Exhibit 2.1
ACQUISITION AGREEMENT
THIS ACQUISITION AGREEMENT (the "Agreement") is made and entered into this
23rd day of April, 2002, by and among Xxxxxxxx.xxx, Inc., a Delaware
corporation, with its principal place of business at 0000 Xxxxxxxxx Xxxxx, Xxxxx
X0000, Xxxx Xxxxx, Xxxxxxx 00000 ("Inventoy"); Assure Oil and Gas Inc., a
company organized under the laws of Ontario, with its principal place of
business at 0 Xxxxxxxx Xxxxxx Xxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx Xxxxxx X0X 0X0
("Assure"); and the Assure shareholders listed on Exhibit A attached hereto and
made a part hereof (singularly and collectively referred to herein as the
"Shareholders"). Inventoy, Assure and the Shareholders are referred to severally
herein as a "Party" and jointly as the "Parties".
PREAMBLE
WHEREAS, Assure has authorized capital stock consisting of an unlimited
number of common shares at no par value (the "Common Stock") and an unlimited
number of preferred shares issuable in series (the "Preferred Stock") of which
One Thousand (1,000) shares of Common Stock are issued and outstanding and owned
by the Shareholders; and
WHEREAS, Inventoy desires to acquire all of the Common Stock owned by the
Shareholders, making Assure a wholly owned subsidiary of Inventoy, in exchange
for Two Million Four Hundred Thousand (2,400,000) units, each unit consisting of
one (1) share of common stock of Inventoy, one (1) A Warrant entitling the
holder to acquire another share of Inventoy common stock at $.50 per share, for
up to five years from the date of issue (the "A Warrants"), and one (1) B
Warrant entitling the holder to acquire another share of Inventoy common stock
at $1.00 per share, for up to five years from the date of issue (the "B
Warrants"), and the Shareholders similarly desire to make such exchange; and
WHEREAS, the parties desire that the exchange qualify as a tax free
exchange meeting the requirements of Article 368(a)(1)(B) of the Internal
Revenue Code of 1986, as amended.
NOW, THEREFORE, in consideration of the premises, and of the promises,
covenants and conditions contained herein, the parties intending to be legally
bound, hereby agree as follows:
WITNESSETH:
ARTICLE 1
EFFECTIVE DATE
The effective date of the transactions contemplated by this Agreement
shall be April 1, 2002.
ARTICLE 2
EXCHANGE OF SHARES
Subject to the hereinafter described conditions, Inventoy hereby agrees to
transfer and deliver Two Million Four Hundred Thousand (2,400,000) units, each
unit consisting of one (1) share of Inventoy common stock, one (1) A Warrant and
one (1) B Warrant (the "Units"), to the Shareholders in exchange for all of the
capital stock of Assure, consisting of One Thousand (1,000) shares of Common
Stock owned by the Shareholders (the "Assure Shares"). Each Shareholder shall
receive the number of Units listed directly across from his or her name on
Exhibit A hereto, such number representing the same proportional share of the
total Units as the Shareholder currently holds of the Assure Shares. The Units
will have registration rights as set forth in that certain Registration Rights
Agreement, dated the date hereof, between Inventoy and the Shareholders, and
attached hereto as Exhibit D.
ARTICLE 3
CLOSING
The exchange of the Units for the Assure Shares (the "Share Exchange")
shall take place at the offices of Xxxxxx Xxxxxxxxxx & Xxxxxxxx, LLP, 000 Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or such other place as the parties may
mutually agree (the "Closing"). The Closing shall take place as soon as
practicable after the execution of this Agreement, but in all events not later
than five (5) business days from the date hereof, unless mutually extended by
the parties. The date on which the Closing occurs is referred to herein at the
Closing Date. At the Closing:
(a) The Shareholders shall tender to Inventoy certificates representing all of
Assure's authorized, issued and outstanding capital stock, duly endorsed in
blank and in proper form for transfer to Inventoy, together with such executed
consents, powers of attorney, stock powers and other items as shall be required
to convey such stock to Inventoy, in compliance with all applicable laws; and
(b) Inventoy shall tender to the Shareholders certificates representing an
aggregate of Two Million Four Hundred Thousand (2,400,000) Units and such other
items as shall be required to convey such stock to the Shareholders in
compliance with all applicable laws.
Inventoy's board of directors currently consists of three (3) members,
namely, Xx Xxxxxx, Xxxxxxx Xxxxxx and Xxx Beit-Halachmy. Following the Closing,
one (1) member of Inventoy's board of directors shall resign. A third member
will be appointed by Assure to fill the vacancy. The resigning director shall
have the right to be indemnified by Inventoy for acts or omissions as director
of Inventoy, and Inventoy shall obtain directors and officers tail insurance
coverage for all the members of its newly formed board.
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ARTICLE 4
EXEMPTION FROM REGISTRATION
(a) Assure and the Shareholders hereby represent, warrant, covenant
and acknowledge that:
(1) The Units are being issued to them without registration under
the provisions of Article 5 of the Securities Act of 1933, as
amended (the "Act"), pursuant to exemptions provided pursuant to
Article 4(2) thereof;
(2) All of the certificates for the Units will bear legends
restricting their transfer, sale, conveyance or hypothecation,
unless such Units are either registered under the provisions of
Article 5 of the Act and under applicable state securities laws, or
an opinion of legal counsel, in form and substance satisfactory to
legal counsel to Inventoy, is provided certifying that such
registration is not required as a result of applicable exemptions
therefrom;
(3) Inventoy's transfer agent shall be instructed not to transfer
any of the Units unless Inventoy advises it that such transfer is in
compliance with all applicable laws;
(4) The Shareholders are acquiring the Units for investment
purposes only, and not with a view to further sale or
distribution; and
(5) Assure, the Shareholders and their advisors have been given and
had access to all reports filed by Inventoy with the Securities and
Exchange Commission and have examined all of Inventoy's books,
records and financial statements and fully and completely questioned
Inventoy's officers and directors to their satisfaction as to all
matters they deemed pertinent.
(b) Inventoy hereby represents, warrants, covenants and acknowledges
that:
(1) The Units are being transferred without registration under the
provisions of Article 5 of the Act pursuant to exemptions provided
pursuant to Article 4(2) thereof;
(2) The certificates for the Units will bear legends restricting
their transfer, sale, conveyance or hypothecation, unless such Units
are either registered under the provisions of Article 5 of the Act
and under applicable state securities laws, or such registration is
not required as a result of applicable exemptions therefrom;
(3) Inventoy shall not transfer any of the Units except in
compliance with all applicable laws; and
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(4) Inventoy has been given and had access to all books, records and
financial statements of Assure and has fully and completely
questioned Assure's officers and directors to its satisfaction as to
all matters it deemed pertinent.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
OF ASSURE AND THE SHAREHOLDERS
Assure and each of the Shareholders hereby represent and warrant to
Inventoy as follows;
(a) Assure is a corporation duly organized, validly existing, and in good
standing under the laws of the jurisdiction in which it was incorporated, which
is Ontario. The charter documents and by-laws of Assure have been duly adopted
or ratified and are current, correct and complete. Assure has the legal capacity
and all necessary corporate and shareholder authority to enter into and perform
this Agreement and to consummate the transactions contemplated hereby;
(b) At the Closing, Assure shall own all of its assets as described in
Schedule B hereto free and clear of all liens, claims, charges, and any other
encumbrances. Exhibit B hereto contains a complete list of Assure's assets.
(c) At the Closing, Assure shall have no material liabilities other than
those liabilities listed in Exhibit C hereof.
(d) The Assure Shares represent all of Assure's issued and outstanding
capital stock. At the Closing, Assure shall have no outstanding subscriptions,
agreements, options, warrants, or other convertible securities that could result
in an obligation to issue additional capital stock of Assure. All of the Assure
Share's are validly issued, fully paid and non-assessable;
(e) This Agreement has been duly authorized, executed and delivered by
Assure and each of the Shareholders and constitutes a legal, valid and binding
obligation of Assure and each of the Shareholders, enforceable against Assure
and each of the Shareholders in accordance with its terms;
(f) The execution and delivery of this Agreement and the performance of
the obligations imposed hereunder will not conflict with, or result in a breach
by Assure of, any of the terms or provisions of, or constitute a default under,
the certificate of incorporation or bylaws of Assure, or any material agreement
or instrument to which Assure is a party, or by which it or any of its
properties or assets are bound, or result in a violation of any order, decree,
or judgment of any court or governmental agency having jurisdiction over Assure
or Assure's properties, and will not conflict with, constitute a default under,
or result in the breach of, any contract, agreement, or other instrument to
which Assure is a party or is otherwise bound and no consent, authorization or
order of, or filing or registration with, any court, governmental, or regulatory
authority is required in connection with the execution and delivery of this
Agreement and any related agreements for the performance by Assure of its
obligations hereunder;
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(g) There is no litigation or proceeding pending or, to the best knowledge
of Assure and the Shareholders, threatened, against Assure, the property of
Assure, or any of the Shareholders which would have any effect on the validity
or performance of this Agreement;
(h) Assure and the Shareholders are aware that the Units have not been
registered under the Act and may not be transferred or otherwise disposed of
unless they are subsequently registered under the Act or an exemption from such
registration is available. Additionally, each of the Shareholders has such
knowledge and experience in financial and business matters that such Shareholder
is capable of evaluating the merits and risks of the exchange of the Units and
making an informed investment decision with respect thereto, has evaluated the
merits and risks of the exchange of the Units, and is able to bear the economic
risk of exchanging the Units;
(i) Each of the Shareholders is purchasing the Units for its own account
for investment purposes and not with a view to "distribute" the Units as that
term is defined in the Act;
(j) Assure and each of the Shareholders have been provided with any and
all written information and materials concerning Inventoy and its business which
it has requested and has had the opportunity to conduct and has conducted its
own due diligence investigation in connection with the transactions set forth
herein;
(k) Neither Inventoy, nor any person acting on behalf of Inventoy, has
offered, offered to sell, offered for sale or sold the Units to the Shareholders
by means of any form of general public solicitation or advertising;
(l) Assure shall file in a timely manner with the appropriate governmental
agencies all tax returns and tax reports required to be filed; all federal,
provincial and local income, franchise, sales, use, occupation or other taxes
due have been fully paid or adequately reserved for; and Assure is not a party
to any action or proceeding by any governmental authority for assessment or
collection of taxes, nor has any claim for assessments been asserted against
Assure;
(m) There are presently no undisclosed contingent liabilities, factual
circumstances, threatened or pending litigation, contractually assumed
obligations or unasserted possible claims which are known to Assure, which might
result in a material adverse change in the future financial condition or
operations of Assure;
(n) No undisclosed transactions have been entered into either by or on
behalf of Assure, other than in the ordinary course of business, nor have any
acts been performed (including within the definition of the term "performed,"
the failure to perform any required acts) which would adversely affect the good
will of Assure, nor will any such transactions be entered into prior to the
Closing;
(o) Assure does not have any subsidiaries;
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(p) Each of the Shareholders owns his, her or its Assure Shares free and
clear of all liens, claims, charges, preemptive rights, and any other
encumbrances and shall deliver the Assure Shares to Inventoy at Closing free and
clear of all liens, claims, charges, preemptive rights, and any other
encumbrances;
(q) Assure shall comply, at Assure's expense, with all Federal,
