STOCK PURCHASE AGREEMENT
STOCK
PURCHASE AGREEMENT (this “Agreement”), dated November
30, 2006, by and among Sockeye Seafood Group Inc., a Nevada
corporation (“Buyer”),
Xxxxxxxxx Xxxxxx and Xxxxxxx Xxxxxxx (each, a “Seller”), and UniverCompany
Limited Liability Company, a society with limited liability organized under
the
laws
of
the Russian Federation (the
“Company”).
R
E C
I T A L S:
A. Sellers
in the aggregate own one hundred percent (100%) of the issued and outstanding
shares of capital stock of the Company (the “Seller Shares”).
B. The
parties hereto desire that Buyer acquire all
of
the Seller
Shares
upon the terms and subject to the conditions of this Agreement.
NOW
THEREFORE, in consideration of the mutual covenants and agreements herein,
and
other
good and valuable consideration, the adequacy, sufficiency and receipt of which
are hereby acknowledged, the parties hereto agree as follows:
ARTICLE
I
DEFINITIONS
AND USAGE
1.1
DEFINITIONS
Certain
capitalized terms used in this Agreement are defined in Exhibit 1.1 attached
hereto.
1.2
USAGE
(a) Interpretation.
In this
Agreement, unless a clear contrary intention appears: (i) the singular number
includes the plural number and vice versa; (ii) reference to any Person includes
such Person's successors and assigns,
if
applicable, unless
prohibited by this Agreement, and reference to a Person in a particular capacity
excludes such Person in any other capacity or in
such
Person’s individual capacity;
(iii)
reference to any gender includes each other gender; (iv) reference to any
agreement, document or instrument means such agreement, document or instrument
as amended or modified and in effect from time to time in accordance with the
terms thereof; (v) reference to any Legal Requirement means such Legal
Requirement as amended, modified, codified, replaced or reenacted, in whole
or
in part, and in effect from time to time, including rules and regulations
promulgated thereunder, and reference to any section or other provision of
any
Legal Requirement means that provision of such Legal Requirement from time
to
time in effect and constituting the substantive amendment, modification,
codification, replacement or reenactment of such section or other provision;
(vi) "hereunder," "hereof," "hereto," and words of similar import shall be
deemed references to this Agreement as a whole and not to any particular
Article, Section or other provision hereof; (vii) "including" (and with
correlative meaning "include") means including without limiting the generality
of any description preceding such term; (viii) "or" is used in the inclusive
sense of "and/or"; (ix) with respect to the determination of any period of
time,
"from" means "from and including" and "to" means "to but excluding"; and (x)
references to documents, instruments or
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agreements
shall be deemed to refer as well to all addenda, exhibits, schedules or
amendments thereto.
(b) Accounting
Terms and Determinations.
Unless
otherwise specified herein, all accounting terms used herein shall be
interpreted and all accounting determinations hereunder shall be made in
accordance with GAAP.
(c) Legal
Representation of the Parties.
The
parties agree that each party was either represented by its own separate and
independent counsel or had an opportunity to be so represented in connection
with this Agreement. This Agreement was negotiated by the parties with the
benefit of legal representation, and any rule of construction or interpretation
otherwise requiring this Agreement to be construed or interpreted against any
party shall not apply to any construction or interpretation hereof.
ARTICLE
II
SALE
OF
SHARES; CONSIDERATION; CLOSING
2.1
THE
SALE
Upon
the
terms and subject to the conditions of this Agreement, at the
Closing:
(a)
Each
Seller shall sell, transfer and assign to Buyer, and Buyer shall purchase from
each Seller, all
of
such
Seller’s respective Seller
Shares
and any and all rights in the Seller
Shares
to which such Seller is entitled, and by doing so Sellers shall be deemed to
have assigned all of their
rights,
title
and interest in and to the Seller
Shares
to Buyer. Such transfer
of the
Seller
Shares
shall be evidenced by stock certificates, duly endorsed in blank or accompanied
by stock powers duly executed in blank, or other instruments of transfer in
form
and substance satisfactory to Buyer.
(b)
In
consideration therefor, Buyer shall issue to Sellers forty
one
million (41,000,000)
shares of common stock of Buyer
(the “Consideration Shares”), which shall be allocated among Sellers as set
forth on Exhibit A hereto.
2.2
CLOSING
The
closing
of the purchase
and sale
transaction
provided
for in this Agreement (the "Closing") will take place at the offices of Xxxxx
Xxxxx & Associates, PLLC, 00 X. Xxxxxxxxx Xxxxxx, Xxxxxx Xxxxxx, Xxx Xxxx
00000], upon the satisfaction of the conditions set forth herein to the
Closing.
2.3
CLOSING OBLIGATIONS
In
addition to any other documents to be delivered under any
other
provisions of this Agreement, at the Closing:
(a) Sellers
or Company, as the case may be, shall deliver to Buyer:
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(i)
stock
certificates evidencing the Seller
Shares,
duly endorsed in blank or accompanied by stock powers duly executed in blank,
with signatures guaranteed by a commercial bank, or other instruments of
transfer in form and substance reasonably satisfactory to Buyer;
(ii)
the
stock books, stock ledgers, minute books, and corporate seals of
Company;
(iii)
written
resignations of all the officers and directors of Company;
(iv)
the
financial statements and other information required to be filed pursuant to
the
Exchange Act with the SEC by Buyer on its Current Report on Form 8-K in
connection with the Closing;
(v)
a
certificate executed by Sellers representing and warranting to Buyer that each
of Sellers’ representations and warranties in this Agreement was accurate in all
respects as of the date of this Agreement and is accurate in all respects as
of
the Closing Date as if made on the Closing Date (giving full effect to any
supplements to the Schedules that were delivered by Seller to Buyer prior to
the
Closing Date);
(vi)
an
opinion of Sellers’ counsel in the form annexed hereto as Exhibit 2.3(a)(vi);
and
(vii)
such other documents and other instruments of transfer and conveyance as may
be
requested by Buyer, each in form and substance satisfactory to Buyer and its
legal counsel and executed by Sellers, if necessary.
(b) Buyer
shall deliver to Sellers’ Agent:
(i) stock
certificates evidencing the Consideration Shares; and
(ii) a
certificate executed by Buyer as to the accuracy of its representations and
warranties as of the date of this Agreement and as of the Closing and as to
its
compliance with and performance of its covenants and obligations to be performed
or complied with at or before the Closing.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF SELLERS
AND COMPANY
Each
of
Sellers and Company,
jointly and severally, represent and warrant to Buyer, as of the date hereof
and
as of the Closing Date, as follows:
3.1
ORGANIZATION
AND GOOD STANDING
(a) Schedule
3.1(a) contains a complete and accurate list of Company's jurisdiction of
organization and any other jurisdictions in which it is qualified to do business
as a foreign entity. Company is a limited liability society duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization, with full corporate power and authority to conduct
its
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business
as it is now being conducted, to own or use the properties and assets that
it
purports to own or use, and to perform all its obligations under the Company
Contracts. Company is duly qualified to do business as a foreign entity and
is
in good standing under the laws of each state or other jurisdiction in which
either the ownership or use of the properties owned or used by it, or the nature
of the activities conducted by it, requires such qualification.
(b) Complete
and accurate copies of the Governing Documents of Company, as currently in
effect, are attached to Schedule 3.1(b) hereto.
(c) Company
has no subsidiaries and does not own any shares of capital stock or other
securities of any other Person.
3.2
ENFORCEABILITY; AUTHORITY; NO CONFLICT
(a) This
Agreement constitutes the legal, valid and binding obligation of each
Seller
and
of
the
Company, enforceable against each of them in accordance with its terms. Upon
the
execution and delivery by each of Seller and Company
of this Agreement and each other document
to be
executed or delivered by Sellers at the Closing (collectively, the ‘Sellers’
Closing Documents”), the Sellers’ Closing Documents will constitute the legal,
valid and binding obligation of each Seller
and of
Company,
enforceable against each of them in accordance with its terms. Each of Sellers
and the
Company has the absolute and unrestricted right, power and authority to execute
and deliver this Agreement and the Sellers’ Closing Documents to which it is a
party and to perform its obligations under this Agreement and the Sellers’
Closing Documents, and such action has been duly authorized by all necessary
action of
Sellers
and Company.
Each of Sellers and Company
has all necessary legal capacity to enter into
and
deliver
this
Agreement and the Sellers’ Closing Documents to which it is a party and to
perform such its obligations hereunder and thereunder.
(b) Neither
the execution and delivery of this Agreement nor the consummation or performance
of any of the Contemplated Transactions will, directly or indirectly (with
or
without notice or lapse of time):
(i) breach
(A) any
provision of any of the Governing Documents of Company or (B) any resolution
adopted by the board of directors or the shareholders of Company;
(ii) breach
or give
any Governmental Body or other Person the right to challenge any of the
Contemplated Transactions or to exercise any remedy or obtain any relief under
any Legal Requirement or Order
to
which Company or any Seller,
or any Assets,
may be subject;
(iii) contravene,
conflict with or result in a violation or breach of any of the terms or
requirements of, or give any Governmental Body the right to revoke, withdraw,
suspend, cancel, terminate or modify, any Governmental Authorization that is
held by Company or that otherwise relates to the Assets or to the business
of
Company;
(iv) breach
any
provision of, or give any Person the right to declare a default or exercise
any
remedy under, or to accelerate the maturity or performance of, or payment under,
or to cancel, terminate or modify, any Company Contract; or
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(v) result
in
the imposition or creation of any Encumbrance upon or with respect to any of
the
Assets.
(c) Neither
Company nor any Seller
is
required to give any notice to or obtain any Consent from any Person in
connection with the execution and delivery of this Agreement
or any
of the Sellers’ Closing Documents
or the
consummation or performance of any of the Contemplated
Transactions.
3.3
CAPITALIZATION
(a)
Schedule 3.3(a) correctly and completely sets forth: (i) the authorized
share
capital
of Company;
and (ii) the number of shares of each class of capital stock of Company
issued and outstanding. Sellers are and will be on the Closing Date the sole
shareholders of the Company. Each Seller is and will be on the Closing Date
the
record and beneficial owner of such Seller’s respective Seller
Shares,
free and clear of all Encumbrances. The
Seller
Shares
constitute one hundred percent
(100%)
of
the
issued and outstanding shares of capital stock of the Company. The
Seller
Shares
have been duly authorized and validly issued and are fully paid and
non-assessable. All of the outstanding equity securities of Company were issued
in compliance with any applicable securities laws, and any other Legal
Requirements.
(b)
There
are no Contracts relating to the issuance, sale or transfer of any equity
securities or other securities of Company, including but
not
limited to, any
of
the following: options, warrants, agreements, or other rights relating
to
the
acquisition of shares of Company's
capital stock; securities or other obligations of Company convertible
into shares of Company's
capital stock; or sale agreements, shareholder agreements, pledges, proxies,
voting trusts, powers of attorney, restrictions on transfer or other agreements
or instruments binding
up
on
Sellers
(exclusive of any agreement to which Buyer
is
a party) and that relate to the ownership, voting or transfer of any shares
of Company's
capital stock.
3.4
FINANCIAL STATEMENTS
The
financial statements previously delivered by Company to Buyer and to be
delivered to Buyer as required hereunder fairly present the financial condition
and the results of operations, changes in shareholders'
equity
and cash flows of Company as at the respective dates of and for the periods
referred to in such financial statements, all in accordance with GAAP. The
financial statements referred to in this Section 3.4 reflect and will reflect
the consistent application of such accounting principles throughout the periods
involved, except as disclosed in the notes to such financial statements. The
financial statements have been and will be prepared from and are in accordance
with the accounting Records of Company.
3.5
BOOKS
AND RECORDS
The
books
of account and other financial and other Records of Company, all of which have
been made available to Buyer, are complete and correct,
represent actual, bona fide transactions,
and have
been maintained in accordance with sound business practices. The minute books
of
Company,
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all
of
which have been made available to Buyer, contain accurate and complete Records
of (a)
all
shareholder
meetings
held and
all
shareholder
action
taken,
and (b)
all meetings of Company’s
board of
directors and committees of Company’s
board of
directors,
and no
meeting of any such shareholders, board of directors or committees
has been
held for which minutes have not been prepared or are not contained in such
minute books.
3.6
TANGIBLE PERSONAL PROPERTY; SUFFICIENCY OF ASSETS
(a)
Schedule
3.6(a) is a complete and accurate schedule describing, and specifying the
location of, all the Assets. Company owns good and marketable title to all
of
the Assets, free and clear of any Encumbrances, and none of the Assets is held
under any lease, security agreement, conditional sales contract, license, or
other title retention or security arrangement, or is located other than in
the
possession of Company.
(b)
The
Assets (i) constitute all of the assets, tangible and intangible, of any nature
whatsoever, necessary to operate Company's business in the manner presently
operated by Company and (ii) include all of the operating assets of
Company.
3.7
DESCRIPTION OF REAL PROPERTY
(a)
Schedule 3.7(a) identifies all tracts, parcels and subdivided lots of
Real
Property in
which
Company has an ownership interest.
(b)
Schedule 3.7(b) identifies all tracts, parcels and subdivided lots of
Real
Property in
which
Company has a leasehold interest and an accurate description (by location,
name
of lessor, effective
date and
term
expiry date) of all Real
Property Leases.
3.8
TITLE
TO REAL PROPERTY
Company
owns good and marketable title to its respective estates in the Real Property,
free and clear of any Encumbrances, other than: (i) liens for Taxes for the
current tax year which are not yet due and payable; and (ii) those described
in
Schedule 3.8(a) ("Real Property
Encumbrances"). True and complete copies of (A) all deeds, existing title
insurance policies and surveys of or pertaining to the Real Property and (B)
all
instruments, agreements and other documents evidencing, creating or constituting
any Real Property
Encumbrances have been delivered to Buyer. At the time of Closing, the Real
Property
shall be
free and clear of all Real Property
Encumbrances other than those identified on Schedule 3.8(a) as acceptable to
Buyer ("Permitted Real Property
Encumbrances").
3.9
CONDITION OF FACILITIES
(a) Use
of
the Real Property for the various purposes for which it is presently being
used
is permitted as of right under all applicable zoning requirements
and is not subject to "permitted nonconforming" use or structure
classifications. All Improvements are in compliance with all applicable Legal
Requirements, including those pertaining to zoning, building and the disabled,
are in good repair and in good condition, ordinary wear and tear excepted,
and
are free from latent and
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patent
defects. No part of any Improvement encroaches on any real property not included
in the definition
of Real
Property, and there are no buildings, structures, fixtures or other Improvements
primarily situated on adjoining real
property
that
encroach
up
on any
part of the Land. The Land for each owned Facility abuts on and has direct
vehicular access to a public road or has access to a public road via a
permanent, irrevocable, appurtenant easement benefiting such Land and comprising
a part of the Real Property, is supplied with public or quasi-public utilities
and other services appropriate for the operation of the Facilities located
thereon and is not located within any flood plain or area subject to wetlands
regulation or any similar restriction. There is no existing or proposed plan
to
modify or realign any street or highway or any existing or proposed eminent
domain proceeding that would result in the taking of all or any part of any
Facility or that would prevent or hinder the continued use of any Facility
as
heretofore used in the conduct of the business of Seller.
