Exhibit 2.1
AMENDED AND RESTATED STOCK PURCHASE AGREEMENT
THIS AMENDED AND RESTATED STOCK PURCHASE AGREEMENT is made and entered
into as of this 28th day of January, 2002, by and among SINO PHARMACEUTICALS
CORPORATION (formerly known as UNIMANN, INC.), a corporation incorporated under
the laws of the State of Wyoming, (the "Purchaser"), SINO PHARMACEUTICALS
CORPORATION, a corporation incorporated under the laws of the State of Nevada
(the "Company"), and the persons listed on Exhibit A who are all of the
Shareholders of the Company (the "Selling Shareholders"). This Amended and
Restated Stock Purchase Agreement amends and restates in its entirety the Stock
Purchase Agreement entered into among the parties on October 10, 2001.
W I T N E S S E T H :
WHEREAS, the Purchaser desires to acquire from the Selling Shareholders
all of the issued and outstanding capital stock of the Company on the terms and
conditions set forth in this Agreement; and
WHEREAS, the Company and the Selling Shareholders deem it advisable and
for their benefit to sell their shares of capital stock of the Company to the
Purchaser, believing that it will contribute materially to the growth and
profitability of the Company; and
NOW, THEREFORE, in consideration of the premises and the agreements and
covenants contained herein, the parties hereto, intending to be legally bound
hereby, agree as follows:
ARTICLE 1.
Definitions
For all purposes of this Agreement:
1.1 "Purchaser Shares" means the shares of common stock, par value $.001 per
share, of the Purchaser.
1.2 "Fiscal Year" means the period from January 1 through December 31 for each
year referenced.
The parties contemplate that (i) after the Closing the Purchaser will
own one hundred percent (100%) of the Company, and (ii) the Company, as a new
member of the Purchaser's consolidated group, will have its financial results
included in the Purchaser's financial results and have its federal income tax
returns consolidated with the federal income tax returns of the Purchaser
covering the appropriate periods as a result of its joining the Purchaser's
consolidated group. The parties agree that accountants of the Company may be
requested to perform such review as may be necessary to have financial results
sufficient to prepare a consolidated federal income tax return for the Company
for any years required by the Internal Revenue Code. The Purchaser shall have
the right to have such tax return reviewed by a representative of an accounting
firm designated by the Purchaser. However, the Company shall retain all
responsibility and authority with respect to such tax return.
At the appropriate times, the Purchaser may require the auditors of the
Company to prepare (i) audited financial statements for the Company for the 1999
and 2000 Fiscal Years and (ii) such financial statements regarding the Company
as the Purchaser reasonably requests for use in preparing its consolidated
federal income tax returns.
1.3 "Company Financial Statements" means the (i) unaudited financial statements
of the Company for its fiscal years ended December 31, 1999 and 2000, (ii) the
unaudited financial statements of the Company for the nine-month period ended
September 30, 2001 and (iii) the audited financial statements of the Company
which will be prepared for the fiscal years ended December 31, 2000 and 2001.
The Company will prepare the items in (i) and (ii) above, include them in
Schedule 1.3 and deliver them prior to the Closing. The Company will prepare the
items in (iii) above, include them in Schedule 1.3 and deliver them within 90
days of the Closing.
1.4 "Company Shares" means the shares of the common stock of the Company, $.001
par value per share, which have been issued and which are held by the Selling
Shareholders.
1.5 "Purchaser Financial Statements" means the audited consolidated financial
statements of the Purchaser for the 1999 and 2000 Fiscal Years. The Purchaser
has previously delivered such financial statements to the Selling Shareholders,
which are included in Schedule 1.5, and will prepare its unaudited financial
statements for the nine months ended September 30, 2001, include them in
Schedule 1.5 and deliver them to the Selling Shareholders prior to the Closing.
1.6 "Confidential Information" means information related to pricing,
commissions, methods, processes, customers, clients, suppliers, financial data,
lists, trade secrets, client lists and information, contacts, computer programs,
software or procedures, discoveries, improvements, inventions, ideas, lists,
apparatus, statistics, programs, research, development, or related information
of the Purchaser or the Company and the Selling Shareholders.
ARTICLE 2.
Purchase and Sale
2.1 Purchase and Sale. Upon the terms and subject to the conditions contained
herein, the Selling Shareholders, agree to sell and transfer the Company shares
to the Purchaser, and the Purchaser agrees to purchase and pay for the Company
Shares by issuing restricted Purchaser Shares to the Selling Shareholders in
accordance with Schedule 2.1. Such purchase and sale shall take place at a
closing (the "Closing") to be held at the offices of the Purchaser, 00000 Xxxx
Xxxxxxxx Xxxxx, Xxxxxx, Xxxxxxx 00000 on the date established pursuant to
Section 11.1, "Closing Date" (the "Closing Date").
ARTICLE 3.
Representations and Warranties of the Purchaser
Except as disclosed on the Disclosure Schedules noted in this Article 3
to be delivered by the Purchaser to the Selling Shareholders on or before
December 31, 2001 and subsequently disclosed in any Supplemental Disclosure
Schedules to be delivered by the Purchaser to the Selling Shareholders on or
before the Closing Date, or thereafter in the case of certain Purchaser
Financial Statements, the Purchaser represents and warrants to the Selling
Shareholders as of the date hereof and as of the Closing Date as follows:
3.1 Authority and Validity. This Agreement is valid and binding upon the
Purchaser and neither the execution nor the delivery of this Agreement by the
Purchaser, nor the performance by it of any of the covenants or obligations to
be performed by the Purchaser hereunder, after the conditions precedent to its
obligations set forth in Article 9, "Conditions Precedent to Obligations of the
Purchaser," have been satisfied, will result in any violation of any order,
decree or judgment of any court or other governmental body, or statute or law
applicable to the Purchaser, or in any breach of any terms or provisions of the
Purchaser's Articles of Incorporation or Bylaws, or constitute a default under
any indenture, mortgage, deed of trust or other contract to which the Purchaser
is a party or by which it is bound, or cause the creation of a lien or
encumbrance on any properties owned by it or leased to it.
3.2 Government Approvals. No consent, approval or authorization of, or
notification to or registration with, any governmental authority is required in
connection with the execution, delivery and performance of this Agreement by the
Purchaser.
3.3 Organization.
3.3.1 The Purchaser is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Wyoming and has full corporate
power and authority to carry on its business as now being conducted and to
execute, deliver and perform its obligations under this Agreement.
3.3.2 The Purchaser is a public company whose shares of capital stock are not
actively traded. The Purchaser is a reporting company under the Securities
Exchange Act of 1934, as amended ("Exchange Act").
3.4 Financial Statements. The consolidated financial statements of the Purchaser
for the Fiscal Years 1998, 1999 and 2000, with accompanying notes, made
available by the Purchaser to the Selling Shareholders and the Company, fairly
present the financial position of the Purchaser at said date and the results of
its operations and changes in its financial position for the years ended on such
dates, in conformity with accounting principles as generally accepted and
consistently applied.
3.5 Absence of Change. There has been no material adverse change in the business
or properties or in the consolidated condition, financial or otherwise, of the
Purchaser since December 31, 2000.
3.6 Securities Laws. The Purchaser is purchasing the Company Shares for its own
account and for investment and not with a view to, or for sale in connection
with, any distribution of the Company Shares.
3.7 Private Placement Memorandum. Set forth as Schedule 3.7 is a Private
Placement Memorandum ("Purchaser Memorandum") of the Purchaser. The information
with respect to the Purchaser is contained in the Memorandum and does not
contain any untrue statement of material fact or omit to state a material fact
necessary in order to make the statements made in the Memorandum and the
Schedules thereto not misleading.
3.8 No Subsidiaries. The Purchaser does not own five percent (5%) or more of the
voting securities of any corporation (or would own such securities in such
amount upon the closing of any existing purchase obligations for securities).
