SHARE EXCHANGE AGREEMENT By and Among A Delaware Corporation and SquareOne Medical, Inc. A Nevada Corporation and the Shareholders of SquareOne Medical, Inc., a Nevada Corporation Dated as of June 25, 2009
Exhibit
2.1
By and
Among
E-18
Corp.
A
Delaware Corporation
and
SquareOne
Medical, Inc.
A Nevada
Corporation
and
the
Shareholders of SquareOne Medical, Inc., a Nevada Corporation
Dated as
of June 25, 2009
THIS SHARE EXCHANGE AGREEMENT
(hereinafter referred to as this “Agreement”) is entered into as of this 25th
day of June, 2009, by and between E-18 Corp., a Delaware corporation
(hereinafter referred to as “E-18”), with offices at 00 Xxxx Xxxx Xxxxxx, Xxx
Xxxx, Xxxxxx, 00000 and SquareOne Medical, Inc., a Nevada corporation
(hereinafter referred to as “SquareOne”), with offices at 000 Xxxxx Xxxxxx XX,
Xxxxx #0000, Xxxxxxxxxxx, Xxxxxxxxx 00000, X.X.X. and the
shareholders of SquareOne (collectively, the “SquareOne Shareholders,”
individually, the “SquareOne Shareholder”) as set forth on Exhibit A hereto.
Each of the parties to this Agreement is individually referred to herein as a
“Party” and
collectively, as the “Parties.”
Premises
WHEREAS, E-18 is a publicly
held corporation organized under the laws of the State of Delaware with no
significant operations;
WHEREAS, SquareOne has
20,714,000 shares of capital stock (the “SquareOne Stock”)
issued and outstanding, all of which are held by the SquareOne Shareholders.
Each SquareOne Shareholder is the record and beneficial owner of the number of
shares of SquareOne Stock set forth adjacent such SquareOne Shareholder’s name
on Exhibit A
hereto.
WHEREAS, in consideration for
100% of the issued and outstanding SquareOne Stock, E-18 agrees to issue
35,000,000 shares of E-18 common stock, par value $.0001 per share (the “E-18
Common Stock”) which represents 77.78% of the issued and outstanding capital
stock of E-18. On the Closing Date (as defined in Section 1.02), SquareOne will
become a wholly-owned subsidiary of E-18.
Agreement
NOW THEREFORE, on the stated
premises and for and in consideration of the mutual covenants and agreements
hereinafter set forth and the mutual benefits to the parties to be derived here
from, and intending to be legally bound hereby, it is hereby agreed as
follows:
ARTICLE
I
PLAN
OF EXCHANGE
Section
1.01 Share
Exchange. On the
terms and subject to the conditions set forth in this Agreement, on the Closing
Date, the SquareOne Shareholders by executing this Agreement, shall assign,
transfer and deliver, free and clear of all liens, pledges, encumbrances,
charges, restrictions or known claims of any kind, nature, or description, the
number of shares of SquareOne set forth on the SquareOne Schedule attached
hereto, constituting all of the shares of SquareOne held by such SquareOne
Shareholders.
In exchange for the transfer of such
securities by the SquareOne Shareholders, E-18 shall issue to the SquareOne
Shareholders, their affiliates or assigns, 35,000,000 shares pursuant to Exhibit A attached
hereto for all of the outstanding shares of SquareOne held by SquareOne
Shareholders (the “Exchange Shares”). After the cancellation of the 15,000,000
shares of E-18 Common Stock upon the Closing, as set forth in Section 1.02
hereof, the 35,000,000 shares shall represent approximately 77.78% of the total
E-18 Common Stock. At the Closing Date, each SquareOne Shareholder shall, on
surrender of his certificate or certificates representing his SquareOne shares
to E-18 or its registrar or transfer agent, be entitled to receive a certificate
or certificates evidencing his proportionate interest in the Exchange
Shares.
1
Upon
consummation of the transaction contemplated herein, all of the issued and
outstanding shares of SquareOne shall be held by E-18. Upon
consummation of the transaction contemplated herein there shall be 45,000,000
shares of E-18 Common Stock issued and outstanding.
Section
1.02 Exchange of Convertible
Securities. Effective as of the Closing Date, the holders (individually,
the “Holder,” and collectively the “Holders”) of the outstanding warrants,
options and convertible debentures of SquareOne (collectively, the “Convertible
Securities”), as set forth on Schedule 1.02 hereto, upon the exercise or
conversion of the Convertible Securities, shall have the right to convert such
Convertible Securities into the kind and amount of shares of stock and other
securities and property which such Holder would have owned or have been entitled
to receive prior to the Closing of the share exchange transaction contemplated
in this Agreement, multiplied by 1.6897.
Section
1.03 Cancellation of Certain
Shares of E-18 Common Stock. Prior to the Closing Date, Xxxxx Xxxxx and
Yosef Itamar Krytman, the former officers and directors of E-18, and Avraham
Xxxx Xxxxxxx, a principal shareholder of E-18, shall cancel a total number of
15,000,000 shares of E-18 Common Stock.
Section
1.04 Closing. The
closing (“Closing”) of the transactions contemplated by this Agreement shall
occur upon the exchange of the stock of E-18 and SquareOne as described in
Section 1.01 herein (the “Closing Date”). Such Closing shall take
place at a mutually agreeable time and place.
Section
1.05 Closing
Events. At
the Closing, E-18, SquareOne and the SquareOne Shareholders shall execute,
acknowledge, and deliver (or shall ensure to be executed, acknowledged, and
delivered), any and all certificates, opinions, financial statements, schedules,
agreements, resolutions, rulings or other instruments required by this Agreement
to be so delivered at or prior to the Closing, together with such other items as
may be reasonably requested by the parties hereto and their respective legal
counsel in order to effectuate or evidence the transactions contemplated
hereby.
Section
1.06 Termination. This
Agreement may be terminated by the board of directors of SquareOne or E-18 only
in the event that E-18 or SquareOne does not meet the conditions precedent set
forth in Articles VI and VII. If this Agreement is terminated
pursuant to this section, this Agreement shall be of no further force or effect,
and no obligation, right or liability shall arise hereunder.
Section
1.07 Directors of E-18 at
Closing. Effective as of the Closing Date, and subject to applicable
regulatory requirements, including the preparation, filing and distribution to
the shareholders of E-18 of a Schedule 14(f)-1 Notice to Stockholders, Xxxxx
Xxxxx and Yosef Itamar Krytman shall resign from the board of directors of E-18
and the following individuals shall be appointed to the board of
E-18:
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Xxxx X. Xxxxxxx – Chairman
Xxxx Xxxxxxx – Director
Xxxxxx Xxxx – Director
Xxxx X. Xxxxxxxx –
Director
Section
1.08 Officers of E-18 at
Closing. Effective as of the Closing Date, Xxxxx Xxxxx and
Xxxxx Xxxxxx Krytman shall resign from each officer position held at E-18, and
the following individual shall be appointed to the offices of E-18:
Xxxx X. Xxxxxxxx – President, Chief
Executive Officer, Secretary
Xxxx Xxxxxxx – Chief Operating
Officer
Xxxxxx Xxxx – Chief Marketing
Officer
Xxxx X. Xxxxxxx – Chief Intelligence
Officer
ARTICLE
II
REPRESENTATIONS,
COVENANTS, AND WARRANTIES OF SQUAREONE
As an
inducement to, and to obtain the reliance of E-18, except as set forth in the
SquareOne Schedules, (as hereinafter defined), SquareOne represents and warrants
as of the Closing Date, as defined below, as follows:
Section
2.01 Incorporation.
Section
2.02 SquareOne
is a company duly incorporated, validly existing, and in good standing under the
laws of the state of Nevada and has the corporate power and is duly authorized
under all applicable laws, regulations, ordinances, and orders of public
authorities to carry on its business in all material respects as it is now being
conducted. Included in the SquareOne Schedules are complete and correct copies
of the articles of incorporations and bylaws of SquareOne as in effect on the
date hereof. The execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated hereby will not, violate any
provision of SquareOne’s articles of incorporation or bylaws. SquareOne has
taken all actions required by law, its articles of incorporation and bylaws, or
otherwise to authorize the execution and delivery of this
Agreement. SquareOne has full power, authority, and legal capacity
and has taken all action required by law, its articles of incorporation and
bylaws, and otherwise to consummate the transactions herein
contemplated.