(b) Each
item
of Tangible Personal Property is in good repair and good operating condition,
ordinary wear and tear excepted, is suitable for immediate use in the Ordinary
Course of Business and is free from latent and patent defects. No item of
Tangible Personal Property is in need of repair or replacement other than as
part of routine maintenance in the Ordinary Course of Business. All Tangible
Personal Property used in Company's business is in the possession of
Company.
3.10
ACCOUNTS RECEIVABLE
All
Accounts Receivable that are reflected on the Balance Sheet or the Interim
Balance Sheet or on the accounting Records of Company as of the Closing Date
represent or will represent valid obligations arising from sales actually made
or services actually performed by Company in the Ordinary Course of Business.
Except to the extent paid prior to the Closing Date, such Accounts Receivable
are or will be as of the Closing Date current and collectible net of the
respective reserves shown on the Balance Sheet or the Interim Balance Sheet
(which reserves are adequate and calculated consistent with past practice).
Subject to such reserves, each of such Accounts Receivable either has been
or
will be collected in full, without any setoff, within ninety (90) days after
the
day on which it first becomes due and payable. There is no contest, claim,
defense or right of setoff, other than returns in the Ordinary Course of
Business of Company, under any Contract with any account debtor of an Account
Receivable relating to the amount or validity of such Account Receivable.
3.11
INVENTORIES
All
items
included in the Inventories consist of a quality and quantity usable and, with
respect to finished goods, saleable, in the Ordinary Course of Business of
Company. Company is not in possession of any inventory not owned by Company,
including goods already sold, and no items included in the Inventories have
been
pledged as collateral or are held on consignment from others. All of the
Inventories have been valued at the lower of cost or market value on a first
in,
first out basis. Inventories now on hand that were purchased after the date
of
the Balance Sheet or the Interim Balance Sheet were purchased in the Ordinary
Course of Business of Company at a cost not exceeding market prices prevailing
at the time of purchase. The quantities of each item
falling
within the definition
of
Inventories (whether raw materials, work-in-process or finished goods)
are
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not
excessive but are reasonable in the present circumstances of Company.
Work-in-process Inventories are now valued, and will be valued on the Closing
Date, according to GAAP.
3.12
NO
UNDISCLOSED LIABILITIES
Except
as
set forth on Schedule 3.12, Company has no Liabilities, except for Liabilities
reflected or reserved against in the Balance Sheet or the Interim Balance Sheet
and current Liabilities
incurred
in the Ordinary Course of Business of Seller since the date of the Interim
Balance Sheet.
3.13
TAXES
(a) Tax
Returns Filed and Taxes Paid.
Company
has filed or caused to be filed on a timely basis all Tax Returns and all
reports with respect to Taxes that are or were required to be filed pursuant
to
all
applicable Legal Requirements. All Tax Returns and reports filed by Company
are
true, correct and complete. Company has paid, or made provision for the payment
of, all Taxes that have or may have become due for all periods covered by the
Tax Returns or otherwise, or pursuant to any assessment received by Company,
except such Taxes, if any, as are listed in Schedule 3.13(a) and are being
contested in good faith and as to which adequate reserves (determined in
accordance with GAAP) have been provided in the Balance Sheet and the Interim
Balance Sheet. Except as provided in Schedule 3.13(a), Company currently is
not
the beneficiary of any extension of time within which to file any Tax Return.
No
claim has ever been made or is expected to be made by any Governmental Body
in a
jurisdiction where Company does not file Tax Returns that it is or may be
subject to taxation in
that
jurisdiction. There are no Encumbrances on any of the Assets that arose in
connection with any failure (or alleged failure) to pay any Tax, and Company
has
no Knowledge of any basis for assertion of any claims attributable to Taxes
which, if adversely determined, would result in any such
Encumbrance.
(b) Delivery
of Tax Returns and Information Regarding Audits and Potential
Audits.
Company
has delivered or made available to Buyer copies of, and Schedule 3.13(b)
contains a complete and accurate list of, all Tax Returns filed since January
1,
2005. Schedule 3.13(b)
contains a complete and accurate list of all Tax Returns of Company that have
been audited or are currently under audit and accurately describes any
deficiencies or other amounts that were paid or are currently being contested.
To the Knowledge of Company, no undisclosed deficiencies are expected to be
asserted with respect to any such audit. All deficiencies proposed as a result
of such audits have been paid, reserved against, settled or are being contested
in good faith by appropriate proceedings as described in Schedule 3.13(b).
Company has delivered, or made available to Buyer, copies of any examination
reports, statements or deficiencies or similar items with respect to such
audits. Except as provided in Schedule 3.13(b), Company has no Knowledge that
any Governmental Body is likely to assess any additional Taxes
for any
period for which Tax Returns have been filed. There is no dispute or claim
concerning any Taxes of Company either (i) claimed or raised by any Governmental
Body in writing or (ii) as to which Company has Knowledge. Schedule 3.13(b)
contains a list of all Tax Returns for which the applicable statute of
limitations has not run. Except as described in Schedule 3.13(b), Company has
not given or been requested to give waivers or extensions (or is or would be
subject to a waiver or extension given by any other Person) of any statute
of
limitations relating to the payment of Taxes by
Company
or for which Company may be liable.
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(c) Proper
Accrual.
The
charges, accruals and reserves with respect to Taxes on the Records of Company
are adequate (determined in accordance with GAAP) and are at least equal to
Company's liability for Taxes. There exists no proposed Tax
assessment or deficiency against Company.
(d) Specific
Potential Tax Liabilities and Tax Situations.
(i) Withholding.
All
Taxes that Company is or was required by Legal Requirements to withhold, deduct
or collect have been duly withheld, deducted or
collected and, to the extent required, have been paid to the proper Governmental
Body or other Person.
(ii) Tax
Sharing or Similar Agreements.
There
is no Tax
sharing
agreement, Tax
allocation agreement, Tax
indemnity obligation or similar written or unwritten agreement, arrangement,
understanding or practice with respect to Taxes (including any advance pricing
agreement, closing agreement or other arrangement relating to Taxes) that will
require any payment by Company.
3.14
NO
MATERIAL ADVERSE CHANGE
Since
the
date of the Balance Sheet, there has not been any material adverse change in
the
business, operations, prospects, Assets,
results
of operations or condition (financial or otherwise)
of
Company, and no event has occurred or circumstance exists that may result in
such a material adverse change. Since the date of the Balance Sheet,
Company
has conducted its business only in the Ordinary Course of Business and there
has
not been any:
(a) change
in
Company's authorized or issued capital stock, grant of any stock option or
right
to purchase shares of capital stock of Company,
or
issuance of any security convertible into such capital stock;
(b) amendment
to the Governing Documents of Company;
(c) payment
(except in the Ordinary Course of Business) or increase by Company of any
bonuses, salaries or other compensation to any Seller, director, officer or
employee or entry into any employment, severance or similar Contract with any
director, officer or employee;
(d) adoption
of, amendment to,
or
increase in the payments to or benefits
arising
under,
any Employee Plan;
(e) damage
to
or destruction or loss of any Asset, whether or not covered by
insurance;
(f) entry
into, termination of or receipt of notice of termination of (i) any license,
distributorship, dealer, sales representative, joint venture, credit or similar
Contract to which Company is a party, or (ii) any Contract or transaction
involving a total remaining commitment by Company of at least
$10,000;
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(g) sale
(other than sales of Inventories in the Ordinary Course of Business), lease
or
other disposition of any Asset or property of Company (including the
Intellectual Property Assets) or the creation of any Encumbrance on any
Asset;
(h) cancellation
or waiver of any claims or rights with a value to Company in excess of
$10,000;
(i) indication
by any customer or supplier of an intention to discontinue or change the terms
of its relationship with Company;
(j) material
change in the accounting methods used by Company; or
(k) entry
by
Company
into any
Contract
to do
any of the foregoing.
3.15
PERSONNEL MATTERS
(a)
Schedule 3.15(a) sets forth a correct and complete list of each director,
officer, employee, independent contractor, consultant and agent of Company,
including but
not
limited to, each
employee on leave of absence or layoff status. No retired employee, director,
of
officer of Company is receiving benefits or scheduled to receive benefits in
the
future.
(b)
Company
is not a party to any employment, consulting or similar agreement, written
or
oral, with any Person, other than as listed in Schedule 3.15 (b).
(c)
No
employees of Company
are represented by any labor union or similar organization. Company
is not party to any collective bargaining or similar agreement covering any
of
its employees. No labor union or similar organization or group of employees
has
made a demand for recognition, filed a petition seeking a representation
proceeding or given Company
notice of any intention to hold an election of a collective bargaining
representative at any time during the past three (3)
years.
(d) Company
does not, and has
never
had,
any
"employee benefit plans" as defined by Section 3(3) of the Employee Retirement
Income Security Act of 1974, pension, retirement, bonus, profit-sharing, stock
option, or other such arrangements providing for employee remuneration or
benefits (the “Employee Plans”).
(e)
Company
has complied in all respects with all Legal Requirements relating to employment
practices, terms and conditions of employment, equal employment opportunity,
nondiscrimination, immigration, wages, hours, benefits, collective bargaining,
the payment of social security and similar Taxes and occupational safety and
health. The Company is not liable for the payment of any Taxes, fines,
penalties, or other amounts, however designated, for failure to comply with
any
of the foregoing Legal Requirements.
(f) To
the
Knowledge of any Seller or Company,
no officer, director, agent, employee, consultant, or contractor of Company
is
bound by any Contract that purports to limit the ability of such officer,
director, agent, employee, consultant, or contractor to engage in or continue
or
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perform
any activity,
duties or practice relating to the business of Company. No former or current
employee of Company is a party to, or is otherwise bound by, any Contract that
in any way
has
adversely affected, affects, or will affect the ability of Company or Buyer
to
conduct the business as heretofore carried on by Company.
3.16
COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS
(a) Company
is, and at all times has been, in full compliance with each Legal Requirement
that is or was applicable to it or to the conduct or operation of its business
or the ownership or use of any of its Assets.
No event has occurred or circumstance exists that (with or without notice or
lapse of time) may constitute or result in a violation by Company of, or a
failure on the part of Company to comply with, any Legal Requirement or may
give
rise to any obligation on the part of Company to undertake, or to bear all
or
any portion of the cost of, any remedial action of any nature.
Company
has not received any notice or other communication (whether oral or written)
from any Governmental Body or any other Person regarding any actual, alleged,
possible or potential violation of, or failure to comply with, any Legal
Requirement or any actual, alleged, possible or potential obligation on the
part
of Company to undertake, or to bear all or any portion of the cost of, any
remedial action of any nature.
(b) Schedule
3.16(b) contains a complete and accurate list of each Governmental Authorization
that is held by Company or that otherwise relates to Company's business or
the
Assets. Each Governmental Authorization listed or required to be listed in
Schedule 3.16(b) is valid and in full force and effect. Except as set forth
in
Schedule 3.16(b):
(i) Company
is, and has been, in full compliance with all of the terms and requirements
of
each Governmental Authorization identified or required to be identified in
Schedule 3.16(b);
(ii) no
event
has occurred or circumstance exists that may (with or without notice or lapse
of
time) (A) constitute or result directly or indirectly in a violation of or
a
failure to comply with any term or requirement of any Governmental Authorization
listed or required to be listed in Schedule 3.16(b) or (B) result directly
or
indirectly in the revocation, withdrawal, suspension, cancellation or
termination of, or any modification to, any Governmental Authorization listed
or
required to be listed in Schedule 3.16(b);
(iii) Company
has not received any notice or other communication (whether oral or written)
from any Governmental Body or any other Person regarding (A) any actual,
alleged, possible or potential violation of or failure to comply with any term
or requirement of any Governmental Authorization or (B) any actual, proposed,
possible or potential revocation, withdrawal, suspension, cancellation,
termination of or modification to any Governmental Authorization;
and
(iv) all
applications required to have been filed for the renewal of the Governmental
Authorizations listed or required to be listed in Schedule 3.16(b) have been
duly filed on a timely basis with the appropriate Governmental Bodies, and
all
other filings required to have been made
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11 -
with
respect to such Governmental Authorizations have been duly made on a timely
basis with the appropriate Governmental Bodies.
(v) The
Governmental Authorizations listed in Schedule 3.16(b) collectively constitute
all of the Governmental Authorizations necessary to permit Company to lawfully
conduct and operate its business in the manner in which it currently conducts
and operates such business and to permit Company to own and use its Assets
in the
manner in which it currently owns and uses such Assets.
3.17
LEGAL PROCEEDINGS; ORDERS
(a) There
is
no pending or threatened Proceeding: (i) by or against Company or that otherwise
relates to or may affect the business of, or any of the Assets
owned or
used by, Company; or (ii) that challenges, or that may have the effect of
preventing, delaying, making illegal or otherwise interfering with, any of
the
Contemplated Transactions. To the Knowledge of Company or any Seller, no event
has occurred or circumstance exists that is reasonably likely to give rise
to or
serve as a basis for the commencement of any such Proceeding.
(b) There
is
no Order to which Company, its business or any of the Assets is subject. To
the
Knowledge of Company or any Seller, no officer, director, agent or employee
of
Company is subject to any Order that prohibits such officer, director, agent
or
employee from engaging in or continuing any conduct, activity or practice
relating to the business of Company.
(c) Company
is
and
has
at all
times been
in
compliance with all of the terms and requirements of each Order to which it
or
any of the Assets is or has been subject. No event has occurred or circumstance
exists that is reasonably likely to constitute or result in (with or without
notice or lapse of time) a violation of or failure to comply with any term
or
requirement of any Order to which Company or any of the Assets is subject;
and
(d) Company
has not received any notice or other communication (whether oral or written)
from any Governmental Body or any other Person regarding any actual, alleged,
possible or potential violation of, or failure to comply with, any term or
requirement of any Order to which Company or any of the Assets is or has been
subject.
3.18
CONTRACTS; NO DEFAULTS
(a) Schedule
3.18(a) contains an accurate and complete list
of,
and
Company has delivered to Buyer
accurate
and complete copies of,
each
Company Contract. Schedule 3.18(a) contains
a summary of all material terms of
such
Contracts, including the parties thereto,
the
amount of the remaining commitment of Company under the Contracts,
and the
location to
the
execution copies of such
Contracts are located.
(b) Except
as
set forth in Schedule 3.18(a), Seller has no
rights
and is not subject
to any obligations
or liabilities
under,
any Contract that relates to the business of Company or any of the
Assets.
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12 -
(c) Except
as
set forth in Schedule 3.18(c):
(i) each
Contract identified or required to be identified in Schedule 3.18(a) is in
full
force and effect and is valid and enforceable in accordance with its
terms;
(ii) to
the
Knowledge of Company and
any
Seller, no Contract identified or required to be identified in Schedule 3.18(a)
will,
upon
completion or performance thereof,
have a
material adverse effect
on the
business, Assets
or
condition of Company or the business to be conducted by Buyer employing
the
Assets.