3.9 Financial Statements. The Purchaser Financial Statements that have been
provided to the Selling Shareholders (i) have been prepared from the books and
records of the Purchaser and (ii) fairly and accurately presents the financial
condition of the Purchaser as of the date thereof and, except as disclosed
therein, were prepared in accordance with generally accepted accounting
principles, and (iii) contain and reflect all necessary adjustments for a fair
and accurate presentation of the financial condition as of such date. Except as
and to the extent reflected or reserved against in such Purchaser Financial
Statements, otherwise expressly disclosed therein or as disclosed in Schedule
3.11, the Purchaser has no liabilities or obligations, contingent or otherwise,
of a nature required to be reflected in the Purchaser Financial Statements, in
accordance with generally accepted accounting principles.
3.10 Absence of Certain Changes. Except as set forth in Schedule 3.10 or as
otherwise provided herein, the Company has not since December 31, 2000:
3.10.1 Suffered any material change adversely affecting its assets, liabilities,
financial condition or business;
3.10.2 Made a material change in the compensation payable or to become payable
to any of its employees or agents, or in any bonus payments or arrangements made
to or with any of its employees or agents;
3.10.3 Paid or declared any dividends or distributed any of its assets of any
kind whatsoever to any of its shareholders;
3.10.4 Issued any stock, or granted any stock options or warrants to purchase
stock;
3.10.5 Sold or transferred any of its assets or canceled any indebtedness or
claims owing to it except in the ordinary course of business, consistent with
its past practices;
3.10.6 Sold, assigned or transferred any formulas, inventions, patents, patent
applications, trademarks, trade names, copyrights, licenses, computer programs
or software, know-how or other intangible assets;
3.10.7 Amended or terminated any contract, agreement or license to which it is a
party otherwise than in the ordinary course of business or as may be necessary
or appropriate for the consummation of the transactions described in this
Agreement;
3.10.8 Borrowed any money or incurred, directly or indirectly (as a guarantor or
otherwise), any indebtedness except in the ordinary course of business,
consistent with its past practices;
3.10.9 Discharged or satisfied any lien or encumbrance or paid any obligation or
liability (absolute or contingent), other than current liabilities shown on the
Purchaser Financial Statements or current liabilities incurred since such date
in the ordinary course of business, consistent with its past practices;
3.10.10 Mortgaged, pledged or subjected to lien, charge or other encumbrance any
of its assets; or
3.10.11 Entered into or committed to any transaction other than transactions in
the ordinary course of business, consistent with past practices.
3.11 Contracts and Other Documents. Attached hereto as Schedule 3.11 is a
complete schedule listing all documents to which the Purchaser is a party or
under which it has any liability in excess of $5,000 per annum. All such
contracts, documents and agreements listed on Schedule 3.11 are valid and
enforceable and accurate and complete copies of such contracts, documents and
agreements (or, with the consent of the Selling Shareholders forms thereof) as
have been requested by the Selling Shareholders have been provided to the
Selling Shareholders. Except as disclosed on Schedule 3.11 hereof, the Purchaser
is not or will not be, merely with the passage of time, in default under any
such contract, including those listed on Schedule 3.11. Except as specified on
Schedule 3.11, there is no requirement for any contract or agreement to which
the Purchaser is a party to be novated or to have the consent of the other
contracting party in order for the contract or agreement to be valid, effective
and enforceable by the Purchaser after the Closing as it was immediately prior
thereto.
3.12 Title to Properties and Assets. Except as set forth in Schedule 3.12, the
Purchaser does not presently own or lease any real property. The Purchaser has
good title to all tangible personal property reflected on its books and records
as owned by it, free and clear of all liens and encumbrances, except (i) liens
for current taxes, and (ii) other liens or encumbrances that do not materially
impair the use of the property subject thereto. Such tangible personal property
is in satisfactory condition and suitable for the purpose for which it is being
used, subject in each case to consumption in the ordinary course, ordinary wear
and tear and ordinary repair, maintenance and periodic replacement.
3.13 Absence of Undisclosed Liabilities. Except as set forth in Schedule 3.13,
the Purchaser is not subject to any liabilities, including contingent
liabilities, liabilities for unperformed obligations, and liabilities for
unasserted claims.
3.14 Absence of Pension Liability.
3.14.1 The Purchaser has no liability of any nature to any person or entity for
pension or retirement obligations, vested or unvested, to or for the benefit of
any of its existing or former employees.
3.14.2 The consummation of the transactions contemplated by this Agreement will
not entitle any employee of the Purchaser to severance pay, unemployment
compensation or any other payment, except as expressly provided in this
Agreement, including the Schedules, or accelerate the time of payment or
increase the amount of compensation due to any such employee.
3.14.3 Except as set forth on Schedule 3.14, the Purchaser presently has no
employee benefit plans and has no announced plan or legally binding commitment
to create any employee benefit plans.
3.15 Absence of Liens. There are no outstanding mechanics', materialmens',
laborers' or other liens or encumbrances filed or enforceable against any
property owned by or in the possession of the Purchaser, or, to the best
knowledge of the Purchaser, threatened to be filed against any property owned by
the Purchaser or in its possession, which properly may be filed against such
property or which are the subject of any lawsuit against the Purchaser.
3.16 Tax Returns. The Purchaser (and any predecessor corporation or partnership
as to which either of them is the transferee or successor) has timely filed, or
has timely secured an extension and will (within the permitted extension) file,
all tax returns, including federal, state, local and foreign tax returns, tax
reports and forms, as to which the due date for filing is prior to the Closing
Date; has reported all reportable income on such returns; has adopted and
followed in the preparation of such returns methods of accounting accepted by
law, and has not changed any methods of accounting without compliance with
procedures required by law; has not deducted any expenses or charges or claimed
any credits which are not allowable; and has paid, or accrued and reserved for,
all taxes, penalties and interest shown to be due or required to be paid
pursuant to the returns as filed, or as adjusted pursuant to amendment or
correction. The Purchaser has no knowledge of any claim for taxes, penalties or
interest thereon in addition to those for which such taxes, penalties or
interest have been paid or accrued.
3.17 Filings. The Purchaser has made all filings and reports required (i) under
all local, state and federal laws with respect to its business of any
predecessor entity or partnership and (ii) as required by the Securities and
Exchange Commission ("SEC").
3.18 Litigation. There are no lawsuits, arbitration actions or other proceedings
(equitable, legal, administrative or otherwise) pending or (to the best of the
Purchaser's knowledge) threatened, or any customer complaints which have not
been resolved or settled, and there are no investigations pending or threatened,
against the Purchaser (or involving the industry in which they are members)
which relate to and could have a material adverse effect on the properties,
businesses or assets of the Purchaser or which could adversely affect the
validity or enforceability of this Agreement or the obligation or ability of the
Purchaser to perform its obligations under this Agreement or to carry out the
transactions contemplated by this Agreement.
3.19 Compliance With Laws. The Purchaser has conducted, and is continuing to
conduct, its business in material compliance with, and is in material compliance
with, all applicable statutes, orders, rules and regulations promulgated by
governmental authorities relating in any material respect to its operations,
conduct of business or use of properties, including, without limitation, any
applicable statute, order, rule or regulation relating to (i) wages, hours,
hiring, nondiscrimination, retirement, benefits, pensions, working conditions,
and worker safety and health; (ii) air, water, toxic substances, noise, or
solid, gaseous or liquid waste generation, handling, storage, disposal or
transportation; (iii) zoning and building codes; (iv) the production, storage,
processing, advertising, sale, distribution, transportation, disposal, use and
warranty of products; or (v) trade and antitrust regulations. The execution,
delivery and performance of this Agreement by the Purchaser and the consummation
by the Purchaser of the transactions contemplated by this Agreement will not,
separately or jointly, violate, contravene or constitute a default under any
applicable statutes, orders, rules and regulations promulgated by governmental
authorities or cause a lien on any property used, owned or leased by the
Purchaser to be created thereunder. There are no proposed changes in any
applicable statutes, orders, rules and regulations promulgated by governmental
authorities that would cause any representation or warranty contained in this
Section to be untrue.