Section
2.02 Authorized
Shares. SquareOne
is authorized to issue 70,000,000 shares of capital stock, consisting of
50,000,000 shares of common stock, par value of $0.01 per share and 20,000,000
shares of preferred stock, par value of $0.01 per share. There are
20,714,000 shares of common stock currently issued and outstanding and zero
shares of preferred stock currently issued and outstanding. The
issued and outstanding shares are validly issued, fully paid, and non-assessable
and not issued in violation of the preemptive or other rights of any
person. Except as disclosed in the Schedule 2.02, there
are not other bonds, debentures, notes or other indebtedness of
SquareOne having the right to vote (or convertible into, or exchangeable for,
securities having right to the vote (“Voting SquareOne Debt”). Except as
disclosed in the
Schedule 2.02, there are not other options, warrants, rights, stock-based
performance units, commitments, contracts, arrangements or undertakings of any
kind to which SquareOne is a party or by which any of them is bound (a)
obligating SquareOne to issue, deliver or sell, or cause to be issued, delivered
or sold, additional shares of capital stock or other equity interests in, or any
security convertible or exercisable for or exchangeable into any capital stock
of or other equity interest in SquareOne or any Voting SquareOne Debt, (b)
obligating SquareOne to issue, grant, extend or enter into any such option,
warrant, call, right, security, commitment, contract, arrangement or undertaking
or (c) that give any person the right to receive any economic benefit or right
similar to or derived from the economic benefits and rights occurring to holders
of the capital stock of SquareOne. As of the date of this Agreement, there are
not any outstanding contractual obligations of SquareOne to repurchase, redeem
or otherwise acquire any shares of capital stock of SquareOne.
3
Section
2.03 Subsidiaries. As
of the date of this Agreement, SquareOne does not have any subsidiaries, and
does not own, beneficially or of record, any shares of any other
corporation.
Section
2.04 Financial
Statements.
(a) Included
in the SquareOne Schedules are the audited balance sheets of SquareOne as of
December 31, 2008 and 2007 and the related audited statements of operations,
stockholders’ equity and cash flows for the fiscal years ended December 31, 2008
and 2007 and for the quarter ended March 31, 2009, together with the notes to
such statements and the opinion of Xxxxx & Associates,
Chartered, independent certified public accountants.
(b) All such
financial statements have been prepared in accordance with generally accepted
accounting principles (the “US GAAP”) consistently applied throughout the
periods involved. The SquareOne balance sheets are true and accurate and present
fairly as of their respective dates the financial condition of
SquareOne. As of the date of such balance sheets, except as and to
the extent reflected or reserved against therein, SquareOne had no other
liabilities or obligations (absolute or contingent) which should be reflected in
the balance sheets or the notes thereto prepared in accordance with the U.S.
GAAP, and all assets reflected therein are properly reported and present fairly
the value of the assets of SquareOne, in accordance with the US GAAP. The
statements of operations, stockholders’ equity and cash flows reflect fairly the
information required to be set forth therein by generally accepted accounting
principles.
(c) SquareOne
has duly and punctually paid all governmental fees and taxation which it has
become liable to pay and has duly allowed for all taxation reasonably
foreseeable and is under no liability to pay any penalty or interest in
connection with any claim for governmental fees or taxation and SquareOne has
made any and all proper declarations and returns for taxation purposes and all
information contained in such declarations and returns is true and complete and
full provision or reserves have been made in its financial statements for all
governmental fees and taxation.
(d) The books
and records, financial and otherwise of SquareOne are in all material aspects
complete and correct and have been maintained in accordance with good business
and accounting practices.
4
(e) All of
SquareOne’s assets are reflected on its financial statements, and, except as set
forth in the SquareOne Schedules or the financial statements of SquareOne or the
notes thereto, SquareOne has no material liabilities, direct or indirect,
matured or unmatured, contingent or otherwise.
Section
2.05 Information. The
information concerning SquareOne set forth in this Agreement and in the
SquareOne Schedules is complete and accurate in all material respects and does
not contain any untrue statement of a material fact or omit to state a material
fact required to make the statements made, in light of the circumstances under
which they were made, not misleading. In addition, SquareOne has
fully disclosed in writing to E-18 (through this Agreement or the SquareOne
Schedules) all information relating to matters involving SquareOne or its assets
or its present or past operations or activities which (i) indicated or may
indicate, in the aggregate, the existence of a greater than $50,000 liability ,
(ii) have led or may lead to a competitive disadvantage on the part of SquareOne
or (iii) either alone or in aggregation with other information covered by this
Section, otherwise have led or may lead to a material adverse effect on
SquareOne, its assets, or its operations or activities as presently conducted or
as contemplated to be conducted after the Closing Date, including, but not
limited to, information relating to governmental, employee, environmental,
litigation and securities matters and transactions with affiliates.
Section
2.06 Absence of Certain Changes
or Events. Since
March 31, 2009:
(a) There has
not been any material adverse change in the business, operations, properties,
assets, or condition (financial or otherwise) of SquareOne;
(b) SquareOne
has not (i) amended its articles of incorporation or bylaws; (ii) declared or
made, or agreed to declare or make, any payment of dividends or distributions of
any assets of any kind whatsoever to stockholders or purchased or redeemed, or
agreed to purchase or redeem, any of its shares; (iii) made any material change
in its method of management, operation or accounting, (iv) entered into any
other material transaction other than sales in the ordinary course of its
business; or (v) made any increase in or adoption of any profit sharing, bonus,
deferred compensation, insurance, pension, retirement, or other employee benefit
plan, payment, or arrangement made to, for, or with its officers, directors, or
employees; and
(c) Except as
disclosed in the SquareOne Schedules, SquareOne has not (i) granted or agreed to
grant any options, warrants or other rights for its stocks, bonds or other
corporate securities calling for the issuance thereof, (ii) borrowed or agreed
to borrow any funds or incurred, or become subject to, any material obligation
or liability (absolute or contingent) except as disclosed herein and except
liabilities incurred in the ordinary course of business; (iii) sold or
transferred, or agreed to sell or transfer, any of its assets, properties, or
rights or canceled, or agreed to cancel, any debts or claims; or (iv) issued,
delivered, or agreed to issue or deliver any stock, bonds or other corporate
securities including debentures (whether authorized and unissued or held as
treasury stock) except in connection with this Agreement.
5
Section
2.07 Litigation and
Proceedings. As of
the date of this Agreement, there are no actions, suits, proceedings, or
investigations pending or, to the knowledge of SquareOne after reasonable
investigation, threatened by or against SquareOne or affecting SquareOne or its
properties, at law or in equity, before any court or other governmental agency
or instrumentality, domestic or foreign, or before any arbitrator of any
kind. SquareOne does not have any knowledge of any material default
on its part with respect to any judgment, order, injunction, decree, award,
rule, or regulation of any court, arbitrator, or governmental agency or
instrumentality or of any circumstances which, after reasonable investigation,
would result in the discovery of such a default.
Section
2.08 Contracts.
(a) All
“material” contracts, agreements, franchises, license agreements, debt
instruments or other commitments to which SquareOne is a party or by
which it or any of its assets, products, technology, or properties are bound
other than those incurred in the ordinary course of business are set forth on
the SquareOne Schedules. A “material” contract, agreement, franchise, license
agreement, debt instrument or commitment is one which (i) will remain in effect
for more than six (6) months after the date of this Agreement or (ii) involves
aggregate obligations of at least fifty thousand dollars ($50,000);
(b) All
contracts, agreements, franchises, license agreements, and other commitments to
which SquareOne is a party or by which its properties are bound and which are
material to the operations of SquareOne taken as a whole are valid and
enforceable by SquareOne in all respects, except as limited by bankruptcy and
insolvency laws and by other laws affecting the rights of creditors generally;
and
(c) Except as
included or described in the SquareOne Schedules or reflected in the most recent
SquareOne balance sheet, SquareOne is not a party to any oral or written (i)
contract for the employment of any officer or employee; (ii) profit sharing,
bonus, deferred compensation, stock option, severance pay, pension benefit or
retirement plan, (iii) agreement, contract, or indenture relating to the
borrowing of money, (iv) guaranty of any obligation; (vi) collective bargaining
agreement; or (vii) agreement with any present or former officer or director of
SquareOne.