(d) Except
as
set forth in Schedule 3.18(d):
(i) Company
is, and at all times has been, in compliance with all applicable terms and
requirements of each Company Contract being
assumed by Buyer;
(ii) each
other Person that has or had any obligation or liability under any Company
Contract is, and at all times has been, in full compliance with all applicable
terms and requirements of such Contract;
(iii) no
event
has occurred or circumstance exists that (with or without notice or lapse of
time) may contravene, conflict with or result in a Breach of, or give Company
or
any
other
Person the right to declare a default or exercise any remedy under, or to
accelerate the maturity or performance of, or payment under, or to cancel,
terminate or modify, any Company Contract being
assigned to or assumed by Buyer;
(iv) no
event
has occurred or circumstance exists under or by virtue of any Contract that
(with or without notice or lapse of time) would trigger
the
creation of any Encumbrance affecting any of the Assets; and
(v) Company
has not given to or received from any other Person any notice or other
communication (whether oral or written) regarding any actual, alleged, possible
or potential violation or Breach of, or default under, any Contract being
assigned to or assumed by Buyer.
(e) There
are
no renegotiations of, attempts to renegotiate or outstanding rights to
renegotiate any material amounts paid or payable to Company under any
Contracts with any Person having the contractual or statutory right to demand
or
require such renegotiation and no such Person has made
oral
or
written
demand for such renegotiation.
(f) Each
Contract relating to the sale, design, manufacture or provision of products
or
services by Company has been entered into in the Ordinary Course of Business
of
Company and has been entered into without the commission of any act alone or
in
concert with any other Person, or any consideration having been paid or
promised, that is or would be in violation of any Legal
Requirement.
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13 -
3.19
INSURANCE
(a) Company
has delivered to Buyer accurate and complete copies of all policies of insurance
(and correspondence relating to coverage thereunder) to which Company is a
party, a list of which is included in Schedule 3.19(a).
(b) Schedule
3.19(b) describes all obligations of Company to provide insurance coverage
to
Third Parties (for example, under Leases or service agreements) and identifies
the policy under which such coverage is provided.
(c) All
policies of insurance to which Company is a party or that provide coverage
to
Company: (i) are valid, outstanding and enforceable; (ii) are issued by an
insurer that is financially sound and reputable; (iii) taken together, provide
adequate insurance coverage for the Assets and the operations of Company for
all
risks normally insured against by a Person carrying on the same business or
businesses as Company in the same location or
locations and
for
all risks to which Company is normally subject;
and
(iv) are sufficient for compliance with all Legal Requirements and Company
Contracts;
(d)
Company
has not received (i) any refusal of coverage or any notice that a defense will
be afforded with reservation of rights or (ii) any notice of cancellation or
any
other indication that any policy of insurance is no longer in full force or
effect or that the issuer of any policy of insurance is not willing or able
to
perform its obligations thereunder. Company has paid all insurance
premiums
as,
and
when due,
and
has otherwise performed all of its obligations
under
each policy of insurance to which it is a party or that lists
Company
as a
beneficiary.
Company
has given notice to all
insurers
of
any
claims
that may be submitted
under said policies of insurance.
3.20
ENVIRONMENTAL MATTERS
Except
as
disclosed in Schedule 3.20:
(a) Company
is, and at all times has been, in full compliance with, and has not been and
is
not in violation of or liable under, any Environmental Law. Neither
Company
nor any Seller has any basis to expect, nor has any of them or any other Person
for whose conduct they are or may be held deemed
responsible received
any
actual or threatened Order,
notice
or other communication from (i) any Governmental Body or private citizen acting
in the public interest or (ii) the current or any
prior
owner or operator of any Facilities, of any actual or potential violation or
failure to comply with any Environmental Law, or of any actual or potential
liability for
any
Environmental, Health and Safety Liabilities with respect to any Facility or
other property or Asset
(whether
real, personal or mixed) in which Company has or had an interest, or
at
which
Hazardous Materials were generated, manufactured, refined, transferred,
imported, used or processed by Company or any other Person for whose conduct
it
is or may be held responsible, or from which Hazardous Materials have been
transported, treated, stored, handled, transferred, disposed, recycled or
received.
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14 -
(b) There
are
no pending or, to the Knowledge of Company or any Seller, threatened claims,
Encumbrances, or other restrictions of any nature resulting from any
Environmental, Health and Safety Liabilities or arising under or pursuant to
any
Environmental Law affecting
any Facility or any other property or asset (whether real, personal or mixed)
in
which Company has or had an interest.
(c) Neither
of
Company nor any Seller has any Knowledge of or any basis to expect, nor has
any
of them, or any other Person for whose conduct any
of
them
are or
may be held responsible, received, any citation, directive, inquiry, notice,
Order, summons, warning or other communication that relates to Hazardous
Activity, Hazardous Materials, or any alleged, actual, or potential violation
or
failure to comply with any Environmental Law, or of any alleged, actual, or
potential obligation to undertake or bear the cost of any Environmental, Health
and Safety Liabilities with respect to any Facility or property or Asset
(whether
real, personal or mixed) in which Company has or had an interest, or
at
which
Hazardous Materials
were
generated, manufactured, refined, imported,
used or processed by Company or any other Person for whose conduct it is or
may
be held responsible,
or from
which Hazardous Materials
have
been transported, treated, stored, handled, transferred, disposed, recycled
or
received.
(d) Neither
Company nor any other Person for whose conduct it is or may be held responsible
has any Environmental, Health and Safety Liabilities with respect to any
Facility or, to the Knowledge of Company, with respect to any other property
or
Asset
(whether
real, personal or mixed) in which Company (or any predecessor) has or had an
interest or at any property geologically or hydrologically adjoining any
Facility or any such other property or Asset.
(e) There
are
no Hazardous Materials present on or in the Environment at any Facility or
at
any geologically or hydrologically adjoining property, including any Hazardous
Materials contained in barrels, aboveground or underground storage tanks,
landfills, land deposits, dumps, equipment (whether movable or fixed) or other
containers, either temporary or permanent, and deposited or located in land,
water, dumps,
or any
other part of the Facility or such adjoining property, or incorporated into
any
structure therein or thereon. Neither Company nor any Person for whose conduct
it is or may be held responsible, or to the Knowledge of Company, any other
Person, has permitted or conducted, or is aware of, any Hazardous Activity
conducted with respect to any Facility or any other property or Assets
(whether
real, personal or mixed) in which Company has or had an interest except in
full
compliance with all applicable Environmental Laws.
(f) There
has
been no Release or, to the Knowledge of Company, Threat of Release, of any
Hazardous Materials at or from any Facility or at any other location where
any
Hazardous Materials were generated, manufactured, refined, transferred,
produced, imported, used, or processed or
from
any other property or Asset
(whether
real, personal or mixed) in which Company has or had an interest, or to the
Knowledge of Company any geologically or hydrologically adjoining property,
whether by Company or any other Person.
(g) Company
has delivered to Buyer true and complete copies and results of any reports,
studies, analyses, tests, or monitoring possessed or initiated by Company
pertaining to Hazardous Materials or Hazardous Activities in, on, or under
the
Facilities, or concerning compliance, by
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15 -
Company
or any other Person for whose conduct it is or may be held responsible, with
Environmental Laws.
3.21
INTELLECTUAL PROPERTY ASSETS
(a) The
term
"Intellectual Property Assets" means all intellectual property owned or licensed
(as licensor or licensee) by or
to
Company,
including: (i) Company's name, all assumed fictional business names, trade
names, registered and unregistered trademarks, service marks and applications
(collectively, "Marks"); (ii) all patents, patent applications and inventions
and discoveries that may be patentable (collectively, "Patents"); (iii) all
registered and unregistered copyrights in both published works and unpublished
works (collectively, "Copyrights"); (iv) all rights in mask works; (v) all
know-how, trade secrets, confidential or proprietary information, customer
lists, Software, technical information, data, process technology, plans,
drawings and blue prints (collectively, "Trade Secrets"); and (vi) all rights
in
internet web sites and internet domain names presently used by Company
(collectively "Net Names”).
(b) Schedule
3.21(b) contains a complete and accurate list and summary description, including
any royalties paid or received by Company, and Company has delivered to Buyer
accurate and complete copies, of all Company Contracts relating to the
Intellectual Property Assets. There are no outstanding and no threatened
disputes or disagreements with respect to any such Contract.
(c)
The
Intellectual Property Assets are all those necessary for the operation of
Company's business as it is currently conducted. Company is the owner or
licensee of all right, title and interest in and to each of the Intellectual
Property Assets, free and clear of all Encumbrances, and has the right to use
without payment to a Third Party all of the Intellectual Property Assets, other
than in respect of licenses listed in Schedule 3.21(c).
(d)
All
former and current employees of Company have executed written Contracts with
Company assigning
to
Company all rights to any inventions, Improvements,
discoveries or information relating to the business of Company.
(e)
Schedule 3.21(e) contains a complete and accurate list and summary description
of all Patents. All of the issued Patents are currently in compliance with
formal legal requirements (including payment of filing, examination and
maintenance fees and proofs of working or use), are valid and enforceable,
and
are not subject to any maintenance fees or taxes or actions falling due within
ninety (90) days after the Closing Date. No Patent has been or is now involved
in any interference, reissue, reexamination, or opposition Proceeding. There
is
no potentially interfering patent or patent application of any Third
Party.
(f) Except
as
set forth in Schedule 3.21(e), (A) no Patent is infringed or, to the Knowledge
of Company or any Seller, has been challenged or threatened in any way and
(B)
none of the products manufactured or sold, nor any process or know-how used,
by
Company infringes or is alleged to infringe any patent or other proprietary
right of any other Person.
(g) All
products made, used or sold under the Patents have been marked with the proper
Patent
notice.
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16 -
(h) Schedule
3.21(h) contains a complete and accurate list and summary description of all
Marks. All Marks have been registered with the United States Patent and
Trademark Office, are currently in compliance with all formal Legal Requirements
(including the timely post-registration filing of affidavits of use and
incontestability and renewal applications), are valid and enforceable and are
not subject to any maintenance fees or Taxes
or
actions falling due within ninety (90) days after the Closing Date. No Xxxx
has
been or is now involved in any opposition, invalidation or cancellation
Proceeding and, to the Knowledge of Company or any Seller, no such action is
threatened with respect to any of the Marks. To the Knowledge of Company or
any
Seller, there is no potentially interfering trademark or trademark application
of any other Person. No Xxxx is infringed or, to Company's Knowledge, has been
challenged or threatened in any way. None of the Marks used by Company infringes
or is alleged to infringe any trade name, trademark or service xxxx of any
other
Person. All products and materials containing a Xxxx xxxx the proper federal
registration notice where permitted by law.
(i)
Schedule 3.21(i) contains a complete and accurate list and summary description
of all Copyrights. All of the registered Copyrights are currently in compliance
with formal Legal Requirements, are valid and enforceable, and are not subject
to any maintenance fees or taxes or actions falling due within ninety (90)
days
after the date of Closing. No Copyright is infringed or, to the Knowledge of
Company or any Seller, has been challenged or threatened in any way. None of
the
subject matter of any of the Copyrights infringes or is alleged to infringe
any
copyright of any Third Party or is a derivative work based upon the work of
any
other Person. All works encompassed by the Copyrights have been marked with
the
proper Copyright
notice.
(j) With
respect to each Trade Secret, the documentation relating to such Trade Secret
is
current, accurate and sufficient in detail and content to identify and explain
it and to allow its full and proper use without reliance on the Knowledge
or
memory of any individual. Company has taken all reasonable precautions to
protect the secrecy, confidentiality and value of all Trade Secrets (including
the enforcement by Company of a policy requiring each employee or contractor
to
execute proprietary information and confidentiality agreements,
and all
current and former employees and contractors of Company have executed such
an
agreement). Company has good title to and an absolute right to use the Trade
Secrets. The Trade Secrets are not part of the public Knowledge
or
literature and, to the Knowledge of Company or any Seller, have not been used,
divulged or appropriated either for the benefit of any Person (other than
Company) or to the detriment of Company. No Trade Secret is subject to any
adverse claim or has been challenged or threatened in any way or infringes
any
intellectual property right of any other Person.
(k)
Schedule
3.21(k) contains a complete and accurate list and summary description of all
Net
Names.
3.22
RELATIONSHIPS WITH RELATED PERSONS
Except
as
disclosed in Schedule 3.22, neither Company nor any Seller
nor any Related Person of any of the
aforementioned
has any
interest in any property (whether real, personal or mixed and whether tangible
or intangible) used in or pertaining to Company's business. Neither Company
nor
any Seller
nor any Related Person of any of the
aforementioned
owns
or,
since
January 1, 2005, has
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17 -
owned,
whether
of
record
or as a beneficial owner, an equity interest or any other financial or profit
interest in any Person that has (a) had business dealings or a material
financial interest in any transaction with Company other than business dealings
or transactions disclosed in Schedule 3.22, each of which has been conducted
in
the Ordinary Course of Business with Company at substantially prevailing market
prices and on substantially prevailing market terms or (b) engaged in
competition with Company with respect to any line of the products or services
of
Company (a "Competing Business") in any market presently served by Company,
except for ownership of less than one percent (1%) of the outstanding capital
stock of any Competing Business that is publicly traded on any recognized
exchange or in the over-the-counter market. Except as set forth in Schedule
3.22, neither Company nor any Seller
nor any Related Person of any of the
aforementioned
is a
party to any Contract with, or has any claim or right against,
Company.
3.23
BROKERS OR FINDERS
Except
as
disclosed in Schedule 3.23, neither
Company,
any Seller,
nor any of their
respective
Representatives has
or
have
incurred any obligation or Liability,
contingent or otherwise, for brokerage or finders' fees or agents' commissions
or other similar payments in connection with the sale of the Seller
Shares
or the Company's business or the Assets or the Contemplated
Transactions.
3.24
SECURITIES LAW MATTERS
(a) Each
Seller understands that the Consideration Shares are being offered and made
in
reliance on one or more exemptions from the registration requirements of United
States federal and state securities laws and that Buyer
is
relying upon the truth and accuracy of the representations, warranties,
agreements, acknowledgments and understandings of Sellers
set forth herein in order to determine the applicability of such exemptions
and
the suitability of Sellers
to acquire the Consideration Shares.
(b)
Each
Seller is acquiring the Consideration Shares for such
Seller’s
own account and not with a view to their
distribution within the meaning of Section 2(11) of the Securities Act. Except
as set forth in Schedule 3.24, no
Seller
is a
U.S.
person (as that term is defined in Regulation S Promulgated under the Securities
Act). Except as set forth in Schedule 3.24, each Seller is an “accredited
investor” (as that term is defined in Rule 501 of the General Rules and
Regulations under the Securities Act by reason of Rule 501(a)(3)), and each
Seller is (i) experienced in making investments of the kind described in this
Agreement and the related documents, (ii) able, by reason of the business and
financial experience of its officers (if an entity) and professional advisors
(who are not affiliated with or compensated in any way by Buyer or any of its
affiliates or selling agents), to protect its own interests in connection with
the Contemplated
Transactions,
and
(iii) able to afford the entire loss of its
investment in the Consideration Shares. Each Seller has been provided an
opportunity for a reasonable period of time prior to the date hereof to obtain
additional information concerning the Consideration Shares, Buyer,
and all
other information to the extent Buyer
possesses such information or can acquire it without unreasonable effort or
expense.
