) business, financial condition or prospects of
NJJ
or N2J.
(d) Financial
Statements.
(i) NJJ’s
and
N2J’s audited balance sheets at May 31, 2005 and statements of operations,
stockholders’ equity and cash flows for the two years in the period then ended
and NJJ’s and N2J’s unaudited balance sheets at May 31, 2006, statements of
operations, stockholders equity and cash flows for the year then ended present
and reflect, in accordance with United Kingdom general accepted accounting
principles consistently applied the consolidated financial position of NJJ
at
the respective balance sheet dates, the changes in stockholders’ equity for the
period then ended and the results of operations and cash flows for the years
then ended. The consolidated financial statements reflect the operations of
the
Unrelated Businesses as a discontinued operation.
(ii) At
the
close of business on the date of the balance sheets delivered pursuant to
Section 6(d)(i) of this Agreement, NJJ and N2J did not have any liabilities,
absolute or contingent, of the type required to be reflected on balance sheets
prepared in accordance with generally accepted accounting principles which
are
not fully reflected, reserved against or disclosed in such financial statements.
Neither NJJ nor N2J has guaranteed or assumed or incurred any obligation with
respect to any debt or obligations of any person, corporation, partnership,
limited liability company or other entity, except endorsements made in the
ordinary course of business in connection with the deposit of items for
collection. Neither NJJ nor N2J has any debts, contracts, guaranty, standby,
indemnity or hold harmless commitments, liabilities or obligations of any kind,
character or description, whether accrued, absolute, contingent or otherwise,
or
due or to become due except to the extent set forth in the financial statements.
(iii) All
of
the assets of NJJ and N2J are clear of all mortgages, liens, pledges,
encumbrances, or security interests of any nature whatsoever and, to the best
of
the NJJ Shareholders’ knowledge, are in good operating condition and repair.
Further, to the best of the NJJ Shareholders’ knowledge, there are no structural
or operational defects in any of the existing operations which would materially
affect their continued use in the same manner. NJJ and N2J are not in default
on
any lease, license, commitment, or other agreement.
(e) No
Violation of Law.
Neither
NJJ nor N2J (A) is in violation of any applicable building, zoning, occupational
safety and health, pension, environmental control or similar law, ordinance
or
regulation in relation to their structures or equipment or the operation thereof
or of their business, or any fair employment, equal opportunity or similar
law,
ordinance or regulation, or any other law, ordinance, regulation or order
applicable to their business or assets, (B) has received any complaint from
any
governmental authority, and none is threatened, alleging that NJJ or N2J is
in
violation of any applicable law, ordinance, regulation or order, (C) has
received any notice from any governmental authority of any pending proceeding
to
take all or any part of any properties (whether leased or owned) by condemnation
or right of eminent domain and no such proceeding is threatened, (D) is a party
to any agreement or instrument, or subject to any charter or other corporate
restriction or judgment, order, writ, injunction, rule, regulation, code or
ordinance, which adversely affects the business, operations, prospects,
properties, assets or condition, financial or otherwise, of NJJ or N2J and
(E)
is in violation of, and the execution of this Agreement and the consummation
of
the transactions contemplated herein will not violate, any bankruptcy law,
ruling, administrative decision, agreement, or plan to which NJJ or N2J is
subject. Neither NJJ nor N2J has any obligation or liability of the type
described in this Section 6(e) with respect to the business or operations of
the
Unrelated Businesses.
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(f) Approvals.
All
authorizations, approvals or other actions by, notices to, or filings with,
any
governmental authority, if applicable, required to be obtained or made in
connection with NJJ have been obtained or made, and no consent of any third
party is required to be obtained for the due execution, delivery and performance
of this Agreement. Governmental authorities include all United Kingdom
agencies.
(g) Accuracy
of Information for filings with the Commission.
The
information supplied by NJJ and the NJJ Shareholders for inclusion in any
filings made by the Company with the Commission shall not contain any untrue
statement of a material fact or omit to state any 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.
7. Representations
and Warranties of the Company.
The
Company makes the following warranties and representations to the NJJ
Shareholders:
(a) Corporate
Organization.
