AGREEMENT AND PLAN OF REORGANIZATION
DATED AS OF JUNE 30, 1998
BY AND AMONG
SOLAR AGE INDUSTRIES. INC.,
HITK CORPORATION,
AND
SGI CAPITAL, INC.,
PALCAN GROUP, INC.,
ROCHESTER PROPERTY HOLDINGS LIMITED
1. Plan of Reorganization
2. Exchange of Shares
3. Delivery of Shares
4. Other Terms and Conditions
5. Representations of the Target
6. Representations of the Acquiror and the Principal
7. Closing and Closing Date
8. Conditions Precedent to the Obligations of the Target
9. Conditions Precedent to the Obligations of Acquiror and the Principal
10. Indemnification
11. Nature and Survival of Representations
12. Documents at Closing
13. Miscellaneous
EXHIBITS
Investment Letter.............................................................A
Copies of Restated Articles of Incorporation and By-Laws of the Acquiror......B
Material Contracts of the Acquiror............................................C
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (hereinafter the "Agreement"), is
entered into effective as of the 30th day of June 1998, by and among Solar Age
Industries, Inc., a Nevada corporation (hereinafter the "Acquiror"), HITK
Corporation, a Delaware corporation ("HITK"), the majority principal shareholder
of the Acquiror (hereinafter, the "Principal") and SGI Capital, Inc., an
Illinois corporation (hereinafter "SGI" or the "Target"), Palcan Group Inc., an
Illinois corporation and Rochester Property Holdings Limited, a British Virgin
Islands corporation (hereinafter collectively the "Target Stockholders");
A. WHEREAS, the Target Stockholders own in the aggregate all of the issued
and outstanding capital stock of SGI, and
B. WHEREAS, SGI owns all of the issued and outstanding capital stock of
Mirtas Limited, a Russian holding corporation, (hereinafter "Mirtas"),
and Mirtas owns ninety (90%) percent of the issued and outstanding
capital stock of NBM Stroiservice Investment and Construction Company, a
Russian Corporation which owns and operates a real estate development and
construction company in Russia (hereinafter "NBM"), with the remaining
ten (10%) percent of the issued and outstanding capital stock of NBM
owned by non-affiliated third parties. NBM shall sometimes hereinafter be
referred to as the "Asset Entity", and
C. WHEREAS, the Acquiror desires to acquire all of the issued and
outstanding capital stock of the Target from the Target Stockholders,
resulting in the Target becoming a wholly owned subsidiary of the
Acquiror, and the Target Stockholders each desire to exchange all of
their respective capital stock of the Target solely for shares of
Acquiror's common stock par value $.01 per share (the "Common Stock"), on
the terms and conditions as set forth herein (the "Exchange").
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained in this Agreement, the parties hereto
agree as follows:
1. PLAN OF REORGANIZATION. The Target Stockholders are the sole owners of all of
the issued and outstanding capital stock of the Target (the "Target Shares"). It
is the intention of the parties hereto that all of the issued and outstanding
Target Shares shall be acquired by the Acquiror in a tax free exchange for
8,000,000 shares of Common Stock (on a post-reverse stock-split basis) of the
Acquiror (the "8,000,000 Acquiror Shares"). The Exchange shall qualify as a tax
free reorganization under Section 368 (a) (1) (B) of the Internal Revenue Code
of 1986, as amended, and related sections thereunder. The Exchange shall qualify
as a transaction in securities exempt from registration or qualification under
the Securities Act of 1933, as amended, and under the applicable securities laws
of each state or jurisdiction where the Target Stockholders reside.
2. EXCHANGE OF SHARES. The Acquiror and the Target Stockholders agree that all
of the issued and outstanding Target Shares shall be exchanged at the Closing
(as defined in Section 7 below) with Acquiror for the 8,000,000 Acquiror Shares,
after giving effect to, among other actions, a 1 for 5.5 reverse stock split of
all shares of Common Stock of Acquiror issued and outstanding immediately prior
to the Closing, as follows:
(a) The 8,000,000 Acquiror Shares will, at the Closing, be delivered to the
Target Stockholders in exchange for the Target Shares, in the ratio of the 8,000
Acquiror Shares to one Target Share. The Target Stockholders agree that they
will acquire the 8,000,000 Acquiror Shares for investment purposes only and not
for further public distribution and agree that the 8,000,000 Acquiror Shares
shall bear an appropriate restrictive legend. Each Target Stockholder shall
enter into an Investment Letter on the Closing Date, the form of which is
annexed hereto as Exhibit A.
(b) The Acquiror presently has 5,375,000 shares of Common Stock issued and
outstanding which immediately prior to the Closing, will represent 977,273
shares of Common Stock issued and outstanding after giving effect to 1 for 5.5
reverse stock split. Other than the 8,000,000 Acquiror Shares to be issued
pursuant to this Agreement and
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the 977,273 shares to be issued and outstanding immediately prior to the Closing
(on a post-reverse stock-split basis), the Company shall not have any other
shares of Common Stock, preferred stock, warrants, options, rights, convertible
securities or other securities outstanding, or direct and/or indirect
agreements, oral or otherwise to issue any such securities.