(c)
Each
Seller understands that the Consideration Shares shall be “restricted” (as that
term is defined in Rule 144 promulgated under the Securities Act), and each
certificate representing the Consideration Shares shall be endorsed with one
or
more of the following restrictive legends, in
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18 -
addition
to any other legend required to be placed thereon by applicable federal or
state
securities laws:
(A) “THE
SECURITIESARE BEING OFFERED TO INVESTORS WHO ARE NOT U.S. PERSONS (AS DEFINED
IN
REGULATION S UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“THE SECURITIES
ACT”)) AND WITHOUT REGISTRATION WITH THE UNITED STATES SECURITIES AND EXCHANGE
COMMISSION UNDER THE SECURITIES ACT IN RELIANCE UPON REGULATION S PROMULGATED
UNDER THE SECURITIES ACT.”
(B) “TRANSFER
OF THESE SECURITIES IS PROHIBITED, EXCEPT IN ACCORDANCE WITH THE PROVISIONS
OF
REGULATION S, PURSUANT TO REGISTRATION UNDER THE SECURITIES ACT, OR PURSUANT
TO
AVAILABLE EXEMPTION FROM REGISTRATION. HEDGING TRANSACTIONS MAY NOT BE CONDUCTED
UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.”
3.25
DISCLOSURE
(a) No
representation,
warranty
or other statement made by Company or any Seller
in
this Agreement, the Schedules, any supplement to the Schedules, or
the
certificates delivered pursuant to Section 2.3(a) or otherwise in connection
with the Contemplated Transactions contains any untrue statement of
material fact or
omits
to state a material fact necessary to make any of them, in light of the
circumstances in which it was made, not misleading.
(b) No
Seller
nor the Company has Knowledge of any fact that has specific application to
Company (other than general economic or industry conditions) or the Seller
Shares
and that may materially adversely affect the Seller
Shares
or the Assets,
business, prospects, financial condition or results of operations of Company
that has not been set forth in this Agreement. No
event,
condition, or other matter, or any series of events, conditions or other
matters, currently
exists that, individually
or in the aggregate, adversely affects
the
Seller
Shares
or the Company's Assets,
business, prospects, financial condition or results of its operations that
has
not been specifically disclosed to Buyer in writing by Company.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF BUYER
Buyer
represents and warrants to Company and Sellers, as of the date hereof and as
of
the Closing Date, as follows:
4.1
ORGANIZATION AND GOOD STANDING
Buyer
is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Nevada
with
full corporate power and authority to conduct its business as it is now
conducted.
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19 -
4.2
AUTHORITY; NO CONFLICT
(a) This
Agreement constitutes the legal, valid and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms. Upon the execution
and
delivery by Buyer of the other documents
to be
executed or delivered by Buyer at Closing (collectively, the "Buyer's Closing
Documents"), each of the Buyer's Closing Documents will constitute the legal,
valid and binding obligation of Buyer, enforceable against Buyer in accordance
with its respective terms. Buyer has the absolute and unrestricted right, power
and authority to execute and deliver this Agreement and the Buyer's Closing
Documents and to perform its obligations under this Agreement and the Buyer's
Closing Documents, and such action has been duly authorized by all necessary
corporate action.
(b) Neither
the execution and delivery of this Agreement by Buyer nor the consummation
or
performance of any of the Contemplated Transactions by Buyer will give any
Person the right to prevent, delay or otherwise interfere with any of the
Contemplated Transactions pursuant to: (i)any provision of Buyer's Governing
Documents; (ii) any resolution adopted by the board of directors of Buyer;
(iii)
any Legal Requirement or Order to which Buyer may be subject; or (iv) any
Contract to which Buyer is a party or by which Buyer may be bound. Buyer is
not
and will not be required to obtain any Consent from any Person in connection
with the execution and delivery of this Agreement or the consummation or
performance of any of the Contemplated Transactions.
4.3 CAPITALIZATION
Schedule
4.3(a) correctly and completely sets forth: (i) the authorized share
capital
of the
Company; and (ii) the number of shares of each class of capital stock of
Buyer
issued
and outstanding.
4.4 FILINGS
WITH THE SEC
To
the
best of Buyer's
knowledge, the Buyer
has not
provided to Company
or any Seller
any
information that, according to applicable law, rule or regulation, should
not
have
been
disclosed publicly prior to the date hereof by Buyer,
but
which has been
so
disclosed. As of their respective dates, the documents filed by Buyer
with the
SEC (the “SEC Documents”) complied in all material respects with the
requirements of the Securities Act of or the Exchange Act, as the case may
be,
and other federal, state and local laws, rules and regulations applicable to
such SEC Documents, and none of the SEC Documents contained any untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of Buyer
included
in the SEC Documents comply as to form and substance in all material respects
with applicable accounting requirements and the published rules and regulations
of the SEC or other applicable rules and regulations with respect thereto.
Such
financial statements have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods involved
(except (a) as may be otherwise indicated in such financial statements or the
notes thereto or (b) in the case of unaudited interim statements, to the extent
they may not include footnotes or may be condensed or summary statements) and
fairly present in all material respects the financial position of Buyer
as of
the dates thereof and the results
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20 -
of
operations and cash flows for the periods then ended (subject, in the case
of
unaudited statements, to normal year-end audit adjustments).
4.5 VALID
ISSUANCE
The
Consideration
Shares, issued
in
accordance with the terms hereof
and
on
the basis
of the
representations and warranties of the Seller set forth herein, may and shall
be
properly issued by Buyer
to
Sellers
pursuant
to any applicable federal or state law. When issued and paid for as herein
provided, the Consideration Shares shall be duly and validly issued, fully
paid,
and nonassessable.
4.6
CERTAIN PROCEEDINGS
There
is
no pending Proceeding that has been commenced against Buyer that
challenges
or may
have the effect of preventing, delaying, making illegal or otherwise interfering
with, any of the Contemplated Transactions. To Buyer's Knowledge, no such
Proceeding has been threatened.
4.7
BROKERS OR FINDERS
Except
as
disclosed on Schedule 4.7, neither Buyer nor any of its Representatives
has
incurred
any obligation or Liability,
contingent or otherwise, for brokerage or finders' fees or agents' commissions
or other similar payments
in
connection with the Contemplated Transactions.
ARITCLE
V
COVENANTS
PRIOR TO CLOSING
5.1
ACCESS AND INVESTIGATION
Between
the date of this Agreement and the Closing Date, and upon reasonable advance
notice, Sellers’ Agent and Company, on the one hand, and Buyer on the other
hand, shall (a) afford the other parties
and
their
respective
Representatives full and free access, during regular business hours, to
their
respective employees, officers, directors and agents,
properties, Contracts, Governmental Authorizations, books and Records and other
documents and data, such rights of access to be exercised in a manner that
does
not unreasonably interfere with their
respective
operations; (b) furnish the other parties
with
copies of all such Contracts, Governmental Authorizations, books and Records
and
other existing documents and data as the other parties
may
reasonably request; (c) furnish the other parties
with
such additional financial, operating and other relevant data and information
as
the other parties
may
reasonably request; and (d) otherwise cooperate and assist, to the extent
reasonably requested by the other parties,
with
the other parties’
investigation of the properties, Assets
and
financial condition.
In
addition, the other parties
shall
have the right to have the real property and Tangible Personal Property
inspected by them,
at
their
sole
cost and expense, for purposes of determining the physical condition and legal
characteristics of the real property and Tangible Personal
Property.
5.2
OPERATION OF THE BUSINESS AND CONDUCT OF SELLERS PRIOR TO
CLOSING
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(a)
Between the date of this Agreement and the Closing, Company shall (and Sellers
shall cause Company to):
(i) conduct
its business only in the Ordinary Course of Business;
(ii) except
as
otherwise directed by Buyer in writing, and without making any commitment on
Buyer's behalf, use its Best Efforts to maintain
its
current business organization
intact,
keep
available the services of its officers, employees and agents,
and
maintain its relationship
and good
will with suppliers, customers, landlords, creditors, employees, agents and
others having business relationships with it;
(iii) confer
with Buyer prior to implementing operational decisions of a material
nature;
(iv) otherwise
report periodically to Buyer concerning the status of its business, operations
and finances;
(v) make
no
material changes in employment
status of employees having managerial responsibilities or officers or
directors
without
prior consultation with Buyer;
(vi) maintain
the Assets in a state of repair and condition that complies with Legal
Requirements and is consistent with the requirements and normal conduct of
Company's business;
(vii) keep
in
full force and effect, without amendment, all material
contractual and other contractual and other
rights
relating to Company's business;
(viii) comply
with all Legal Requirements and contractual obligations applicable to the
operations of Company's business;
(ix) continue
insurance
coverage in
full
force and effect under
the
policies
of
insurance
set
forth in Schedule 3.19 or substantially equivalent policies;
(x) cooperate
with Buyer and assist Buyer in identifying the Governmental Authorizations
required for
Buyer to
operate the business from and after the Closing Date and either transferring
existing Governmental Authorizations of Company to Buyer, where permissible,
or
obtaining new Governmental Authorizations for Buyer;
(xi) upon
request of
Buyer
from
time
to time, execute and deliver all documents, make all truthful oaths, testify
in
any Proceedings and do all other acts that may be reasonably necessary or
desirable in the opinion of Buyer to consummate the Contemplated Transactions,
all without further consideration; and
(xii) maintain
all books and Records of Company relating to Company's business in the Ordinary
Course of Business.
(b)
Between
the date of this Agreement and the Closing, no
Seller
shall:
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(i)
sell,
transfer or otherwise dispose of any of the Seller
Shares
or any interest in the Seller
Shares
and or
agree to
do any of the foregoing;
(ii)
accept
any dividend or other distribution in respect of any of the Seller
Shares;
(iii)
incur,
make, assume or suffer to exist any Encumbrance or other matter affecting title
to any of the Seller
Shares;
(iv)
enter
into any shareholder agreements, voting trusts, restrictions on transfer or
other agreements or instruments that would be binding on the Buyer as the owner
of the Seller
Shares;
or
(v)
take
any
action,
that
would result in any of the Seller’s representations and warranties in this
Agreement being
untrue and incorrect and each Seller shall use its
best
efforts to prevent the occurrence of any event or the existence of any
condition.
5.3
NEGATIVE COVENANT
Except
as
otherwise expressly permitted herein, between the date of this Agreement and
the
Closing Date, Company shall not, and Seller shall not permit Company to, without
the prior written Consent of Buyer, (a) take any affirmative action, or fail
to
take any reasonable action within its control, as a result of which any of
the
changes or events listed in Section 3.14 would be likely to occur; (b) make
any
modification to any material Contract or Governmental Authorization; (c) allow
the levels of raw materials, supplies or other materials included in the
Inventories to vary materially from the levels customarily
maintained
in the
Ordinary Course of Business;
or (d)
enter into any compromise or settlement of any litigation, proceeding or
governmental investigation relating to Company, its Assets, or its
business.
5.4
REQUIRED APPROVALS
As
promptly as practicable after the date of this Agreement, Company shall make
all
filings required by Legal Requirements to be made by it in order to consummate
the Contemplated Transactions. Company and Seller also shall cooperate with
Buyer and its Representatives with respect to all filings that Buyer elects
to
make or, pursuant to Legal Requirements, shall be required to make in connection
with the Contemplated Transactions. Company and Seller also shall cooperate
with
Buyer and its Representatives in obtaining all Material Consents.
5.5
NOTIFICATION
Between
the date of this Agreement and the Closing, each
Seller
and
Company
shall promptly notify Buyer in writing upon becoming aware of (a) any fact
or
condition that causes or constitutes a Breach of any of Company's
representations and warranties made as of the date of this Agreement or (b)
the
occurrence after the date of this Agreement of any fact or condition that would
or be reasonably likely to (except as expressly contemplated by this Agreement)
cause or constitute a Breach of any such representation or warranty had that
representation or warranty been made as of the time of the occurrence of, or
Company's or such
Seller's
discovery of, such fact or condition.
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23 -
Should
any such fact or condition require any change to the representations an
warranties made herein, the Company and
the
applicable
Sellers
shall promptly deliver to Buyer a supplement to the Schedules attached hereto
specifying such change. Such delivery shall not affect any rights of Buyer
under
Section 9.2 and Article 11. During the same period, Company and each
Seller shall
also
promptly
notify Buyer of the occurrence of any Breach of any covenant of Company or
such
Seller or
of the
occurrence of any event that may make the satisfaction of the
conditions
set
forth
in
Article 7 impossible or unlikely.
5.6
NO
NEGOTIATION
Until
such time as this Agreement shall have
been
terminated pursuant to Section 9.1, neither Company nor any Seller
shall directly or indirectly solicit, initiate, encourage or entertain any
inquiries or proposals from, discuss or negotiate with, provide any nonpublic
information to or consider the merits of any inquiries or proposals from any
Person (other than Buyer) relating to any business combination transaction
involving Company, including but
not
limited to the
sale
by any Seller of Company's stock, the merger or consolidation of Company or
the
sale of Company's business or any of the Assets (other than in the Ordinary
Course of Business). Company and Sellers shall notify Buyer of any such inquiry
or proposal within twenty-four (24) hours of receipt or awareness of the same
by
Company or
any
Seller.
5.7
BEST
EFFORTS
Company
and Sellers shall use their Best Efforts to cause the conditions in Article
7
and Section 8.3 to be satisfied.
5.8
PAYMENT
OF LIABILITIES
Company
shall pay or otherwise satisfy in the Ordinary Course of Business all of its
Liabilities and obligations.
5.9
COOPERATION WITH RESPECT TO FINANCIAL REPORTING
After
the
date of this Agreement, Sellers and Company shall reasonably cooperate with
Buyer in connection with Buyer's preparation of financial statements and other
information required
for Buyer’s filings with the SEC under the Exchange Act, including
but not
limited to,
Buyer’s
Current Report on Form 8-K that is to be filed with the SEC pursuant to the
Exchange Act in connection with the Closing.
ARTICLE
VI
COVENANTS
OF BUYER PRIOR TO CLOSING
6.1
BEST
EFFORTS
Buyer
shall use its Best Efforts to cause the conditions in Article 8 and Section
7.3
to be satisfied.
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ARTICLE
VII
CONDITIONS
PRECEDENT TO BUYER’S OBLIGATION TO CLOSE
Buyer's
obligation to purchase the Seller
Shares
and to take the other actions required to be taken by Buyer at the Closing
is
subject to the satisfaction, at or prior to the Closing, of each of the
following conditions (any of which may be waived by Buyer, in whole or in
part):
7.1
ACCURACY OF REPRESENTATIONS
All
of
Sellers’ and Company’s representations and warranties in this Agreement
(considered collectively), and each of these representations and warranties
(considered individually), shall have been accurate in all material respects
as
of the date of this Agreement, and shall be accurate in all material respects
as
of the time of the Closing as if then made, without giving effect to any
supplement to the Schedules.