3.20 Certain Activities. The Purchaser has not, directly or indirectly, engaged
in or been a party to any of the following activities:
3.20.1 Bribes, kickbacks or gratuities to any person or entity, including
domestic or foreign government officials or any other payments to any such
persons or entity, whether legal or not legal, to obtain or retain business or
to receive favorable treatment of any nature with regard to business (excluding
commissions or gratuities paid or given in full compliance with applicable law
and constituting ordinary and necessary expenses incurred in carrying on its
business in the ordinary course);
3.20.2 Contributions (including gifts), whether legal or not legal, made to any
domestic or foreign political party, political candidate or holder of political
office;
3.20.3 Holding of or participation in bank accounts, funds or pools of funds
created or maintained in the U.S. or any foreign country, without being
reflected on the corporate books of account, or as to which receipts or
disbursements therefrom have not been reflected on such books, the purpose of
which is to obtain or retain business or to receive favorable treatment with
regard to business;
3.20.4 Receiving or disbursing monies, the actual nature of which has been
improperly disguised or intentionally misrecorded on or improperly omitted from
the corporate books of account;
3.20.5 Paying fees to domestic or foreign consultants or commercial agents which
exceed the reasonable value of the ordinary and customary consulting and agency
services purported to have been rendered;
3.20.6 Paying or reimbursing (including gifts) personnel of the Purchaser for
the purpose of enabling them to expend time or to make contributions or payments
of the kind or for the purposes referred to in Paragraphs 3.20.1 through 3.20.5
above;
3.20.7 Participating in any manner in any activity which is illegal under the
international boycott provisions of the Export Administration Act, as amended,
or the international boycott provisions of the Internal Revenue Code, or
guidelines or regulations thereunder; and
3.20.8 Making or permitting unlawful charges, mischarges or defective or
fraudulent pricing under any contract or subcontract under a contract with any
department, agency or subdivision thereof, of the United States government,
state or municipal government or foreign government.
3.21 Insurance Coverage. All policies of fire, liability or other forms of
insurance which the Purchaser has obtained are set forth on Schedule 3.21. All
of the insurance represented by such policies is in full force and effect.
3.22 Articles of Incorporation and By-Laws. The Purchaser has delivered to the
Selling Shareholders true, accurate and complete copies of the Articles of
Incorporation and By-Laws of the Purchaser, together with all amendments to each
of the same as of the date of this Agreement.
3.23 Corporate Minutes. The minute books of the Purchaser made available for
inspection by the Selling Shareholders prior to the Closing are the correct and
only such minute books and contain complete and accurate records of any and all
proceedings and actions at all meetings (including written consents executed in
lieu of meetings) of its shareholder and Board of Directors and committees
thereof, through the Closing Date. The stock records of the Purchaser made
available for inspection by the Selling Shareholders prior to the Closing are
the correct and only such stock records and each accurately reflect all issues
and transfers of record of the capital stock of the Purchaser.
3.24 Default on Indebtedness. The Purchaser is not in default in any respect
under any evidence of indebtedness for borrowed money.
3.25 Consents. The Purchaser does not require any authorizations, consents,
approvals and waivers or other actions in order to make any license, lease,
contract or agreement listed under Schedule 3.13 valid and fully enforceable by
the Purchaser and effective after the issuance of the Purchaser Shares to the
Selling Shareholders as such license, lease, contract or agreement was
immediately prior thereto.
3.26 Indebtedness to Purchaser. No employee, officer or director of the
Purchaser or any third party is indebted to the Purchaser.
3.27 Completeness of Representations and Schedules. The Schedules hereto, where
applicable to the Purchaser, completely and correctly present in all material
respects the information required by this Agreement. This Agreement, the
certificates to be delivered by the Purchaser at the Closing, the Schedules and
the provisions of this Article 3, and the documents and written information
pertaining to the Purchaser furnished to the Selling Shareholders or their
agents by or on behalf of the Purchaser, do not contain any untrue statement of
a material fact or omit to state a material fact necessary in order to make this
Agreement, or such certificates, schedules, documents or written information not
misleading.
ARTICLE 4.
Representations and Warranties of Selling Shareholders
Except as disclosed on the Disclosure Schedules noted in this Article 4
and Article 5, "Representations and Warranties of the Company," to be delivered
by the Selling Shareholders and the Company to the Purchaser on or before
December 31, 2001 and subsequently disclosed in any Supplemental Disclosure
Schedules to be delivered by the Selling Shareholders and the Company to the
Purchaser on the Closing Date, or thereafter in the case of certain Company
Financial Statements, the Selling Shareholders hereby represent and warrant to
the Purchaser as of the date hereof and as of the Closing Date as follows:
4.1 Authority and Validity.
4.1.1 This Agreement is valid and binding upon the Selling Shareholders and
neither the execution nor delivery of this Agreement by the Selling Shareholders
nor the performance by the Selling Shareholders of any of their respective
covenants or obligations hereunder will constitute a default under any contract,
agreement or obligation to which the Selling Shareholders are a party or by
which the Selling Shareholders or any of their respective properties is bound.
This Agreement is enforceable severally against the Selling Shareholders in
accordance with its terms.
4.1.2 The execution, delivery and performance of this Agreement by the Company
have been duly authorized by its Board of Directors. This Agreement is valid and
binding upon the Company, and is enforceable against the Company in accordance
with its terms. The execution, delivery and performance of this Agreement by the
Company will not result in the violation or breach of any term or provision of
charter instruments applicable to the Company or constitute a default under any
indenture, mortgage, deed of trust or other contract or agreement to which the
Company is a party or by which it or any of its properties is bound or cause the
creation of a lien or encumbrance on any properties owned by or leased to or by
it.
4.2 Governmental Approvals. No consent, approval or authorization of, or
notification to or registration with, any governmental authority, either
federal, state or local, is required in connection with the execution, delivery
and performance of this Agreement by the Selling Shareholders or the Company.
4.3 Title. Each of the Selling Shareholders has full right and title to the
number of the Company Shares set forth opposite his or her name in Schedule 2.1;
such Company Shares constitute all the Company Shares which are owned, directly
or indirectly by the Selling Shareholders; and at the time of transfer thereof
to the Purchaser, all of the Company Shares to be transferred by the Selling
Shareholders will be free of all liens, claims or encumbrances of any kind, and
will be fully transferable to the Purchaser.
4.4 Organization and Good Standing. The Company is a corporation duly organized
and existing in good standing under the laws of the State of California. The
Company has full corporate power and authority to carry on its business as now
conducted and to own or lease and operate the properties and assets now owned or
leased and operated by it. The Company is duly qualified to transact business in
all states and jurisdictions in which the business or ownership of its property
makes it necessary so to qualify (other than jurisdictions in which the nature
of the property owned or business conducted, when considered in relation to the
absence of serious penalties, renders qualification as a foreign corporation
unnecessary as a practical matter).
4.5 Capitalization. The authorized capital stock of the Company consists solely
of 100,000,000 shares of Common Stock, of which 1,000,000 Company Shares are
issued and outstanding, as correctly disclosed on Schedule 2.1. The Company
Shares are validly issued, are fully paid and nonassessable, and subject to no
restrictions on transfer. The Company Shares constitute the only outstanding
shares of the capital stock of the Company of any nature whatsoever, voting and
non-voting. All shares of capital stock of the Company are required to be
certificated, and the Company has executed and delivered no certificates for
shares in excess of the number of issued shares of the Company set forth above.
There are, and at Closing will be, no outstanding options, warrants or other
rights for the purchase of, or any securities convertible into, capital stock of
the Company, whether issued, unissued or held in its treasury.