Section
2.09 No Conflict with Other
Instruments. The
execution of this Agreement and the consummation of the transactions
contemplated by this Agreement will not result in the breach of any term or
provision of, constitute a default under, or terminate, accelerate or modify the
terms of any indenture, mortgage, deed of trust, or other material agreement, or
instrument to which SquareOne is a party or to which any of its assets,
properties or operations are subject.
Section
2.10 Compliance with Laws and
Regulations. To the
best of its knowledge, SquareOne has complied with all applicable statutes and
regulations of any federal, state, or other governmental entity or agency
thereof, except to the extent that noncompliance would not materially and
adversely affect the business, operations, properties, assets, or condition of
SquareOne or except to the extent that noncompliance would not result in the
occurrence of any material liability for SquareOne. This compliance
includes, but is not limited to, the filing of all reports to date with federal
and state securities authorities.
6
Section
2.11 Authority, Execution and
Delivery; Enforceability of Agreement. SquareOne has all
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the Share Exchange. The execution and delivery by SquareOne of
this Agreement and the consummation by SquareOne of the Share Exchange have been
duly authorized and approved by the Board of Directors of SquareOne and no other
corporate proceedings on the part of SquareOne are necessary to authorize this
Agreement and the Share Exchange. When executed and delivered, this
Agreement will be enforceable against SquareOne in accordance with its
terms.
Section
2.12 SquareOne
Schedules. SquareOne
has delivered to E-18 the following schedules, which are collectively referred
to as the “SquareOne Schedules” and which consist of separate schedules dated as
of the date of execution of this Agreement, all certified by the chief executive
officer of SquareOne as complete, true, and correct as of the date of this
Agreement in all material respects:
(a) a
schedule containing complete and correct copies of the articles of incorporation
and bylaws in effect as of the date of this Agreement;
(b) a
schedule containing the financial statements of SquareOne identified in
paragraph 2.04(a);
(c) a
schedule setting forth a description of any material adverse change in the
business, operations, property, inventory, assets, or condition of SquareOne
since March 31, 2009, required to be provided pursuant to section 2.06
hereof;
(d) a
schedule of any exceptions to the representations made herein; and
(e) a
schedule containing the other information requested above.
SquareOne
shall cause the SquareOne Schedules and the instruments and data delivered to
E-18 hereunder to be promptly updated after the date hereof up to and including
the Closing Date.
Section
2.13 Valid
Obligation. This
Agreement and all agreements and other documents executed by SquareOne in
connection herewith constitute the valid and binding obligation of SquareOne,
enforceable in accordance with its or their terms, except as may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting the
enforcement of creditors’ rights generally and subject to the qualification that
the availability of equitable remedies is subject to the discretion of the court
before which any proceeding therefore may be brought.
Section
2.14 Title to
Properties. Except as disclosed in Schedule 2.14,
SquareOne does not own any real property.
Section
2.15 Intellectual
Property. Except as disclosed in Schedule 2.15,
SquareOne does not own, nor is validly licensed nor otherwise has the right to
use, any Intellectual Property Rights. No claims are pending or, to
the knowledge of SquareOne, threatened that SquareOne is infringing or otherwise
adversely affecting the rights of any person with regard to any Intellectual
Property Rights.
Section
2.16 Insurance. Except as
disclosed in Schedule
2.16, SquareOne and any of its subsidiaries does not currently maintain
any form of insurance.
7
Section
2.17 Labor
Matters. Except as disclosed in Schedule 2.17, there
are no collective bargaining or other labor union agreements to which SquareOne
is a party or by which SquareOne is bound. No material labor dispute
exists or, to the knowledge of SquareOne, is imminent with respect to any of the
employees of SquareOne.
ARTICLE
III
REPRESENTATIONS,
COVENANTS, AND WARRANTIES OF E-18
As an
inducement to, and to obtain the reliance of SquareOne and the SquareOne
Shareholders, except as set forth in the E-18 Schedules (as hereinafter
defined), E-18 represents and warrants, as of the date hereof and as of the
Closing Date, as follows:
Section
3.01 Organization. E-18
is a corporation duly organized, validly existing, and in good standing under
the laws of the State of Delaware and has the corporate power and is duly
authorized under all applicable laws, regulations, ordinances, and orders of
public authorities to carry on its business in all material respects as it is
now being conducted. Included in the E-18 Schedules are complete and
correct copies of the certificate of incorporation and bylaws of E-18 as in
effect on the date hereof. The execution and delivery of this Agreement does
not, and the consummation of the transactions contemplated hereby will not,
violate any provision of E-18’ certificate of incorporation or
bylaws. E-18 has taken all action required by law, its certificate of
incorporation, its bylaws, or otherwise to authorize the execution and delivery
of this Agreement, and E-18 has full power, authority, and legal right and has
taken all action required by law, its certificate of incorporation, bylaws, or
otherwise to consummate the transactions herein contemplated.
Section
3.02 Capitalization. E-18
is authorized to issue 150,000,000 shares of common stock, par value $.0001 per
share (“E-18 Common Stock”), of which 10,000,000 shares are issued and
outstanding after the cancellation of 15,000,000 shares of common stock by our
officers, directors, and majority shareholder as of the date hereof, and no
shares of preferred stock. All issued and outstanding shares are
legally issued, fully paid, and non-assessable and not issued in violation of
the preemptive or other rights of any person. There are no bonds, debentures,
notes or other indebtedness of E-18 having the right to vote (or convertible
into, or exchangeable for, securities having right to the vote (“Voting E-18
Debt”). There are no options, warrants, rights, stock-based performance units,
commitments, contracts, arrangements or undertakings of any kind to which E-18
is a party or by which the company is bound (a) obligating E-18 to issue,
deliver or sell, or cause to be issued, delivered or sold, additional shares of
capital stock or other equity interests in, or any security convertible or
exercisable for or exchangeable into any capital stock of or other equity
interest in E-18 or any Voting E-18 Debt, (b) obligating E-18 to issue, grant,
extend or enter into any such option, warrant, call, right, security,
commitment, contract, arrangement or undertaking or (c) that give any person the
right to receive any economic benefit or right similar to or derived from the
economic benefits and rights occurring to holders of the capital stock of E-18.
As of the date of this Agreement, there are not any outstanding contractual
obligations of E-18 to repurchase, redeem or otherwise acquire any shares of
capital stock of E-18.
Section
3.03 Subsidiaries and Predecessor
Corporations. E-18
does not have any subsidiaries, and does not own, beneficially or of record, any
shares of any other corporation.
8
Section
3.04 No Assets
or Liabilities. Except as set forth on the attached Schedule 3.04, E-18
does not have any (a) material assets of any kind or (b) material liabilities or
obligations, whether secured or unsecured, accrued, determined, absolute or
contingent, asserted or unasserted or otherwise.
Section
3.05 Financial
Statements.
(a) Included
in the E-18 Schedules are (i) the audited balance sheets of E-18 as of December
31, 2008 and 2007 and the related audited statements of operations,
stockholders’ equity and cash flows for December 31, 2008 and 2007 together with
the notes to such statements and the opinion of Xxxxxxxx & Associates LLC,
independent certified public accountants with respect thereto.
(b) Included
in the E-18 Schedules are: (i) unaudited balance sheets of March 31, 2009 and
the related unaudited statements of operations, stockholders’ equity and cash
flows for the quarters ended on such dates and all such financial statements
have been reviewed by Xxxxxxxx & Associates LLC.