(c) The Principal presently has majority number of shares of Common
Stock issued and outstanding.
(d) All references herein to shares of Acquiror's Common Stock shall
reflect the l for 5.5 reverse stock split.
3. DELIVERY OF SHARES. At the Closing, the Target Stockholders will deliver
stock certificates to the Acquiror representing all of the Target Shares duly
endorsed for transfer so as to make the Acquiror the sole owner thereof, and
simultaneously at the Closing the Acquiror shall deliver stock certificates to
the Target Stockholders representing the 8,000,000 Acquiror Shares.
4. OTHER TERMS AND CONDITIONS.
(a) As of the Closing Date, the Acquiror shall continue its corporate
existence as a Nevada corporation.
(b) The Principal hereby irrevocably agrees to vote all of the respective
shares of Common Stock in favor of all of the terms and conditions contained in
and transactions contemplated by this Agreement.
(c) The current officers and directors of Acquiror shall resign their
respective positions with Acquiror effective as of the Closing immediately after
having appointed a Board of Directors of Acquiror as designated to the Acquiror
in writing by the Target.
(d) On or before the Closing Date, Acquiror shall demonstrate to the
reasonable satisfaction of the Target and its legal counsel, that the Acquiror
has no less than 300 beneficial stockholders.
(e) The Acquiror shall have no liabilities incurred or accrued as of the
Closing Date and the Principal shall guarantee as of the Closing Date that the
Acquiror has no liability incurred or accrued.
(f) Each of the parties hereto shall make all of its corporate records
fully available to the other parties hereto and shall allow full access to their
books, records and properties during regular business hours on a reasonable
basis. If the transactions contemplated by this Agreement are not consummated,
all parties shall keep confidential any information (unless it is public
knowledge) obtained from the other parties.
(g) Each of the parties hereto shall continue to conduct their business
in accordance with the ordinary, usual and normal course of business heretofore
conducted by them, it being agreed that the Acquiror has no, and shall conduct
no, business.
5. REPRESENTATIONS OF THE TARGET. The Target hereby represents, warrants and
covenants effective as of the date hereof and as of the Closing Date, as
follows:
(a) The Target Shares are validly authorized and issued, fully paid and
non-assessable and are free from any and all claims, liens, or other
encumbrances, and the Target Stockholders have good title and the unqualified
right to transfer the Target Shares as provided herein; and when the Target
Shares are delivered to the Acquiror in exchange for the 8,000,000 Acquiror
Shares as provided herein, the Acquiror shall receive all right and title to the
Target Shares free from any and all claims, liens or other encumbrances on
title.
(b) The Target Stockholders are the sole owners of all of the Target Shares
and the Target Shares constitute all of the issued and outstanding capital stock
of the Target.
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(c) The Target through a wholly owned subsidiary Mirtas, owns ninety (90%)
percent of the issued and outstanding capital stock of the Asset Entity, and the
remaining ten (10%) percent is owned by non-affiliated third parties.
(d) Neither the Target nor Mirtas nor the Asset Entity is a defendant in
any material pending litigation or governmental investigation or proceeding
disclosed in writing to the Acquiror and, to the best knowledge of the Target,
no litigation, claims, assessments, or governmental investigations or
proceedings are threatened against the Target or the Asset Entity.
(e) As of the Closing Date, the Target, Mirtas and the Asset Entity will be
in good standing in each of their respective jurisdictions of incorporation, and
each will be qualified to do business in each jurisdiction where required to be
so qualified, except where the failure to so qualify would not have a material
adverse effect on the business.
(f) The Target, Mirtas and the Asset Entity have filed all governmental,
tax or related returns and reports due or required to be filed and have paid or
accrued all taxes or assessments which have become due or will be due as of the
Closing Date.
(g) Complete corporate financial records, contracts, minute books, and
other corporate documents and records of the Target, Mirtas and the Asset Entity
have been made reasonably available to present management of the Acquiror prior
to the Closing Date, including the Asset Entity's financial statement for the
fiscal years as at December 31, 1996 and December 31, 1997.
(h) The execution of this Agreement and the performance of the actions
contemplated hereby will not, to the best knowledge of the Target materially
violate or breach any material agreement, contract, or commitment to which the
Target, Mirtas or the Asset Entity are a party and this Agreement has been duly
authorized by all appropriate and necessary action by the Target and the Target
Stockholders.
(i) There are no outstanding convertible securities, warrants or options
which may cause authorized but unissued shares of the Target and/or Mirtas
and/or the Asset Entity to be issued to any person.
6. REPRESENTATIONS OF THE ACQUIROR AND THE PRINCIPAL. The Acquiror and the
Principal hereby jointly and severally represent, warrant and covenant,
effective as of the date hereof and the Closing Date, as follows:
(a) The 8,000,000 Acquiror Shares to be delivered to the Target will, when
issued in accordance with this Agreement, be duly authorized and validly issued
and will be fully paid and non-assessable and free and clear of any and all
direct and/or indirect liens, claims and encumbrances and will vest in the
Target Stockholders, good and unencumbered title and right to such shares.