provincial and local stock transfer tax requirements;
(r) Except as contemplated by this Agreement or as expressly agreed to in
writing by Inventoy, during the period from the date of this Agreement to the
Closing Date, Assure will conduct its operations only in the ordinary course of
business consistent with sound financial, operational and regulatory practice,
and will take no action which would have a material adverse effect on its
ability to consummate this Agreement. Without limiting the generality of the
foregoing, except as otherwise expressly provided in this Agreement, prior to
the Closing Date, Assure will not, without the prior written consent of
Inventoy, it being understood that such consent shall not be unreasonably
withheld:
(1) amend its charter documents or bylaws (or similar
organizational documents);
(2) authorize for issuance, issue, sell, deliver, grant any options
or warrants for, or otherwise agree or commit to issue, sell or
deliver any shares of its capital stock or any other securities;
(3) recapitalize, split, combine or reclassify any shares of its
capital stock; declare, set aside or pay any dividend or other
distribution (whether in cash, stock or property or any combination
thereof) in respect of its capital stock; or purchase, redeem or
otherwise acquire any of its securities or modify any of the terms
of any such securities;
(4) (i) create, incur, assume or permit to exist any long-term debt
or any short-term debt for borrowed money other than under existing
notes payable, lines of credit or other credit facilities or in the
ordinary course of business or; (ii) assume, guarantee, endorse or
otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other Person;
(5) (i) increase in any manner the rate of compensation of any of
its directors, officers or other employees everywhere, (ii) pay or
agree to pay any bonus, pension, retirement allowance, severance or
other employee benefit except as required under currently existing
benefit plans, if any, except for holiday bonuses in an aggregate
amount not to exceed holiday bonuses for the prior year, or (iii)
amend, terminate or enter into any employment, consulting,
severance,
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change in control or similar agreements or arrangements with any of
its directors, officers or other employees;
(6) except as contemplated by the Letter of Intent with Westerra
2000, Inc., in the form attached hereto as Exhibit E, enter into any
material agreement, commitment or contract, except agreements,
commitments or contracts for the purchase, sale or lease of goods or
services in the ordinary course of business;
(7) except as contemplated by Letter of Intent with Westerra 2000,
Inc., in the form attached hereto as Exhibit E, other than in the
ordinary course of business, authorize, recommend, propose or
announce an intention to authorize, recommend or propose, or enter
into any contract with respect to, any (i) plan of liquidation or
dissolution, (ii) acquisition of a material amount of assets or
securities, (iii) disposition or encumbrance of a material amount of
assets or securities, (iv) merger or consolidation or (v) material
change in its capitalization;
(8) change any material accounting or tax procedure or practice;
(9) take any action the taking of which, or knowingly fail to take
any action the failure of which, would cause any of the
representations and warranties herein to fail to be true and correct
in all material respects as of the date of such action or failure to
act as though made at and as of the date of such action or failure
to act;
(10) compromise, settle or otherwise modify any material claim
or litigation;
(11) permit any existing insurance policy insuring Assure's
assets to terminate; or
(12) commit, promise or agree to do any of the foregoing.
(s) Assure shall use its reasonable best efforts to continue to maintain
and service its assets consistent with past practice. Assure shall not directly
or indirectly, sell or encumber all or any part of its assets, other than sales
in the ordinary course of business, or initiate or participate in any
discussions or negotiations or enter into any agreement to do any of the
foregoing.
(t) Assure shall use commercially reasonable efforts to keep available the
services of its current employees and agents and to maintain its relations and
goodwill with its suppliers, customers, distributors and any others having
business relations with it.
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ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF INVENTOY
Inventoy hereby represents and warrants to Assure and the Shareholders as
follows:
(a) Inventoy is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Delaware and has the legal capacity
and all necessary corporate authority to carry on its business, to own its
properties and assets, and to enter into and perform this Agreement and to
consummate the transactions contemplated hereby;
(b) This Agreement has been duly authorized, executed and delivered by
Inventoy and constitutes a legal, valid and binding obligation of Inventoy,
enforceable against Inventoy in accordance with its terms;
(c) The execution and delivery of this Agreement and the performance of
the obligations imposed hereunder will not conflict with, or result in a breach
by Inventoy of, any of the terms or provisions of, or constitute a default under
the certificate of incorporation or bylaws of Inventoy, or any material
agreement or instrument to which Inventoy is a party, or by which it or any of
its properties or assets are bound, or result in a violation of any order,
decree, or judgment of any court or governmental agency having jurisdiction over
Inventoy or Inventoy's properties, will not conflict with, constitute a default
under, or result in the breach of, any contract, agreement, or other instrument
to which Inventoy is a party or is otherwise bound and no consent, authorization
or order of, or filing or registration with, any court, governmental, or
regulatory authority is required in connection with the execution and delivery
of this Agreement and any related agreements or the performance by Inventoy of
its obligations hereunder;
(d) There is no litigation or proceeding pending or, to the best knowledge
of Inventoy, threatened, against Inventoy which would have any material effect
on the validity or performance of this Agreement;
(e) The shares of Inventoy common stock issued as a part of the Units
will, when issued, be duly authorized, validly issued, fully paid, and
non-assessable; The A Warrants and B Warrants issued as part of the units will,
when issued, be duly authorized and validly issued.
(f) Except as contemplated by this Agreement, or as expressly agreed to in
writing by Assure, during the period from the date of this Agreement to the
Closing Date, Inventoy will conduct its operations only in the ordinary course
of business consistent with sound financial, operational and regulatory
practice, and will take no action which would have a material adverse effect on
its ability to consummate this Agreement. Without limiting the generality of the
foregoing, except as otherwise expressly provided in this Agreement, prior to
the Closing Date, Inventoy will not, without the prior written consent of
Assure, it being understood that such consent shall not be unreasonably
withheld:
(1) amend its charter documents or bylaws (or similar
organizational documents);
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(2) authorize for issuance, issue, sell, deliver, grant any options
for, or otherwise agree or commit to issue, sell or deliver any
shares of its capital stock or any other securities;
(3) recapitalize, split, combine or reclassify any shares of its
capital stock; declare, set aside or pay any dividend or other
distribution (whether in cash, stock or property or any combination
thereof) in respect of its capital stock; or purchase, redeem or
otherwise acquire any of its securities or modify any of the terms
of any such securities;
(4) (i) create, incur, assume or permit to exist any long-term debt
or any short-term debt for borrowed money other than under existing
notes payable, lines of credit or other credit facilities exceeding
USD $2.0 million or in the ordinary course of business; or (ii)
assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of
any other person;
(5) (i) increase in any manner the rate of compensation of any of
its directors, officers or other employees everywhere, (ii) pay or
agree to pay any bonus, pension, retirement allowance, severance or
other employee benefit except as required under currently existing
benefit plans, if any, except for holiday bonuses in an aggregate
amount not to exceed holiday bonuses for the prior year, or (iii)
amend, terminate or enter into any employment, consulting,
severance, change in control or similar agreements or arrangements
with any of its directors, officers or other employees;
(6) enter into any material agreement, commitment or contract,
except agreements, commitments or contracts for the purchase, sale
or lease of goods or services in the ordinary course of business;
(7) other than in the ordinary course of business, authorize,
recommend, propose or announce an intention to authorize, recommend
or propose, or enter into any contract with respect to, any (i) plan
of liquidation or dissolution, (ii) acquisition of a material amount
of assets or securities, (iii) disposition or encumbrance of a
material amount of assets or securities, (iv) merger or
consolidation or (v) material change in its capitalization;
(8) change any material accounting or tax procedure or practice;
(9) take any action the taking of which, or knowingly omit to take
any action the omission of which, would cause any of the
representations and warranties herein to fail to be true and correct
in all material respects as of the date of such action or omission
as though made at and as of the date of such action or omission;
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(10) compromise, settle or otherwise modify any material claim
or litigation;
(11) permit any existing insurance policy insuring Inventoy's
assets to terminate; or
(12) commit, promise or agree to do any of the foregoing.
(g) Inventoy shall use its reasonable best efforts to continue to maintain
and service it assets consistent with past practice. Except for the sale of
Xxxxxxxx.xxx International, Inc., Inventoy shall not directly or indirectly,
sell or encumber all or any part of its assets, other than sales in the ordinary
course of business.
(h) Except for the transactions contemplated in connection with the sale
of Xxxxxxxx.xxx International, Inc., Inventoy shall use commercially reasonable
efforts to keep available the services of its current employees and agents and
to maintain its relations and goodwill with its suppliers, customers,
distributors and any others having business relations with it.
ARTICLE 7
JOINT COVENANTS OF THE PARTIES
(a) Each of Inventoy, on the one hand, and Assure and each of the
Shareholders, on the other hand, shall give prompt notice to each other of the
following:
(1) the occurrence or nonoccurrence of any event whose occurrence or
nonoccurrence would be likely to cause either (i) any representation
or warranty contained in this Agreement to be untrue or inaccurate
at any time from the date hereof to the Closing Date, or (ii)
directly or indirectly, any material adverse effect to the assets,
business, financial condition or results of operations of any Party;
and
(2) any material failure of such Party, or any officer, director,
employee or agent thereof, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it
hereunder.
(b) From the date hereof to the Closing Date, Inventoy and Assure shall,
and shall cause its officers, directors, employees, auditors, counsel and agents
to, afford the officers, employees, auditors, counsel, financial advisors and
agents of the other Party complete access at all reasonable times to such
Party's officers, employees, auditors, counsel, agents, properties, offices and
other facilities and to all of their respective books and records, and shall
furnish the other with all financial, operating and other data and information
as such other Party may reasonably request.
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(c) Assure and Inventoy shall issue a joint press release announcing the
terms of this Agreement in form mutually acceptable to the Parties as promptly
as practicable if, in the good faith opinion of counsel for Inventoy, such
public disclosure is required by the Securities and Exchange Commission or the
NASD OTCBB. Assure acknowledges that Inventoy is a publicly traded company with
disclosure obligations under federal and state securities laws and regulations
and that the existence, conduct and results of the relationship between Assure
and Inventoy may present material disclosure items for Inventoy. In the event
that Assure and Inventoy shall disagree over the form or substance of any public
press release communication, Inventoy shall be justified in relying on the
advice of its counsel regarding the obligations of Inventoy under any federal or
state securities laws or regulations in deciding whether to release any public
press release without the prior consent of Assure. Inventoy will provide copies
of any public announcement to Assure prior to any public dissemination of such
announcement.