7.2
COMPANY'S PERFORMANCE
All
of
the covenants and obligations that Company and Seller are required to perform
or
with
which Company and Seller are required to
comply pursuant
to this Agreement at or prior to the Closing (considered collectively), and
each
of these covenants and obligations (considered individually), shall have been
duly performed and complied with in all material respects.
7.3
CONSENTS
Each
of
the Consents identified in Schedule 7.3 (the "Material Consents") shall have
been obtained and shall be in full force and effect.
7.4
ADDITIONAL DOCUMENTS
Company
and Seller shall have caused the documents and instruments required by Section
2.3(a) and the following documents to be delivered (or tendered subject only
to
Closing) to Buyer:
(a) The
articles of incorporation and all amendments thereto of Company, duly certified
as of a recent date by the appropriate officials of the jurisdiction of
Company's organization;
(b) If
requested by Buyer, any Consents or other instruments that may be required
to
permit Buyer's qualification in each jurisdiction in which Company is licensed
or qualified to do business as a foreign corporation;
(c) Releases
of all Encumbrances on the Assets;
(e) Certificates
dated as of a date not earlier than the third Business
Day
prior to
the Closing as to the good standing of Company, executed by the appropriate
officials in each jurisdiction in which Company is licensed or qualified to
do
business as a foreign corporation as specified in Schedule 3.1(a);
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25 -
(f) Such
other documents as Buyer may request for the purpose of: (i) evidencing the
accuracy of any of Company's representations and warranties; (ii) evidencing
the
performance by Company or Sellers
of, or
the compliance by Company or Sellers
with,
any covenant or obligation required to be performed or complied with by Company
or Sellers;
(iii)
evidencing the satisfaction of any condition referred to in this Article 7;
or
(iv) otherwise facilitating the consummation or performance of any of the
Contemplated Transactions; and
(g) The
financial statements of the Company, audited in accordance with GAAP, pursuant
to the rules and regulations of the SEC, and the information required to be
filed by Buyer in the Current Report on Form 8-K with respect to this
transaction.
7.5
NO
PROCEEDINGS
Since
the
date of this Agreement, there shall not have been commenced or threatened
against Buyer, or against any Related Person of Buyer, any Proceeding (a)
involving any challenge to, or seeking Damages or other relief in connection
with, any of the Contemplated Transactions or (b) that may have the effect
of
preventing, delaying, making illegal, imposing limitations or conditions on
or
otherwise interfering with any of the Contemplated Transactions.
7.6
NO
CONFLICT
Neither
the consummation nor the performance of any of the Contemplated Transactions
will, directly or indirectly (with or without notice or lapse of time),
contravene or conflict with or result in a violation of or cause Buyer or any
Related Person of Buyer to suffer any adverse consequence under (a) any
applicable Legal Requirement or Order or (b) any Legal Requirement or Order
that
has been published, introduced or otherwise proposed by or before any
Governmental Body, excluding bulk
sales laws.
7.7
GOVERNMENTAL AUTHORIZATIONS
Buyer
shall have received such Governmental Authorizations as are necessary or
desirable to allow Buyer to operate the Company’s business
from and
after the Closing.
7.8
SATISFACTION WITH DUE DILIGENCE
Buyer’s
due diligence investigation shall not have indicated that any of the information
provided for in the Agreement or provided
by any Seller
or Company
is inaccurate, incomplete or untrue in any way, and Buyer’s due diligence
investigation shall not have revealed any facts, circumstances, liabilities
or
conditions that
Buyer
considers,
may
adversely affect the value or prospects of the Seller
Shares
or the Company or that may expose the Company to any liability not heretofore
fully disclosed to Buyer.
7.9
FINANCIAL INFORMATION
Company
shall have prepared and delivered to Buyer the financial statements referred
to
in Sections 3.4 and other information required to be filed pursuant to the
Exchange Act with the SEC
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by
Buyer
on its Current Report on Form 8-K in connection with the Closing.
7.10
SECURITIES LAW MATTERS
Sellers
shall be non-U.S. Persons
(as
defined in Regulation S promulgated under the Securities Act), except that
not
more than thirty-five (35) of Sellers may
be
non-accredited U.S. investors, and the offer and issuance of the Consideration
Shares shall not be in violation of the applicable federal or state securities
laws.
ARTICLE
VIII
CONDITIONS
PRECEDENT TO SELLERS’ AND
COMPANY’S OBLIGATION
TO CLOSE
Sellers’
obligation to sell the Seller
Shares
and to take the other actions required to be taken by Company at the Closing
is
subject to the satisfaction, at or prior to the Closing, of each of the
following conditions (any of which may be waived by
Sellers
and
Company
in whole or in part):
8.1
ACCURACY OF REPRESENTATIONS
All
of
Buyer's representations and warranties in this Agreement (considered
collectively), and each of these representations and warranties (considered
individually), shall have been accurate in all material respects as of the
date
of this Agreement and shall be accurate in all material respects as of the
time
of the Closing as if then made.
8.2
BUYER'S PERFORMANCE
All
of
the covenants and obligations that Buyer is required to perform or with
which Buyer is required to
comply pursuant
to this Agreement at or prior to the Closing (considered collectively), and
each
of these covenants and obligations (considered individually), shall have been
performed and complied with in all material respects.
8.3
CONSENTS
Each
of
the Consents identified in Schedule
8.3
shall have been obtained and shall be in full force and effect.
8.4
ADDITIONAL DOCUMENTS
Buyer
shall have caused the documents and instruments required by Section 2.3(b)
and
the following documents to be delivered (or tendered subject only to Closing)
to
Company and Seller as
well
as such
other documents as Company and
Sellers may
reasonably request for the purpose of (i) evidencing the accuracy of any
representation or warranty of Buyer, (ii) evidencing the performance by Buyer
of, or the compliance by Buyer with, any covenant or obligation required to
be
performed or with
which
Buyer
is
required to comply
or (iii)
evidencing the satisfaction of any condition referred to in this Article
8.
8.5
NO
INJUNCTION
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No
Legal
Requirement,
injunction or other Order
shall be
in effect
that (a)
prohibits the consummation of the Contemplated Transactions and (b) has been
adopted or issued, or has otherwise become effective, since the date of this
Agreement.
ARTICLE
IX
TERMINATION
9.1
TERMINATION EVENTS
By
notice
given prior to or at the Closing, subject to Section 9.2, this Agreement may
be
terminated by
the
party or parties referenced below as
follows:
(a) by
Buyer,
if a material Breach of any provision of this Agreement has been committed
by
Company or Seller and such Breach has not been waived by Buyer;
(b)
by
Buyer,
if its due diligence investigation indicates that any of the information
provided for in the Agreement or by
Seller
or Company
is inaccurate, incomplete or untrue in any way, or if such due diligence
investigation reveals any facts, circumstances, liabilities or conditions that,
in Buyer’s
discretion, may adversely affect the value or prospects of the Seller
Shares
or Company
or that may expose Company
to any liability not heretofore fully disclosed to Buyer; or
(c) by
Seller,
if a
material Breach of any provision of this Agreement has been committed by Buyer
and such Breach has not been waived by Sellers’ Agent or Company;
(d) by
Buyer,
if any condition in Article 7 has not been satisfied as of the date specified
for Closing in the first sentence of Section 2.2 or if satisfaction of such
a
condition by such date is or becomes impossible (other than through the failure
of Buyer to comply with its obligations under this Agreement), and Buyer has
not
waived such condition on or before such date;
(e) by
Seller,
if any
condition in Article 8 has not been satisfied as of the date specified for
Closing in the first sentence of Section 2.2 or if satisfaction of such a
condition by such date is or becomes impossible (other than through the failure
of Company or Sellers
to
comply with their obligations under this Agreement), and Company and
Sellers have
not
waived such condition on or before such date;
(f) by
mutual
consent of Buyer, the majority of Sellers
Shares,
and
Company;
(g) by
Buyer,
if the Closing has not occurred on or before ninety (90) days after the date
hereof, or such later date upon
which
the
parties may agree,
unless
the Buyer is in material Breach of this Agreement; or
(h) by
the
Seller,
if the
Closing has not occurred on or before ninety (90) days after the date hereof,
or
such later date upon
which
the
parties may agree,
unless
any Seller
or
the Company is in material Breach of this Agreement.
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28 -
9.2
EFFECT OF TERMINATION
Each
party's right of termination under Section 9.1 is in addition to any other
rights it may have under this Agreement,
at
law
or
in
equity,
and the
exercise of such right of termination will not be an election of
remedies
to the
exclusion of any others. If
this
Agreement is terminated pursuant to Section 9.1, all obligations of the parties
under this Agreement will terminate, except that the obligations of the parties
in this Section 9.2 and Articles 12 and 13 will survive;
provided, however, that, if this Agreement is terminated because of a Breach
of
this Agreement by the non-terminating party or because one or more of the
conditions to the terminating party's obligations under this Agreement is not
satisfied as a result of the non-terminating party's failure to comply with
its
obligations under this Agreement, the terminating party's right to pursue all
legal remedies will survive such termination unimpaired.
ARTICLE
X
ADDITIONAL
COVENANTS
10.1
CUSTOMER AND OTHER BUSINESS RELATIONSHIPS
After
the
Closing, Sellers shall cooperate with Buyer in its efforts to maintain
and
continue for
the
benefit of Buyer those business relationships of Company that
existed
prior to
the Closing and relating to the business to be operated by Buyer after the
Closing, including relationships with lessors, employees, regulatory
authorities, licensors, customers, suppliers and others. Sellers will refer
to
Buyer all inquiries relating to such business. Sellers shall not take any action
that would have
the
effect of to diminishing
the
value of, or interfering
with,
the Company’s business after the Closing, including
but not
limited to,
disparaging the name or business of Buyer.
10.2
FURTHER ASSURANCES
From
and
after the date hereof, and continuing after the Closing, the parties shall
cooperate reasonably with each other and with their respective Representatives
in connection with any steps required to be taken as part of their respective
obligations under this Agreement, and shall (a) furnish upon request to each
other any
further
information
that any
party hereto may reasonably require;
(b)
execute and deliver to each other party
such
other documents
as such
other parties may reasonably require;
and (c)
do such other acts and things
as the
other parties
may
reasonably request for the purpose of carrying out the intent of this Agreement
and the Contemplated Transactions.
10.3
POST-CLOSING SEC FILINGS
As
soon
as practicable following the Closing, Buyer shall cause the transactions
contemplated hereunder to be memorialized and disclosed by making all filings
or
recordings required under applicable law. Sellers hereby covenant and agree
to
aid Buyer, as specifically requested by Buyer, in preparing and making such
filings or recordings, at Buyer’s expense.
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ARTICLE
XI
INDEMNIFICATION;
REMEDIES
11.1
SURVIVAL
(a)
All
representations, warranties, covenants and obligations in this Agreement, the
Schedules, any supplements to the Schedules, the certificates delivered pursuant
to Section 2.3, and any other certificate or document delivered pursuant to
this
Agreement shall survive the Closing and the consummation of the Contemplated
Transactions until the expiration of their respective statutes of limitations.
(b)
The
right to indemnification, reimbursement or other remedy based upon such
representations, warranties, covenants and obligations shall not be affected
by
any investigation (including any environmental investigation or assessment)
conducted with respect to, or any Knowledge acquired (or capable of being
acquired) at any time, whether before or after the execution and delivery of
this Agreement or the Closing Date, with respect to the accuracy or inaccuracy
of or compliance with any such representation, warranty, covenant or obligation.
The waiver of any condition based upon the accuracy of any representation or
warranty, or upon
the
performance of or compliance with any covenant or obligation, will not affect
the right to indemnification, reimbursement or other remedy based upon such
representations, warranties, covenants and obligations.
11.2
INDEMNIFICATION AND REIMBURSEMENT BY SELLERS
Sellers
and Company
shall, jointly and severally, indemnify and hold harmless Buyer, and its
Representatives,
shareholders, directors, officers, employees, agents, subsidiaries, and
affiliates (collectively, the "Buyer Indemnified Persons"), and shall reimburse
the Buyer Indemnified Persons for any loss, Liability,
claim,
damage, expense (including costs of investigation and defense and reasonable
attorneys' fees and expenses) or diminution of value, whether or not involving
a
Third Party
Claim (collectively, "Damages"), arising from or in connection
with:
(a)
any
Breach of any representation or warranty made by any Seller or Company
in this Agreement and any other certificate, document, writing or instrument
delivered by any Seller or Company
pursuant
to this Agreement;
(b)
any
Breach of any covenant or obligation of any Seller or Company
in this Agreement or in any other certificate, document, writing or instrument
delivered by any Seller or Company
pursuant to this Agreement;
(c)
any
Liability arising out of the operation of Company
or its business or Assets prior to the Closing Date;
(d)
any
product or any services sold, included in Inventory, or otherwise provided
by,
Company,
in whole or in part, prior to the Closing Date, including claims for
Breach
of
warranty or product Liability;
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30 -
(e)
any
Liability under any Company Contract entered into prior to the Closing Date,
including any Liability arising out of or relating to Seller's credit facilities
or any security interest related thereto;
(f)
any
Liability for Taxes, including (i)
any
Taxes arising as a result of the Company's operation of its Business or
ownership of its Assets prior to the Closing Date, and (ii)
any
Taxes that will arise as a result of the sale of the Seller
Shares
pursuant to this Agreement;
(g)
any
Liability relating to payroll, vacation, sick leave, workers' compensation,
unemployment benefits, pension benefits, employee stock option or profit-sharing
plans, health care plans or benefits or any other employee plans or benefits
of
any kind for Company's
employees or former employees or both;
(h)
any
Liability relating to the payment of all wages and other remuneration due to
any
Company
employees with respect to their services as employees of Company through the
close of business on the Closing Date, including pro rata bonus payments and
all
vacation pay earned prior to the Closing Date and the payment of any termination
or severance payments and the provision of health plan continuation coverage
in
accordance with the requirements of COBRA and Sections 601 through 608 of
Employee Retirement Income Security Act of 1974.
(i)
any
Liability arising out of any Proceeding commenced after the Closing Date and
arising out of or relating to any occurrence or event happening prior to the
Closing Date, and any Liability under any Company Contract that arises after
the
Closing but that arises out of or relates to any Breach that occurred prior
to
the Closing, and any such other Liability;
(j)
any
Liability arising out of or resulting from Company's
compliance or noncompliance with any Legal Requirement or Order of any
Governmental Body;
(k)
any
Liability of Company
under this Agreement or any other document executed in connection with the
Contemplated Transactions; and
(l)
any
Liability of Company
based upon any Seller’s acts or omissions occurring after the Closing
Date.
11.3
INDEMNIFICATION AND REIMBURSEMENT BY BUYER
Buyer
will indemnify and hold harmless Sellers and Company,
and will reimburse Sellers and Company,
for any Damages arising from or in connection with:
(a) any
Breach of any representation or warranty made by Buyer in this Agreement or
in
any certificate, document, writing or instrument delivered by Buyer pursuant
to
this Agreement;
or
(b) any
Breach of any covenant or obligation of Buyer in this Agreement or in any other
certificate, document, writing or instrument delivered by Buyer pursuant to
this
Agreement.