The
Company is a Nevada corporation organized and in good standing in such state,
and it has all necessary corporate power and authority to engage in the business
in which it is presently engaged. The Company has the full right, power, legal
capacity, and authority to enter into, and perform its obligations under this
Agreement, and that this Agreement will not conflict with any other obligations,
contracts or agreements of the Company. No authorization, approval or other
action by, and no notice to or filing with, any governmental authority is
required to be obtained or made, and no consent of any third party is required
to be obtained by Tricell for the due execution, delivery and performance of
this Agreement.
(b) Accuracy
of SEC Reports.
The
Company is a reporting company pursuant to the Securities Exchange Act of 1934,
as amended (the “Exchange Act”), comply in all material respects with the
applicable filing requirements of the Exchange Act. The financial statements
contained in the Company’s reports filed with the Commission since December 31,
2005 (the “SEC Reports”) present and reflect, in accordance with United States
general accepted accounting principles consistently applied the financial
position of the Company at the respective balance sheet dates, the changes
in
stockholders’ equity for the period then ended and the results of operations and
cash flows for the periods then ended. The accounting firm that audited the
audited financial statements is independent in accordance with the rules of
the
Commission and is a member of the CPAOB.
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(c) At
the
close of business on the date of the balance sheets included in the SEC Reports,
the Company did not have any liabilities, absolute or contingent, of the type
required to be reflected on balance sheets prepared in accordance with generally
accepted accounting principles which are not fully reflected, reserved against
or disclosed in such financial statements. The Company has not guaranteed or
assumed or incurred any obligation with respect to any debt or obligations
of
any person, corporation, partnership, limited liability company or other entity,
except endorsements made in the ordinary course of business in connection with
the deposit of items for collection except as reflected in the SEC Reports.
Except as disclosed in the SEC Reports, the Company has no debts, contracts,
guaranty, standby, indemnity or hold harmless commitments, liabilities or
obligations of any kind, character or description, whether accrued, absolute,
contingent or otherwise, or due or to become due except for those incurred
in
the normal course of business
8. Due
Diligence.
The
parties hereby acknowledge and agree that prior to the execution of this
Agreement they have conducted such due diligence necessary and commercially
customary for this Agreement and the transactions contemplated by it.
9. Covenants
of the NJJ Shareholders.
(a) Covenant
not to Compete.
Each
NJJ Shareholder hereby covenants and agrees that, for a period of five (5)
years
from the Closing Date, such NJJ Shareholder will not directly or indirectly,
(i)
engage in any business in which the Company, NJJ, N2J and their respective
subsidiaries (collectively, the “Companies”) are then engaged in North America,
Europe and Asia and, to the extent that any of the Companies is operating in
countries outside of the North America, Europe and Asia during such period,
those countries in which any of the Companies operates (whether for profit
or
not for profit), whether as an officer, director, consultant, stockholder,
guarantor, principal, agent, member, operator, proprietor, employee, advisor
or
in any other manner in the United States, or (ii) solicit any present or
proposed client or customer of the Companies, or (iii) employ or engage any
employee of any of the Companies until six months after such person ceased
to be
an employee, (iv) make any disparaging statements concerning any of the
Companies or their respective officers, directors, or employees, that could
injure, impair or damage the relationships between any of the Companies, on
the
one hand, and any of the employees, customers or suppliers or other persons
with
whom any of the Companies conduct business, or (v) aid or assist others with
respect to any of the foregoing provided, however, that nothing herein shall
be
construed to prohibit any NJJ Shareholder from giving factual information
required to be given pursuant to legal process, subject to the provisions of
Section 9(b)(ii) of this Agreement. The parties hereto acknowledge and agree
that this non-competition covenant is an integral part of this Agreement for
which each NJJ Shareholder is receiving adequate compensation, that the Company
would not enter in this Agreement without the inclusion of this Section 9(a)
and
Sections 9(b) and 9(c) of this Agreement and that if any court of competent
jurisdiction shall hold that the scope or duration of the covenant not to
compete set forth in this Section 9(a) is not reasonable or otherwise
enforceable, then the parties agree that such court shall enforce the covenant
to the greatest extent permitted under applicable law. As used in this Section
9(c), a present client or customer shall mean a customer of any of the Companies
who is or was a customer or client of any of the Companies at any time during
the term of this covenant and a prospective client or customer shall mean any
client or customer actively solicited by any of the Companies at any time during
the one (1) year period ending on the date of the expiration of this covenant.