4.6 No Subsidiaries. The Company does not own five percent (5%) or more of the
securities having voting power of any corporation (or would own such securities
in such amount upon the closing of any existing purchase obligations for
securities).
4.7 Financial Statements. The Company Financial Statements which have been
provided to the Purchaser (i) have been prepared from the books and records of
the Company and (ii) fairly and accurately presents the financial condition of
the Company as of the date thereof and, except as disclosed therein, were
prepared in accordance with generally accepted accounting principles, and (iii)
contain and reflect all necessary adjustments for a fair and accurate
presentation of the financial condition as of such date. Except as and to the
extent reflected or reserved against in such Company Financial Statements, or
otherwise expressly disclosed therein, the Company has no liabilities or
obligations, contingent or otherwise, of a nature required to be reflected in
the Company Financial Statements, in accordance with generally accepted
accounting principles.
4.8 Absence of Certain Changes. Except as set forth in Schedule 4.10 or
otherwise provided herein, the Company has not since December 31, 2001:
4.8.1 Suffered any material change adversely affecting its assets, liabilities,
financial condition or business;
4.8.2 Made a material change in the compensation payable or to become payable to
any of its employees or agents, or in any bonus payments or arrangements made to
or with any of its employees or agents;
4.8.3 Paid or declared any dividends or distributed any of its assets of any
kind whatsoever to any of its shareholders;
4.8.4 Issued any stock, or granted any stock options or warrants to purchase
stock;
4.8.5 Sold or transferred any of its assets or canceled any indebtedness or
claims owing to it except in the ordinary course of business, consistent with
its past practices;
4.8.6 Sold, assigned or transferred any formulas, inventions, patents, patent
applications, trademarks, trade names, copyrights, licenses, computer programs
or software, know-how or other intangible assets;
4.8.7 Amended or terminated any contract, agreement or license to which it is a
party otherwise than in the ordinary course of business or as may be necessary
or appropriate for the consummation of the transactions described in this
Agreement;
4.8.8 Borrowed any money or incurred, directly or indirectly (as a guarantor or
otherwise), any indebtedness except in the ordinary course of business,
consistent with its past practices;
4.8.9 Discharged or satisfied any lien or encumbrance or paid any obligation or
liability (absolute or contingent), other than current liabilities shown on the
Company Financial Statements or current liabilities incurred since such date in
the ordinary course of business, consistent with its past practices;
4.8.10 Mortgaged, pledged or subjected to lien, charge or other encumbrance any
of its assets; or
4.8.11 Entered into or committed to any transaction other than transactions in
the ordinary course of business, consistent with past practices.
4.9 Contracts and Other Documents. Attached hereto as Schedule 4.11 is a
complete schedule listing of all documents to which the Company is a party or
under which it has any liability. All such contracts, documents and agreements
listed on Schedule 4.11 are valid and enforceable and accurate and complete
copies of such contracts, documents and agreements (or, with the consent of the
Purchaser, forms thereof) as have been requested by the Purchaser have been
provided to the Purchaser. Except as disclosed on Schedule 4.11 hereof, the
Company is not or will not be, merely with the passage of time, in default under
any such contract, including those listed on Schedule 4.11. Except as specified
on Schedule 4.11, there is no requirement for any contract or agreement to which
the Company is a party to be novated or to have the consent of the other
contracting party in order for the contract or agreement to be valid, effective
and enforceable by the Company after the Closing as it was immediately prior
thereto.
4.10 Title to Properties and Assets. Except as set forth in Schedule 4.12, the
Company does not presently own or lease any real property. The Company has good
title to all tangible personal property reflected on its books and records as
owned by it, free and clear of all liens and encumbrances, except (i) liens for
current taxes, and (ii) other liens or encumbrances that do not materially
impair the use of the property subject thereto. Such tangible personal property
is in satisfactory condition and suitable for the purpose for which it is being
used, subject in each case to consumption in the ordinary course, ordinary wear
and tear and ordinary repair, maintenance and periodic replacement.
4.11 Absence of Undisclosed Liabilities. The Company is not subject to any
liabilities, including contingent liabilities, liabilities for unperformed
obligations, and liabilities for unasserted claims, other than liabilities and
obligations incurred in the ordinary course of business, none of which is
materially adverse.
4.12 Absence of Pension Liability.
4.12.1 The Company has no liability of any nature to any person or entity for
pension or retirement obligations, vested or unvested, to or for the benefit of
any of its existing or former employees.
4.12.2 The consummation of the transactions contemplated by this Agreement will
not entitle any employee of the Company to severance pay, unemployment
compensation or any other payment, except as expressly provided in this
Agreement, including the Schedules, or accelerate the time of payment or
increase the amount of compensation due to any such employee.
4.12.3 Except as set forth on Schedule 4.14, the Company presently has no
employee benefit plans and has no announced plan or legally binding commitment
to create any employee benefit plans.
4.13 Absence of Liens. There are no outstanding mechanics', materialmens',
laborers' or other liens or encumbrances filed or enforceable against any
property owned by or in the possession of the Company, or, to the best knowledge
of the Selling Shareholders, threatened to be filed against any property owned
by the Company or in its possession, which properly may be filed against such
property or which are the subject of any lawsuit against the Company.
4.14 Tax Returns. The Company (and any predecessor corporation or partnership as
to which either of them is the transferee or successor) has timely filed, or has
timely secured an extension and will (within the permitted extension) file, all
tax returns, including federal, state, local and foreign tax returns, tax
reports and forms, as to which the due date for filing is prior to the Closing
Date; has reported all reportable income on such returns; has adopted and
followed in the preparation of such returns methods of accounting accepted by
law, and has not changed any methods of accounting without compliance with
procedures required by law; has not deducted any expenses or charges or claimed
any credits which are not allowable; and has paid, or accrued and reserved for,
all taxes, penalties and interest shown to be due or required to be paid
pursuant to the returns as filed, or as adjusted pursuant to amendment or
correction. The Selling Shareholders have no knowledge of any claim for taxes,
penalties or interest thereon in addition to those for which such taxes,
penalties or interest have been paid or accrued.
4.15 Litigation. Except as set forth on Schedule 4.15, there are no lawsuits,
arbitration actions or other proceedings (equitable, legal, administrative or
otherwise) pending or (to the best of the Selling Shareholders' knowledge)
threatened, or any customer complaints which have not been resolved or settled,
and there are no investigations pending or threatened, against the Selling
Shareholders or the Company (or involving the industry in which they are
members) which relate to and could have a material adverse effect on the
properties, businesses or assets of the Company or which could adversely affect
the validity or enforceability of this Agreement or the obligation or ability of
the Selling Shareholders or the Company to perform their respective obligations
under this Agreement or to carry out the transactions contemplated by this
Agreement.
4.16 Compliance With Laws. The Company has conducted, and is continuing to
conduct, its business in material compliance with, and is in material compliance
with, all applicable statutes, orders, rules and regulations promulgated by
governmental authorities relating in any material respect to its operations,
conduct of business or use of properties, including, without limitation, any
applicable statute, order, rule or regulation relating to (i) wages, hours,
hiring, nondiscrimination, retirement, benefits, pensions, working conditions,
and worker safety and health; (ii) air, water, toxic substances, noise, or
solid, gaseous or liquid waste generation, handling, storage, disposal or
transportation; (iii) zoning and building codes; (iv) the production, storage,
processing, advertising, sale, distribution, transportation, disposal, use and
warranty of products; or (v) trade and antitrust regulations. The execution,
delivery and performance of this Agreement by the Selling Shareholders and the
Company and the consummation by the Selling Shareholders and the Company of the
transactions contemplated by this Agreement will not, separately or jointly,
violate, contravene or constitute a default under any applicable statutes,
orders, rules and regulations promulgated by governmental authorities or cause a
lien on any property used, owned or leased by the Company to be created
thereunder. There are no proposed changes in any applicable statutes, orders,
rules and regulations promulgated by governmental authorities that would cause
any representation or warranty contained in this Section to be untrue.