(c) All such
financial statements have been prepared in accordance with the U.S. GAAP
consistently applied throughout the periods involved. The E-18 balance sheets
are true and accurate and present fairly as of their respective dates the
financial condition of E-18. As of the date of such balance sheets,
except as and to the extent reflected or reserved against therein, E-18 had no
liabilities or obligations (absolute or contingent) which should be reflected in
the balance sheets or the notes thereto prepared in accordance with generally
accepted accounting principles, and all assets reflected therein are properly
reported and present fairly the value of the assets of E-18, in accordance with
the US GAAP. The statements of operations, stockholders’ equity and cash flows
reflect fairly the information required to be set forth therein by the US
GAAP.
(d) E-18 has
no liabilities with respect to the payment of any federal, state, county, local
or other taxes (including any deficiencies, interest or penalties), except for
taxes accrued but not yet due and payable.
(e) E-18 has
timely filed all state, federal or local income and/or franchise tax returns
required to be filed by it from inception to the date hereof. Each of
such income tax returns reflects the taxes due for the period covered thereby,
except for amounts which, in the aggregate, are immaterial.
(f) The books
and records, financial and otherwise, of E-18 are in all material aspects
complete and correct and have been maintained in accordance with good business
and accounting practices.
(g) All of
E-18’s assets are reflected on its financial statements, and, except as set
forth in the E-18 Schedules or the financial statements of E-18 or the notes
thereto, E-18 has no material liabilities, direct or indirect, matured or
unmatured, contingent or otherwise.
9
Section
3.06 Information. The
information concerning E-18 set forth in this Agreement and the E-18 Schedules
is complete and accurate in all material respects and does not contain any
untrue statements of a material fact or omit to state a material fact required
to make the statements made, in light of the circumstances under which they were
made, not misleading. In addition, E-18 has fully disclosed in
writing to E-18 (through this Agreement or the E-18 Schedules) all information
relating to matters involving E-18 or its assets or its present or past
operations or activities which (i) indicated or may indicate, in the aggregate,
the existence of a greater than $500 liability , (ii) have led or may lead to a
competitive disadvantage on the part of E-18 or (iii) either alone or in
aggregation with other information covered by this Section, otherwise have led
or may lead to a material adverse effect on E-18, its assets, or its operations
or activities as presently conducted or as contemplated to be conducted after
the Closing Date, including, but not limited to, information relating to
governmental, employee, environmental, litigation and securities matters and
transactions with affiliates.
Section
3.07 Absence of Certain Changes
or Events. Since
December 31, 2008:
(a) there has
not been (i) any material adverse change in the business, operations,
properties, assets or condition of E-18 or (ii) any damage, destruction or loss
to E-18 (whether or not covered by insurance) materially and adversely affecting
the business, operations, properties, assets or condition of E-18;
(b) E-18 has
not (i) amended its certificate of incorporation or bylaws except as required by
this Agreement; (ii) declared or made, or agreed to declare or make any payment
of dividends or distributions of any assets of any kind whatsoever to
stockholders or purchased or redeemed, or agreed to purchase or redeem, any of
its capital stock; (iii) waived any rights of value which in the aggregate are
outside of the ordinary course of business or material considering the business
of E-18; (iv) made any material change in its method of management,
operation, or accounting; (v) entered into any transactions or agreements other
than in the ordinary course of business; (vi) made any accrual or arrangement
for or payment of bonuses or special compensation of any kind or any severance
or termination pay to any present or former officer or employee;
(vii) increased the rate of compensation payable or to become payable by it to
any of its officers or directors or any of its salaried employees whose monthly
compensation exceed $1,000; or (viii) made any increase in any profit
sharing, bonus, deferred compensation, insurance, pension, retirement, or other
employee benefit plan, payment, or arrangement, made to, for or with its
officers, directors, or employees;
(c) E-18 has
not (i) granted or agreed to grant any options, warrants, or other rights for
its stock, bonds, or other corporate securities calling for the issuance
thereof; (ii) borrowed or agreed to borrow any funds or incurred, or become
subject to, any material obligation or liability (absolute or contingent) except
liabilities incurred in the ordinary course of business; (iii) paid or agreed to
pay any material obligations or liabilities (absolute or contingent) other than
current liabilities reflected in or shown on the most recent E-18 balance sheet
and current liabilities incurred since that date in the ordinary course of
business and professional and other fees and expenses in connection with the
preparation of this Agreement and the consummation of the transaction
contemplated hereby; (iv) sold or transferred, or agreed to sell or transfer,
any of its assets, properties, or rights (except assets, properties, or rights
not used or useful in its business which, in the aggregate have a value of less
than $1,000), or canceled, or agreed to cancel, any debts or claims (except
debts or claims which in the aggregate are of a value less than $1,000); (v)
made or permitted any amendment or termination of any contract, agreement, or
license to which it is a party if such amendment or termination is material,
considering the business of E-18; or (vi) issued, delivered or agreed to issue
or deliver, any stock, bonds or other corporate securities including debentures
(whether authorized and unissued or held as treasury stock), except in
connection with this Agreement; and
10
(d) to its
knowledge, E-18 has not become subject to any law or regulation which materially
and adversely affects, or in the future, may adversely affect, the business,
operations, properties, assets or condition of E-18.
Section
3.08 Litigation and
Proceedings. There
are no actions, suits, proceedings or investigations pending or, to the
knowledge of E-18 after reasonable investigation, threatened by or against E-18
or affecting E-18 or its properties, at law or in equity, before any court or
other governmental agency or instrumentality, domestic or foreign, or before any
arbitrator of any kind except as disclosed in the E-18
Schedules. E-18 has no knowledge of any default on its part with
respect to any judgment, order, writ, injunction, decree, award, rule or
regulation of any court, arbitrator, or governmental agency or instrumentality
or any circumstance which after reasonable investigation would result in the
discovery of such default.
Section
3.09 Contracts.
(a) E-18 is
not a party to, and its assets, products, technology and properties are not
bound by, any contract, franchise, license agreement, agreement, debt instrument
or other commitments whether such agreement is in writing or oral.
(b) E-18 is
not a party to or bound by, and the properties of E-18 are not subject to any
contract, agreement, other commitment or instrument; any charter or other
corporate restriction; or any judgment, order, writ, injunction, decree, or
award; and
(c) E-18 is
not a party to any oral or written (i) contract for the employment of any
officer or employee; (ii) profit sharing, bonus, deferred compensation, stock
option, severance pay, pension benefit or retirement plan, (iii) agreement,
contract, or indenture relating to the borrowing of money, (iv) guaranty of any
obligation, (vi) collective bargaining agreement; or (vii) agreement with any
present or former officer or director of E-18.
Section
3.10 No Conflict with Other
Instruments. The
execution of this Agreement and the consummation of the transactions
contemplated by this Agreement will not result in the breach of any term or
provision of, constitute a default under, or terminate, accelerate or modify the
terms of, any indenture, mortgage, deed of trust, or other material agreement or
instrument to which E-18 is a party or to which any of its assets, properties or
operations are subject.
Section
3.11 Compliance with Laws and
Regulations. To the best of its
knowledge, E-18 has complied with all applicable statutes and regulations of any
federal, state, or other applicable governmental entity or agency thereof. This
compliance includes, but is not limited to, the filing of all reports to date
with federal and state securities authorities.
11
Section
3.12 Approval of
Agreement. The
board of directors of E-18 has authorized the execution and delivery of this
Agreement by E-18 and has approved this Agreement and the transactions
contemplated hereby.
Section
3.13 Material Transactions or
Affiliations. Except
as disclosed herein and in the E-18 Schedules, there exists no contract,
agreement or arrangement between E-18 and any predecessor and any person who was
at the time of such contract, agreement or arrangement an officer, director, or
person owning of record or known by E-18 to own beneficially, 5% or more of the
issued and outstanding common stock of E-18 and which is to be performed in
whole or in part after the date hereof or was entered into not more than three
years prior to the date hereof. Neither any officer, director, nor 5%
Shareholders of E-18 has, or has had since inception of E-18, any known
interest, direct or indirect, in any such transaction with E-18 which was
material to the business of E-18. E-18 has no commitment, whether
written or oral, to lend any funds to, borrow any money from, or enter into any
other transaction with, any such affiliated person.