The covenants in this Section 9 are in addition to any covenants on the part
of
any NJJ Shareholder pursuant to any employment or other
agreement.
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(b) Non-Disclosure
and Non-Disturbance.
(i) Each
NJJ
Shareholder agrees that he will not at any time use or disclose to any person
any Confidential Information relating to any of the Companies or any client
of
any of the Companies which provided confidential information to such NJJ
Shareholder; provided, however, that nothing in this Section 9(b) shall be
construed to prohibit an NJJ Shareholder from using or disclosing such
information if they can demonstrate that such information became public
knowledge other than by or as a result of disclosure by a person not having
a
right to make such disclosure. “Confidential
Information” shall mean all information of a proprietary or confidential nature
relating to any person, including, but not limited to, such person’s trade
secrets or proprietary information, confidential know-how, and products,
processes, inventions and discoveries, whether or not patentable, and
information concerning such person’s services, business, customer or client
lists, proposed services, marketing strategy, pricing policies and the
requirements of its clients and relationships with its lenders, suppliers,
licensors, licensees and others with which a person has a business relationship.
Confidential Information will not, however, include any information that the
NJJ
Shareholder can demonstrate (a) has become publicly known or ascertainable
other
than as a result of disclosure by a person not having a legal right to make
such
disclosure.
(ii) In
the
event that any Confidential Information is required to be produced by any NJJ
Shareholder pursuant to legal process, such NJJ Shareholder shall give the
Company notice of such legal process within a reasonable time, but not later
than ten (10) business days prior to the date such disclosure is to be made,
unless the NJJ Shareholder has received less notice, in which event NJJ
Shareholder shall immediately notify the Company. The Company shall have the
right to object to any such disclosure, and if the Company objects (at the
Company’s cost and expense) in a timely manner so that the NJJ Shareholder is
not subject to penalties for failure to make such disclosure, the NJJ
Shareholder shall not make any disclosure until there has been a court
determination on the Company’s objections. If disclosure is required by a court
order, final beyond right of review, or if the Company does not object to the
disclosure, the NJJ Shareholder shall make disclosure only to the extent that
disclosure is required by the court order, and, in compliance with express
directions from the Company, the NJJ Shareholder will
exercise reasonable efforts at the Company’s expense, to obtain reliable
assurance that confidential treatment will be accorded the Confidential
Information.
(iii) Each
NJJ
Shareholder further agrees that in the event that any of the Companies transfers
its business, he will take no action to induce or cause any of the Companies’
present or prospective clients to cease engaging any the company or other entity
which is the transferee for its requirements for the type of product or service
being rendered by the transferring Companies or to reduce the scope of services
performed by such Companies.
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(c) Injunctive
Relief.
Each
NJJ Shareholder agrees that his violation or threatened violation of any of
the
provisions of Sections 9(a) and 9(b) of this Agreement shall cause immediate
and
irreparable harm to one or more of the Companies. In the event of any breach
or
threatened breach of said provisions, the NJJ Shareholders consent to the entry
of preliminary and permanent injunctions by a court of competent jurisdiction
prohibiting such party from any violation or threatened violation of these
provisions and compelling NJJ Shareholders to comply with these provisions.
This
Section 9(c) shall not affect or limit, and the injunctive relief provided
in
this Section 9(c) shall be in addition to, any other remedies available to
the
Companies at law or in equity.
(d) Survival
of Covenants.
The
covenants set forth in this Section 9 shall survive the Closing and shall be
continuing obligations of the NJJ Shareholders.
10. Continuing
Obligations of the Parties.
The
parties hereby agree to assist and cooperate in good faith with each other
on a
timely basis after Closing in providing any information or documents, or
executing any documents, necessary or reasonably required to fulfill such
party’s obligations hereunder.