4.17 Certain Activities. The Company has not, directly or indirectly, engaged in
or been a party to any of the following activities:
4.17.1 Bribes, kickbacks or gratuities to any person or entity, including
domestic or foreign government officials or any other payments to any such
persons or entity, whether legal or not legal, to obtain or retain business or
to receive favorable treatment of any nature with regard to business (excluding
commissions or gratuities paid or given in full compliance with applicable law
and constituting ordinary and necessary expenses incurred in carrying on its
business in the ordinary course).
4.17.2 Contributions (including gifts), whether legal or not legal, made to any
domestic or foreign political party, political candidate or holder of political
office;
4.17.3 Holding of or participation in bank accounts, funds or pools of funds
created or maintained in the U.S. or any foreign country, without being
reflected on the corporate books of account, or as to which receipts or
disbursements therefrom have not been reflected on such books, the purpose of
which is to obtain or retain business or to receive favorable treatment with
regard to business;
4.17.4 Receiving or disbursing monies, the actual nature of which has been
improperly disguised or intentionally misrecorded on or improperly omitted from
the corporate books of account;
4.17.5 Paying fees to domestic or foreign consultants or commercial agents which
exceed the reasonable value of the ordinary and customary consulting and agency
services purported to have been rendered;
4.17.6 Paying or reimbursing (including gifts) personnel of the Company for the
purpose of enabling them to expend time or to make contributions or payments of
the kind or for the purposes referred to in Paragraphs 4.17.1 through 4.17.5
above;
4.17.7 Participating in any manner in any activity which is illegal under the
international boycott provisions of the Export Administration Act, as amended,
or the international boycott provisions of the Internal Revenue Code, or
guidelines or regulations thereunder; and
4.17.8 Making or permitting unlawful charges, mischarges or defective or
fraudulent pricing under any contract or subcontract under a contract with any
department, agency or subdivision thereof, of the United States government,
state or municipal government or foreign government.
4.18 Insurance Coverage. All policies of fire, liability or other forms of
insurance which the Company has obtained and are set forth on Schedule 4.18. All
of the insurance represented by such policies is in full force and effect.
4.19 Articles of Incorporation and By-Laws. The Company has delivered to the
Purchaser true, accurate and complete copies of the Articles of Incorporation
and By-Laws of the Company, together with all amendments to each of the same as
of the date of this Agreement.
4.20 Corporate Minutes. The minute books of the Company delivered to the
Purchaser at the Closing are the correct and only such minute books and do and
will contain complete and accurate records of any and all proceedings and
actions at all meetings (including written consents executed in lieu of
meetings) of its shareholder and Board of Directors and committees thereof,
through the Closing Date. The stock records of the Company delivered to the
Purchaser at the Closing are the correct and only such stock records and each
accurately reflect all issues and transfers of record of the capital stock of
the Company.
4.21 Default on Indebtedness. Except as set forth in Schedule 4.21, the Company
is not in default in any respect under any evidence of indebtedness for borrowed
money.
4.22 Consents. The Company does not require any authorizations, consents,
approvals and waivers or other actions in order to make any license, lease,
contract or agreement listed under Schedule 4.22 valid and fully enforceable by
the Selling Shareholders and the Company and effective after the issuance of the
Company Shares to the Purchaser as such license, lease, contract or agreement
was immediately prior thereto.
4.23 Satisfaction of Indebtedness. Schedule 4.23 sets forth the indebtedness of
the Selling Shareholders, any employee of the Selling Shareholders, any employee
of the Company, or any other party, to the Company.
4.24 Completeness of Representations and Schedules. The Schedules hereto, where
applicable to the Selling Shareholders and the Company, completely and correctly
present in all material respects the information required by this Agreement.
This Agreement, the certificates to be delivered by the Selling Shareholders at
the Closing, the Schedules and the provisions of this Article 4, and the
documents and written information pertaining to the Company furnished to the
Purchaser or its agents by or on behalf of the Selling Shareholders or the
Company, do not contain any untrue statement of a material fact or omit to state
a material fact necessary in order to make this Agreement, or such certificates,
schedules, documents or written information not misleading.
ARTICLE 5.
Representations and Warranties of the Company
5.1 Representations and Warranties of the Company. Independent of the
representations and warranties of the Selling Shareholders in Article 4,
"Representations and Warranties of Selling Shareholders," the Company represents
and warrants to the Purchaser all of the matters regarding the Company set forth
in Sections 4.1, 4.2 and 4.4 through 4.27, and matters regarding the Company
specifically represented and warranted in those Sections to the knowledge of the
Selling Shareholders are represented and warranted in this Section to the
knowledge of the Company.
ARTICLE 6.
Pre-Closing Covenants of the Selling Shareholders and the Company
The Selling Shareholders and the Company independently covenant and
agree, pending the Closing of the transactions contemplated by this Agreement,
to comply with and perform, and hereby independently represent and warrant that
as of the Closing they will have complied with and performed, the following
covenants and undertakings.
6.1 No Distributions to Shareholder. The Company will not pay or declare any
dividend on, or make any other distribution of, any of its assets of any kind
whatsoever to the Selling Shareholders, or redeem, purchase or otherwise acquire
any of its capital stock.
6.2 Issuance of Capital Stock. The Company will not issue any stock, or grant
any stock options or warrants to purchase stock, or issue any securities
convertible into its capital stock, for consideration or otherwise, except as
provided for in this Agreement.
6.3 Articles of Incorporation and By-Laws. The Company will not amend or alter
in any way its Articles of Incorporation or By-Laws, except to change the name
of the Company, without the prior written consent of the Purchaser.
6.4 Operations of the Company. Except as contemplated by this Agreement, the
Company will conduct its business and operations only in the ordinary course.
Without limiting the generality of the foregoing, and except as contemplated by
this Agreement, prior to the Closing Date, without the prior written consent of
the Purchaser, the Company will not take any action which would result in a
breach of any representation or warranty contained in Article 4,
"Representations and Warranties of Selling Shareholders," and Article 5,
"Representations and Warranties of the Company," as if such representations and
warranties were by their terms applicable to such period.
6.5 Termination of Interest in the Company Shares. The Selling Shareholders
shall take such actions as are necessary to ensure that as of the Closing Date
they have full right and title to, and rights to convey, all the issued and
outstanding shares of the capital stock of the Company and there shall be no
outstanding options on, rights to or claims regarding the capital stock of the
Company.
ARTICLE 7.
Post-Closing Covenants By the Selling Shareholders
7.1 Resale of Purchaser Shares. The Selling Shareholders hereby agree that:
7.1.1 The Selling Shareholders will not, without the prior written consent of
Purchaser, sell or otherwise transfer any Purchaser Shares for a period of one
(1) year after the date of receipt of such shares.
7.1.2 For a period of one (1) year after the receipt of the Purchaser Shares,
the Selling Shareholders will not offer or sell any of said Purchaser Shares
except with the prior written consent of Purchaser, pursuant to an available
exemption under the Securities Act of 1933, as amended (the "Securities Act").
If the Purchaser shall have registered with the SEC and become subject to the
reporting requirements of the Exchange Act, then Purchaser's consent for any
such offer and sale shall not be unreasonably withheld. After expiration of said
two-year period, any sale of the Purchaser Shares must be pursuant to an
available exemption from the Securities Act and shall also be subject to the
Purchaser's consent, which consent shall not be unreasonably withheld. The
Selling Shareholders agree to retain a copy of any letter referenced above for a
reasonable period and to furnish a copy thereof to Purchaser within ten (10)
days after completion of any sale. As used herein, "U.S.A." and "U.S. Person"
shall have the same meanings as in the certificate legend set forth in Section
8.1.
ARTICLE 8.