(d) Upon the terms and subject to the conditions hereof, each of the
Parties shall use its commercially reasonable efforts to take or cause to be
taken all actions and to do or cause to be done all things necessary, proper or
advisable to consummate as promptly as practicable this Agreement and shall use
its commercially reasonable efforts to obtain all required consents, and to
effect all necessary filings under the Securities Act and the Exchange Act.
Without limiting the generality of the foregoing, each Party shall use all
commercially reasonable efforts to take, or cause to be taken, all other actions
and to do, or cause to be done, all other things necessary, proper or advisable
to fulfill the conditions herein to the extent that the fulfillment thereof is
within a Party's control.
(e) Inventoy shall pay all of the legal, accounting and other expenses
incurred by Inventoy in connection with this Agreement. Assure shall pay all of
the legal, accounting and other expenses incurred by Assure and the Shareholders
in connection with this Agreement.
(f) Each Party represents that it has incurred no obligation or liability
for brokerage or finders' fees or similar payment in connection with this
Agreement or the transactions contemplated hereby. Each Party shall indemnify
and hold the other Party harmless from any claim for brokerage or finders' fees
arising out the transactions contemplated hereby by any person claiming to have
been engaged by either Party.
ARTICLE 8
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE PARTIES
This Agreement and the performance of the obligations hereunder will be
subject to the following conditions:
(a) The delivery of audited financial statements of Assure for the
years ended December 31, 2000, and 2001;
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(b) Completion of all required corporate and shareholder actions and
approvals, if any, including any approvals of all terms and conditions of this
Agreement by the board of directors or shareholders of each Party;
(c) Inventoy shall have a sufficient number of authorized but unissued and
unreserved shares of common stock to consummate the transactions contemplated
hereby;
(d) Opinions of counsel to Inventoy that the transactions contemplated
hereby do not violate any state or federal securities laws or the regulations of
any applicable governmental agencies, and have been duly authorized by Inventoy,
or Assure as the case may be;
(e) Inventoy is listed for quotation on the NASD Over-the-Counter Bulletin
Board ("OTCBB") at the Closing Date, and has not received notice of delisting
from the OTCBB which has not been withdrawn prior to the Closing Date of the
Acquisition;
(f) Inventoy shall timely file all reports required to be filed pursuant
to Section 13 or Section 15 of the Securities Exchange Act of 1934, as amended
("Exchange Act");
(g) At the Closing Date, Inventoy shall have cash in excess of
payables.
(h) Absence of any event having a material adverse effect on the
Parties respective business or financial condition;
(i) Absence of pending or threatened litigation regarding the Parties
respective shares of stock, assets or this Agreement.
ARTICLE 9
NOTICE
All notices, demands or other communications given hereunder shall be in
writing and shall be deemed to have been duly given when received if sent by fax
or overnight courier, and if mailed shall be deemed to have been given on the
first business day after mailing by United States registered or certified mail,
return receipt requested, postage prepaid, addressed as follows:
To Inventoy: Xxxxx Xxxxxx
0000 Xxxxxxxxx Xxxxx, Xxxxx X0000
Xxxx Xxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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with a copy to: Xxxxxx Gottbetter & Xxxxxxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
To Assure: Assure Oil & Gas Inc.
0 Xxxxxxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx X0X 0X0
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
To the Shareholders: At the address provided on Exhibit A attached
hereto.
ARTICLE 10
MISCELLANEOUS
(a) Each of Inventoy, Assure and the Shareholders agrees to take such
actions as are reasonably necessary to carry out the intentions of the parties
under this Agreement, including but not limited to the prompt execution and
delivery of any documents reasonably necessary to carry out and perform the
terms or intention of this Agreement.
(b) All costs and expenses incurred in connection with this Agreement and
the transactions contemplated hereby shall be paid by the party incurring such
costs or expenses, unless otherwise agreed.
(c) This Agreement shall be governed by and construed in accordance with
the laws of the State of New York, without regard to conflicts of laws of
principles and each party hereby agrees that all performances due and
transactions undertaken pursuant to this Agreement shall be deemed to be due or
have occurred in New York, and the exclusive venue and place of jurisdiction for
any litigation arising from or related to this Agreement shall be the state or
federal courts located in the State and County of New York.
(d) The headings used in this Agreement are for convenience only, do not
form a part of this Agreement, and shall not affect in any way the meaning or
interpretation of this Agreement.
(e) This Agreement may be executed in one or more counterparts which when
taken together shall constitute one agreement.
(f) This Agreement is intended for the benefit of the parties hereto and
is not for the benefit of, nor may any provisions hereof be enforced by any
other person, firm or entity.
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(g) This Agreement may be amended, modified and supplemented in writing
only by the mutual consent of the parties hereto.
(h) This Agreement and all of the provisions hereof shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns, but neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto without the prior written consent of the other parties, and any attempts
to do so without the consent of the other parties shall be void and of no
effect.
(i) In the event any party breaches the terms of this Agreement, the
non-breaching parties shall be entitled to the recovery of their attorney's fees
and other professional costs and fees incurred in enforcing their rights
hereunder.
(j) This writing constitutes the entire agreement and understanding
between the parties hereto with respect to the subject matter contained herein.
Neither party is relying on any representation or statement not contained in
this writing. This Agreement supercedes and cancels any prior agreements
relating to the subject matter contained herein.
14
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first written above.
XXXXXXXX.XXX, INC.
By: /s/ Xx Xxxxxx
--------------------------------
Name: Xx Xxxxxx
Title: President and CEO
ASSURE OIL AND GAS, INC.
By: /s/ Xxxxx Xxxxx
--------------------------------
Name: Xxxxx Xxxxx
Title: President
THE SHAREHOLDERS
/s/ Xxxxxx Xxxx
---------------------------------------
Xxxxxx Xxxx
/s/ Xxxxxx Xxxxx
---------------------------------------
Xxxxxx Xxxxx
BELESARIUS INDUSTRIES INC.
By: /s/ D.A. Kent
--------------------------------
Name: D.A. Kent
Title: President
1083862 ONTARIO LIMITED
By: /s/ Xxxx Xxxxxxxxx
--------------------------------
Name: Xxxx Xxxxxxxxx
Title: President
/s/ Xxxxxx X. Xxxxxxx
------------------------------------
Xxxxxx X. Xxxxxxx
TONBRIDGE FINANCIAL CORP.
By: /s/ R.E. Xxxxxx
--------------------------------
Name: R.E. Xxxxxx
Title: President
PRIVATE INVESTMENT COMPANY LTD.
By: /s/ Xxxxxx Xxxxxxxx
--------------------------------
Name: Xxxxxx Xxxxxxxx
Title: President
FIELDSTON TRADERS LIMITED
By: /s/ Xxxxx Xxx
--------------------------------
Name: Xxxxx Xxx
Title: Canadian Power-of-Attorney
HARVESTER EMERGING MARKETS FUND
By: /s/ R.E. Xxxxxx
--------------------------------
Name: R.E. Xxxxxx
Title: President
Signature Page 1 of 3
/s/ Xxxxxx X. Xxxxxxx
------------------------------------
Xxxxxx X. Xxxxxxx
LIBREVILLE COMPANY LTD.
By: /s/ Xxxx Xxxxx
--------------------------------
Name: Xxxx Xxxxx
Title: Director
/s/ Xxxxx Xxxxx
------------------------------------
Xxxxx Gocht
/s/ Xxxxx Xxxxxxxxx
------------------------------------
Xxxxx Xxxxxxxxx
/s/ Xxxx X. Xxxxxxx
------------------------------------
Xxxx X. Xxxxxxx
TERAMA COMPANY LIMITED
By: /s/ R.E. Xxxxxx
--------------------------------
Name: R.E. Xxxxxx
Title: President
/s/ Xxxx XxXxxxxx
------------------------------------
Xxxx XxXxxxxx
/s/ Xxxx Xxxxxxxxx
------------------------------------
Xxxx Xxxxxxxxx
INTEGRAL BUSINESS SERVICES LTD.
By: /s/ Blanco Montano
--------------------------------
Name: Blanco Montano
Title: President
PADDINGTON INC.
By: /s/ Xxxxx X. Xxxxx
--------------------------------
Name: Xxxxx X. Xxxxx
Title: for Director: Xxxxx Xxxxxxxxx, Ltd.
HECATE, INC.
By: /s/ J. Xxxxxxxx Xxxxxxxx
--------------------------------
Name: J. Xxxxxxxx Xxxxxxxx
Title: for Director: Xxxxxxxx Xxxxxxxx, Ltd.
/s/ Xxxxxx Xxxxxxxx
------------------------------------
Xxxxxx Xxxxxxxx
DART MANAGEMENT CORPORATION
By: /s/ Xxxxxxx Xxxxx
--------------------------------
Name: Xxxxxxx Xxxxx
Title: Vice-President
CRYSTAL OVERSEAS TRADING INC.
By: /s/ Xxxxxxxx Xxxx
--------------------------------
Name: Xxxxxxxx Xxxx
Title: Director/Secr.
Signature Page 2 of 3
XXXXXX SERVICES, LTD.
By: /s/ Xxxxx Xxxxxx-Xxxxxxx
--------------------------------
Name: Xxxxx Xxxxxx-Xxxxxxx
Title: for Director: Xxxxx Xxxxxx, Ltd.