(b) The officers and directors of the Acquiror are duly authorized to
execute this Agreement and have taken all action necessary and required by law
to properly and legally execute this Agreement. The shareholders of the Acquiror
have approved this Agreement and all actions required to be taken hereunder in
accordance with Nevada law. The execution of this Agreement by the Acquiror and
the Principal and the performance of all actions hereunder by the Acquiror and
the Principal will not violate any provision of the Acquiror's Articles of
Incorporation or By-Laws, each as amended, and will not constitute a breach of
any contract and/or agreement to which any such person is a party. The copies of
the Acquiror's Restated Articles of Incorporation and Amended By-Laws through
the Closing Date are annexed hereto as Exhibit B and are true and complete
copies of such documents and have not been amended or otherwise changed.
(c) The Acquiror's financial statements have been audited and certified by
a duly qualified certified public accountant(s) meeting all standards imposed by
the SEC with respect to the preparation of financial statements of the Acquiror
for the fiscal years as at June 30, 1996, June 30, 1997 and June 30, 1998, and
the related statements of operations for the periods then ended (collectively
"Financial Statements"). The Financial Statements present
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fairly the consolidated financial position of the Acquiror as at such dates and
the results of the operations for the periods then ended. The Financial
Statements were prepared in accordance with generally accepted accounting
principles applied on a consistent basis with prior periods except as otherwise
stated herein. The books of account and other financial records of the acquiror
are in all respects complete and correct in all material respects and are
maintained in accordance with good business and accounting practices. Since the
date of the Acquiror Financial Statements there has not been, and as of the
Closing Date there shall not be, any material adverse changes in the financial
condition and/or position of the Acquiror, other than has been disclosed in
writing to the Target. As of the date hereof and as of the Closing Date, the
Acquiror shall have no judgments, liens, liabilities or debts, fixed or
contingent, and as of the Closing Date shall have paid all of its costs relating
to this transaction.
(d) Neither the Acquiror nor the Principal is involved in any pending
action, litigation, claims, or governmental investigations or proceedings, and
there are no lawsuits, claims, assessments, investigations, or similar matters,
to the best knowledge of the Acquiror and the Principal, threatened or
contemplated by or against the Acquiror and/or the Principal, except as
disclosed in Exhibit C attached hereto.
(e) As of the date hereof and the Closing Date, the Acquiror and the
Principal are duly organized, validly existing and in good standing under the
laws of the State of Nevada as to the Acquiror and under the laws of the State
of Delaware as to the Principal; both have the corporate power to own their
assets and to carry on their business as now being conducted and are duly
qualified to do business in any jurisdiction where so required except where the
failure to so qualify would not have a material adverse effect on the Acquiror.
(f) The Acquiror has filed all federal, state, county and local income,
excise, property and other tax returns, forms, or reports, which are due or
required to be filed by it prior to the date hereof and has paid or made
adequate provision for the payment of any and all taxes, fees, or assessments
which have or may become due pursuant to such returns or pursuant to any
assessments received. Prior to the Closing, the Acquiror will deliver to new
management all prior tax returns.
(g) The Acquiror has not breached, nor is there any pending or threatened
claims that Acquiror has breached, any of the terms or conditions of any
agreements, contracts or commitments to which it is a party or is bound, and the
execution and performance of this Agreement by the Acquiror and the Principal
will not violate any provisions of any law or any agreement to which the
Acquiror and/or the Principal is subject or a party. All material contracts,
commitments and agreements to which the Acquiror is a party, including all
contracts, commitments and agreements dealings or relationships with related
parties or affiliates, are listed on Exhibit C attached hereto.
(h) As of the Closing Date, after giving effect to 1 for 5.5 reverse stock
split, but prior to the issuance of the 8,000,000 Acquiror Shares, the
outstanding capitalization of the Acquiror will consist of 977,273 shares of
Common Stock, all of which will be "free trading", except the 674,832 shares
held by the Principal. The Principal has held and paid for 190,909 shares of
Common Stock for a period of over 3 years from the date of purchase of the
190,909 shares.
(i) As of the Closing Date, other than (i) the 8,000,000 Acquiror Shares to
be issued pursuant hereto, and (ii) the 977,273 shares of post-split Common
Stock then issued and outstanding there will not be (direct and/or indirect) any
other securities of the Acquiror outstanding, including, but not limited to, any
other shares of Common Stock or preferred stock, or any warrants, options, or
other derivative securities or pre-emptive rights, rights of first refusal,
registration rights, or related commitments of the Acquiror or any contracts,
commitments or rights (oral or otherwise) to issue any of such securities and/or
rights.
(j) The Acquiror has no subsidiary corporations. Any prior subsidiaries
being dissolved by the state of incorporation by operation of law.
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(k) The 8,000,000 Acquiror Shares to be issued to the Target Stockholders
on the Closing Date will be issued in full compliance with all applicable
corporate and other laws and will be issued in a non-public offering and
isolated transaction in compliance with all federal and state securities laws.