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11.4
THIRD-PARTY CLAIMS
(a) Promptly
after receipt by a Person entitled to indemnity under Section 11.2, 11.3 (to
the
extent provided in the last sentence of Section 11.3) (an "Indemnified Person")
of notice of the assertion of a Third-Party Claim against it, such Indemnified
Person shall give notice to the Person obligated to indemnify it
under
such Section (an "Indemnifying Person") of the assertion of such Third-Party
Claim, provided that the failure to notify the Indemnifying Person will not
relieve the Indemnifying Person of any liability that it may have to any
Indemnified Person, except to the extent that the Indemnifying Person
demonstrates that the defense of such Third-Party Claim is prejudiced by the
Indemnified Person's failure to give such notice.
(b) If
an
Indemnified Person gives notice to the Indemnifying Person pursuant to Section
11.4(a) of the assertion of a Third-Party Claim, the Indemnifying Person shall
be entitled to participate in the defense of such Third-Party Claim and, to
the
extent that it wishes (unless (i) the Indemnifying Person is also a Person
against whom the Third-Party Claim is made and the Indemnified Person determines
in good faith that joint representation would be inappropriate or (ii) the
Indemnifying Person fails to provide reasonable assurance to the Indemnified
Person of its financial capacity to defend such Third-Party Claim
and
to
provide
indemnification with respect to such Third-Party Claim), to assume the defense
of such Third-Party Claim with counsel satisfactory to the Indemnified Person.
After notice from the Indemnifying Person to the Indemnified Person of its
election to assume the defense of such Third-Party Claim, the Indemnifying
Person shall not, so long as it diligently conducts such defense, be liable
to
the Indemnified Person under this Article 11 for any fees of other counsel
or
any other expenses with respect to the defense of such Third-Party Claim, in
each case subsequently incurred by the Indemnified Person in connection with
the
defense of such Third-Party Claim, other than reasonable costs of investigation.
If the Indemnifying Person assumes the defense of a Third-Party Claim, (i)
such
assumption will conclusively establish for purposes of this Agreement that
the
claims made in that Third-Party Claim are within the scope of and subject to
indemnification, and (ii) no compromise or settlement of such Third-Party Claims
may be effected by the Indemnifying Person without the Indemnified Person's
Consent unless (A) there is no finding or admission of any violation of Legal
Requirement or any violation of the rights of any Person; (B) the sole relief
provided is monetary damages that are paid in full by the Indemnifying Person;
and (C) the Indemnified Person shall have no liability with respect to any
compromise or settlement of such Third-Party Claims effected without its
Consent. If notice is given to an Indemnifying Person of the assertion of any
Third-Party Claim and the Indemnifying Person does not, within ten (10) days
after the Indemnified Person's notice is given, give notice to the Indemnified
Person of its election to assume the defense of such Third-Party Claim, the
Indemnifying Person will be bound by any determination made in such Third-Party
Claim or any compromise or settlement effected by the Indemnified
Person.
(c) Notwithstanding
the foregoing, if an Indemnified Person determines in good faith that there
is a
reasonable probability that a Third-Party Claim may adversely affect it or
its
Related Persons other than as a result of monetary damages for which it would
be
entitled to indemnification under this Agreement, the Indemnified Person may,
by
notice to the Indemnifying Person, assume the exclusive right to defend,
compromise or settle such Third-Party Claim, but the Indemnifying Person will
not be bound by any determination of any Third-Party Claim so defended for
the
purposes of this Agreement or any compromise or settlement effected without
its
Consent (which may not be unreasonably withheld).
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32 -
(d) Notwithstanding
the provisions of Section 13.4, Company and Sellers
hereby
consent to the nonexclusive jurisdiction of any court in which a Proceeding
in
respect of a Third-Party Claim is brought against any Buyer Indemnified Person
for purposes of any claim that a Buyer Indemnified Person may have under this
Agreement with respect to such Proceeding or the matters alleged therein and
agree that process may be served on Company and Sellers
with
respect to such a claim anywhere in the world.
(e) With
respect to any Third-Party Claim subject to indemnification under this Article
11: (i) both the Indemnified Person and the Indemnifying Person, as the case
may
be, shall keep the other Person fully informed of the status of such Third-Party
Claim and any related Proceedings at all stages thereof where such Person is
not
represented by its own counsel, and (ii) the parties agree (each at its own
expense) to render to each other such assistance as they may reasonably require
of each other and to cooperate in good faith with each other in order to ensure
the proper and adequate defense of any Third-Party Claim.
(f) With
respect to any Third-Party Claim subject to indemnification under this Article
11, the parties agree to cooperate in such a manner as to preserve in full
(to
the extent possible) the confidentiality of all Confidential Information and
the
attorney-client and work-product privileges. In connection therewith, each
party
agrees that: (i) it will use its Best Efforts, in respect of any Third-Party
Claim in which it has assumed or participated in a
defense,
to avoid production of Confidential Information (consistent with applicable
law
and rules of procedure), and (ii) all communications between any party hereto
and counsel responsible for or participating in the defense of any Third-Party
Claim shall, to the extent possible, be made so as to preserve any applicable
attorney-client or work-product privilege.
11.5
OTHER CLAIMS
A
claim
for indemnification for any matter not involving a Third-Party Claim may be
asserted by notice to the party from whom indemnification is sought and shall
be
paid promptly after such notice.
11.6
INDEMNIFICATION IN CASE OF STRICT LIABILITY OR INDEMNITEE
NEGLIGENCE
THE
INDEMNIFICATION PROVISIONS CONTAINED
IN
THIS
ARTICLE 11 SHALL BE ENFORCEABLE REGARDLESS OF WHETHER THE LIABILITY IS BASED
UPON PAST, PRESENT OR FUTURE ACTS, CLAIMS OR LEGAL REQUIREMENTS (INCLUDING
ANY
PAST, PRESENT OR FUTURE ENVIRONMENTAL LAW, FRAUDULENT TRANSFER ACT, OCCUPATIONAL
SAFETY AND HEALTH LAW OR PRODUCTS LIABILITY, SECURITIES OR OTHER LEGAL
REQUIREMENT) AND REGARDLESS OF WHETHER ANY PERSON (INCLUDING THE PERSON FROM
WHOM INDEMNIFICATION IS SOUGHT) ALLEGES OR PROVES THE SOLE, CONCURRENT,
CONTRIBUTORY OR COMPARATIVE NEGLIGENCE OF THE PERSON SEEKING INDEMNIFICATION
OR
THE SOLE OR CONCURRENT STRICT LIABILITY IMPOSED UPON THE PERSON SEEKING
INDEMNIFICATION.
-
33 -
ARTICLE
XII
CONFIDENTIALITY
12.1
CONFIDENTIAL INFORMATION
(a) Each
party agrees that, unless and until the Closing has been consummated, each
party
will hold in strict confidence, and will not use to the detriment of any other
party hereto, any data and information obtained in connection with this
Agreement or the Contemplated Transactions, except insofar as this data and
information may be required by law to be included in documents required to
be
filed by Buyer with the SEC under the Exchange Act and the rules and regulations
promulgated thereunder.
(b) "Confidential
Information" means all items, materials and information which belong to a party
hereto and are not generally known to the public that has been or may hereafter
be disclosed to the other party by such party or by the directors, officers,
employees, agents, consultants, advisors or other representatives, including
legal counsel, accountants and financial advisors of such party, irrespective
of
the form of the disclosure. Confidential Information is intended to be
interpreted broadly and includes trade secrets and other proprietary or
confidential information concerning the business and affairs of a party hereto,
product specifications, data, know-how, formulae, compositions, processes,
designs, sketches, photographs, graphs, drawings, samples, inventions and ideas,
past, current, and planned research and development, current and planned
manufacturing or distribution methods and processes, customer lists, current
and
anticipated customer requirements, price lists, supplier lists, market studies,
business plans, computer software and programs (including object code and source
code), computer software and database technologies, systems, structures and
architectures (and related processes, formulae, composition, improvements,
devices, know-how, inventions, discoveries, concepts, ideas, designs, methods
and information); financial statements, financial projections and budgets,
historical and projected sales, capital spending budgets and plans, the names
and backgrounds of key personnel, and personnel training techniques and
materials. Confidential Information also includes all notes, analyses,
compilations, studies, summaries and other material containing or based, in
whole or in part, upon any Confidential Information.
ARTICLE
XIII
GENERAL
PROVISIONS
13.1
EXPENSES
Except
as
otherwise provided in this Agreement, each party to this Agreement will bear
its
own
fees and
expenses incurred in connection with the preparation, negotiation, execution
and
performance of this Agreement and the Contemplated Transactions, including
all
fees and expenses
of its
Representatives. If this Agreement is terminated, the obligation of each party
to pay its own fees and expenses will be subject to any rights of such party
arising from a Breach of this Agreement by another party.
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34 -
13.2
PUBLIC ANNOUNCEMENTS
Any
public announcement, press release or similar publicity with respect to this
Agreement or the Contemplated Transactions will be issued, if at all, at such
time and in such manner as Buyer determines. Except with the prior consent
of
Buyer or as permitted by this Agreement, neither Company, Sellers
nor any
of their Representatives shall disclose to any Person (a) the fact that any
confidential information of Company or Sellers
has been
disclosed to Buyer or its Representatives, that Buyer or its Representatives
have inspected any portion of the Confidential
Information
of
Company or Sellers,
that
any Confidential
Information
of Buyer
has been disclosed to Company, Sellers
or their
Representatives or that Company, Sellers
or their
Representatives have inspected any portion of the Confidential
Information
of Buyer
or (b) any information about the Contemplated Transactions, including the status
of such discussions or negotiations, the execution of any documents (including
this Agreement) or any of the terms of the Contemplated Transactions or the
related documents (including this Agreement). Company
Sellers
and
Buyer will consult with each other concerning the means by which Company's
employees, customers, suppliers and others having dealings with Company will
be
informed of the Contemplated Transactions, and Buyer will have the right to
be
present for any such communication.
13.3
NOTICES
All
notices, Consents, waivers and other communications required or permitted by
this Agreement shall be in writing and shall be deemed given to a party when
(a)
delivered to the appropriate address by hand or by nationally recognized
overnight courier service (costs prepaid); (b) sent by facsimile with
confirmation of transmission by the transmitting equipment; or (c) sent
to
the
addressee
by
certified mail, return receipt requested, in each case to the following
addresses and facsimile numbers and marked to the attention of the Person
(by name
or title) designated below (or to such other address, facsimile number, e-mail
address or Person
as a
party may designate by notice to the other parties):
Company
(prior to Closing):
____________________
____________________
____________________
Attention:
____________
Facsimile:
____________
Company
(after the Closing):
____________________
____________________
____________________
Attention:
___________
Facsimile:
___________
Seller:
___________________
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35 -
___________________
___________________
Facsimile:
__________
with
a
mandatory copy to:
_____________________________
Attention:
_____________________
Fax
no.:
_______________________
Buyer:
Star
Energy Corporation
000
Xxxx
Xxxxxx
Xxx
Xxxx,
XX 00000
with
a
mandatory copy to:
Xxxxx
Xxxxx & Associates, PLLC
00
Xxxx
Xxxxxxxxx Xxxxxx
Xxxxxx
Xxxxxx, XX 00000
Attention:
Xxxxx Xxxxx, Esq.
Fax
no.:
(000) 000-0000
13.4
RESOLUTION OF DISPUTES
(a) In
the
event that any dispute, controversy or claim arising out of or relating to
this
Agreement or the breach, termination or validity thereof should arise between
the Parties (a “Dispute”), the Party wishing to declare a Dispute shall deliver
to the other Party a written notice identifying the disputed issue.
(b) Either
Party may give the other Party written notice of any Dispute not resolved in
the
normal course of business. Executives of both Parties shall meet at a mutually
acceptable time and place within ten (10) Business Days after delivery of such
notice and thereafter as often as they reasonably deem necessary, to exchange
relevant information and to attempt to resolve the Dispute. In such meetings
and
exchanges, a Party shall have the right to designate as confidential any
information that such Party offers. No confidential information exchanged in
such meetings for the purpose of resolving a Dispute may be used by a Party
in
litigation against the other Party. If the matter has not been resolved in
the
aforementioned manner within thirty (30) Days of the disputing Party’s notice
having been issued, or if the Parties fail to meet within ten (10) Business
Days
as required above, either Party may initiate binding arbitration in New York,
New York, as hereafter provided in clause (c) below.
(c) The
Parties agree that all disputes, controversies or claims that may arise out
of
the transactions contemplated by this Agreement, or the breach, termination
or
invalidity thereof, including any requests for emergent or equitable relief
and/or specific performance, shall be submitted to, and determined by, binding
arbitration in accordance with the following procedures:
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36 -
(i) Either
Party may submit a dispute, controversy or claim to arbitration by giving the
other Party written notice to such effect, which notice shall describe, in
reasonable detail, the facts and legal grounds forming die basis for the filing
Party’s request for relief. The arbitration shall be held before three (3)
neutral arbitrators in New York, New York and a decision as to any matters
submitted thereto shall be made by a vote of any two (2) of the three
arbitrators.
(ii) Within
thirty (30) days after the other Party’s receipt of such demand, the Parties
shall each submit a proposed arbitrator and, once each of such arbitrators
has
been cleared of any potential conflicts of interest, both of such arbitrators
shall jointly select a third arbitrator. In the event of any controversy
concerning the selection of any one (1) or more of the arbitrators, and the
Parties cannot resolve their disagreements as to the same within thirty (30)
days, such arbitrator(s) shall be selected by the American Arbitration
Association (“AAA”). In any event, each of the arbitrators shall have a
background in, and knowledge of, transactions in the energy industry and shall
otherwise be an appropriate person based on the nature of the dispute. If a
person with experience in such matters is not available, the arbitrator shall
be
chosen from the retired federal judges pool maintained by AAA.
(iii) The
arbitration shall be governed by the Commercial Arbitration Rules of the
AAA.
(iv) Discovery
shall be limited to requests for and production of documents, depositions and
interrogatories. All discovery shall be guided by the Federal Rules of Civil
Procedure. All issues concerning discovery upon which the Parties cannot agree
shall be submitted to the arbitrators for determination.
(iv) In
rendering an award, the arbitrators shall determine the rights and obligations
of the Parties according to the substantive and procedural laws of the State
of
New York.
(v) The
decision of, and award rendered by, the arbitrators, shall be determined no
more
than sixty (60) days after the submission of the case to the arbitrators and
shall be final and binding on the Parties and shall not be subject to appeal.
Judgment on the award may be entered in and enforced by any court of competent
jurisdiction.
(vi) Each
Party shall bear its own costs and expenses (including filing fees) with respect
to the arbitration, including one-half of the fees and expenses of the
arbitrators.
13.5
ENFORCEMENT OF AGREEMENT
Company
and Sellers acknowledge and agree
that
Buyer will
be
irreparably damaged if any of the provisions of this Agreement are not performed
in accordance with their specific terms and that any Breach of this Agreement
by
Company or Sellers will
be
incapable of being
adequately compensated by
monetary damages alone. Accordingly, in addition to any other right or remedy
to
which Buyer may be entitled
at law
or in equity, Buyer
shall be
entitled to enforce any provision of this Agreement by a decree of specific
performance and by
temporary, and
permanent injunctive relief to prevent Breaches or threatened Breaches of any
of
the provisions of this Agreement, without posting any bond or other
undertaking.