Signature Page 3 of 3
EXHIBIT A
LIST OF SHAREHOLDERS
NUMBER
OF NUMBER
ASSURE OF UNITS
SHARES TO BE
NAME ADDRESS OWNED RECEIVED
----------------------------------------------------------------------------------------------------
Xxxxxx Xxxx 000 Xxxxxxxx Xxxxx 47 112,800
Xxxx, Xxxxxxx, X0X 0X0
Xxxxxx Xxxxx 000, 0 Xxxxxxxx Xxxxxx Xxxx 145 348,000
Xxxxxxx, Xxxxxxx X0X 0X0
Belesarius Industries Inc. X.X. Xxx X-00000 46 110,400
Freeport, Bahamas
1083862 Ontario Limited 000 Xxxxxxxx Xxxxxx Xxxx, 00 156,000
Xxxxx 000
Xxxxxxx, Xxxxxxx X0X 0X0
Xxxxxx X. Xxxxxxx 0, Xxxxx Xxxxxx Xxxx, #00-00 15 36,000
High Street Centre, Singapore
17 90 94
Rep of Singapore
Tonbridge Financial Corp. BM Box 9562 65 156,000
00 Xxxxxxxxxx Xxxxxx
Xxxxxx XX0X 0XX
Xxxxxxx, Great Britain
Private Investment Company Xxxxxxx Xxxxx, Xxxx Xxxxxx 65 156,000
Ltd. X.X. Xxx 00
Xxxxx Xxxx
Turk & Caicos Islands BWI
Fieldston Traders Limited 0000 Xxxx Xxxxxx, Xxxxx 000 47 112,800
Xxxxxxxxx, Xxxxxxx Xxxxxxxx
X0X 0X0
Harvester Emerging Markets X.X. Xxx 00000, Xxxxxxxx, 47 112,800
Fund Bahamas
Xxxxxx X. Xxxxxxx 0, Xxxxx Xxxxxx Xxxx, #00-00 45 108,000
High Street Centre, Singapore
17 90 94
Rep of Singapore
A-1
NUMBER
OF NUMBER
ASSURE OF UNITS
SHARES TO BE
NAME ADDRESS OWNED RECEIVED
----------------------------------------------------------------------------------------------------
Libreville Company Ltd. Paseo Estate 32 76,800
Roadtown
Tortola, BVI
Xxxxx Xxxxx 0000 Xxxxxxxx Xxxxx 0 0,000
Xxxxx Xxxxx Xxxxx, Xxxxxxx
00000
XXX
Xxxxx Xxxxxxxxx 0000, 000-0xx Xxxxxx XX 0 0,000
Xxxxxxx, Xxxx X0X 0X0
Xxxx X. Xxxxxxx 0000, 000-0xx Xxxxxx XX 0 0,000
Xxxxxxx, Xxxx X0X 0X0
Terama Company Limited X.X. Xxx X-00000, Xxxxxxxx, 34 81,600
Bahamas
Xxxx XxXxxxxx 236 Alscot Cresent 6 14,400
Xxxxxxxx, Xxxxxxx X0X 0X0
Xxxx Xxxxxxxxx X.X. Xxx 0000 Xxxxxx Xxxxx 0 14,400
Fe, California
Integral Business Services Xxxxx 000, 0000 Xxxxxxxx Xxx 7 16,800
Ltd. Xxxx, Xxxxxx 00000-0000
Paddington Inc. X.X. Xxx 000 42 100,800
Main Street, Charlestown,
Nevis
Hecate, Inc. 00 Xxxxxx Xxxxxx 42 100,800
Castries, St. Lucia
Xxxxxx Xxxxxxxx 84 Cane Vale, Crescent Xx. 0 00 000,000
Xxxxxx Xxxxxx, Xxxxxxxx W.I.
Dart Management Corporation Avenue Mont Joie 289 (Bte. 13) 65 156,000
0000 Xxxxxxxxx
Xxxxxxx
Crystal Overseas Trading Xxxxxxxxxxx 00 65 156,000
Inc. X.X. Xxx 0000
Xx-0000, Xxxxxx
X-0
NUMBER
OF NUMBER
ASSURE OF UNITS
SHARES TO BE
NAME ADDRESS OWNED RECEIVED
----------------------------------------------------------------------------------------------------
Xxxxxx Inc. X.X. Xxx 000 41 98,400
000 Xxxx Xxxxxx
Xxxxxxxxx
TOTAL ----- ---------
1,000 2,400,000
A-3
EXHIBIT B
LIST OF ASSURE ASSETS AS AT MARCH 31, 2002
(ASSETS-EXPRESSED IN CANADIAN DOLLARS)
1) Cash $ 81,580.62
2) To the best knowledge of Assure the following represents the accounts
receivable of Assure as of March 31, 2002 and should be considered in
conjunction with the audited financial statements of Assure as of December 31,
2001. The revenue receivable does not include Oil revenue from two producing
xxxxx for the months of January, February and March 2002. Certain accounts
receivable are forward looking accruals or estimates and should be considered
accordingly:
ACCOUNTS RECEIVABLE
Drilling & Completion Advances $ 441,178.00
Land Bid Fund $ 64,132.00
Government Sales Tax Receivable $ 13,458.49
Revenue Receivable $ 42,710.46
------------
$ 561,478.95
3) "Lands" means the lands described and includes the Petroleum Substances
within, upon or under such lands, if any, together with the right to explore for
and recover the same insofar as such rights are granted by the leases,
reservations, permits, licences, contracts or other documents.
LANDS WORKING ENCUMBRANCES
XXXXXXXX
Xxxxxxx Xxxx, Xxxxxxx
Xxxxxxxx 00 Xxx 00 X0X NW/4 Section 2 47.5% Crown SS, 2% non-convertible GOR
(excluding wellbore 100/00-00-00-00 W4M) based on 50% of production
(NG to Base Xxxxxxxx)
Xxxxxxxx 00 Xxx 00 X0X SE/4 Section 2 47.5% Crown SS, 2% non-convertible GOR
(NG to Base Manville) based on 50% of production
Township 15 Rge 16 W4M SW/4 Section 2 47.5% Crown SS, 2% non-convertible GOR
(NG to Base Manville) based on 50% of production
Xxxxxxxx 00 Xxx 00 X0X NE/4 Section 2 47.5% Crown SS, 2% non-convertible GOR
(NG to Base Manville) based on 50% of production
X-0
XXXXX XXXXXXX XXXXXXXXXXXX
XXXXXXXX
Xxxxxxx Xxxx, Xxxxxxx (continued)
Xxxxxxxx 00 Xxx 00 X0X XX/0 Section 2 95% Crown SS, 2% non-convertible GOR
(wellbore only 100/00-00-00-00 W4M) based on 100% of production
(NG to Base Xxxxxxxx)
Xxxxxxxx 00 Xxx 00 X0X Section 3 95% Crown SS, 2% non-convertible GOR
(P&NG from top Manville to Base based on 50% of production
Xxxxxxxxxxx)
Xxxxxxxx 00 Xxx 00 X0X NW/4 of Section 35 95% Crown
(P&NG below Xxxxxxxxx)
Xxxxxxxx 00 Xxx 00 X0X SW/4 of Section 35 95% Crown
(P&NG below Mannville)
Xxxxx: Status:
100/01-02-015-16 W4M/00 47.5% Prod Gas
100/12-02-015-16 W4M/00 95% Abn
100/08-03-015-16 W4M/00 47.5% Pump Oil
100/10-03-015-16 W4M/00 47.5% Susp Oil
100/10-03-015-16 W4M/02 47.5% Flow Oil
Tangibles:
Wellhead and related equipment for each of above xxxxx.
Facilities: Pipeline Licence #30456
3.2 km tie in of the 8-13-15-16 W4M to the Battery located
at 5-27-15-16- W4M
.56 km tie in from the 10-3-15-16- W4M to the Satellite
located 8-3-15-16 W4M
.05 km tie in from the 8-3-15-16 W4M to the Satellite
located at 8-13-15-16- W4M
Xxxxxx Xxxx, Xxxxxxx
Xxxxxxxx 00, Xxx 00 X0X Section 24 63% Crown
(All P&NG Rights from Surface to Basement)
B-2
LANDS WORKING ENCUMBRANCES
INTEREST
Well: Status:
100/04-24-018-23 W4M/00 63% Prod Oil
Xxxxxxxx Xxxx, Xxxxxxx
Xxxxxxxx 00 Xxx 00 X0X Section 24 100% Crown
(P&NG Rights to base Bluesky and Bullhead)
Xxxxxxxx Xxxx, Xxxxxxx
Xxxxxxxx 00 Xxx 0 X0X W/2 Section 29 22.5% BPO Crown
(All P&NG below base Viking to 16.875% APO
base Xxxxxx Valley)
Xxx 00 Xxx 0 X0X X/0 Xxxxxxx 00
(Xxx X&XX below base Viking to Manville)
Well: Status:
100/04-29-033-04 W5M/00 22.5% BPO Waiting completion/tie in
16.875% XXX
Xxxxx Xxxx, Xxxxxxx
Xxxxxxxx 00 Xxx 0 X0X SW/4 Section 20 16.665% Crown & 10% XXXX
(P&NG below base Xxxxxxx to
Basement)
Well: Status:
100/05-20-083-07 W6M/00 16.665% Pending completion/tie in
Charlie Lake Oil well
Xxxxx Xxxxxx, Xxxxxxx
Xxxxxxxx 00 Xxx 00 X0X Section 20 60% Crown
P&NG from Surface to Basement)
B-3
LANDS WORKING ENCUMBRANCES
XXXXXXXX
Xxxxxxx, Xxxxxxx
Xxxxxxxx 00 Xxx 00 X0X Section 14 65% of Costs Crown, 5/15% oil, 15% gas
(P&NG from Surface to base Triassic) 48.77% BPO
39% XXX
Xxxxxx/Xxxx Xxxx, Xxxxxxx
Xxxxxxxx 00 Xxx 00 X0X Section 22 12% Crown
(P&NG in the Glauconitic SS, P&NG
in the Ellersie MBR)
Well: Status:
100/06-22-038-24 W4M/00 12% Abandoned
Xxxxxx/Pine Lake, Alberta (continued)
Xxxxxxxx 00 Xxx 00 X0X XX/0 Section 7 20% BPO Lessor 18%
(All NG) 12% XXX
Xxxxxxxx 00 Xxx 00 X0X E/2 & SW/4 Section 7 20% BPO Lessor 20%
(All NG) 12% XXX
Xxxxxxxx 00 Xxx 00 X0X Section 7 0% BPO Lessor 20%
(All Petroleum) 12% APO
Well: Status:
100/11-07-036-23 W4M/00 20% BPO Pending completion/tie in
12% APO Potential Glauconite Gas well
B-4
EXHIBIT C
LIST OF ASSURE LIABILITIES AS AT MARCH 31, 2002
(LIABILITIES-EXPRESSED IN CANADIAN DOLLARS)
To the best knowledge of Assure the following represents the liabilities of
Assure as of March 31, 2002 and should be considered in conjunction with the
audited financial statements of Assure as of December 31, 2001. Certain amounts
are forward looking accruals or estimates and should be considered accordingly:
1) Xxxxxxx Xxxxxx, C.A. December 2000 and 2001 audits (Estimated) $ 6,000.00
2) Xxxxxx Energy, Harmatten Account Balance $ 29,904.06
3) Xxxxxxx Associates-March 1, 2002 reserve report (Estimated) $ 5,500.00
4) 1420041 Ontario Inc. Jan-March 2002 Corporate Services $ 4,012.50
5) Xxxxxx Xxxxx, Jan - March 2002 Consulting Services $ 5,250.00
6) Belesarius Industries Inc.-Shareholder advance $ 3,590.00
7) Private Investment Company Ltd.-Shareholder advance $ 287.75
8) EMM Energy Corp. re-entry & completion Lomond well $ 156,978.36
9) Provincial Treasurer of Alberta $ 11,556.68
10) Federal Express $ 14.13
-------------
$ 223,093.48
C-1
EXHIBIT D
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made as of April
23, 2002 by and between Xxxxxxxx.xxx, Inc., a Delaware corporation, (the
"Company") and the persons listed as shareholders on the signature page hereto
(each a "Shareholder" and collectively the "Shareholders").
WHEREAS, the Shareholders received an aggregate of 2,400,000 Units, each
Unit consisting of one (1) share of common stock of the Company (the "Shares"),
1 A Warrant (the "A Warrants") and 1 B Warrant (the "B Warrants") to purchase
shares (the "Warrant Shares") of common stock of the Company pursuant to an
Acquisition Agreement between the Shareholders, Assure Oil and Gas, Inc. and the
Company, dated even date herewith (the "Acquisition Agreement"); and
WHEREAS, the Company has agreed to provide the Shareholders certain rights
as set forth in this Agreement.