(1) As of the date hereof and on the Closing Date, the Acquiror has and
will have disclosed to the Target all events, conditions and facts materially
affecting the business, finances and legal status of Acquiror.
(m) The corporate financial records, minute books, and other books and
records of Acquiror in its possession, custody or control will be made available
to the Target and its representatives prior to the Closing Date and delivered on
the Closing Date to newly appointed management of the Acquiror at the Closing.
(n) This Agreement constitutes a legal, valid and binding obligation of the
Acquiror and the Principal, enforceable against the Acquiror and the Principal
in accordance with its terms.
(o) The Acquiror is and on the Closing Date shall be in full compliance
with all applicable federal and state securities laws.
(p) On the Closing Date, the Acquiror will have no less than 300 beneficial
owners of shares of its Common Stock as determined by the applicable provisions
of the National Association of Securities Dealers Manual, referring to
qualification requirements for NASDAQ securities listings. The shareholders list
submitted by the Acquiror and the Acquiror's transfer agent and dated June 29,
1998 is, to the best of the Acquiror's knowledge, true, complete and accurate in
all material respects.
(q) The Acquiror is not subject to the reporting requirements of the
Securities Act of 1933, as amended (the "Act") and the Securities Exchange Act
of 1934, as amended (the "Exchange Act").
(r) Neither the Principal nor the Acquiror is the subject of any current or
prior actions, lawsuits, judgments, orders, decrees, activities, violations or
other proceedings or activities of any nature which will, or could, prevent the
shares of Common Stock of the Acquiror from being listed on the NASDAQ or the
NASDAQ SmallCap Market System and knows of no reason why such listing cannot be
obtained.
(s) The Acquiror and the Principal have completed their due diligence of
the Target and the Asset Entity to their full satisfaction (including, but not
limited to, having received copies of and reviewed the Asset Entity's Financial
Statements) and have had a full and complete opportunity to discuss and ask
questions of officers and directors, their representatives and legal counsel.
(t) Other than as disclosed in this Agreement, neither the Principal nor
any of their respective affiliates have any direct or indirect beneficial or
other ownership interest in or any other right, title, or interest to any other
shares of Common Stock of the Acquiror including, but not limited to, any
arrangements to receive or share in the proceeds from the sale of any shares of
Common Stock of the Acquiror.
7. CLOSING AND CLOSING DATE. The closing date as referred to herein ("Closing
Date") shall be as of June 30, 1998 subject to an extension of up to thirty (30)
days if required at the discretion of the Target, or such other time and place
as agreed to by the parties. The closing (the "Closing") of the transactions
contemplated herein shall occur at 10:00 a.m. on the Closing Date at the offices
of Xxxx X. Xxxxxx, Esq., 00 Xxxxxxxx Xxxx, Xxxxxxxxx, Xxx Xxxx 00000, or at such
other places as the parties mutually agree.
8. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE TARGET. All obligations of the
Target under this Agreement are subject to the fulfillment, prior to or on the
Closing Date of each of the following conditions, unless expressly waived in
writing by the Target:
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(a) The representations and warranties of the Acquiror and the Principal
contained in this Agreement or in any exhibit, certificate or document delivered
to the Target pursuant to this Agreement shall be true, correct, complete and
accurate in all material respects at and as of the Closing Date as though such
representations and warranties were made at and as of such time.
(b) The Acquiror and the Principal shall have performed and complied with
all covenants, agreements, and conditions required by this Agreement to be
performed or complied with or by them prior to or on the Closing Date and shall
have delivered all documents required to be delivered by them hereunder.
(c) The present officers and directors of the Acquiror (consisting of Xxxxxx
X. Xxxxxx, President and Director, Xxxx X. Xxxxxx, Secretary, Treasurer and
Director and Xxxxxxx Xxxxx, Vice President and Director) shall cause the
appointment on the Closing Date, of all nominees of the Target to the Board of
Directors of the Acquiror as directed by the Target and all such present
officers and directors (and any other person who may be officers and/or
directors of the Acquiror) shall provide to the Acquiror their written
resignations.
(d) The directors and shareholders of the Acquiror shall have approved in
accordance with Nevada law and the applicable provisions of the Acquiror's
Restated Articles of Incorporation and By-Laws, the following matters, which
matters shall have occurred prior to or simultaneously with the Closing:
(i) The 1 for 5.5 reverse stock split of all of the issued and
outstanding Common Stock of the Company.
(ii) The issuance of the 8,000,000 Acquiror Shares to the
Target in exchange for the Target Shares.
(iii) The election of the new directors to the Board of
Directors of the Acquiror as specified by the Target.
(iv) All other matters contemplated herein.
(e) The Acquiror and the Principal shall have delivered certified copies of
resolutions of the Board of Directors and shareholders of each approving and
authorizing the execution, delivery and performance of this Agreement and all of
the actions contemplated hereby, including all of the matters in subparagraph
(d) above.
(f) All instruments and documents delivered to the Target pursuant to the
provisions hereof shall be satisfactory to legal counsel for the Target.