-
37 -
13.6
WAIVER; REMEDIES CUMULATIVE
The
rights and remedies of the parties to this Agreement are cumulative and not
alternative. Neither any failure nor any delay by any party in exercising any
right, power or privilege under this Agreement or any of the documents referred
to in this Agreement will operate as a waiver of such right, power or privilege,
and no single or partial exercise of any such right, power or privilege will
preclude any other or further exercise of such right, power or privilege or
the
exercise of any other right, power or privilege. To the maximum extent permitted
by applicable law, (a) no claim or right arising out of this Agreement or any
of
the documents referred to in this Agreement can be discharged by one party,
in
whole or in part, by a waiver or renunciation of the claim or right unless
in
writing signed by the other party; (b) no waiver that may be given by a party
will be applicable except in the specific instance for which it is given; and
(c) no notice to or demand on one party will be deemed to be a waiver of any
obligation of that party or of the right of the party giving such notice or
demand to take further action without notice or demand as provided in this
Agreement or the documents referred to in this Agreement.
13.7
ENTIRE AGREEMENT AND MODIFICATION
This
Agreement supersedes all prior agreements, whether written or oral, between
the
parties with respect to its subject matter (including any letter of intent
and
any confidentiality agreement between Buyer, on the one hand, and Sellers
or
Company, on the other hand) and constitutes (along with the Schedules, Exhibits
and other documents delivered pursuant to this Agreement) a complete and
exclusive statement of the terms of the agreement between the parties with
respect to its subject matter. This Agreement may not be amended, supplemented,
or otherwise modified except by a written agreement executed by the party to
be
charged with the amendment.
13.8
SCHEDULES
(a) The
information contained
in
the
Schedules constitutes (i) exceptions to particular representations, warranties,
covenants and obligations of Sellers and
Company as
set
forth in this Agreement or (ii) descriptions or lists of Assets
and
Liabilities
and
other items referred to in this Agreement. If there is any inconsistency between
the statements in this Agreement and those in the Schedules (other than an
exception expressly set forth as such in the Schedules with respect to a
specifically identified representation or warranty), the statements in this
Agreement will prevail.
(b) The
statements in the Schedules, and those in any supplement thereto, relate only
to
the provisions in the Section of this Agreement to which they expressly relate
and not to any other provision in this Agreement.
-
38 -
(c)
From
time to time prior to the Closing, the parties shall promptly provide,
supplement or amend the Schedules hereto. Such disclosure, supplement or
amendment shall have the effect of curing any related misrepresentation or
breach of warranty made in connection with the transactions contemplated by
this
Agreement; provided,
however,
that if
such misrepresentation or breach is material, each party shall have a
commercially reasonable period of time following receipt of any supplemented
or
amended Schedules to elect (i) to terminate this Agreement without any further
liability to the Parties or (ii) in such non-amending party’s sole discretion,
to waive such breach and consummate the transactions contemplated by this
Agreement.
13.9
ASSIGNMENTS, SUCCESSORS AND NO THIRD-PARTY RIGHTS
No
party
may assign any of its rights or delegate any of its obligations under this
Agreement without the prior written consent of the other parties, and any such
attempted assignment shall be null and void and of no force or effect. Subject
to the preceding sentence, this Agreement will apply to, be binding in all
respects upon and inure to the benefit of the successors and permitted assigns
of the parties. Nothing expressed or referred to in this Agreement will be
construed to give any Person other than the parties to this Agreement any legal
or equitable right, remedy or claim under or with respect to this Agreement
or
any provision of this Agreement, except such rights as shall inure to a
successor or permitted assignee pursuant to this Section 13.9.
13.10
SEVERABILITY
If
any
provision of this Agreement is held invalid or unenforceable by any court of
competent jurisdiction, the other provisions of this Agreement will remain
in
full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to
the
extent not held invalid or unenforceable.
13.11
CONSTRUCTION
The
headings of Articles and Sections in this Agreement are provided for convenience
only and will not affect its construction or interpretation. All references
to
"Articles," "Sections," “Exhibits,” and "Schedules" refer to the corresponding
Articles, Sections, Exhibits, and Schedules of this Agreement.
13.12
TIME OF ESSENCE
With
regard to all dates and time periods set forth or referred to in this Agreement,
time is of the essence.
13.13
GOVERNING LAW
This
Agreement will be governed by and construed under the laws of the State of
New
York, without regard to conflicts-of-laws
rules or
any
principles that would require the application of any other law.
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39 -
13.14
EXECUTION OF AGREEMENT
This
Agreement may be executed in one or more counterparts, each of which will be
deemed to be an original copy of this Agreement and all of which, when taken
together, will be deemed to constitute one and the same instrument.
The
exchange of copies of this Agreement and of signature pages by facsimile
transmission shall constitute effective execution and delivery of this Agreement
as to the parties and may be used in lieu of the original Agreement for all
purposes. Signatures of the parties transmitted by facsimile shall be deemed
to
be their original signatures for all purposes.
13.15
SELLER AND COMPANY LIABILITY; SELLERS’ RELEASE
(a)
The
Liability
of each
Seller hereunder shall be joint and several with the other Sellers. Where in
this Agreement provision is made for any action to be taken or not taken by
Company, Sellers jointly and severally undertake to cause Company to take or
not
take such action, as the case may be. Without limiting the generality of the
foregoing, Sellers shall be jointly and severally liable for the indemnities
set
forth in Article 11.
(b)
The
Liability
of
Company prior to Closing shall be joint and several with Sellers.
Upon Closing, Company shall be forever discharged and released from all
Liabilities
hereunder, including any claims of contribution from Sellers.
In addition, in consideration for the Contemplated
Transactions,
as of
the Closing, Sellers and their respective heirs, executors, successors and
assigns (the "Waiving Parties"), release, waive and forever discharge, in all
capacities, including as stockholders of Company, from and after the Closing
any
and all claims, known or unknown, that the Waiving Parties ever had, now have
or
may have against Company and its officers, directors, employees or agents in
connection with or arising out of any act or omission of Company or its
officers, directors, employees, advisers or agents, in such capacity, at or
prior to the Closing.
IN
WITNESS WHEREOF, the parties have executed this Stock Purchase Agreement as
of
the date first written above.
|
BUYER:
|
COMPANY:
|
||
|
SOCKEYE
SEAFOOD GROUP, INC.
|
UNIVERCOMPANY
LIMITED LIABILITY COMPANY
|
||
|
By:
/s/
Xxxxxx Xxxxx
|
By:
/s/
UniverCompany Limited Liability Company
|
||
|
Name:
Xxxxxx
Xxxxx
|
Name:
____________________
|
||
|
Title:
Chief
Executive Officer
|
Title:
____________________
|
||
|
SELLERS:
|
|||
|
/s/
Xxxxxxxxx Xxxxxx
|
|||
|
Name:
|
Xxxxxxxxx
Xxxxxx
|
||
|
/s/
Xxxxxxx Xxxxxxx
|
|||
|
Name:
|
Xxxxxxx
Xxxxxxx
|
||
-
40 -
LIST
OF
EXHIBITS
Exhibit
A: Sellers
Exhibit
1.1 Definitions
Exhibit
2.3(a)(vi): Seller’s Legal Opinion
-
41 -
LIST
OF
SCHEDULES
Schedule
3.1(a): Jurisdictions of Company
Schedule
3.1(b): Governing Documents of Company
Schedule
3.3(a): Company’s Capitalization
Schedule
3.6(a): Company’s Assets
Schedule
3.7(a): Real Estate Owned by Company
Schedule
3.7(b): Real Estate Leased by Company
Schedule
3.8(a): Encumbrances on Real Estate of Company
Schedule
3.13(a): Unpaid Taxes of Company
Schedule
3.13(b): Company Tax Returns
Schedule
3.15(a): Company Personnel Matters
Schedule
3.16(b): Company Governmental Authorizations
Schedule
3.18(a): Company Contracts
Schedule
3.18(c): Enforceability of Company Contracts
Schedule
3.18(d): Compliance with Company Contracts
Schedule
3.19(a): Company Insurance Policies
Schedule
3.19(b): Third Party Obligations of Company to Provide Insurance
Coverage
Schedule
3.20: Company Environmental Liabilities
Schedule
3.21(b): Company Intellectual Property Matters
Schedule
3.21(c): Intellectual Property Licenses
Schedule
3.21(e): Company Patents
Schedule
3.21(h): Company Marks
Schedule
3.21(i): Company Copyrights
Schedule
3.21(k): Company Net Names
Schedule
3.22: Company Related Persons
Schedule
3.23: Company Brokers
Schedule
3.24: Company Securities Law Matters
Schedule
4.3(a): Buyer’s Capitalization
Schedule
4.7: Buyer Brokers
Schedule
7.3: Company Material Consents
Schedule
8.3: Buyer Material Consents
-
42 -
EXHIBITS
-
43 -
EXHIBIT
A
SELLERS
AND ALLOCATION OF CONSIDERATION SHARES
Name No.
of
Shares
Xxxxxxx
Xxxxxxx
____________
Xxxxxxxxx
Xxxxxx
____________
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44 -
EXHIBIT
1.1
DEFINITIONS
For
purposes of this Agreement, the following terms and variations thereof have
the
meanings specified or referred to in this Section 1.1:
"Accounts
Receivable"
means
(a)
all
trade accounts receivable and other rights to payment from customers of
Company
and the full benefit of all security for such accounts or rights to payment,
including all trade accounts receivable representing amounts receivable in
respect of goods shipped or products sold or services rendered to customers
of
Company,
(b) all other accounts or notes receivable of Company
and the full benefit of all security for such accounts or notes and (c) any
claim, remedy or other right related to any of the foregoing.
"Assets"
means
all real
property; all Tangible Personal Property; all Inventories; all Accounts
Receivable; all Company Contracts; all data and Records related to the
operations of Company; and all of the intangible rights and property of Company,
including Intellectual Property Assets, going concern value, goodwill,
telephone, facsimile and e-mail addresses.
"Balance
Sheet"
has the
meaning set forth
in
Section 3.4.
"Best
Efforts"
means
the
efforts that a prudent Person desirous of achieving a result would use in
similar circumstances to achieve that result as expeditiously as
possible;
provided, however, that a Person required to use Best Efforts under this
Agreement will not be thereby required to take actions that would result in
a
material adverse change in the benefits to such Person of this Agreement and
the
Contemplated Transactions or to dispose of or make any change to its business,
expend any material funds or incur any other material burden.
"Breach"
means
any
breach of, or any inaccuracy in, any representation or warranty or any breach
of, or failure to perform or comply with, any covenant or obligation, in or
of
this Agreement or any other Contract, or any event which,
with the
passing of time or the giving of notice
or both,
would constitute such a breach, inaccuracy or failure.
"Business
Day"
means
any
day
other than (a) Saturday or Sunday or (b) any other day on which banks are
permitted or required to be closed
in the
State of New York.
"Buyer"
has the
meaning set forth
in the
first paragraph of this Agreement.
"Buyer
Indemnified Persons"
has the
meaning set forth
in
Section 11.2.
"Closing"
has the
meaning set forth
in
Section 2.2.
"Closing
Date"
means
the
date
on which the Closing actually takes place.
"Code"
means
the
Internal Revenue Code of 1986.
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45 -
"Company"
has the
meaning set forth
in the
first paragraph of this Agreement.
"Company
Contract"
means
any
Contract (a) under which Company has or may acquire any rights or benefits;
(b)
under which Company has or may become subject to any obligation or Liability;
or (c)
by which Company or any of the Assets
owned or
used by Company is,
are
or may
become bound.
"Confidential
Information"
has the
meaning set forth
in
Section 12.1.
"Consent"
means
any
approval, consent, ratification, waiver or other authorization.
"Contemplated
Transactions"
means
all
of
the transactions contemplated by this Agreement.
"Contract"
means
any
agreement, contract, Lease, consensual obligation, promise or undertaking
(whether written or oral and whether express or implied), whether or not legally
binding.
“Copyright”
has the meaning set forth in Section 3.21.
"Damages"
has the
meaning set forth
in
Section 11.2.
"Effective
Time"
means
the time
at which the Closing is consummated.
"Employee
Plans" has the meaning set forth in Section 3.15(d).
"Encumbrance"
means
any
charge, claim, community or other marital property interest, condition,
equitable interest, lien, option, pledge, security interest, mortgage, right
of
way, easement, encroachment, servitude, right of first option, right of first
refusal or similar restriction, including any restriction on use, voting (in
the
case of any security or equity interest), transfer, receipt of income or
exercise of any other attribute of ownership.
"Environment"
means
soil,
land surface or subsurface strata, surface waters (including navigable waters
and ocean waters), groundwaters, drinking water supply, stream sediments,
ambient air (including indoor air), plant and animal life and any other
environmental medium or natural resource.
"Environmental,
Health and Safety Liabilities"
means
any
cost,
damages, expense, Liability,
obligation or other responsibility arising from or under any Environmental
Law
or Occupational Safety and Health Law, including those consisting of or relating
to:
(a) any
environmental, health or safety matter or condition (including on-site or
off-site contamination, occupational safety and health and regulation of any
chemical substance or product);
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46 -
(b) any
fine,
penalty, judgment, award, settlement, legal or administrative proceeding,
damages, loss, claim, demand or response, remedial or inspection cost or expense
arising under any Environmental Law or Occupational Safety and Health
Law;
(c) financial
responsibility under any Environmental Law or Occupational Safety and Health
Law
for cleanup costs or corrective action, including any cleanup, removal,
containment or other remediation or response actions ("Cleanup") required by
any
Environmental Law or Occupational Safety and Health Law (whether or not such
Cleanup has been required or requested by any Governmental Body or any other
Person) and for any natural resource damages; or
(d) any
other
compliance, corrective or remedial measure required under any Environmental
Law
or Occupational Safety and Health Law.
The
terms
"removal," "remedial" and "response action" include the types of activities
covered by the United States Comprehensive Environmental Response, Compensation
and Liability Act of 1980 (CERCLA).
"Environmental
Law"
means
any
Legal
Requirement that requires or relates to:
(a) advising
appropriate authorities, employees or the public of intended or actual Releases
of pollutants or hazardous substances or materials, violations of discharge
limits or other prohibitions and the commencement of activities, such as
resource extraction or construction, that could have significant impact on
the
Environment;
(b) preventing
or reducing to acceptable levels the Release of pollutants or hazardous
substances or materials into the Environment;
(c) reducing
the quantities, preventing the Release or minimizing the hazardous
characteristics of wastes that are generated;
(d) assuring
that products are designed, formulated, packaged and used so that they do not
present unreasonable risks to human health or the Environment when used or
disposed of;
(e) protecting
resources, species or ecological amenities;
(f) reducing
to acceptable levels the risks inherent in the transportation of hazardous
substances, pollutants, oil or other potentially harmful
substances;
(g) cleaning
up pollutants that have been Released, preventing the Threat of Release or
paying the costs of such clean up or prevention; or
(h) making
responsible parties pay private parties, or groups of them, for damages done
to
their health or the Environment or permitting self-appointed representatives
of
the public interest to recover for injuries done to public assets.