NOW THEREFORE, the parties hereto agree as follows:
1. Definitions.
"Affiliate" means, with respect to any Person, any other Person that
directly or indirectly controls or is controlled by or under common control with
such Person. For the purposes of this definition, "control" when used with
respect to any Person, means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise;
and the terms of "affiliated," "controlling" and "controlled" have meanings
correlative to the foregoing.
"Business Day" means any day except Saturday, Sunday and any day
which shall be a legal holiday or a day on which banking institutions in the
state of New York generally are authorized or required by law or other
government actions to close.
"Commission" means the Securities and Exchange Commission.
"Effectiveness Period" shall have the meaning set forth in Section
2.
"Event" shall have the meaning set forth in Section 4.
"Event Date" shall have the meaning set forth in Section 4.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Filing Date" means, with respect to a Registration Statement, the
date ninety (90) days from the date of this Agreement.
D-1
"Holder" or "Holders" means each Shareholder or the Shareholders or
such other holder or holders, as the case may be, from time to time of
Registrable Securities.
"Indemnified Party" shall have the meaning set forth in Section
6(c).
"Indemnifying Party" shall have the meaning set forth in Section
6(c).
"Losses" shall have the meaning set forth in Section 6(a).
"Person" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or political subdivision
thereof) or other entity of any kind.
"Proceeding" means an action, claim, suit, investigation or
proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened.
"Prospectus" means the prospectus included in either the Tranche A
Registration Statement or the Tranche B Registration Statement (including,
without limitation, a prospectus that includes any information previously
omitted from a prospectus filed as part of an effective registration statement
in reliance upon Rule 430A promulgated under the Securities Act), as amended or
supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Registrable Securities covered by such
Registration Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.
"Registrable Securities" means (1) the Shares received by the
Shareholders from the Company pursuant to the Acquisition Agreement; (2) the
Warrant Shares issuable upon exercise of the A Warrants received by the
Shareholders from the Company pursuant to the Acquisition Agreement (the "A
Warrant Shares"); (3) the Warrant Shares issuable upon exercise of the B
Warrants received by the Shareholders from the Company pursuant to the
Acquisition Agreement (the "B Warrant Shares"); and (4) any Common Stock of the
Company issued as (or issuable upon the conversion or exercise of any warrant,
right, or other security which is issued as) a dividend or other distribution
with respect to, or in exchange for or in replacement of, such Shares and
Warrant Shares excluding in all cases, however, any Registrable Securities sold
by a person in a transaction in which his rights under this Agreement are not
assigned.
"Registration Statement" means either the Tranche A Registration
Statement or the Tranche B Registration Statement, contemplated by Section 2,
including the Prospectus, amendments and supplements to such registration
statement or Prospectus, including pre- and post-effective amendments, all
exhibits thereto, and all material incorporated by reference or deemed to be
incorporated by reference in such registration statement.
"Rule 144" means Rule 144 promulgated by the Commission pursuant to
the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
D-2
"Rule 158" means Rule 158 promulgated by the Commission pursuant to
the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Rule 415" means Rule 415 promulgated by the Commission pursuant to
the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Securities Act" means the Securities Act of 1933, as amended.
"Tranche A Registrable Securities" means 50% of the Shares and 100%
of the A Warrant Shares.
"Tranche B Registrable Securities" means 50% of the Shares and 100%
of the B Warrant Shares.
"Underwritten Registration" or "Underwritten Offering" means a
registration in connection with which securities of the Company are sold to an
underwriter for reoffering to the public pursuant to an effective registration
statement.
2. Shelf Registration.
(a) Tranche A Registrable Securities.
As soon as practicable, the Company shall diligently prepare and
file with the Commission a Registration Statement covering the resale of the
Tranche A Registrable Securities for an offering to be made on a continuous
basis pursuant to Rule 415 (the "Tranche A Registration Statement"). The Tranche
A Registration Statement shall be on Form SB-2 or, if Form SB-2 is not then
available, another appropriate form permitting registration of Tranche A
Registrable Securities for resale by the Holders in the manner or manners
designated by them (including, without limitation, public or private sales). The
Company shall use its best efforts to cause the Tranche A Registration Statement
to be declared effective under the Securities Act as promptly as possible after
the filing thereof, and to keep such Tranche A Registration Statement
continuously effective under the Securities Act until the date which is two (2)
years after the date of this Agreement or such earlier date when all Tranche A
Registrable Securities covered by such Tranche A Registration Statement have
been sold or may be sold pursuant to Rule 144(k) as determined by the counsel to
the Company pursuant to a written opinion letter, addressed to the Holders, to
such effect (the "Tranche A Effectiveness Period"); provided, however, that the
Company shall not be deemed to have used its best efforts to keep the Tranche A
Registration Statement effective during the Tranche A Effectiveness Period if it
voluntarily or negligently takes any action (or fails to take any action) to
suspend, delay or withdraw the effectiveness of the Tranche A Registration
Statement under the Securities Act during the Tranche A Effectiveness Period,
unless such action is required under applicable law or the Company has filed a
post-effective amendment to the Tranche A Registration Statement and the
Commission has not declared it effective.
D-3
(b) Tranche B Registrable Securities.
Within 18 months of the declared effectiveness of the Tranche A
Registration Statement, the Company shall diligently prepare and file with the
Commission a registration statement covering the resale of the Tranche B
Registrable Securities for an offering to be made on a continuous basis pursuant
to Rule 415 (the "Tranche B Registration Statement"). The Tranche B Registration
Statement shall be on Form SB-2 or, if Form SB-2 is not then available, another
appropriate form permitting registration of Tranche B Registrable Securities for
resale by the Holders in the manner or manners designated by them (including,
without limitation, public or private sales). The Company shall use its best
efforts to cause the Tranche B Registration Statement to be declared effective
under the Securities Act as promptly as possible after the filing thereof, and
to keep such Tranche B Registration Statement continuously effective under the
Securities Act until the date which is two (2) years after the date of this
Agreement or such earlier date when all Tranche B Registrable Securities covered
by such Tranche B Registration Statement have been sold or may be sold pursuant
to Rule 144(k) as determined by the counsel to the Company pursuant to a written
opinion letter, addressed to the Holders, to such effect (the "Tranche B
Effectiveness Period"); provided, however, that the Company shall not be deemed
to have used its best efforts to keep the Tranche B Registration Statement
effective during the Tranche B Effectiveness Period if it voluntarily or
negligently takes any action (or fails to take any action) to suspend, delay or
withdraw the effectiveness of the Tranche B Registration Statement under the
Securities Act during the Tranche B Effectiveness Period, unless such action is
required under applicable law or the Company has filed a post-effective
amendment to the Tranche B Registration Statement and the Commission has not
declared it effective.
(c) Underwritten Offering.
If either the Tranche A Registration Statement or the Tranche B
Registration Statement is to be effected in the form of an Underwritten Offering
and the managing underwriters thereof advise the Company in writing that in
their opinion the amount of Registrable Securities proposed to be sold in such
offering exceeds the amount of Registrable Securities which can be sold in such
offering, there shall be included in such Underwritten Offering the amount of
such Registrable Securities which in the opinion of such managing underwriters
can be sold, and such amount shall be allocated pro rata among the Holders
proposing to sell Registrable Securities in such Underwritten Offering. No
Holder may participate in any Underwritten Offering hereunder unless such Person
(i) agrees to sell its Registrable Securities on the basis provided in any
underwriting agreements and (ii) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
required under the terms of such arrangements.
3. Registration Procedures. For the purposes of this Section 3, the
Tranche A Registration Statement and the Tranche B Registration Statement are
sometimes referred to collectively as the "Registration Statements." In
connection with the Company's registration obligations hereunder, the Company
shall:
(a) Prepare and file with the Commission within the time periods
set forth in Section 2 the Registration Statements on Form SB-2 or, if Form SB-2
is not available, another appropriate form permitting registration of
Registrable Securities for resale by the Holders in
D-4
accordance with the method or methods of distribution thereof as specified by
the Holders, and use its best efforts to cause the Registration Statements to
become effective and remain effective as provided herein; provided, however
that, subject only to the Holders providing to the Company in writing
information relating to the Holders' proposed method of distribution of
Registrable Securities and such other information required by law, not less than
ten (10) days prior to the filing of the Registration Statements or any related
Prospectus or any amendment or supplement thereto (including any document that
would be incorporated or deemed to be incorporated therein by reference), the
Company shall (i) furnish to the Holders copies of all such documents proposed
to be filed, which documents (other than those incorporated or deemed to be
incorporated by reference) will be subject to the review of such Holders, and
(ii) cause its officers and directors, counsel and independent certified public
accountants to respond to such inquiries as shall be necessary, in the opinion
of counsel to such Holders, to conduct a reasonable investigation within the
meaning of the Securities Act. The Holders shall have five days after receipt of
the Registration Statements or any related Prospectus or any amendment or
supplement thereto to comment on or object to the filing of such documents. The
Company shall not file the Registration Statements or any such Prospectus or any
amendments or supplements thereto without including any comments reasonably
requested by the Holders and shall not file any such documents to which the
Holders of a majority of the Registrable Securities shall object.
(b) (i) Prepare and file with the Commission such amendments,
including post-effective amendments, to the Registration Statements as may be
necessary to keep the Registration Statements continuously effective for the
applicable time period; (ii) cause the related Prospectus to be amended or
supplemented by any required Prospectus supplement, and as so supplemented or
amended to be filed pursuant to Rule 424 (or any similar provisions then in
force) promulgated under the Securities Act; (iii) respond as promptly as
practicable to any comments received from the Commission with respect to the
Registration Statements or any amendment thereto; and (iv) comply with the
provisions of the Securities Act and the Exchange Act with respect to the
registration of all Registrable Securities covered by the Registration
Statements during the applicable period in accordance with the intended methods
of disposition by the Holders thereof set forth in the Registration Statements
as so amended or in such Prospectus as so supplemented.
(c) Notify the Holders of Registrable Securities to be sold
immediately (and, in the case of (i)(A) below, not less than three Business Days
prior to such filing) and (if requested by any such Person) confirm such notice
in writing no later than one Business Day following the day (i)(A) when a
Prospectus or any Prospectus supplement or post-effective amendment to the
Registration Statements is proposed to be filed; and (B) with respect to the
Registration Statements or any post-effective amendment, when the same has
become effective; (ii) of any request by the Commission or any other federal or
state governmental authority for amendments or supplements to the Registration
Statements or Prospectus or for additional information; (iii) of the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statements covering any or all of the Registrable Securities or the
initiation of any Proceedings for that purpose; (iv) if at any time the
Registration Statements become stale and are no longer effective; (v) of the
receipt by the Company of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction, or the initiation or threatening of any
Proceeding for such purpose; and (vi) of the occurrence of any event that makes
any statement
D-5
made in the Registration Statements or Prospectus or any document incorporated
or deemed to be incorporated therein by reference untrue in any material respect
or that requires any revisions to the Registration Statements, Prospectus or
other documents so that, in the case of the Registration Statements or the
Prospectus, as the case may be, it will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(d) Use its best efforts to avoid the issuance of, or, if issued,
obtain the withdrawal of (i) any order suspending the effectiveness of the
Registration Statements or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in
any jurisdiction, at the earliest practicable moment.