(g) The Acquiror and the Principal shall deliver such other documents to the
Target as requested by its representatives and their legal counsel including,
but not limited to, an opinion of the Acquiror's legal counsel dated as of the
Closing Date to the effect that:
(i) The Acquiror and the Principal are corporations duly organized,
validly exiting and in good standing under the laws of the State of Nevada and
the State of Delaware, respectively, and are authorized to do business in such
jurisdictions where its business requires it to be so authorized under the laws.
(ii) This Agreement has been duly authorized, executed and delivered
by the Acquiror and the Principal and constitutes a legal, valid and binding
obligation of the Acquiror and the Principal enforceable against such persons in
accordance with its terms.
(iii) The Acquiror, through its Board of Directors and shareholders,
has taken all corporate action necessary for performance of all transactions
contemplated hereby and the execution of this Agreement.
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(iv) The documents executed and delivered to the Target by the
Acquiror and the Principal hereunder are legal, valid and binding obligations of
such persons, enforceable against such entities and persons in accordance with
their respective terms.
(v) To the best knowledge of counsel to the Acquiror and the
Principal, the Acquiror is not a party to any action, proceeding or
investigation and there is no order, lien, decree or judgment against them or
any of their respective assets.
(vi) The Acquiror has no less than three hundred (300) shareholders of
record of its Common Stock so as to meet the NASDAQ listing requirements of
having three hundred (300) shareholders.
(vii) The 1 for 5.5 reverse stock split of the Common Stock of the
Acquiror has been approved by all requisite director and shareholder action in
accordance with the laws of the State of Nevada and the Acquiror's Restated
Articles of Incorporation and By-Laws and has become effective.
(viii) The 8,000,000 Acquiror Shares to be delivered to the Target
will, when issued in accordance with this Agreement, be duly authorized and
validly issued and will be fully paid and non-assessable and free and clear of
any and all direct and/or indirect liens, claims and encumbrances and will vest
in the Target Stockholders, good and unencumbered title and right to such
shares.
(h) The capital structure and stock ownership of the Acquiror shall be as
set forth in Section 2(b) of this
(i) The Target has completed its due diligence of the Acquiror and the
Principal to the extent it deems necessary or advisable with the results
satisfactory to the Target and its representatives.
(j) The Acquiror shall have delivered to the new management of the Acquiror
certified copies of all charter documents and by-laws and amendments hereto and
all shareholders and Board of Directors resolutions.
9. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE ACQUIROR AND THE PRINCIPAL.
All obligations of the Acquiror and the Principal under this Agreement are
subject to the fulfillment, prior to or on the Closing Date of each of the
following conditions, unless expressly waived in writing by the Acquiror and the
Principal:
(a) The representations and warranties of the Target contained in this
Agreement or in any certificate or document delivered to the Acquiror by the
Target pursuant to the provisions hereof shall be true, correct, complete and
accurate in all material respects at and as of the Closing Date as though such
representations and warranties were made at and as of such time.
(b) The Target shall have performed and complied with all covenants,
agreements, and conditions required by this Agreement to be performed or
complied with by them prior to or on the Closing Date.
(c) Each Target Stockholder shall deliver to the Acquiror an "Investment
Letter" acknowledging that the 8,000,000 Acquiror Shares are being acquired for
investment purposes. The form of said letter is attached hereto as Exhibit A.
(d) The Target shall have delivered to Acquiror an opinion of their legal
counsel dated as of the Closing Date substantially to the effect that:
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(i) The Target and the Asset Entity are corporations duly
organized, validly existing and in good standing under the
laws of the place of their incorporation.
(ii) The Target Stockholders own all of the issued and
outstanding capital stock of the Target, and the Target
owns the percentage of capital stock of the Asset Entity
as set forth elsewhere in this Agreement; and
(iii) All of the issued and outstanding capital stock of the
Target and the Asset Entity has been duly authorized and
has been validly and legally issued.
(e) The Target shall prior to the Closing release the Acquiror of the two
obligations: (i) payment to the stock transfer agent and (ii) payment to the
certified public accountant(s) for preparation of the Financial Statements,
which payments shall be negotiated and settled at the sole discretion of the
Target and in no event shall exceed (i) $17,000 and (ii) $3,000 respectfully.
10. INDEMNIFICATION. For a period of two (2) years from the Closing Date, the
Acquiror and the Principal agree jointly and severally, to defend, indemnify and
hold harmless the Target and the Target Stockholders from, against and in
respect of any loss, liability, damage or deficiency, and all actions, suits,
proceedings, demands, assessments, judgments, costs and expenses (including
attorneys' fees as such are incurred) (collectively, "Losses"), resulting
directly and/or indirectly from the conduct of the Acquiror prior to the Closing
Date, and the Target agrees to defend, indemnify and hold harmless the Acquiror
and the Principal against, from and in respect of all Losses resulting directly
and/or indirectly from the conduct of Acquiror's business following the Closing
Date. In addition, the Acquirors and the Principal agree to indemnify and hold
harmless the Target and the Target Stockholders, and the Target agrees to
indemnify and hold harmless the Principal and the Acquiror from, against and in
respect of any Losses resulting directly and/or indirectly from any breach of
any term of this Agreement including, but not limited to, any representation,
warranty, covenant or any other term hereof made by any such party.