Section
3.14 E-18
Schedules. E-18
has delivered to SquareOne the following schedules, which are collectively
referred to as the “E-18 Schedules” and which consist of separate schedules,
which are dated the date of this Agreement, all certified by the chief executive
officer of E-18 to be complete, true, and accurate in all material respects as
of the date of this Agreement.
(a) a
schedule containing complete and accurate copies of the certificate of
incorporation and bylaws of E-18 as in effect as of the date of this
Agreement;
(b) a
schedule containing the financial statements of E-18 identified in paragraph
3.04(a) and (b);
(c) a
schedule setting forth a description of any material adverse change in the
business, operations, property, inventory, assets, or condition of E-18 since
December 31, 2008, required to be provided pursuant to section 3.07 hereof;
and
(d) a
schedule setting forth any other information, together with any required copies
of documents, required to be disclosed in the E-18 Schedules.
E-18
shall cause the E-18 Schedules and the instruments and data delivered to
SquareOne hereunder to be promptly updated after the date hereof up to and
including the Closing Date.
Section
3.15 Bank Accounts; Power of
Attorney. Set
forth in the E-18 Schedules is a true and complete list of (a) all accounts with
banks, money market mutual funds or securities or other financial institutions
maintained by E-18 within the past twelve (12) months, the account numbers
thereof, and all persons authorized to sign or act on behalf of E-18, (b) all
safe deposit boxes and other similar custodial arrangements maintained by E-18
within the past twelve (12) months, (c) the check ledger for the last 12 months,
and (d) the names of all persons holding powers of attorney from E-18 or who are
otherwise authorized to act on behalf of E-18 with respect to any matter, other
than its officers and directors, and a summary of the terms of such powers or
authorizations.
12
Section
3.16 Valid
Obligation. This
Agreement and all agreements and other documents executed by E-18 in connection
herewith constitute the valid and binding obligation of E-18, enforceable in
accordance with its or their terms, except as may be limited by bankruptcy,
insolvency, moratorium or other similar laws affecting the enforcement of
creditors’ rights generally and subject to the qualification that the
availability of equitable remedies is subject to the discretion of the court
before which any proceeding therefore may be brought.
Section
3.17 SEC
Filings; Financial
Statements.
(a) E-18
has made available to SquareOne a correct and complete copy, or there has been
available on XXXXX, copies of each report, registration statement and definitive
proxy statement filed by E-18 with the SEC for the 36 months prior to the date
of this Agreement (the “E-18 SEC Reports”),
which, to E-18’s knowledge, are all the forms, reports and documents filed by
E-18 with the SEC for the 36 months prior to the date of this Agreement. As of
their respective dates, to E-18’s knowledge, the E-18 SEC Reports: (i) were
prepared in accordance and complied in all material respects with the
requirements of the Securities Act or the Exchange Act, as the case may be, and
the rules and regulations of the SEC thereunder applicable to such E-18 SEC
Reports, and (ii) did not at the time they were filed (and if amended or
superseded by a filing prior to the date of this Agreement then on the date of
such filing and as so amended or superceded) contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
(b) To
E-18’s knowledge, each set of financial statements (including, in each case, any
related notes thereto) contained in the E-18 SEC Reports comply as to form in
all material respects with the published rules and regulations of the SEC with
respect thereto, were prepared in accordance with the U.S. GAAP applied on a
consistent basis throughout the periods involved (except as may be indicated in
the notes thereto or, in the case of unaudited statements, do not contain
footnotes as permitted by Form 10-Q or Form 10-QSB promulgated under the
Exchange Act) and each fairly presents in all material respects the financial
position of E-18 at the respective dates thereof and the results of its
operations and cash flows for the periods indicated, except that the unaudited
interim financial statements were or are subject to normal adjustments which
were not or are not expected to have a Material Adverse Effect taken as a
whole.
Section
3.18 Over-the-Counter Bulletin
Board Quotation. E-18
Common Stock is quoted on the Over-the-Counter Electronic Bulletin Board (“OTC BB”). There is no
action or proceeding pending or, to E-18’s knowledge, threatened against E-18 by
The Financial Industry Regulatory Authority, Inc. ("FINRA") with respect to any
intention by such entities to prohibit or terminate the quotation of E-18 Common
Stock on the OTC BB.
Section
3.19 Exchange Act
Compliance. E-18
is in compliance with, and current in, all of the reporting, filing and other
requirements under the Exchange Act, the shares of E-18 Common Stock have been
registered under Section 12(g) of the Exchange Act, and E-18 is in compliance
with all of the requirements under, and imposed by, Section 12(g) of the
Exchange Act, except where a failure to so comply is not reasonably likely to
have a Material Adverse Effect on E-18.
13
Section 3.20 Consent to Proceed without
Counsel. E-18 acknowledges that Xxxxxx & Jaclin, LLP is
acting as counsel only for SquareOne and the SquareOne
Shareholders. E-18 is not relying on any advice or legal counsel from
Xxxxxx & Xxxxxx, LLP. E-18 further represents and warrants that
E-18 has elected to engage in the transactions described herein without being
represented by counsel.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF THE SQUAREONE SHAREHOLDERS
Each SquareOne Shareholder hereby
represents and warrants, severally and not jointly, to E-18 as
follows.
Section
4.01 Good Title.
The
SquareOne Shareholder is the record and beneficial owner, and has good title to
his SquareOne Common Stock, with the right and authority to sell and deliver
such SquareOne Common Stock. Upon delivery of any certificate or
certificates duly assigned, representing the same as herein contemplated and/or
upon registering of E-18 as the new owner of such SquareOne Common Stock in the
share register of SquareOne, E-18 will receive good title to such SquareOne
Common Stock, free and clear of all Liens.
Section
4.02 Power
and Authority. The SquareOne Shareholder has the legal power, capacity
and authority to execute and deliver this Agreement to consummate the
transactions contemplated by this Agreement, and to perform the SquareOne
Shareholder’s obligations under this Agreement and each Transaction Document to
which the SquareOne Shareholder is a party. This Agreement
constitutes a legal, valid and binding obligation of the SquareOne Shareholder,
enforceable against the SquareOne Shareholder in accordance with the terms
hereof.
Section
4.03 No
Conflicts. The execution and delivery of this Agreement by the
SquareOne Shareholder and the performance by the SquareOne Shareholder of its
obligations hereunder in accordance with the terms hereof: (a) will not require
the consent of any third party or Governmental Entity under any Laws; (b) will
not violate any Laws applicable to the SquareOne Shareholder and (c) will not
violate or breach any contractual obligation to which the SquareOne Shareholder
is a party.
Section
4.04 Finder’s
Fee. The SquareOne Shareholder represents and warrants that it
has not created any obligation for any finder’s, investment banker’s or broker’s
fee in connection with the Share Exchange.
Section
4.05 Purchase Entirely for Own
Account. The E-18 Common Stock proposed to be acquired by the SquareOne
Shareholder hereunder will be acquired for investment for its own account, and
not with a view to the resale or distribution of any part thereof, and the
SquareOne Shareholder has no present intention of selling or otherwise
distributing the E-18 Common Stock, except in compliance with applicable
securities laws.
Section
4.06 Sophistication. The
SquareOne Shareholder is a sophisticated investor, as described in Rule
506(b)(2)(ii) promulgated under the Securities Act and has such experience in
business and financial matters that it is capable of evaluating the merits and
risk of an investment in E-18.