(e) Furnish to each Holder, without charge, at least one complete
copy of each of the Registration Statements and each amendment thereto,
including financial statements and schedules, all documents incorporated or
deemed to be incorporated therein by reference, and all exhibits to the extent
requested by such Person (including those previously furnished or incorporated
by reference) promptly after the filing of such documents with the Commission.
(f) Promptly deliver to each Holder, without charge, as many
copies of the Prospectus or Prospectuses (including each form of prospectus
forming part of the effective Registration Statements) and each amendment or
supplement thereto as such Persons may reasonably request; and the Company
hereby agrees to respond in writing to a written request from the Purchaser with
respect to the effectiveness of such Prospectus.
(g) Prior to any public offering of Registrable Securities, use
its best efforts to register or qualify or cooperate with the selling Holders in
connection with the registration or qualification (or exemption from such
registration or qualification) of such Registrable Securities for offer and sale
under the securities or Blue Sky laws of such jurisdictions within the United
States as any Holder requests in writing, to keep each such registration or
qualification (or exemption therefrom) effective during the Effectiveness Period
and to do any and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Securities covered by the
Registration Statements; provided, however, that the Company shall not be
required to qualify generally to do business in any jurisdiction where it is not
then so qualified or to take any action that would subject it to general service
of process in any such jurisdiction where it is not then so subject or subject
the Company to any tax in any such jurisdiction where it is not then so subject.
(h) Cooperate with the Holders to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be sold, which certificates shall be free of all restrictive legends, except as
required by applicable law, and to enable such Registrable Securities to be in
such denominations and registered in such names as any Holder may request at
least three (3) Business Days prior to any sale of Registrable Securities.
(i) Upon the occurrence of any event contemplated by Section
3(c)(vi), as promptly as practicable, prepare a supplement or amendment,
including a post-effective amendment, to the Registration Statements or a
supplement to the related Prospectus or any
D-6
document incorporated or deemed to be incorporated therein by reference, and
file any other required document so that, as thereafter delivered, neither the
Registration Statements nor such Prospectuses will contain an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(j) Use its best efforts to cause all Registrable Securities
relating to such Registration Statement to be listed or quoted on any securities
exchange, market or over-the-counter bulletin board, if any, on which similar
securities issued by the Company are then listed or quoted to the extent
required by the rules of such exchange, market or other quotation system.
(k) Comply with all applicable rules and regulations of the
Commission and make generally available to its security holders earning
statements satisfying the provisions of Section 11(a) of the Securities Act and
Rule 158 not later than forty-five (45) days after the end of any 12-month
period (or ninety (90) days after the end of any 12-month period if such period
is a fiscal year) commencing on the first (1st) day of the first (1st) fiscal
quarter of the Company after the effective date of the Registration Statements.
(l) At such time as a Registration Statement has been declared
effective by the Commission covering the resale of any Registrable Securities,
the Company shall cause its legal counsel to deliver to the Transfer Agent an
opinion, subject to the holders of any Registrable Securities making such
representations and warranties to Company counsel as it may require, certifying
that such Registrable Securities may be sold by the Holders pursuant to such
Registration Statement with the purchasers thereof receiving share certificates
without restrictive legend, which opinion shall remain effective so long as such
Registration Statement remains in full force and effect. In the event that, at
any time, such Registration Statement ceases to be effective, the Company shall
immediately deliver written notice thereof to the Transfer Agent and the Holders
stating that the opinion of the Company's legal counsel may no longer be relied
upon by the Transfer Agent (unless and until an additional or amended, as
applicable, Registration Statement is so declared effective (with respect to the
resale of such Registrable Securities) ). Upon the receipt of any conversion or
exercise notice while the Registration Statement is effective, the share
certificates representing such Registrable Securities shall bear a restrictive
legend unless the Holders, either in connection with the delivery of such notice
or thereafter, deliver written notice to the Transfer Agent and the Company
(including notice via telecopy) that such Registrable Shares have been sold by
the Holders pursuant to such Registration Statement and make such
representations and warranties as Company counsel may require, whereupon the
Transfer Agent shall issue share certificates to the purchasers thereof without
restrictive legend.
Each Holder covenants and agrees that (i) it will not offer or sell any
Registrable Securities under the Registration Statement until it has received
copies of the Prospectus as then amended or supplemented as contemplated in
Section 3(f) and notice from the Company that such Registration Statement and
any post-effective amendments thereto have become effective and (ii) each Holder
and its officers, directors or Affiliates, if any, will comply with the
prospectus delivery requirements of the Securities Act as applicable to them in
connection with sales of Registrable Securities pursuant to the Registration
Statement.
D-7
Each Holder agrees by its acquisition of such Registrable Securities that,
upon receipt of a written notice from the Company of the occurrence of any event
of the kind described in Section 3(c)(ii), 3(c)(iii), 3(c)(iv), 3(c)(v) or
3(c)(vi), such Holder will forthwith discontinue disposition of such Registrable
Securities until such Holder's receipt of the copies of the supplemented
Prospectus and/or amended Registration Statement contemplated by Section 3(i),
or until it is advised in writing by the Company that the use of the applicable
Prospectus may be resumed, and, in either case, has received copies of any
additional or supplemental filings that are incorporated or deemed to be
incorporated by reference in such Prospectus or Registration Statement.
4. [Reserved].
5. Registration Expenses.
(a) All fees and expenses incident to the performance of or
compliance with this Agreement by the Company shall be borne by the Company
whether or not a Registration Statement is filed or becomes effective and
whether or not any Registrable Securities are sold pursuant to the Registration
Statement. The fees and expenses referred to in the foregoing sentence shall
include, without limitation, (i) all registration and filing fees, (ii) printing
expenses (including, without limitation, expenses of printing certificates for
Registrable Securities and of printing prospectuses if the printing of
prospectuses is requested by the holders of a majority of the Registrable
Securities included in the Registration Statement), (iii) messenger, telephone
and delivery expenses, (iv) fees and disbursements of counsel for the Company
and, (v) fees and disbursements of all independent certified public accountants
referred to in Section 3(a)(ii), (vi) Securities Act liability insurance, if the
Company so desires such insurance, and (vii) fees and expenses of all other
Persons retained by the Company in connection with the consummation of the
transactions contemplated by this Agreement. In addition, the Company shall be
responsible for all of its internal expenses incurred in connection with the
consummation of the transactions contemplated by this Agreement (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual audit, the
fees and expenses incurred in connection with the listing of the Registrable
Securities on any securities exchange on which similar securities issued by the
Company are then listed.
(b) Notwithstanding anything to the contrary herein, the Holders
shall be responsible for the cost of underwriting discounts and commissions if
any, applicable to the Registrable Securities, and the fees and expenses of its
counsel.
6. Indemnification.
(a) Indemnification by the Company. The Company shall,
notwithstanding termination of this Agreement and without limitation as to time,
indemnify and hold harmless each Holder, the officers, directors, agents,
brokers, investment advisors and employees of each of them, each Person who
controls any such Holder (within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act) and the officers, directors, agents and
employees of each such controlling Person, to the fullest extent permitted by
applicable law, from and against any and all losses, claims, damages,
liabilities, costs (including, without limitation, costs of preparation and
attorneys' and expert fees) and expenses (collectively,
D-8
"Losses"), as incurred, arising out of or relating to any breach of any warranty
or representation contained herein, any untrue or alleged untrue statement of a
material fact contained in the Registration Statement, any Prospectus or any
form of prospectus or in any amendment or supplement thereto or in any
preliminary prospectus, or arising out of or relating to any omission or alleged
omission of a material fact required to be stated therein or necessary to make
the statements therein (in the case of any Prospectus or form of prospectus or
supplement thereto, in light of the circumstances under which they were made)
not misleading, except solely to the extent that (i) such untrue statements or
omissions are based solely upon information regarding such Holder furnished in
writing to the Company by or on behalf of such Holder expressly for use therein,
which information was relied on by the Company for use therein or (ii) such
information relates to such Holder or such Holder's proposed method of
distribution of Registrable Securities and was furnished in writing to the
Company by or on behalf of such Holder expressly for use therein. The Company
shall notify the Holders promptly of the institution, threat or assertion of any
Proceeding of which the Company is aware in connection with the transactions
contemplated by this Agreement.
(b) Indemnification by Holders. In connection with the
Registration Statement, each Holder shall furnish to the Company in writing such
information as the Company reasonably requests for use in connection with the
Registration Statement or any Prospectus and agrees to indemnify and hold
harmless the Company, their directors, officers, agents and employees, each
Person who controls the Company (within the meaning of Section 15 of the
Securities Act and Section 20 of the Exchange Act), and the directors, officers,
agents or employees of such controlling Persons, to the fullest extent permitted
by applicable law, from and against all Losses (as determined by a court of
competent jurisdiction in a final judgment not subject to appeal or review)
arising solely out of or based solely upon any untrue statement of a material
fact contained in the information provided to the Company as provided for
hereinabove, and only to the extent, that (i) such untrue statement or omission
is contained in any information furnished in writing by such Holder to the
Company specifically for inclusion in the Registration Statement or such
Prospectus and such information was relied upon by the Company for use in the
Registration Statement, such Prospectus or such form of prospectus or (ii) such
information relates to such Holder or such Holder's proposed method of
distribution of Registrable Securities and was furnished in writing by or on
behalf of such Holder to the Company specifically for inclusion in the
Registration Statement or such Prospectus and such information was relied upon
by the Company for use in the Registration Statement, such Prospectus or such
form of prospectus.
(c) Conduct of Indemnification Proceedings. If any Proceeding
shall be brought or asserted against any Person entitled to indemnity hereunder
(an "Indemnified Party"), such Indemnified Party promptly shall notify the
Person from whom indemnity is sought (the "Indemnifying Party") in writing, and
the Indemnifying Party shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to the Indemnified Party and the
payment of all fees and expenses incurred in connection with defense thereof;
provided, that the failure of any Indemnified Party to give such notice shall
not relieve the Indemnifying Party of its obligations or liabilities pursuant to
this Agreement, except (and only) to the extent that it shall be finally
determined by a court of competent jurisdiction (which determination is not
subject to appeal or further review) that such failure shall have proximately
and materially adversely prejudiced the Indemnifying Party.