11. NATURE AND SURVIVAL OF REPRESENTATIONS. All representations, warranties and
covenants made by any party in this Agreement shall survive the Closing Date
hereunder and the consummation of the transactions contemplated hereby for two
(2) years from the Closing Date. All of the parties hereto are executing and
carrying out the provisions of this Agreement in reliance solely on the
representations, warranties and covenants and agreements contained in this
Agreement and not upon any investigation upon which it might have made or on any
representations, warranty, agreement, promise or information, written or oral,
made by the other party or any other person other than as specifically set forth
herein.
12. DOCUMENTS AT THE CLOSING. At the Closing, the following transactions shall
occur, all of such transactions being deemed to occur simultaneously:
(a) The Target will deliver, or cause to be delivered to the Acquiror
the following:
(i) Stock certificates representing the Target Shares being issued
to the Acquiror hereunder, duly endorsed for transfer.
(ii) A certificate of the President of the Target to the effect that
all representations and warranties made by the Target under or pursuant to this
Agreement are true, correct and reaffirmed as of the Closing Date, the same as
though originally given to the Acquiror on said date.
(iii) A good standing certificate from the Secretary of State of the
State of Illinois dated on or about the Closing Date that the Target is in good
standing under the laws of said State.
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(iv) A certificate from the jurisdiction (or local legal counsel
opinion if such certificate is not available) of the place of incorporation of
the Asset Entity dated on or about the Closing Date to the effect that the Asset
Entity is in good standing under the laws of said jurisdiction,
(v) A duly executed Investment Letter from each Target Stockholder.
(vi) The Asset Entity's financial statements compiled for the fiscal
years as at December 31, 1996 and December 31, 1997, which statements shall
include accompanying balance sheets of the Asset Entity and the related
statements of income for each of the two (2) years then ended.
(vii) Such other instruments, documents and certificates, if any, as
are reasonably required by the Acquiror and the Principal, including the legal
opinion set forth in Section 9(d) hereof, to be delivered pursuant to the
provisions of this Agreement.
(b) The Acquiror and the Principal will deliver or cause to be delivered:
(i) Stock certificates in the names of the Target Stockholders
representing the 8,000,000 Acquiror Shares to be issued by the Acquiror to the
Target Stockholders in full consideration for the Target Shares as set forth in
Section 2 hereof.
(ii) A certificates of the President of the Acquiror and the
President of the Principal to the effect that all representations and warranties
of the Acquiror and the Principal made under or pursuant to this Agreement are
true, correct and reaffirmed as of the Closing Date, the same as though
originally made and given to the Target on said date.
(iii) Certified copies of resolutions by the Acquiror's and the
Principal's Board of Directors and shareholders authorizing all of the
transactions described herein including those set forth in Section 8(d) of this
Agreement.
(iv) A good standing certificate from the Secretary of State of the
State of Nevada dated on or about the Closing Date that the Acquiror is in good
standing under the laws of said State and a good standing certificate from the
Secretary of State of the State of Delaware dated on or about the Closing Date
that the Principal is good standing under the laws of said State.
(v) Copies of the duly executed, certified By-Laws, the Amendment,
the Articles of Incorporation of the Acquiror as well as all amendments thereto.
(vi) A guarantee by the Principal that the Acquiror has no liability
incurred and accrued.
(vii) The legal opinion of the Acquiror's counsel as set forth in
Section 8 hereof.
(viii) All corporate, tax and other books and records of the Acquiror
in its possession, custody or control, including, but not limited to, all Board
of Directors and shareholders minutes and resolutions and other interested
corporate documents of the Acquiror.
(ix) The Financial Statements of the Acquiror for the fiscal years as
at June 30, 1996, June 30, 1997 and June 30, 1998, respectfully and the related
statements of operations for the periods then ended audited and certified by a
duly certified public accountant(s) meeting all standards imposed by the SEC.
(x) A receipt of the Acquiror of all of the issued and outstanding
capital stock of the Target.
(xi) Resignations of all current officers and directors of the
Acquiror after appointment of new directors and officers nominated by the Target
Stockholders.
10
(xii) Such other instruments and documents as are required to be
delivered (or requested by the Target's legal counsel) pursuant to the
provisions of this Agreement.
13. MISCELLANEOUS.
(a) FURTHER ASSURANCES. At any time, and from time to time, after the date
of this Agreement, each party will execute such additional instruments and take
such action as may be reasonably required by the other party to confirm the
provisions of this Agreement or otherwise to carry out the intent and purposes
of this Agreement. In addition, the Principal hereby covenant and agree to fully
cooperate with the Acquiror in any future NASDAQ listing application the
Acquiror may submit to NASD.
(b) WAIVER. Any failure on the party of any party hereto to comply with any
of its obligations, agreements or conditions hereunder may be waived only in
writing by the party to whom such compliance is owed.