14
Section
4.07 Non-Registration.The
SquareOne Shareholder understands that the E-18 Stock has not been registered
under the Securities Act and, if issued in accordance with the provisions of
this Agreement, will be issued by reason of a specific exemption from the
registration provisions of the Securities Act which depends upon, among other
things, the bona fide nature of the investment intent and the accuracy of the
SquareOne Shareholder’s representations as expressed herein. The
non-registration shall have no prejudice with respect to any rights, interests,
benefits and entitlements attached to the E-18 Stock in accordance with E-18’s
charter documents or the laws of its jurisdiction of incorporation.
Section
4.08 Restricted
Securities. The
SquareOne Shareholder understands that the Exchange Shares are characterized as
“restricted securities” under the Securities Act inasmuch as this Agreement
contemplates that, if acquired by the Shareholder pursuant hereto, the Exchange
Shares would be acquired in a transaction not involving a public offering. The
issuance of the Shares hereunder have not been registered under the Securities
Act or the securities laws of any state of the U.S. and that the issuance of
Exchange Shares is being effected in reliance upon an exemption from
registration afforded either under Section 4(2) of the Securities Act for
transactions by an issuer not involving a public offering or Regulation S for
offers and sales of securities outside the U.S. The SquareOne Shareholder
further acknowledges that if the Exchange Shares are issued to the SquareOne
Shareholder in accordance with the provisions of this Agreement, such Exchange
Shares may not be resold without registration under the Securities Act or the
existence of an exemption therefrom. The SquareOne Shareholder
represents that it is familiar with Rule 144 promulgated under the Securities
Act, as presently in effect, and understands the resale limitations imposed
thereby and by the Securities Act.
Section
4.09 Legends. The
SquareOne Shareholder hereby agrees with E-18 that the Exchange Shares will bear
the following legend or one that is substantially similar to the following
legend:
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY STATE SECURITIES LAWS AND
NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED,
ASSIGNED OR OTHERWISE TRANSFERRED EXCEPT (1) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES
LAWS OR (2) PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, IN
WHICH CASE THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE COMPANY AN
OPINION OF COUNSEL, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE
COMPANY, THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR
OTHERWISE TRANSFERRED IN THE MANNER CONTEMPLATED PURSUANT TO AN AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
APPLICABLE STATE SECURITIES LAWS.
15
Section
4.10 Additional
Legend; Consent. Additionally, the Exchange Shares will bear any legend
required by the “blue sky” laws of any state to the extent such laws are
applicable to the securities represented by the certificate so legended. The
SquareOne Shareholder consents to E-18 making a notation on its records or
giving instructions to any transfer agent of Exchange Shares in order to
implement the restrictions on transfer of the Exchange Shares.
ARTICLE
V
SPECIAL
COVENANTS
Section
5.01 Access to
Properties and Records. E-18
and SquareOne will each afford to the officers and authorized
representatives of the other full access to the properties, books and records of
E-18 or SquareOne , as the case may be, in order that each may have a full
opportunity to make such reasonable investigation as it shall desire to make of
the affairs of the other, and each will furnish the other with such additional
financial and operating data and other information as to the business and
properties of E-18 or SquareOne, as the case may be, as the other shall from
time to time reasonably request. Without limiting the foregoing, as
soon as practicable after the end of each fiscal quarter (and in any event
through the last fiscal quarter prior to the Closing Date), each party shall
provide the other with quarterly internally prepared and unaudited financial
statements.
Section 5.02 Delivery of Books and
Records. At the
Closing, E-18 shall deliver to SquareOne, the originals of the corporate minute
books, books of account, contracts, records, and all other books or documents of
E-18 now in the possession of E-18 or its representatives.
Section
5.03 Third
Party Consents and Certificates. E-18 and
SquareOne agree to cooperate with each other in order to obtain any required
third party consents to this Agreement and the transactions herein
contemplated.
Section 5.04 Designation of New
Directors. Effective as of the Closing Date, and subject to
applicable regulatory requirements, including the preparation, filing and
distribution to the shareholders of E-18 of a Schedule 14(f)-1 Notice to
Stockholders, Xxxxx Xxxxx and Yosef Itamar Krytman shall resign from the board
of directors of E-18 and the following individuals shall be appointed to the
board of E-18:
Xxxx X. Xxxxxxx – Chairman
Xxxx Xxxxxxx – Director
Xxxxxx Xxxx – Director
Xxxx X. Xxxxxxxx –
Director
Section
5.05 Designation of New
Officers. Effective as of the Closing Date, Xxxxx Xxxxx and
Xxxxx Xxxxxx Krytman shall resign from each officer position held at E-18, and
the following individuals shall be appointed to the offices of
E-18:
16
Xxxx X. Xxxxxxxx – President, Chief
Executive Officer, Secretary
Xxxx Xxxxxxx – Chief Operating
Officer
Xxxxxx Xxxx – Chief Marketing
Officer
Xxxx X. Xxxxxxx – Chief Intelligence
Officer
Section
5.06 Actions
Prior to Closing.
(a) From and
after the date of this Agreement until the Closing Date and except as set forth
in the E-18 Schedules or SquareOne Schedules or as permitted or contemplated by
this Agreement, E-18 (subject to paragraph (d) below) and SquareOne
respectively, will each:
(i) carry on
its business in substantially the same manner as it has heretofore;
(ii) maintain
and keep its properties in states of good repair and condition as at present,
except for depreciation due to ordinary wear and tear and damage due to
casualty;
(iii) maintain
in full force and effect insurance comparable in amount and in scope of coverage
to that now maintained by it;
(iv) perform
in all material respects all of its obligations under material contracts,
leases, and instruments relating to or affecting its assets, properties, and
business;
(v) use its
best efforts to maintain and preserve its business organization intact, to
retain its key employees, and to maintain its relationship with its material
suppliers and customers; and
(vi) fully
comply with and perform in all material respects all obligations and duties
imposed on it by all federal and state laws and all rules, regulations, and
orders imposed by federal or state governmental authorities.
(b) From and
after the date of this Agreement until the Closing Date, neither E-18 nor
SquareOne will:
(i) make any
changes in their memorandum of association, articles of association, articles or
certificate of incorporation or bylaws except as contemplated by this Agreement
including a name change;
(ii) take any
action described in Section 2.06 in the case of SquareOne or in
Section 3.07, in the case of E-18 (all except as permitted therein or as
disclosed in the applicable party’s schedules);
(iii) enter
into or amend any contract, agreement, or other instrument of any of the types
described in such party’s schedules, except that a party may enter into or amend
any contract, agreement, or other instrument in the ordinary course of business
involving the sale of goods or services; or
(iv) sell any
assets or discontinue any operations, sell any shares of capital stock or
conduct any similar transactions other than in the ordinary course of
business.
17
Section
5.07 Indemnification.
(a)
SquareOne hereby agrees to indemnify E-18 and each of the officers, agents and
directors of E-18 as of the date of execution of this Agreement against any
loss, liability, claim, damage, or expense (including, but not limited to, any
and all expense whatsoever reasonably incurred in investigating, preparing, or
defending against any litigation, commenced or threatened, or any claim
whatsoever) (“Loss”), to which it or they may become subject arising out of or
based on any inaccuracy appearing in or misrepresentations made under Article II
of this Agreement. The indemnification provided for in this paragraph
shall survive the Closing and consummation of the transactions contemplated
hereby and termination of this Agreement for one year following the
Closing.
(b) The
SquareOne Shareholders agree to indemnify E-18 and each of the officers, agents
and directors of E-18 as of the date of execution of this Agreement against any
Loss, to which it or they may become subject arising out of or based on any
inaccuracy appearing in or misrepresentations made under Article IV of this
Agreement. The indemnification provided for in this paragraph shall
survive the Closing and consummation of the transactions contemplated hereby and
termination of this Agreement for one year following the Closing.
(c) E-18
hereby agrees to indemnify SquareOne and each of the officers, agents, and
directors of SquareOne and the SquareOne Shareholders as of the date of
execution of this Agreement against any Loss to which it or they may become
subject arising out of or based on any inaccuracy appearing in or
misrepresentation made under Article III of this Agreement. The
indemnification provided for in this paragraph shall survive the Closing and
consummation of the transactions contemplated hereby and termination of this
Agreement for one year following the Closing.