Securities Laws
8.1 Certificates Evidencing Purchaser Shares. The Purchaser Shares delivered to
the Selling Shareholders pursuant to Section 2.2, "Total Consideration," shall
be in registered form and bear the following legend:
"THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE UNITED STATES SECURITIES ACT OF 1933 AND, EXCEPT PURSUANT
TO AN EXEMPTION THEREFROM, MAY NOT BE OFFERED OR SOLD,
DIRECTLY OR INDIRECTLY, IN THE UNITED STATES OF AMERICA,
INCLUDING THE STATES AND POSSESSIONS AND OTHER AREAS SUBJECT
TO ITS JURISDICTION (THE "U.S.A."), OR TO CITIZENS OR
RESIDENTS OF THE U.S.A., CORPORATIONS, PARTNERSHIPS OR OTHER
ENTITIES CREATED OR ORGANIZED IN OR UNDER THE LAWS OF THE
U.S.A. OR ESTATES OR TRUSTS THE INCOME OF WHICH IS SUBJECT TO
UNITED STATES FEDERAL INCOME TAXATION REGARDLESS OF ITS SOURCE
("U.S. PERSONS"). SPECIFIC RESTRICTIONS ON REOFFERS AND
RESALES OF THE SHARES ARE SET FORTH IN SECTION 7.1 OF THE
STOCK PURCHASE AGREEMENT UNDER WHICH THESE SHARES WERE ISSUED,
TO WHICH THE OWNER OF SUCH SHARES, BY ACCEPTANCE HEREOF,
ASSENTS. COPIES OF THE FORM OF SECTION 7.1 OF SUCH STOCK
PURCHASE AGREEMENT CAN BE OBTAINED FROM THE SECRETARY OF THE
CORPORATION UPON REQUEST."
8.2 Representation and Warranty By the Selling Shareholders. The Selling
Shareholders, represent and warrant to Purchaser that:
8.2.1 The Selling Shareholders have been furnished information concerning the
Purchaser in the Memorandum, including Purchaser's Financial Statements for the
Fiscal Years 1999 and 2000 and, as of the Closing, the unaudited Purchaser
Financial Statements for the nine months ending September 30, 2001 Fiscal Year,
has had an opportunity to discuss Purchaser's business and affairs with its
executives in order to secure such further information about Purchaser as it
desired to receive and has not looked to the Purchaser, or any agents or
employees of Purchaser, to provide it with any information except for such
documents as have been specifically requested and delivered prior to the date of
this Agreement;
8.2.2 The Selling Shareholders have knowledge and experience in financial and
business matters such that they are capable of evaluating the merits and risks
of the prospective investment in the Purchaser Shares to be received hereunder;
8.2.3 The Selling Shareholders are and will be accepting the Purchaser Shares
for their respective own accounts for investment and not with a view to, or for
sale in connection with, any distribution of the Purchaser Shares; and
8.2.4 The Selling Shareholders acknowledge that they are aware that the
Purchaser Shares have not been registered under the Securities Act, that
Purchaser has not agreed to register the Purchaser Shares under the Securities
Act, that the Purchaser Shares may not be offered or sold within the U.S.A. or
to U.S. Persons (as defined in the legend contained in Section 8.1) unless an
exemption from such registration is available, and that, accordingly, it must
bear the economic risk of the investment in the Purchaser Shares for an
indefinite period of time.
ARTICLE 9.
Conditions Precedent to Obligations of the Purchaser
The obligations of the Purchaser under this Agreement shall be subject
to the satisfaction, on or prior to the Closing Date, of all of the following
conditions, any one or more of which may be waived by the Purchaser:
9.1 Representations and Warranties Accurate. All representations and warranties
of the Selling Shareholders and the Company contained in this Agreement shall
have been true in all material respects when made, and also at and as of the
Closing Date as if such representations and warranties were made at and as of
the Closing Date. The Selling Shareholders shall furnish the Purchaser with a
certificate, dated the Closing Date and signed on behalf of the Company by a
duly authorized officer thereof, and by the Selling Shareholders, stating the
above in such form as the Purchaser may reasonably request. Acceptance of the
Purchaser Shares by the Selling Shareholders shall constitute an affirmation by
it of the truth, as of the Closing Date, of the representations and warranties
made by it in this Agreement. Any Supplemental Disclosure Schedules prepared by
the Selling Shareholders and delivered to the Purchaser after December 20, 2001
shall be subject to review and acceptance by the Purchaser as of the Closing
Date, in its sole discretion.
9.2 Performance by the Selling Shareholders and the Company.
9.2.1 The Selling Shareholders and the Company shall have performed and complied
in all material respects with all agreements, covenants and conditions required
by this Agreement to be performed and complied with by them, and the Selling
Shareholders shall deliver a certificate to that effect, dated the Closing Date
and signed in the manner set forth in Section 9.1, "Representations and
Warranties Accurate."
9.2.2 The Selling Shareholders shall deliver to the Purchaser evidence that it
has full right and title to, and rights to convey, the Company Shares and that
there are no outstanding options on, rights to or claims regarding the capital
stock of the Company.
9.3 Legal Prohibition. On the Closing Date, there shall exist no injunction or
final judgment, law or regulation prohibiting the consummation of the
transactions contemplated by this Agreement.
9.4 Tender of All Outstanding the Company Shares. The Selling Shareholders
shall, pursuant to this Agreement, tender the Company Shares to the Purchaser at
the Closing in transferrable form acceptable to the Purchaser in accordance with
Article 2, "Purchase and Sale."
9.5 Financial Conditions. The review of the Company Financial Statements shall
not have revealed any matter which, in the reasonable business judgment of the
Purchaser, makes the transactions contemplated by this Agreement on the terms
herein set forth inadvisable for the Purchaser.
ARTICLE 10.
Conditions Precedent to Obligations of the Selling Shareholders and the Company
The obligations of the Selling Shareholders and the Company under this
Agreement shall be subject to the satisfaction, on or prior to the Closing Date,
of all of the following conditions, any one or more of which may be waived by
the Selling Shareholders and the Company:
10.1 Representations and Warranties Accurate. All representations and warranties
of the Purchaser contained in this Agreement shall have been true in all
material respects when made, and also at and as of the Closing Date as if such
representations and warranties were made at and as of the Closing Date. The
Purchaser shall deliver to the Selling Shareholders a certificate, dated as of
the Closing Date and signed by an officer of the Purchaser, stating the above in
such form as the Selling Shareholders may reasonably request. Acceptance of the
Company Shares by the Purchaser shall constitute an affirmation by it of the
truth, as of the Closing Date, of the representations and warranties made by it
in this Agreement. Any Supplemental Disclosure Schedules prepared by the
Purchaser and delivered to the Selling Shareholders after December 20, 2001
shall be subject to review and acceptance by the Selling Shareholders as of the
Closing Date, in its sole discretion.
10.2 Performance by the Purchaser. The Purchaser shall have performed and
complied in all material respects with all agreements, covenants and conditions
required by this Agreement to be performed and complied with by it prior to or
on the Closing Date, and there shall be delivered to the Selling Shareholders a
certificate to that effect, dated the Closing Date and signed in the manner set
forth in Section 10.1, "Representations and Warranties Accurate."
10.3 Legal Prohibition. On the Closing Date, there shall exist no injunction or
final judgment, law or regulation prohibiting the consummation of the
transactions contemplated by this Agreement.
10.4 Issuance of the Purchaser Shares. The Purchaser shall, pursuant to this
Agreement, issue the Purchaser Shares to the Selling Shareholders at the Closing
in accordance with Article 2, "Purchase and Sale."
10.5 Financial Conditions. The review of the Purchaser Financial Statements
shall not have revealed any matter which, in the reasonable business judgment of
the Selling Shareholders, makes the transactions contemplated by this Agreement
on the terms herein set forth inadvisable for the Selling Shareholders.
ARTICLE 11.