(c) BROKERS. Neither party has employed any brokers or finders with regard
to this Agreement and the transactions contemplated hereby.
(d) NOTICES. All notices, consents, requests, demands and other
communications required or permitted to be given under this Agreement shall be
in writing and delivered personally, receipt acknowledged, or by
nationally-recognized overnight courier service, next-day delivery guaranteed
with receipt acknowledged, or mailed by registered or certified mail, postage
prepaid, return receipt requested, addressed to the parties hereto as follows
(or to such other addresses as any of the parties hereto shall specify by notice
given in accordance with this provision):
If to the Acquiror: Solar Age Industries, Inc.
00 Xxxxxxxxxxxxx Xxxx, (P.0. Box 233)
Xxxxxxxxxx Xxxx, Xxx Xxxxxx 00000
If to the Principal: HITK Corporation
00 Xxxxxxxxxxxxx Xxxx, (X.0. Box 233)
Xxxxxxxxxx Xxxx, Xxx Xxxxxx 00000
With a copy to: Xxxx X. Xxxxxx, Esq.
00 Xxxxxxxx Xxxx
Xxxxxxxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxx
If to the Target/Stockholders: SGI Capital, Inc.
0000 Xxxxxx Xxxxxxxxx (525)
Xxxxxxxx, Xxxxxxxx 00000
With a copy to: Xxxxxx X. Xxxxxxx, Esq.
00 Xxxxx XxXxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
All such notices, consents, requests, demands and other communications shall
be deemed given when personally delivered as aforesaid, or, if mailed as
aforesaid, on the third business day after the mailing thereof or on the day
actually received, if earlier, except for a notice of a change of address which
shall be effective only upon receipt.
(e) HEADINGS. The section and subsection headings in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(f) 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.
11
(g) BINDING EFFECT. This Agreement shall be binding upon the parties hereto
and inure to the benefit of the parties, their respective heirs, administrators,
executors, successors and permitted assigns. The parties hereto agree that
neither this Agreement nor any right hereunder shall be assignable without the
prior express written consent of all of the parties hereto.
(h) ENTIRE AGREEMENT. This Agreement constitutes the entire agreement of
the parties hereto with respect to the subject matter hereof. There are no oral
promises, conditions, representations, understandings, interpretations or terms
of any kind as conditions or inducements to the execution hereof. This Agreement
can only be amended or supplemented by a written instrument signed by the party
to be bound hereby.
(i) SEVERABILITY. If any part of this Agreement is deemed to be
unenforceable, the balance of the Agreement shall remain in full force and
effect.
(j) TERMINATION. All obligations hereunder may be terminated at the
discretion of the Board of Directors of the Acquiror or the Target if (i) the
closing conditions specified in Sections 10 and 11 hereof are not satisfied or
waived by the Closing Date, unless extended as set forth in Section 7 hereof,
(ii) any of the representations and warranties made herein have been materially
breached, or (iii) at any time if the Target is not satisfied, for any reason,
with the due diligence investigation. If this Agreement is terminated in
accordance herewith, following such termination, the parties shall have no
obligations to each other.
(k) EXPENSES. Each party shall pay any and all of its expenses relating to
this Agreement and the related transactions contemplated hereby, including, but
not limited to, its own legal fees and costs.
(1) GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois with respect to contracts made
and to be fully performed therein, without regard to the conflicts of laws
principles thereof.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and year
first above written.
SOLAR AGE INDUSTRIES, INC. (ACQUIROR)
By:/s/ X.X. Xxxxxx
-----------------------
Name: X.X. Xxxxxx
Title: President
HITK CORPORATION (PRINCIPAL)
By: /s/ X.X. Xxxxxx
-----------------------
Name: X.X. Xxxxxx
Title: President
SGI CAPITAL, INC. (TARGET)
By:/s/ Xxxx Xxxxxxxxx
-----------------------
Name: Xxxx Xxxxxxxxx
Title: President
PALCAN GROUP INC.(TARGET STOCKHOLDER)
By:/s/ Xxxx Xxxxxxxxx
-----------------------
Name: Xxxx Xxxxxxxxx
Title: Director and Secretary
ROCHESTER PROPERTY HOLDINGS LIMITED
(TARGET STOCKHOLDER)
By:/s/ Xxxx Xxxxxxxxxxx
-----------------------
Name: Xxxx Xxxxxxxxxxx
Title: Director and Secretary
12
EXIBIT A
INVESTMENT LETTER # 1
---------------------
Target Stockholder (the "Target Stockholder") represents and warrants pursuant
to the Agreement and Plan of Reorganization (the "Agreement") the following:
(a) Target Stockholder is acquiring Solar Age Industries, Inc. ("Solar")
Common Stock for its own account in exchange for SGI Capital, Inc.'s ("SGI")
Common Stock in the ratio set forth in the Agreement for the purpose of
investment, and not with a view to, or for sale in connection with, any
distribution thereof; and
(b) Target Stockholder (i) has such knowledge and experience in financial
and business matters that it is capable of evaluating the merits and risks of
its proposed investment in Solar's Common Stock; or (ii) has been advised by
attorneys, accountants or other representatives having such knowledge and
experience. Target Stockholder acknowledges that its attorneys, accountants or
other representatives, had, prior to its actions as Target Stockholder in voting
upon or otherwise consenting to the Agreement, the opportunity to ask questions
of, and to receive answers from the officers concerning Solar and its business
and financial condition; and
(c) Target Stockholder understands and acknowledges that shares of the
Solar Common Stock to be delivered to it pursuant to the provisions of Section I
of the Agreement will be "restricted securities" within the meaning of the
Securities Act of 1933, as amended (the "1933 Act"), and agrees that the
certificates therefore shall bear the following legend or substantially similar
legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN PURCHASED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR UNDER ANY OTHER
APPLICABLE STATE SECURITIES LAWS. THE SHARES MAY NOT BE SOLD OR TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR PURSUANT TO AN EXEMPTION UNDER SAID ACT
AND/OR UNDER SAID STATE SECURITIES.