Section
5.08 The Acquisition
of E-18 Common Stock. E-18
and SquareOne understand and agree that the consummation of this Agreement
including the issuance of the Exchange Shares to the SquareOne Shareholders in
exchange for the SquareOne Shares as contemplated hereby constitutes the offer
and sale of securities under the Securities Act and applicable state
statutes. E-18 and SquareOne agree that such transactions shall be
consummated in reliance on exemptions from the registration and prospectus
delivery requirements of such statutes, which depend, among other items, on the
circumstances under which such securities are acquired.
18
(a)
In connection with the transaction contemplated by this Agreement, E-18 and
SquareOne shall each file, with the assistance of the other and their respective
legal counsel, such notices, applications, reports, or other instruments as may
be deemed by them to be necessary or appropriate in an effort to document
reliance on such exemptions, and the appropriate regulatory authority in the
states where the shareholders of SquareOne reside unless an exemption requiring
no filing is available in such jurisdictions, all to the extent and in the
manner as may be deemed by such parties to be appropriate.
(b)
The SquareOne Shareholders acknowledges that the basis for relying on exemptions
from registration or qualifications are factual, depending on the conduct of the
various parties, and that no legal opinion or other assurance will be required
or given to the effect that the transactions contemplated hereby are in fact
exempt from registration or qualification.
Section
5.09 Sales
of Securities Under Rule 144, If Applicable.
(a) E-18
will use its best efforts to at all times satisfy the current public information
requirements of Rule 144 promulgated under the Securities Act so that its
shareholders can sell restricted securities that have been held for one year or
more or such other restricted period as required by Rule 144 as it is from time
to time amended.
(b) Upon
being informed in writing by any person holding restricted stock of E-18 that
such person intends to sell any shares under rule 144 promulgated under the
Securities Act (including any rule adopted in substitution or replacement
thereof), E-18 will certify in writing to such person that it is compliance with
Rule 144 current public information requirement to enable such person to sell
such person’s restricted stock under Rule 144, as may be applicable under the
circumstances.
(c) If
any certificate representing any such restricted stock is presented to E-18’s
transfer agent for registration or transfer in connection with any sales
theretofore made under Rule 144, provided such certificate is duly endorsed for
transfer by the appropriate person(s) or accompanied by a separate stock power
duly executed by the appropriate person(s) in each case with reasonable
assurances that such endorsements are genuine and effective, and is accompanied
by a legal opinion that such transfer has complied with the requirements of Rule
144, as the case may be, E-18 will promptly instruct its transfer agent to
register such transfer and to issue one or more new certificates representing
such shares to the transferee and, if appropriate under the provisions of Rule
144, as the case may be, free of any stop transfer order or restrictive
legend.
Section
5.10 Assistance with Post-Closing
SEC Reports and Inquiries. Upon the
reasonable request of SquareOne, after the Closing Date, E-18 shall use their
reasonable best efforts to provide such information available to it, including
information, filings, reports, financial statements or other circumstances of
E-18 occurring, reported or filed prior to the Closing, as may be necessary or
required by E-18 for the preparation of the reports that E-18 is required to
file after Closing with the SEC to remain in compliance and current with its
reporting requirements under the Exchange Act, or filings required to address
and resolve matters as may relate to the period prior to Closing and any SEC
comments relating thereto or any SEC inquiry thereof.
19
ARTICLE
VI
CONDITIONS
PRECEDENT TO OBLIGATIONS OF E-18
The
obligations of E-18 under this Agreement are subject to the satisfaction, at or
before the Closing Date, of the following conditions:
Section
6.01 Accuracy of Representations
and Performance of Covenants. The
representations and warranties made by SquareOne and SquareOne Shareholders in
this Agreement were true when made and shall be true at the Closing Date with
the same force and effect as if such representations and warranties were made at
and as of the Closing Date (except for changes therein permitted by this
Agreement). SquareOne shall have performed or complied with all
covenants and conditions required by this Agreement to be performed or complied
with by SquareOne prior to or at the Closing. E-18 shall be furnished
with a certificate, signed by a duly authorized executive officer of SquareOne
and dated the Closing Date, to the foregoing effect.
Section 6.02 Officer’s
Certificate. E-18
shall have been furnished with a certificate dated the Closing Date and signed
by a duly authorized officer of SquareOne to the effect that no litigation,
proceeding, investigation, or inquiry is pending, or to the best knowledge of
SquareOne threatened, which might result in an action to enjoin or prevent the
consummation of the transactions contemplated by this Agreement, or, to the
extent not disclosed in the SquareOne Schedules, by or against SquareOne, which
might result in any material adverse change in any of the assets, properties,
business, or operations of SquareOne.
Section
6.03 Good
Standing. At the
Closing, E-18 shall have received a certificate of good standing from the
Secretary of State of Nevada certifying that SquareOne is in good standing as a
company in the State of Nevada.
Section
6.04 Approval by SquareOne
Shareholders. The
Share Exchange shall have been approved by the holders of not less than fifty
and one tenths percent (50.01%) of the shares, including voting power, of
SquareOne, unless a lesser number is agreed to by E-18.
Section
6.05 No
Governmental Prohibition. No
order, statute, rule, regulation, executive order, injunction, stay, decree,
judgment or restraining order shall have been enacted, entered, promulgated or
enforced by any court or governmental or regulatory authority or instrumentality
which prohibits the consummation of the transactions contemplated
hereby.
Section
6.06 Consents. All
consents, approvals, waivers or amendments pursuant to all contracts, licenses,
permits, trademarks and other intangibles in connection with the transactions
contemplated herein, or for the continued operation of SquareOne after the
Closing Date on the basis as presently operated shall have been
obtained.
Section
6.07 Other
Items.
|
(i)
|
E-18
shall have received a list containing the name, address, and number of
shares held by the SquareOne Shareholders as of the date of Closing,
certified by an executive officer of SquareOne as being true, complete and
accurate; and
|
|
(ii)
|
E-18
shall have received such further opinions, documents, certificates or
instruments relating to the transactions contemplated hereby as E-18 may
reasonably request.
|
20
ARTICLE
VII
CONDITIONS
PRECEDENT TO OBLIGATIONS OF SQUAREONE
AND
THE SQUAREONE SHAREHOLDERS
The
obligations of SquareOne and the SquareOne Shareholders under this Agreement are
subject to the satisfaction, at or before the Closing Date, of the following
conditions:
Section
7.01 Accuracy of Representations
and Performance of Covenants. The
representations and warranties made by E-18 in this Agreement were true when
made and shall be true as of the Closing Date (except for changes therein
permitted by this Agreement) with the same force and effect as if such
representations and warranties were made at and as of the Closing
Date. Additionally, E-18 shall have performed and complied with all
covenants and conditions required by this Agreement to be performed or complied
with by E-18.
Section
7.02 Officer’s
Certificate. SquareOne
shall have been furnished with certificates dated the Closing Date and signed by
duly authorized executive officers of E-18, to the effect that no litigation,
proceeding, investigation or inquiry is pending, or to the best knowledge of
E-18 threatened, which might result in an action to enjoin or prevent the
consummation of the transactions contemplated by this Agreement or,
to the extent not disclosed in the E-18 Schedules, by or against E-18, which
might result in any material adverse change in any of the assets, properties or
operations of E-18, and that there are no outstanding liabilities of
E-18.
Section
7.03 Good
Standing. At the
Closing, SquareOne shall receive a certificate of good standing from the
Secretary of State of Delaware or other appropriate office, dated as of a date
certifying that E-18 is in good standing as a corporation in the State of
Delaware and has filed all tax returns required to have been filed by it to date
and has paid all taxes reported as due thereon.
Section
7.04 No Governmental
Prohibition. No
order, statute, rule, regulation, executive order, injunction, stay, decree,
judgment or restraining order shall have been enacted, entered, promulgated or
enforced by any court or governmental or regulatory authority or instrumentality
which prohibits the consummation of the transactions contemplated
hereby.