11. Indemnification.
(a) Indemnity
by the Company.
The
Company agrees to defend, indemnify and hold harmless and the NJJ Shareholders
from and against, and to reimburse the NJJ Shareholders with respect to, all
liabilities, losses, costs and expenses, including, without limitation,
reasonable attorneys’ fees and disbursements, incurred by the NJJ Shareholders
by reason of, arising out of, or in connection with any material breach of
any
representation or warranty contained in this Agreement made by the Company
in
any document or certificate delivered by the Company pursuant to the provisions
of this Agreement or in connection with the transactions contemplated
thereby.
(b) Indemnity
by the NJJ Shareholders.
The NJJ
Shareholders agree to jointly and severally defend, indemnify and hold harmless
the Company from and against, and to reimburse the Company with respect
to:
(i) All
liabilities, losses, costs and expenses, including, without limitation,
reasonable attorneys’ fees and disbursements, incurred by the Company by reason
of, arising out of, or in connection with any material breach of any
representation or warranty contained in this Agreement made by the NJJ
Shareholders or in any document or certificate delivered by the NJJ Shareholders
pursuant to the provisions of this Agreement or in connection with the
transactions contemplated thereby; provided, however, that the indemnification
with respect to the representations and warranties pursuant to Section 6(a)
shall be made by each NJJ Shareholder with respect only to breach of the
representations and warranties made by him.
(ii) All
liabilities, losses, costs and expenses, including, without limitation,
reasonable attorneys’ fees and disbursements, incurred by the Company by reason
of, arising out of, or in connection directly or indirectly with the operations
by the Unrelated Business, whether prior to, on or after the Closing
Date.
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(c) Indemnification
Procedure.
A party
(an “Indemnified Party”) seeking indemnification shall give prompt notice to the
other party (the “Indemnifying Party”) of any claim for indemnification arising
under this Article 10. The Indemnifying Party shall have the right to
assume and to control the defense of any such claim with counsel reasonably
acceptable to such Indemnified Party, at the Indemnifying Party’s own cost and
expense, including the cost and expense of reasonable attorneys’ fees and
disbursements in connection with such defense, in which event the Indemnifying
Party shall not be obligated to pay the fees and disbursements of separate
counsel for such in such action. In the event, however, that such Indemnified
Party’s legal counsel shall determine that defenses may be available to such
Indemnified Party that are different from or in addition to those available
to
the Indemnifying Party, in that there could reasonably be expected to be a
conflict of interest if such Indemnifying Party and the Indemnified Party have
common counsel in any such proceeding, or if the Indemnified Party has not
assumed the defense of the action or proceedings, then such Indemnifying Party
may employ separate counsel to represent or defend such Indemnified Party,
and
the Indemnifying Party shall pay the reasonable fees and disbursements of
counsel for such Indemnified Party. No settlement of any such claim or payment
in connection with
any
such settlement shall be made without the prior consent of the Indemnifying
Party which consent shall not be unreasonably withheld.
(d) Survival
of Representations and Warranties.
(i) Subject
to Section 11(d)(ii) of this Agreement, the representations and warranties
shall
survive the Closing for a period of one year, and any claim for indemnification
must be made prior to the expiration of such one-year period. The obligations
of
the Indemnifying Party shall continue in full force and effect with respect
to
any claim made during such period until such claim shall be
resolved.
(ii) The
indemnification obligations of the NJJ Shareholders pursuant to Section
11(b)(ii) shall not be subject to any temporal limitation other than the
applicable statute of limitations.
(iii) The
obligations pursuant to Section 9 of this Agreement shall continue in full
force
and effect for the period set forth therein.
12. Entire
Agreement.