Closing
11.1 Closing Date. The Closing Date shall be January 18, 2002, or such later
date as the Purchaser and Selling Shareholders may mutually select, but in no
event later than January 28, 2002. No extension thereof beyond January 28, 2002
shall be made unless mutually agreed between the parties to this Agreement. Such
agreement to extend the Closing Date shall be deemed sufficient if executed by
the Purchaser, the Selling Shareholders and the Company.
11.2 Deliveries by the Purchaser on the Closing Date. The Purchaser shall
deliver to the Selling Shareholders at Closing:
11.2.1 The certificates contemplated by Sections 10.1, "Representations and
Warranties Accurate," and 10.2, "Performance by the Purchaser"; and
11.2.2 The share certificates representing the Purchaser Shares.
11.3 Deliveries by the Selling Shareholders on the Closing Date. The Selling
Shareholders shall deliver to the Purchaser at Closing:
11.3.1 The certificates contemplated by Sections 9.1, "Representations and
Warranties Accurate," and 9.2, "Performance by the Selling Shareholders and the
Company";
11.3.2 The original minute book, stock record book, seal of the Company and all
books and records of the Company; and
11.3.3 The share certificates representing all of the Company Shares held by the
Selling Shareholders, with attached stock powers duly executed by the Selling
Shareholders.
ARTICLE 12.
Termination
12.1 Termination Events. This Agreement may be terminated and abandoned, by
notice given by the Purchaser, or by the Selling Shareholders and the Company,
as the case may be, in the manner hereinafter provided:
12.1.1 By the Purchaser, if without fault of the Purchaser all of the conditions
set forth in Article 9, "Conditions Precedent to Obligations of the Purchaser,"
shall not have been satisfied (or are incapable of being satisfied) on or before
the Closing Date and have not been waived by the Purchaser on or before such
date;
12.1.2 By the Selling Shareholders and the Company, if without their fault all
of the conditions set forth in Article 10, "Conditions Precedent to Obligations
of the Selling Shareholders and the Company," shall not have been satisfied (or
are incapable of being satisfied) on or before the Closing Date and have not
been waived by the Selling Shareholders and the Company on or before such Date;
and
12.1.3 By the mutual consent and agreement of the Purchaser, the Selling
Shareholders and the Company;
12.1.4 By either the Purchaser or by the Selling Shareholders and the Company if
after completion of their respective due diligence of each other either the
Purchaser or the Selling Shareholders and the Company for any reason are not
satisfied with the results of their respective due diligence investigations of
the other party and give notice to the other party to such effect. The parties
shall have completed their respective due diligence investigations on or before
January 5, 2002, and if the Selling Shareholders and the Company or the
Purchaser fail to give such notice on or before the foregoing date, they shall
be deemed to be satisfied with their respective due diligence examinations for
purposes of this Paragraph 12.1.4.
12.2 Relationships with Third Parties. In consideration of the undertaking by
the parties of the substantial legal, accounting and other expenses incident to
their entering into this Agreement and proceeding toward the Closing, the
parties agree that until the Closing Date or upon earlier termination of this
Agreement, they will not enter into or pursue any arrangements or negotiations
with any other party relative to the sale or merger of the Company into any
other party or any sale of assets for control relative to any extraordinary
transaction involving the Company without the consent of the Purchaser.
12.3 Effect of Termination. If this Agreement is terminated pursuant to Section
12.1, "Termination Events," this Agreement shall forthwith become void, and
there shall be no liability or continuing obligations on the part of the parties
hereunder.
ARTICLE 13.
Indemnification
13.1 Survival of Representations, Warranties and Certain Covenants. The
representations and warranties made by the parties in this Agreement and in the
certificates delivered at the Closing, and all of the covenants of the parties
in this Agreement, shall survive the execution and delivery of this Agreement
and the Closing Date and (except for those contained in Sections 3.6, 4.3, 4.5,
4.15, 7.1 and 7.2 and any substantially identical representations, warranties
and covenants effectively made in Article 5 or in any certificate delivered at
the Closing) shall expire on the second anniversary of the Closing Date. Any
claim for indemnification (other than a claim based upon Sections 3.6, 4.3, 4.5
or 7.2, which can be asserted at any time, or based upon Section 4.15, which can
be asserted within the limit provided therein, or based on Section 7.1, which
can be asserted prior to the second anniversary of the Closing Date) shall be
effective only if notice of such claim is given by the party claiming
indemnification or other relief to the party against whom such indemnification
or other relief is claimed before said expiration date.
13.2 Indemnification by the Purchaser.
13.2.1 The Purchaser agrees to indemnify and hold the Selling Shareholders
harmless, from and after the Closing Date, against and in respect of all matters
in connection with any losses, liabilities or damages (including reasonable
attorneys' fees) incurred by the Selling Shareholders that result from any
misrepresentation or breach of the warranties by the Purchaser in Article 3,
"Representations and Warranties of the Purchaser," or any breach or
nonfulfillment of any agreement or covenant on the part of the Purchaser
contained in this Agreement, and all suits, actions, proceedings, demands,
judgments, costs and expenses incident to the foregoing matters, including
reasonable attorneys' fees.
13.2.2 In no event shall the Purchaser's liability under Paragraph 13.2.1 above
to the Selling Shareholders (other than for costs and reasonable attorneys' fees
incurred by such Selling Shareholders to which he may be entitled pursuant to
Section 13.5, "Arbitration," or Section 15.2.3) exceed the total value of the
Company Shares which have been (and will, pursuant to the formula of Article 2
hereof, be required to be) delivered to the Purchaser, which value shall be set
forth in Schedule 13.2.
13.2.3 Notwithstanding the provisions of Paragraph 13.2.1 above, the Selling
Shareholders shall be entitled to seek indemnification from the Purchaser
pursuant to Paragraph 13.2.1 of this Section 13.2 only to the extent that the
aggregate of the losses, liabilities, costs and damages (including reasonable
attorneys' fees) incurred by the Selling Shareholders which it would be entitled
to claim under such Paragraph 13.2.1 exceeds $25,000.
13.3 Indemnification by the Selling Shareholders.
13.3.1 The Selling Shareholders agree to indemnify and hold the Purchaser
harmless, from and after the Closing Date, against and in respect of all matters
in connection with any losses, liabilities, costs or damages (including
reasonable attorneys' fees) incurred by the Purchaser resulting from (i) any
breach of its representations and warranties in Section 4.3, "Title," or (ii)
any breach or nonfulfillment of his covenants in Article 7, "Post-Closing
Covenants By the Selling Shareholders."
13.3.2 The Selling Shareholders agree to indemnify and hold the Purchaser
harmless, from and after the Closing Date, against and in respect of all matters
in connection with any losses, liabilities or damages (including reasonable
attorneys' fees) incurred by the Purchaser resulting from any misrepresentation
or breach of its warranties in Article 4, "Representations and Warranties of
Selling Shareholders," Article 5, "Representations and Warranties of the
Company," or Article 8, "Securities Laws," (other than Section 4.3), or any
breach or nonfulfillment of any agreement or covenant on the part of the Selling
Shareholders contained in this Agreement (other than those in Article 7,
"Post-Closing Covenants By the Selling Shareholders") and all suits, actions,
proceedings, demands, judgments, costs and expenses incident to the foregoing
matters, including reasonable attorneys' fees. In addition, in the event that
any matter covered by indemnification is clearly also covered by insurance held
by the Company, the Purchaser shall cause the relevant company to make
reasonable efforts to recover on such insurance in mitigation of its
indemnification claim.
13.3.3 Notwithstanding the provisions of Paragraph 13.3.2 above, the Purchaser
shall be entitled to seek indemnification from the Selling Shareholders pursuant
to Paragraph 13.3.2 of this Section 13.3 only to the extent that the aggregate
of the losses, liabilities, costs and damages (including reasonable attorneys'
fees) incurred by the Purchaser which it would be entitled to claim under such
Paragraph 13.3.2 exceeds $25,000.