Section
7.05 Consents. All
consents, approvals, waivers or amendments pursuant to all contracts, licenses,
permits, trademarks and other intangibles in connection with the transactions
contemplated herein, or for the continued operation of E-18 after the Closing
Date on the basis as presently operated shall have been
obtained.
Section
7.06 Other
Items. SquareOne
shall have received further opinions, documents, certificates, or instruments
relating to the transactions contemplated hereby as SquareOne may reasonably
request.
21
ARTICLE
VIII
MISCELLANEOUS
Section
8.01 Brokers. E-18 and
SquareOne agree that there were no finders or brokers involved in bringing the
parties together or who were instrumental in the negotiation, execution or
consummation of this Agreement. E-18 and SquareOne each agree to
indemnify the other against any claim by any third person other than those
described above for any commission, brokerage, or finder’s fee arising from the
transactions contemplated hereby based on any alleged agreement or understanding
between the indemnifying party and such third person, whether express or implied
from the actions of the indemnifying party.
Section
8.02 Governing
Law. This
Agreement shall be governed by, enforced, and construed under and in accordance
with the laws of the United States of America and, with respect to the matters
of state law, with the laws of the State of Delaware. Venue for all
matters shall be in Wilmington, Delaware without giving effect to principles of
conflicts of law thereunder. Each of the parties (a) irrevocably
consents and agrees that any legal or equitable action or proceedings arising
under or in connection with this Agreement shall be brought exclusively in the
federal courts of the United States. By execution and delivery of this
Agreement, each party hereto irrevocably submits to and accepts, with respect to
any such action or proceeding, generally and unconditionally, the jurisdiction
of the aforesaid court, and irrevocably waives any and all rights such party may
now or hereafter have to object to such jurisdiction.
Section
8.03 Notices. Any
notice or other communications required or permitted hereunder
shall be in writing and shall be sufficiently given if personally
delivered to it or sent by telecopy, overnight courier or registered mail or
certified mail, postage prepaid, addressed as follows:
If to
SquareOne Medical, Inc., to:
SquareOne Medical, Inc.
Attn.: Xxxx X. Xxxxxxxx
000 Xxxxx
Xxxxxx XX, Xxxxx #0000
Xxxxxxxxxxx,
XX 00000
Tel.:
000-000-0000
Fax:
000-000-0000
With
copies (which shall not constitute notice) to:
Xxxxxx & Jaclin, LLP
Attn.: Xxxxx Xxxxxx, Esq.
000 Xxxxx 0 Xxxxx, Xxxxx
000
Xxxxxxxxx, XX 00000
Tel.: 000-000-0000
22
If to
E-18, to:
E-18,
Corp.
Attn.:
Xxxxx Xxxxx
00 Xxxx
Xxxx Xx.
Xxx Xxxx,
Xxxxxx, 00000
Tel: (000) 000-00-000-0000
Fax:
(000) 000-00-000-0000
or such
other addresses as shall be furnished in writing by any party in the manner for
giving notices hereunder, and any such notice or communication shall be deemed
to have been given (i) upon receipt, if personally delivered, (ii) on the day
after dispatch, if sent by overnight courier, (iii) upon dispatch, if
transmitted by telecopy and receipt is confirmed by telephone and (iv) three (3)
days after mailing, if sent by registered or certified mail.
Section
8.04 Attorney’s
Fees. In the
event that either party institutes any action or suit to enforce this Agreement
or to secure relief from any default hereunder or breach hereof, the prevailing
party shall be reimbursed by the losing party for all costs, including
reasonable attorney’s fees, incurred in connection therewith and in enforcing or
collecting any judgment rendered therein.
Section
8.05 Confidentiality. Each
party hereto agrees with the other that, unless and until the transactions
contemplated by this Agreement have been consummated, it and its representatives
will hold in strict confidence all data and information obtained with respect to
another party or any subsidiary thereof from any representative, officer,
director or employee, or from any books or records or from personal inspection,
of such other party, and shall not use such data or information or disclose the
same to others, except (i) to the extent such data or information is published,
is a matter of public knowledge, or is required by law to be published; or (ii)
to the extent that such data or information must be used or disclosed in order
to consummate the transactions contemplated by this Agreement. In the
event of the termination of this Agreement, each party shall return to the other
party all documents and other materials obtained by it or on its behalf and
shall destroy all copies, digests, work papers, abstracts or other materials
relating thereto, and each party will continue to comply with the
confidentiality provisions set forth herein.
Section
8.06 Schedules;
Knowledge. Each
party is presumed to have full knowledge of all information set forth in the
other party’s schedules delivered pursuant to this Agreement.
Section
8.07 Third Party
Beneficiaries. This
contract is strictly between E-18 and SquareOne, and, except as specifically
provided, no director, officer, stockholder (other than the SquareOne
Shareholders), employee, agent, independent contractor or any other person or
entity shall be deemed to be a third party beneficiary of this
Agreement.
Section
8.08 Expenses. Subject
to Section 8.04 above, whether or not the Exchange is consummated, each of E-18
and SquareOne will bear their own respective expenses, including legal,
accounting and professional fees, incurred in connection with the Exchange or
any of the other transactions contemplated hereby.
23
Section
8.9 Entire
Agreement. This
Agreement represents the entire agreement between the parties relating to the
subject matter thereof and supersedes all prior agreements, understandings and
negotiations, written or oral, with respect to such subject
matter.
Section
8.10 Survival;
Termination. The
representations, warranties, and covenants of the respective parties shall
survive the Closing Date and the consummation of the transactions herein
contemplated for a period of two years.
Section
8.11 Counterparts. This
Agreement may be executed in multiple counterparts, each of which shall be
deemed an original and all of which taken together shall be but a single
instrument.
Section
8.12 Amendment or
Waiver. Every
right and remedy provided herein shall be cumulative with every other right and
remedy, whether conferred herein, at law, or in equity, and may be enforced
concurrently herewith, and no waiver by any party of the performance of any
obligation by the other shall be construed as a waiver of the same or any other
default then, theretofore, or thereafter occurring or existing. At
any time prior to the Closing Date, this Agreement may by amended by a writing
signed by all parties hereto, with respect to any of the terms contained herein,
and any term or condition of this Agreement may be waived or the time for
performance may be extended by a writing signed by the party or parties for
whose benefit the provision is intended.
Section
8.13 Best
Efforts. Subject
to the terms and conditions herein provided, each party shall use its best
efforts to perform or fulfill all conditions and obligations to be performed or
fulfilled by it under this Agreement so that the transactions contemplated
hereby shall be consummated as soon as practicable. Each party also
agrees that it shall use its best efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make effective
this Agreement and the transactions contemplated herein.
[Signature
Pages Follow]
24
IN
WITNESS WHEREOF, the corporate parties hereto have caused this Agreement to be
executed by their respective officers, hereunto duly authorized, as of the date
first-above written.
|
E-18,
Corp., a Delaware corporation
|
|
|
|
By: /s/
Xxxxx Xxxxx
|
|
|
Name:
Xxxxx Xxxxx
|
|
|
Title: Chief
Executive Officer
|
| SquareOne Medical, Inc., a Nevada corporation |
|
|
By:
/s/
Xxxx X. Xxxxxxxx, Ph.D.
|
|
|
Name:
Xxxx X. Xxxxxxxx, Ph.D.
|
|
|
Title: Chief
Executive Officer
|
SquareOne
Shareholders
|
Name
|
Signature
|
Date
|
|
SquareOne
Medical, LP
|
/s/
Xxxx Xxxxxxx
|
June
25, 2009
|
|
Xxxx
X. Xxxxxxxx
|
/s/
Xxxx X. Xxxxxxxx
|
June
25, 2009
|
|
Xxxxxxx
X. Xxxxxxx
|
/s/
Xxxxxxx X. Xxxxxxx
|
June
25, 2009
|
|
The
Xxxxxxx and Xxxxx Xxxxxx Trust
|
/s/
Xxxxxxx Xxxxxx
|
June
25, 2009
|
25