"Exchange
Act"
means
the
Securities Exchange Act of 1934.
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47 -
"Facilities"
means
any
real
property, leasehold or other interest in real property currently owned or
operated by Company, including the Tangible Personal Property used or operated
by Company at the respective locations of the Real Property specified herein.
Notwithstanding the foregoing, for purposes of the definitions of "Hazardous
Activity" and "Remedial Action", "Facilities" shall mean any real property,
leasehold or other interest in real property currently or formerly owned or
operated by Company, including the Tangible Personal Property used or operated
by Company at the respective locations of the Real Property specified herein.
"GAAP"
means
generally
accepted accounting principles for financial reporting in the United States,
applied on a basis consistent with the basis on which the Balance Sheet and
the
other financial statements referred to in Section 3.4 were
prepared.
"Governing
Documents"
means
with
respect to any particular entity, (a) if a corporation, the articles or
certificate of incorporation and the bylaws; (b) if a general partnership,
the
partnership agreement and any statement of partnership; (c) if a limited
partnership, the limited partnership agreement and the certificate of limited
partnership; (d) if a limited liability company, the articles of organization
and operating agreement; (e) if another type of Person, any other charter or
similar document adopted or filed in connection with the creation, formation
or
organization of the Person; (f) all equityholders' agreements, voting
agreements, voting trust agreements, joint venture agreements, registration
rights agreements or other agreements or documents relating to the organization,
management or operation of any Person or relating to the rights, duties and
obligations of the equityholders of any Person; and (g) any amendment or
supplement to any of the foregoing.
"Governmental
Authorization"
means
any
Consent, license, registration or permit issued, granted, given or otherwise
made available by or under the authority of any Governmental Body or pursuant
to
any Legal Requirement.
"Governmental
Body"
means
any:
(a)
nation, state, county, city, town, borough, village, district or other
jurisdiction; (b) federal,
state, local, municipal, foreign or other government; (c) governmental or
quasi-governmental authority of any nature (including any agency, branch,
department, board, commission, court, tribunal or other entity exercising
governmental or quasi-governmental powers); (d) multinational organization
or
body; (e) body exercising, or entitled or purporting to exercise, any
administrative, executive, judicial, legislative, police, regulatory or taxing
authority or power; or (f) official of any of the foregoing.
"Ground
Lease"
means
any
long-term lease of land in which most of the rights and benefits comprising
ownership of the land and the improvements thereon or to be constructed thereon,
if any, are transferred to the tenant for the term thereof.
"Ground
Lease Property"
means
any
land,
improvements and appurtenances subject to a Ground Lease in favor of
Company.
"Hazardous
Activity"
means
the
distribution, generation, handling, importing, management, manufacturing,
processing, production, refinement, Release, storage, transfer,
transportation,
-
48 -
treatment
or use (including any withdrawal or other use of groundwater) of Hazardous
Material in, on, under, about or from any of the Facilities or any part thereof
into the Environment and any other act, business, operation or thing that
increases the danger, or risk of danger, or poses an unreasonable risk of harm,
to persons or property on or off the Facilities.
"Hazardous
Material"
means
any
substance, material or waste which is or will foreseeably be regulated by any
Governmental Body, including any material, substance or waste which is defined
as a "hazardous waste," "hazardous material," "hazardous substance," "extremely
hazardous waste," "restricted hazardous waste," "contaminant," "toxic waste"
or
"toxic substance" under any provision of Environmental Law, and including
petroleum, petroleum products, asbestos, presumed asbestos-containing material
or asbestos-containing material, urea formaldehyde and polychlorinated
biphenyls.
"Improvements"
means
all
buildings, structures, fixtures and improvements located on the Land or included
in the Assets, including those under construction.
"Intellectual
Property Assets" has the meaning set forth in Section 3.21.
"Interim
Balance Sheet"
has the
meaning set forth
in
Section 3.4.
"Inventories"
means
all
inventories of Company, wherever located, including all finished goods, work
in
process, raw materials, spare parts and all other materials and supplies to
be
used or consumed by Company in the production of finished goods.
"IRS"
means
the
United States Internal Revenue Service and, to the extent relevant, the United
States Department of the Treasury.
"Knowledge"
means
that an
individual will be deemed to have Knowledge of a particular fact or other matter
if: (a) that
individual is actually aware of that fact or matter; or (b) a prudent individual
could be expected to discover or otherwise become aware of that fact or matter
in the course of conducting a reasonably comprehensive investigation regarding
the accuracy of any representation or warranty contained in this Agreement.
A
Person (other than an individual) will be deemed to have Knowledge of a
particular fact or other matter if any individual who is serving, or who has
at
any time served, as a director, officer, partner, executor or trustee of that
Person (or in any similar capacity) has, or at any time had, Knowledge of that
fact or other matter (as set forth in (a) and (b) above), and any such
individual (and any individual party to this Agreement) will be deemed to have
conducted a reasonably comprehensive investigation regarding the accuracy of
the
representations and warranties made herein by that Person or
individual.
"Land"
means
all
parcels and tracts of land in which Company has an ownership
interest.
"Lease"
means
any
Real
Property Lease or any lease or rental agreement, license, right to use or
installment and conditional sale agreement to which Company is a party and
any
other Company Contract pertaining to the leasing or use of any Tangible Personal
Property.
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49 -
"Legal
Requirement"--any federal, state, local, municipal, foreign, international,
multinational or other constitution, law, ordinance, principle of common law,
code, regulation, statute or treaty.
"Liability"
means
with
respect to any Person, any liability or obligation of such Person of any kind,
character or description, whether known or unknown, absolute or contingent,
accrued or unaccrued, disputed or undisputed, liquidated or unliquidated,
secured or unsecured, joint or several, due or to become due, vested or
unvested, executory, determined, determinable or otherwise, and whether or
not
the same is required to be accrued on the financial statements of such
Person.
“Marl”
has the meaning set forth in Section 3.21.
"Material
Consents" has the meaning set forth in Section 7.3.
“Net
Name” has the meaning set forth in Section 3.21.
"Order"
means
any
order, injunction, judgment, decree, ruling, assessment or arbitration award
of
any Governmental Body or arbitrator.
"Ordinary
Course of Business"
means
an
action
taken by a Person will be deemed to have been taken in the Ordinary Course
of
Business only if that action:
(a) is
consistent in nature, scope and magnitude with the past practices of such Person
and is taken in the ordinary course of the normal, day-to-day operations of
such
Person;
(b) does
not
require authorization by the board of directors or shareholders of such Person
(or by any Person or group of Persons exercising similar authority) and does
not
require any other separate or special authorization of any nature;
and
(c) is
similar in nature, scope and magnitude to actions customarily taken, without
any
separate or special authorization, in the ordinary course of the normal,
day-to-day operations of other Persons that are in the same line of business
as
such Person.
“Patent”
has the meaning set forth in Section 3.21.
"Person"
means
an
individual, partnership, corporation, business trust, limited liability company,
limited liability partnership, joint stock company, trust, unincorporated
association, joint venture or other entity or a Governmental Body.
"Proceeding"
means
any
action, arbitration, audit, hearing, investigation, litigation or suit (whether
civil, criminal, administrative, judicial or investigative, whether formal
or
informal, whether public or private) commenced, brought, conducted or heard
by
or before, or otherwise involving, any Governmental Body or
arbitrator.
-
50 -
"Real
Property"
means
the
Land
and Improvements and all Appurtenances thereto and any Ground Lease
Property.
"Real
Property Lease"
means
any
Ground Lease or Space Lease.
"Record"
means
information
that is inscribed on a tangible medium or that is stored in an electronic or
other medium and is retrievable in perceivable form.
"Related
Person"
means,:
(a) with
respect
to a particular individual: (i)
each
other member of such individual's Family; (ii)
any
Person that is directly or indirectly controlled by any one or more members
of
such individual's Family; (iii)
any
Person in which members of such individual's Family hold (individually or in
the
aggregate) a Material Interest; and (iv)
any
Person with respect to which one or more members of such individual's Family
serves as a director, officer, partner, executor or trustee (or in a similar
capacity);
and
(b) with
respect
to a specified Person other than an individual: (i)
any
Person that directly or indirectly controls, is directly or indirectly
controlled by or is directly or indirectly under common control with such
specified Person; (ii)
any
Person that holds a Material Interest in such specified Person; (iii)
each
Person that serves as a director, officer, partner, executor or trustee of
such
specified Person (or in a similar capacity); (iv)
any
Person in which such specified Person holds a Material Interest; and
(v)
any
Person with respect to which such specified Person serves as a general partner
or a trustee (or in a similar capacity).
For
purposes of this definition, (a) "control" (including "controlling," "controlled
by," and "under common control with") means the possession, direct or indirect,
of the power to direct or cause the direction of the management and policies
of
a Person, whether through the ownership of voting securities, by contract or
otherwise, and shall be construed as such term is used in the rules promulgated
under the Securities Act; (b) the "Family" of an individual includes (i) the
individual, (ii) the individual's spouse, (iii) any other natural person who
is
related to the individual or the individual's spouse within the second degree
and (iv) any other natural person who resides with such individual; and (c)
"Material Interest" means direct or indirect beneficial ownership (as defined
in
Rule 13d-3 under the Exchange Act) of voting securities or other voting
interests representing at least ten percent (10%) of the outstanding voting
power of a Person or equity securities or other equity interests representing
at
least ten percent (10%) of the outstanding equity securities or equity interests
in a Person.
"Release"
means
any
release, spill, emission, leaking, pumping, pouring, dumping, emptying,
injection, deposit, disposal, discharge, dispersal, leaching or migration on
or
into the Environment or into or out of any property.
"Remedial
Action"
means
all
actions, including any capital expenditures, required or voluntarily undertaken
(a) to clean up, remove, treat or in any other way address any Hazardous
Material or other substance; (b) to prevent the Release or Threat of Release
or
to minimize the further Release of any Hazardous Material or other substance
so
it does not migrate or endanger or threaten to endanger public health or welfare
or the Environment; (c) to perform pre-remedial
-
51 -
studies
and investigations or post-remedial monitoring and care; or (d) to bring all
Facilities and the operations conducted thereon into compliance with
Environmental Laws and environmental Governmental Authorizations.
"Representative"
means
with
respect to a particular Person, any director, officer, manager, employee, agent,
consultant, advisor, accountant, financial advisor, legal counsel or other
representative of that Person.
"SEC"
means
the
United States Securities and Exchange Commission.
"SEC
Documents" has the meaning set forth in Section 4.4.
"Securities
Act"
means
Securities
Act of 1933, as amended.
"Seller"
has the
meaning set forth
in the
first paragraph of this Agreement.
“Sellers’
Agent” has
the
meaning set forth
in
Section 13.16.
"Tangible
Personal Property"
means
all
machinery, equipment, tools, furniture, office equipment, computer hardware,
supplies, materials, vehicles and other items of tangible personal property
(other than Inventories) of every kind owned or leased by Company (wherever
located and whether or not carried on Company's books).
"Tax"
means
any
income, gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, property, environmental, windfall profit, customs, vehicle,
airplane, boat, vessel or other title or registration, capital stock, franchise,
employees' income withholding, foreign or domestic withholding, social security,
unemployment, disability, real property, personal property, sales, use,
transfer, value added, alternative, add-on minimum and other tax, fee,
assessment, levy, tariff, charge or duty of any kind whatsoever and any
interest, penalty, addition or additional amount thereon imposed, assessed
or
collected by or under the authority of any Governmental Body or payable under
any tax-sharing agreement or any other Contract.
"Tax
Return"
means
any
return (including any information return), report, statement, schedule, notice,
form, declaration, claim for refund or other document or information filed
with
or submitted to, or required to be filed with or submitted to, any Governmental
Body in connection with the determination, assessment, collection or payment
of
any Tax or in connection with the administration, implementation or enforcement
of or compliance with any Legal Requirement relating to any Tax.
"Third
Party"
means
a
Person
that is not a party to this Agreement.
"Third-Party
Claim"
means
any
claim
against any Indemnified Person by a Third Party, whether or not involving a
Proceeding.
"Threat
of Release"
means
a
reasonable likelihood of a Release that may require action in order to prevent
or mitigate damage to the Environment that may result from such
Release.
“Trade
Secret” has the meaning set forth in Section 3.21.
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52 -
EXHIBIT
2.3(a)(vi)
SELLER’S
LEGAL OPINION
-
53 -
SCHEDULES
-
54 -
Schedule
3.1(a):
Jurisdictions
of Company
1.
Russian
Federation
-
55 -
Schedule
3.1(b):
Governing
Documents of Company
-
56 -
Schedule
3.3(a):
Company’s
Capitalization
100%
of
the issued and outstanding shares of the Company are owned in the aggregate
by
Sellers
-
57 -
Schedule
3.6(a):
Company’s
Assets
-
58 -
Schedule
3.7(a):
Real
Estate Owned by Company
-
59 -
Schedule
3.7(b):
Real
Estate Leased by Company
-
60 -
Schedule
3.8(a):
Encumbrances
on Real Estate of Company
-
61 -
Schedule
3.13(a):
Unpaid
Taxes of Company
-
62 -
Schedule
3.13(b):
Company
Tax Returns and Audits Thereof
-
63 -
Schedule
3.15(a):
Company
Personnel Matters
-
64 -
Schedule
3.15 (b)
List
of
Labor Agreements
-
65 -
Schedule
3.16(b):
Company
Governmental Authorizations
-
66 -
Schedule
3.18(a):
Company
Contracts
-
67 -
Schedule
3.18I:
Enforceability
of Company Contracts
-
68 -
Schedule
3.18(d):
Compliance
with Company Contracts
-
69 -
Schedule
3.19(a):
Company
Insurance Policies
-
70 -
Schedule
3.19(b):
Third
Party Obligations of Company to Provide Insurance Coverage
-
71 -
Schedule
3.20:
Company
Environmental Liabilities
-
72 -
Schedule
3.21(b):
Company
Intellectual Property Matters
-
73 -
Schedule
3.21I:
Intellectual
Property Licenses
-
74 -
Schedule
3.21(e):
Company
Patents
-
75 -
Schedule
3.21(h):
Company
Marks
-
76 -
Schedule
3.21(i):
Company
Copyrights
-
77 -
Schedule
3.21(k):
Company
Net Names
-
78 -
Schedule
3.22:
Company
Related Persons
-
79 -
Schedule
3.23:
Company
Brokers
-
80 -
Schedule
3.24:
Company
Securities Law Matters
-
81 -
Schedule
4.3(a):
Buyer’s
Capitalization
Authorized
Capital Stock: 25,000,000 shares of common stock, par value $0.001
Total
Number of Issued and Outstanding Shares: 2,000,000 shares of common
stock
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82 -
Schedule
4.7:
Buyer
Brokers
-
83 -
Schedule
7.3:
Company
Material Consents
-
84 -
Schedule
8.3:
Buyer
Material Consents
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85 -