D-9
An Indemnified Party shall have the right to employ separate counsel in
any such Proceeding and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Party or
Parties unless: (1) the Indemnifying Party has agreed to pay such fees and
expenses; or (2) the Indemnifying Party shall have failed promptly to assume the
defense of such Proceeding and to employ counsel reasonably satisfactory to such
Indemnified Party in any such Proceeding; or (3) the named parties to any such
Proceeding (including any impleaded parties) include both such Indemnified Party
and the Indemnifying Party, and such Indemnified Party shall have been advised
by counsel that a conflict of interest is likely to exist if the same counsel
were to represent such Indemnified Party and the Indemnifying Party (in which
case, if such Indemnified Party notifies the Indemnifying Party in writing that
it elects to employ separate counsel at the expense of the Indemnifying Party,
the Indemnifying Party shall not have the right to assume the defense thereof
and such counsel shall be at the expense of the Indemnifying Party). The
Indemnifying Party shall not be liable for any settlement of any such Proceeding
effected without its written consent, which consent shall not be unreasonably
withheld. No Indemnifying Party shall, without the prior written consent of the
Indemnified Party, effect any settlement of any pending Proceeding in respect of
which any Indemnified Party is a party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability on claims
that are the subject matter of such Proceeding.
All fees and expenses of the Indemnified Party to which the Indemnified
Party is entitled hereunder (including reasonable fees and expenses to the
extent incurred in connection with investigating or preparing to defend such
Proceeding in a manner not inconsistent with this Section) shall be paid to the
Indemnified Party, as incurred, within ten (10) Business Days of written notice
thereof to the Indemnifying Party.
(d) Contribution. If a claim for indemnification under Section
6(a) or 6(b) is unavailable to an Indemnified Party or is insufficient to hold
such Indemnified Party harmless for any Losses in respect of which this Section
would apply by its terms (other than by reason of exceptions provided in this
Section), then each Indemnifying Party, in lieu of indemnifying such Indemnified
Party, shall contribute to the amount paid or payable by such Indemnified Party
as a result of such Losses, (i) in such proportion as is appropriate to reflect
the relative benefits received by the Indemnifying Party on the one hand and the
Indemnified Party on the other from the distribution of the Registrable
Securities or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Indemnifying Party and Indemnified Party in connection with the
actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations. The relative benefits received by the
Indemnified Party and the Indemnifying Party, as the case may be, shall be
deemed to be in the same proportion as the total net proceeds received by the
Company from the initial sale of the Registrable Securities by the Company to
the Purchasers pursuant to the Purchase Agreement and the Warrants bear to the
gain, if any, realized by the selling Holder upon the resale thereof. The
relative fault of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission of a material fact, has been taken or made by, or relates to
information supplied by, such Indemnifying Party or Indemnified Party, and the
parties' relative intent, knowledge, access
D-10
to information and opportunity to correct or prevent such action, statement or
omission. The amount paid or payable by a party as a result of any Losses shall
be deemed to include, subject to the limitations set forth in Section 6(c), any
attorneys' or other fees or expenses incurred by such party in connection with
any Proceeding to the extent such party would have been indemnified for such
fees or expenses if the indemnification provided for in this Section was
available to such party.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 6(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 6(d), no Shareholder or Holder
shall be required to contribute, in the aggregate, any amount in excess of the
amount by which the proceeds actually received by such Holder from the sale of
the Registrable Securities subject to the Proceeding exceeds the amount of any
damages that such Purchaser has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.
The indemnity and contribution agreements contained in this Section are in
addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties.
7. Rule 144. The Company shall file the reports required to be filed by it
under the Securities Act and the Exchange Act in a timely manner and, if at any
time the Company is not required to file such reports, they will, upon the
request of any Holder, make publicly available other information so long as
necessary to permit sales of its securities pursuant to Rule 144. The Company
further covenants that it will take such further action as any Holder may
reasonably request, all to the extent required from time to time to enable such
Holder to sell Registrable Securities without registration under the Securities
Act within the limitation of the exemptions provided by Rule 144. Upon the
request of any Holder, the Company shall deliver to such Holder a written
certification of a duly authorized officer as to whether it has complied with
such requirements.
8. Remedies. In the event of a breach by the Company, of any of its
obligations under this Agreement, each Holder in addition to being entitled to
exercise all rights granted by law and under this Agreement, including recovery
of damages, will be entitled to specific performance of its rights under this
Agreement and to obtain preliminary, temporary and injunctive relief without the
necessity of posting any bond or undertaking, whether statutory or otherwise, as
a pre-requisite to obtaining such injunctive relief, said requirement being
hereby waived by the Company. The Company agrees that monetary damages would not
provide adequate compensation for any losses incurred by reason of a breach by
it of any of the provisions of this Agreement and hereby further agrees that, in
the event of any action for specific performance in respect of such breach, it
shall waive the defense that a remedy at law would be adequate.
D-11
9. Miscellaneous.
(a) Survival of Warranties. The warranties, representations, and
covenants of the Company and the Shareholder contained in or made pursuant to
this Agreement shall survive the execution and delivery of this Agreement and
the Closing and shall in no way be affected by any investigation of the subject
matter thereof made by or on behalf of the Shareholder or the Company.
(b) Successors and Assigns. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
heirs, legal representatives, successors and assigns of the parties. Nothing in
this Agreement, express or implied, is intended to confer upon any party other
than the parties hereto or their respective heirs, legal representatives,
successors and assigns any rights, remedies, obligations, or liabilities under
or by reason of this Agreement, except as expressly provided in this Agreement.
Neither this Agreement nor any of the rights and obligations created hereby can
be assigned by the Company, and any such attempted assignment will be void. Any
Shareholder can transfer all or any portion of its rights and obligations
hereunder to any other person or entity selected by the Shareholder who is not a
competitor of the Company.
(c) Governing Law/Venue. This Agreement shall be governed by and
construed under the laws of the State of New York as applied to agreements
entered into and to be performed entirely within New York. Any dispute or
controversy concerning or relating to this Agreement shall be exclusively
resolved in the federal or state courts located in the City, County and State of
New York, USA.
(d) Counterparts. This Agreement may be executed 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.
(e) Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
(f) Notices. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or sent by
overnight delivery by a nationally recognized overnight courier upon proof of
sending thereof and addressed to the party to be notified at the address
indicated for such party on the signature page hereof, or at such other address
as such party may designate by written notice to the other parties. Notices to
Holders shall be furnished by the same method to the address(es) provided to the
Company in writing by Shareholder.
(g) Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the
Shareholders.
D-12
(h) Severability. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provisions shall be excluded
from this Agreement and the balance of the Agreement shall be interpreted as if
such provisions were so excluded and shall be enforceable in accordance with its
terms.
(i) Attorney's Fees. Notwithstanding anything herein to the
contrary, in the event of a default by either party of its duties and
obligations under this Agreement, the non-defaulting party shall be entitled to
recover of the defaulting party, in addition to all other damages and relief,
all of its reasonable attorney's fees and costs, in addition to the reasonable
costs of any expert witnesses.
(j) Entire Agreement. This Agreement represents and constitutes the
entire agreement and understanding between the parties with regard to the
subject matter contained herein. All prior agreements, understandings and
representations are hereby merged into this Agreement.
[remainder of page is blank]
D-13
IN WITNESS WHEREOF, the undersigned have executed, or caused to be
executed on their behalf by an agent thereunto duly authorized, this Agreement
as of the date first above written.
THE COMPANY:
XXXXXXXX.XXX, INC.
By: /s/ Xx Xxxxxx
------------------------------
Name: Xx Xxxxxx
Title: President and CEO
THE SHAREHOLDERS:
----------------------------------
Xxxxxx Xxxx
----------------------------------
Xxxxxx Xxxxx
BELESARIUS INDUSTRIES INC.
------------------------------
Name: D.A. Kent
Title: President
1083862 ONTARIO LIMITED
By:
------------------------------
Name: Xxxx Xxxxxxxxx
Title: President
----------------------------------
Xxxxxx X. Xxxxxxx
TONBRIDGE FINANCIAL CORP.
By:
------------------------------
Name: R.E. Xxxxxx
Title: President
PRIVATE INVESTMENT COMPANY LTD.
By:
------------------------------
Name: Xxxxxx Xxxxxxxx
Title: Director
FIELDSTON TRADERS LIMITED
By:
------------------------------
Name: Xxxxx Xxx
Title: Canadian Power-of-Attorney
HARVESTER EMERGING MARKETS FUND
By:
------------------------------
Name: R.E. Xxxxxx
Title: President
Signature page 1 of 2
----------------------------------
Xxxxxx X. Xxxxxxx
LIBREVILLE COMPANY LTD.
By:
------------------------------
Name: Xxxx Xxxxx
Title: Director
----------------------------------
Xxxxx Xxxxx
----------------------------------
Xxxxx Xxxxxxxxx
----------------------------------
Xxxx X. Xxxxxxx
TERAMA COMPANY LIMITED
By:
------------------------------
Name: R.E. Xxxxxx
Title: President
----------------------------------
Xxxx XxXxxxxx
----------------------------------
Xxxx Xxxxxxxxx
INTEGRAL BUSINESS SERVICES LTD.
By:
------------------------------
Name: Xxxxxx Xxxxxxx
Title: President
PADDINGTON INC.
By:
------------------------------
Name: Xxxxx X. Xxxxx
Title: for Director -- Xxxxx Xxxxxxxxx, Ltd.
HECATE, INC.
By:
------------------------------
Name: J. Xxxxxxxx Xxxxxxxx
Title: for Director -- Xxxxxxxx Xxxxxxx
----------------------------------
Xxxxxx Xxxxxxxx
DART MANAGEMENT CORPORATION
By:
------------------------------
Name: Xxxxxxx Xxxxx
Title: Vice-President
CRYSTAL OVERSEAS TRADING INC.
By:
------------------------------
Name: Xxxxxxxx Xxxx
Title: Director/Secr.
XXXXXX SERVICES LTD.
By:
------------------------------
Name: Xxxxx Xxxxxx-Xxxxxxx
Title: for Director -- Xxxxx Xxxxxx, Ltd.
Signature page 2 of 2
EXHIBIT E
ASSURE OIL & GAS CORP.
0 XXXXXXXX XXXXXX XXXX, XXXXX 000
XXXXXXX, XXXXXXX
X0X 0X0
TELEPHONE: 0 (000) 000-0000
FAX: 0 (000) 000-0000
Xxxx Xxxxxxx Xxxxx 0, 0000
Xxxxx Xxxxx
Xxxx Xxxxxxxx
C/o Westerra 2000 Inc.
000-00xx Xxx. XX
Xxxxxxx, Xxxxxxx
X0X 0X0
Re: Acquisition by Assure Oil & Gas Corp. and/or its assigns
("Purchaser") of the Shares of Westerra 2000 Inc. ("Company")
This letter is forwarded to you in furtherance of the proposed
acquisition by Purchasers of the shares and businesses carried on by the
Company.