This
Agreement constitutes the entire agreement of the parties, superseding and
terminating any and all prior or contemporaneous oral and written agreements,
understandings or letters of intent between or among the parties with respect
to
the subject matter of this Agreement. No part of this Agreement may be modified
or amended, nor may any right be waived, except by a written instrument which
expressly refers to this Agreement, states that it is a modification or
amendment of this Agreement and is signed by the parties to this Agreement,
or,
in the case of waiver, by the party granting the waiver. No course of conduct
or
dealing or trade usage or custom and no course of performance shall be relied
on
or referred to by any party to contradict, explain or supplement any provision
of this Agreement, it being acknowledged by the parties to this Agreement that
this Agreement is intended to be, and is, the complete and exclusive statement
of the agreement with respect to its subject matter. Any waiver shall be limited
to the express terms thereof and shall not be construed as a waiver of any
other
provisions or the same provisions at any other time or under any other
circumstances.
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13. Severability.
If any
section, term or provision of this Agreement shall to any extent be held or
determined to be invalid or unenforceable, the remaining sections, terms and
provisions shall nevertheless continue in full force and effect.
14. Notices.
All
notices provided for in this Agreement shall be in writing signed by the party
giving such notice, and delivered personally or sent by overnight courier,
mail
or messenger against receipt thereof or sent by registered or certified mail,
return receipt requested, or by facsimile transmission or similar means of
communication if receipt is confirmed or if transmission of such notice is
confirmed by mail as provided in this Section 14. Notices shall be deemed to
have been received on the date of personal delivery or telecopy or attempted
delivery. Notice shall be delivered to the parties at the addresses or
telecopier numbers set forth on the signature page of this Agreement. Any party
may, by like notice, change the address, person or telecopier number to which
notice shall be sent.
15. Governing
Law.
This
Agreement shall be governed and construed in accordance with the laws of the
State of New York applicable to agreements executed and to be performed wholly
within such State, without regard to any principles of conflicts of law. Each
of
the parties hereby irrevocably consents and agrees that any legal or equitable
action or proceeding arising under or in connection with this Agreement shall
be
brought in the federal or state courts located in the County of New York in
the
State of New York, by execution and delivery of this Agreement, irrevocably
submits to and accepts the jurisdiction of said courts, (iii) waives any defense
that such court is not a convenient forum, and (iv) consent to any service
of
process made either (x) in the manner set forth in Section 14 of this Agreement
(other than by telecopier), or (y) any other method of service permitted by
law.
16. Parties
to Pay Own Expenses.
Each of
the parties to this Agreement shall be responsible and liable for its own
expenses incurred in connection with the preparation of this Agreement, the
consummation of the transactions contemplated by this Agreement and related
expenses, except that any expenses incurred by the NJJ shall be paid by the
NJJ
Shareholders.
17. Tax
Consequences.
Each
party to this Agreement is relying on his or its own tax advisors as to the
tax
consequences of this Agreement and the transactions contemplated by this
Agreement, and no party is making any representations or warranties of any
kind
as to such tax consequences to any other party.
18. Successors.
This
Agreement shall be binding upon the parties and their respective heirs,
executors, administrators, legal representatives, successors and assigns;
provided, however, that the NJJ Shareholders may not assign this Agreement
or
any of its rights under this Agreement except as expressly provided in this
Agreement.
19. Further
Assurances.
Each
party to this Agreement agrees, without cost or expense to any other party,
to
deliver or cause to be delivered such other documents and instruments as may
be
reasonably requested by any other party to this Agreement in order to carry
out
more fully the provisions of, and to consummate the transaction contemplated
by,
this Agreement.
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20. Execution
by Facsimile.
This
Agreement may be executed and delivery by delivering this Agreement by
facsimile, and the facsimile signature shall be binding on the party who so
executed and delivered this Agreement.
21. Counterparts.
This
Agreement may be executed simultaneously in two or more counterparts, each
of
which shall be deemed an original but all of which together shall constitute
one
and the same instrument.
22. No
Strict Construction.
The
language used in this Agreement will be deemed to be the language chosen by
the
parties with the advice of counsel to express their mutual intent, and no rules
of strict construction will be applied against any party.
23. Headings.
The
headings in the Sections of this Agreement are inserted for convenience only
and
shall not constitute a part of this Agreement.
(Signature
Page to Follow)
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IN
WITNESS WHEREOF, the signatures of the Parties below evidence their approval,
acceptance and acknowledgement of the terms contained in this
Agreement.
| Address and Telecopier No. | ||
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/s/
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