The Target Stockholder further understands and acknowledges that stop transfer
instructions will be issued by Solar to its transfer agent with respect to all
of Solar Common Stock to be delivered to it pursuant to the provisions of the
Agreement; and
(d) Target Stockholder understands and acknowledges that the shares of the
Solar Common Stock to be delivered pursuant to the provisions of the Agreement
will not be registered under the 1933 Act and, accordingly, Target Stockholder
recognizes that it may be required to bear the economic risk of its investment
until such shares are registered. Target Stockholder agrees on behalf of itself,
and its heirs, executors, successors and assigns, that it will only sell,
transfer, pledge or hypothecate any of the Solar Common Stock to be acquired by
it pursuant to the provisions of the Agreement pursuant to an effective
registration statement under the 1933 Act or in a transaction wherein
registration under the 1933 Act is not required. Target Stockholder understands
that Solar has no obligation to register such Solar Common Stock under the 1933
Act.
PALCAN GROUP INC. (TARGET STOCKHOLDER)
By: /s/ Xxxx Xxxxxxxxx
--------------------------
Name: Xxxx Xxxxxxxxx
Title: Director and Secretary
INVESTMENT LETTER # 2
---------------------
Target Stockholder (the "Target Stockholder") represents and warrants pursuant
to the Agreement and Plan of Reorganization (the "Agreement") the following:
(a) Target Stockholder is acquiring Solar Age Industries, Inc. ("Solar")
Common Stock for its own account in exchange for SGI Capital, Inc.'s ("SGI")
Common Stock in the ratio set forth in the Agreement for the purpose of
investment, and not with a view to, or for sale in connection with, any
distribution thereof; and
(b) Target Stockholder (i) has such knowledge and experience in financial
and business matters that it is capable of evaluating the merits and risks of
its proposed investment in Solar's Common Stock; or (ii) has been advised by
attorneys, accountants or other representatives having such knowledge and
experience. Target Stockholder acknowledges that its attorneys, accountants or
other representatives, had, prior to its actions as Target Stockholder in voting
upon or otherwise consenting to the Agreement, the opportunity to ask questions
of, and to receive answers from the officers concerning Solar and its business
and financial condition; and
(c) Target Stockholder understands and acknowledges that shares of the
Solar Common Stock to be delivered to it pursuant to the provisions of Section I
of the Agreement will be "restricted securities" within the meaning of the
Securities Act of 1933, as amended (the "1933 Act"), and agrees that the
certificates therefore shall bear the following legend or substantially similar
legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN PURCHASED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR UNDER ANY OTHER
APPLICABLE STATE SECURITIES LAWS. THE SHARES MAY NOT BE SOLD OR TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR PURSUANT TO AN EXEMPTION UNDER SAID ACT
AND/OR UNDER SAID STATE SECURITIES.
The Target Stockholder further understands and acknowledges that stop transfer
instructions will be issued by Solar to its transfer agent with respect to all
of Solar Common Stock to be delivered to it pursuant to the provisions of the
Agreement; and
(d) Target Stockholder understands and acknowledges that the shares of the
Solar Common Stock to be delivered pursuant to the provisions of the Agreement
will not be registered under the 1933 Act and, accordingly, Target Stockholder
recognizes that it may be required to bear the economic risk of its investment
until such shares are registered. Target Stockholder agrees on behalf of itself,
and its heirs, executors, successors and assigns, that it will only sell,
transfer, pledge or hypothecate any of the Solar Common Stock to be acquired by
it pursuant to the provisions of the Agreement pursuant to an effective
registration statement under the 1933 Act or in a transaction wherein
registration under the 1933 Act is not required. Target Stockholder understands
that Solar has no obligation to register such Solar Common Stock under the 1933
Act.
ROCHESTER PROPERTY HOLDINGS LIMITED (TARGET STOCKHOLDER)
By: /s/ Xxxx Xxxxxxxxxxx
----------------------------
Name: Xxxx Xxxxxxxxxxx
Title: Director and Secretary