1. We understand that:
(a) Xxxx Xxxxxxx, Xxxxx Xxxxx and Xxxx Xxxxxxxx ("Vendors") are the
registered and beneficial owners of 100% of the issued and outstanding
shares of the Company and no other form of equity is outstanding or
issuable. At closing, the Vendors will sell all of the shares of the
Company owned by them to Purchasers. Currently, the issued and
outstanding shares of the Company are held as follows:
Xxxx Xxxxxxx 125 shares (62.5%)
Xxxxx Xxxxx 15 shares (7.5%)
Xxxx Xxxxxxxx 60 shares (30%)
(b) Prior to closing, you will provide Purchaser with "audited" financial
statements of Company as at and for the years ended March 31, 2000 and
March 31, 2002 prepared by an independent firm of chartered accountants;
Purchaser has relied upon the information verbally conveyed to us and
provided to us in the financial information and Tilikum engineering
report in making this proposal and this proposal is conditional upon
that reliance and the understandings set forth above.
2. Subject to the following conditions, we agree as follows:
E-1
(a) at the closing of the transactions contemplated hereby, Purchaser will
purchase from the Vendors all of the issued and outstanding shares of
Company owned by the Vendors (the "Shares");
(b) the purchase price payable by Purchaser to the Vendors for the transfer
of the Shares shall be up to $800,000 by way of a cash payment on the
closing date subject to the sum of 2b(i) and 2b(ii) not exceeding
$2,650,000.00 as described below.
(i) $2,300,000 by repayment on behalf of the Company of the bridge
loan between Westerra 2000 Inc. and AltaGas Services Inc. dated
June I, 2001 (a copy of which is Schedule "A" attached hereto and
forming part of this agreement; and
(ii) $350,000.00 by repayment on behalf of the Company of the working
capital loan from AltaGas Services Inc. to Westerra 2000 Inc. the
amount currently outstanding as of the effective date which is
indicated on the payout report from AltaGas on Schedule "B"
attached hereto and forming part of this agreement
(iii) upon Purchaser recovering 100% of the total of 2b(i), 2b(ii)
along with the $800,000.00 cash payment the Vendor shall have the
option to request the Purchaser reconvey a 25% working interest
in the properties outlined in the Tilikum engineering report or
to allow the Purchaser the right to maintain a 100% interest in
the properties. If the Vendor elects to have the Purchaser
reconvey a 25% working interest in the properties outlined in the
Tilikum report the interests will be in the following percentages
: Roswell Petroleum Corporation (62.5%), 000000 Xxxxxxx Ltd..
(30%) and Xxxxx Venture I Inc. (7.5%) .
(iv) Purchaser shall establish a payout account consisting of the
Bridge Loan Value, Working Capital Loan and the Share Purchase
Price Value.
Purchaser shall apply against the payout account the monthly net
income from the monthly Operating Statement. It is understood
that Administrative Overhead shall not exceed $1,250.00 per
month.
(c) the cash portion of the purchase price shall be allocated to the Vendors
pro rata pursuant to the percentage ownership of shares as described in
paragraph 1(a) or as may otherwise be directed by the Vendors prior to
closing.
3. The conditions precedent to closing are as follows:
(a) the confirmation, to the satisfaction of Purchaser, of the condition
and values attributed to the assets and liabilities, real or
contingent, and business carried on by the Company;
(b) the confirmation, to the satisfaction of Purchaser, of the financial
condition and legal status of each of the Company and Vendors;
E-2
(c) the provision by the Company to Purchaser of the financial statements
referred to in paragraph 1(b), in form and substance satisfactory to
Purchaser, which Purchaser shall have the right to review with the
Company's firm of independent accountants at its sole cost and expense;
(d) the Company having carried on its business in the ordinary course since
March 27,2000 and there not being any material adverse change in the
financial affairs or business of the Company prior to the closing of the
transactions;
(e) the obtaining of the approval of all regulatory authorities having
jurisdiction over the proposed transaction, if required and any
necessary consents to the change of control of the Company if required,
(f) the entering into of an employment agreement on terms consistent with
the industry, with Xxxx Xxxxxxx for a minimum period of 6 months
following the closing of the transactions;
(g) the entering into an Area of Mutual Interest agreement with the Vendors
for a period of two (2) years following the closing of the transactions
covering all lands outlined on Schedule "C" attached hereto and forming
part of this agreement;
(h) definitive agreements respecting the transactions set out herein being
agreed to, executed and delivered;
(i) the receipt by Purchaser of satisfactory legal opinions with respect to:
(i) the due completion of all corporate matters on the part of
Purchaser, the Company and Vendors related to the
transactions contemplated hereby;
(ii) the title of Company to the assets owned by it; and
(iii) the terms of the proposed acquisition complying with all
applicable legislation, regulations, rules and orders of
regulatory and other bodies having jurisdiction; and
(j) Purchasers being permitted unrestricted access to all of the Company's
records and Purchaser having received all requested cooperation from the
Company and their respective officers, directors and employees.
(k) The execution of the Farmout and Option Agreement dated March 9th, 2002
between Nevarro Energy Ltd., Assure Oil & Gas Corp., Roswell Petroleum
Corporation, 970313 Alberta Ltd.. and Xxxxx Venture I Inc.(attached
hereto as Schedule "D")
(l) The NE1/4 26 Twp 49 Rge 28 W3M will be posted for the August 3, 2002
Crown land sale. The bid and cost for these lands will be shared in the
following interests and ratios: Nevarro 25%, Assure Oil & Gas Corp. 25%,
Roswell Petroleum Corporation 31.25%, Xxxxx Venture I Inc. 3.75% and
000000 Xxxxxxx Ltd. 15%.
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(m) Purchaser will attempt to lease the freehold lands in the NW1/4 26 Twp.
49 Rge 28 W3M. If successful the lease and cost will be shared in the
following interests and ratios: Nevarro 25%, Assure Oil & Gas Corp. 25%,
Roswell Petroleum Corporation 31.25%, Xxxxx Venture I Inc. 3.75% and
000000 Xxxxxxx Ltd. 15%.
(n) Purchaser will attempt to lease the freehold lands in the XX0/0 00 Xxx.
00 Xxx 00 X0X. If successful the lease and cost will be shared in the
following interests and ratios: Nevarro 25%, Assure Oil & Gas Corp.25%,
Roswell Petroleum Corporation 31.25%, Xxxxx Venture I Inc. 3.75% and
000000 Xxxxxxx Ltd.. 15%.
The effective date of the transaction shall be April 1, 2002 and the
parties shall use all reasonable efforts to close the transaction on or
before April 15, 2002. Any adjustments required shall be made as of the
effective date and other undertakings to be completed by the parties as
contemplated herein shall take place on the closing date.
If the Purchaser's proposals set forth herein are acceptable to you,
Purchaser will conduct its due diligence activities between the date
hereof and the date of closing of the transactions and will prepare for
your consideration a form of sale and purchase agreement and other
required documentation. We will each bear our own costs in relation to
the transactions contemplated hereby.
Purchaser undertakes to use all reasonable efforts to expedite these
matters and the completion of the transactions. By executing a copy of this
offer in the space provided below, each of you also agrees to use all reasonable
efforts to conclude the transactions described herein and agrees to refrain from
dealing with any other potential purchaser of the businesses referred to herein.
If this transaction is not closed on or before May 1, 2002, by reason of default
by either the Vendors or the Purchaser then the non defaulting party shall have
the option but not the obligation to nullify and void this agreement and no
party shall have any obligation to any other hereunder. Each party shall
maintain strict confidentiality with respect to the transactions except that we
may each make disclosure to our advisors as necessary and each comply with any
disclosure requirements of any regulatory body having jurisdiction over the
matter.
If this proposal is acceptable to you, sign the enclosed copies of this
letter in the space provided and return one copy, fully executed, to the
undersigned on or before 5:00 p.m. (Calgary time) on March 19, 2002, failing
which this offer will lapse and become null and void.
Yours very truly,
ASSURE OIL & GAS CORP..
Per: ______________
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This page 5 is the execution page to the Letter of Intent dated March 9, 2002
between Assure Oil and Gas Corp. And Westerra 2000 Inc
AGREED TO THIS _____ DAY OF ___________________, _______
__________________________
XXXX XXXXXXX
AGREED TO THIS _____ DAY OF ___________________, _______
__________________________________
XXXXX XXXXX
AGREED TO THIS _____ DAY OF ___________________, _______
__________________________________
XXXX XXXXXXXX
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This page 6 is the execution page to the Letter of Intent dated March 9, 2002
between Assure Oil and Gas Corp. And Westerra 2000 Inc
AGREED TO THIS _____ DAY OF ___________________, _______
ROSWELL PETROLEUM CORPORATION
PER: ________________________________ TITLE: _______________________________
AGREED TO THIS _____ DAY OF ___________________, _______
XXXXX VENTURE I INC.
PER: ________________________________ TITLE: _______________________________
AGREED TO THIS _____ DAY OF ___________________, _______
970313 ALBERTA LTD.
PER: ________________________________ TITLE: _______________________________
AGREED TO THIS _____ DAY OF ___________________, _______
NEVARRO ENERGY LTD.
PER: ________________________________ TITLE: ____________________________
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SCHEDULE "A"
THIS IS SCHEDULE "A" ATTACHED TO AND FORMING PART OF A LETTER OF INTENT DATED
THE 9TH DAY OF MARCH, 2002, BETWEEN ASSURE OIL & GAS CORP. AND WESTERRA 2000
INC.
(THE BRIDGE LOAN AGREEMENT BETWEEN ALTAGAS SERVICES INC AND WESTERRA 2000 INC.
DATED JUNE 1,2001 WILL BE ATTACHED AS SCHEDULE "A")
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SCHEDULE "B"
THIS IS SCHEDULE "B" ATTACHED TO AND FORMING PART OF A LETTER OF INTENT DATED
THE 9TH DAY OF MARCH, 2002, BETWEEN ASSURE OIL & GAS CORP. AND WESTERRA 2000
INC.
(THIS SCHEDULE WILL CONTAIN THE OUTSTANDING AMOUNT OWED BY WESTERRA TO ALTAGAS
FOR WESTERRAS CAPITAL LOAN AGREEMENT WHICH IS ESTIMATED TO BE APPROXIMATELY
$350,000 ON MARCH 1, 2002 ALTAGAS HAS INDICATED THAT THEY WILL HAVE A CURRENT
NUMBER ON OR BEFORE MARCH 15, 2002)
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SCHEDULE "C"
THIS IS SCHEDULE "C" ATTACHED TO AND FORMING PART OF A LETTER OF INTENT DATED
THE 9TH DAY OF MARCH, 2002, BETWEEN ASSURE OIL & GAS CORP. AND WESTERRA 2000
INC.
(THIS SCHEDULE WILL CONTAIN THE ATTACHED LAND PLAT WHICH WILL BE THE AREA OF
MUTUAL INTEREST LANDS AS INDICATED IN CLAUSE 3(a) OF THE LETTER OF INTENT)
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