13.4 Indemnification by the Company. The Company agrees to indemnify and hold
the Purchaser harmless, from and after the Closing Date, against and in respect
of all matters in connection with any losses, liabilities or damages (including
reasonable attorneys' fees) incurred by the Purchaser resulting from any
misrepresentation or breach of its warranties in Article 5, and all suits,
actions, proceedings, demands, judgments, costs and expenses incident to the
foregoing matters, including reasonable attorneys' fees; provided, however, that
the Purchaser shall not be entitled to make a claim against the Company (i) to
the extent that such claim could not be asserted against the Selling
Shareholders because excluded from indemnification under the provisions in
Paragraph 13.3.2 or (ii) if resolved against the Purchaser pursuant to the
procedures provided in Section 13.5, "Arbitration." Subject to the foregoing,
the liability of the Company hereunder is separate and independent of any
liability of the Selling Shareholders. Nothing herein shall require the
Purchaser to assert its indemnification rights against the Company prior to
asserting its indemnification rights against the Selling Shareholders, and
either or both rights may be pursued by the Purchaser independently, in such
priority as the Purchaser may in its discretion decide, or jointly. No agreement
between the Purchaser and the Company shall be binding upon or have any
evidentiary value in any dispute between the Purchaser and the Selling
Shareholders.
13.5 Arbitration. If the Purchaser believes that a matter has occurred that
entitles it to indemnification under Section 13.3, "Indemnification by the
Selling Shareholders," or Section 13.4, "Indemnification by the Company," or the
Selling Shareholders believe that a matter has occurred that entitles him to
indemnification under Section 13.2, "Indemnification by the Purchaser," it (the
"Indemnified Party") shall give notice to the party or parties against whom
indemnification is sought (each, an "Indemnifying Party") describing such matter
in reasonable detail. The Indemnifying Party shall be entitled to give such
notice prior to the establishment of the amount of its losses, liabilities,
costs or damages, and to supplement its claim from time to time thereafter by
further notices as they are established. The Indemnifying Party shall respond to
such claim for indemnification within 30 days after receipt of the claim stating
its acceptance or objection to the indemnification claim, and explaining its
position in respect thereto in reasonable detail. If such Indemnifying Party
does not timely so respond, it will be deemed to have accepted the Indemnified
Party's indemnification claim as specified in the notice given by the
Indemnified Party. If the Indemnifying Party gives a timely objection notice,
then the parties will negotiate in good faith to attempt to resolve the dispute,
and upon the expiration of an additional 30-day period from the objection notice
or such longer period as to which the Indemnified and Indemnifying Parties may
agree, any such dispute shall be submitted to arbitration in California to a
member of the American Arbitration Association mutually appointed by the
Indemnified and Indemnifying Parties (or, in the event the Indemnified and
Indemnifying Parties cannot agree on a single such member, to a panel of three
members of such Association selected in accordance with the rules of such
Association), who shall promptly arbitrate such dispute in accordance with the
rules of such Association and report to the parties upon such disputed items,
and such report shall be final, binding and conclusive on the parties. Judgment
upon the award by the arbitrator(S) may be entered in any court having
jurisdiction. The prevailing party in any such arbitration shall be entitled to
recover from, and have paid by, the other party hereto all fees and
disbursements of such arbitrator or arbitrators. For this purpose, a party shall
be deemed to be the prevailing party only if such party would be deemed to be a
prevailing party under Section 15.2.3.
13.6 No Finders. The Purchaser represents and warrants to the Selling
Shareholders, and the Selling Shareholders represent and warrant to the
Purchaser, respectively, that they have not become obligated to pay any fee or
commission to any broker, finder or intermediary for or on account of the
transactions contemplated by this Agreement. The Purchaser agrees to indemnify
and hold the Selling Shareholders harmless from any breach of the Purchaser's
representation in the previous sentence, and the Selling Shareholders agree to
indemnify and hold the Purchaser harmless from any breach of their
representation in the previous sentence.
13.7 Third Person Claim Procedures. If a third person asserts a claim against a
party to this Agreement, and it is intended to seek indemnification against
another party or parties (the "Indemnifying Party") under the provisions of this
Article 13 in connection with the matter involved in such claim, the party
intending to seek such indemnification (the "Indemnified Party") shall promptly
(but in no event later than ten (10) days prior to the time at which an answer
or other responsive pleading or notice with respect to the claim is required)
notify the Indemnifying Party of such claim. The Indemnifying Party shall have
the right at its election to take over the defense or settlement of such claim
by giving prompt notice to the Indemnified Party that it will do so, such
election to be made and notice given in any event at least 24 hours prior to the
time at which an answer or other responsive pleading or notice with respect
thereto is required. If the Indemnifying Party makes such election, it may
conduct the defense of such claim through counsel of its choosing (subject to
the Indemnified Party's approval, not to be unreasonably withheld), will be
responsible for the expenses of such defense, and shall be bound by the results
of its defense or settlement of the claim to the extent it produces damage or
loss to the Indemnified Party. The Indemnifying Party shall not settle such
claims without prior notice to and consultation with the Indemnified Party, and
no such settlement involving any injunction or material and adverse effect on
the Indemnified Party may be agreed to without its consent. So long as the
Indemnifying Party is diligently contesting any such claim in good faith, the
Indemnified Party shall not pay or settle any such claim. If the Indemnifying
Party does not make such election, or having made such election does not proceed
diligently to defend such claim prior to the time at which an answer or other
responsive pleading or notice with respect thereto is required, or does not
continue diligently to contest such claim, then the Indemnified Party may take
over defense and proceed to handle such claim in its exclusive discretion, and
the Indemnifying Party shall be bound by any defense or settlement that the
Indemnified Party may make in good faith with respect to such claim. The parties
agree to cooperate in defending such third party claims, and the defending party
shall have access to records, information and personnel in control of the other
part which are pertinent to the defense thereof.
13.8 Limitation of Remedies.
13.8.1 Except as provided in Paragraph 13.8.2 of this Section 13.8, no party to
this Agreement shall be liable to any other party or parties or have any
remedies against any other party or parties under this Agreement other than as
provided in this Article 13. The parties understand that this requires that all
disputed claims shall be submitted to arbitration in accordance with Section
13.5, "Arbitration."
13.8.2 Notwithstanding the provisions of Paragraph 13.8.1 of this Section 13.8,
the Purchaser shall, in addition to rights to indemnification provided in this
Article 13, be entitled to such equitable remedies for any breach of Article 7
of this Agreement as are available under applicable law. Such remedies shall not
be subject to arbitration, except that if the Purchaser elects to submit any
dispute over a claim for equitable relief to arbitration in accordance with
Arizona law such dispute shall be submitted for and decided by arbitration. In
such event, arbitrators shall be chosen in the manner set forth in Section 13.5,
"Arbitration."
ARTICLE 14.
Post-Closing Covenants by the Purchaser
With respect to its post-Closing operation of the Company, the
Purchaser covenants to and agrees with the Selling Shareholders as follows:
14.1 Election of Directors of the Purchaser. The Purchaser shall use its best
efforts to cause the directors of the Purchaser to nominate and vote for the
election of Xxxxxxx X. Xxxx, Xxxxxxxx Xxx, Xxxxxx Xxx, Xxxxx Xxxxx and Xxxxxx
Xxxxxx as directors of the Purchaser and not to vote for the removal of, and to
vote for the reappointment through the 2002 Fiscal Year of such individuals as
directors.
14.2 Election of Directors of the Company. The Purchaser shall use its best
efforts to cause the directors of the Company to nominate and vote for the
election of Mahmaud X. Xxxx, Xxxxxxxx Xxx, Xxxxxx Xxx, Xxxxx Xxxxx and Xxxxxx
Xxxxxx, subject to the approval of the Board of Directors of the Purchaser, as
directors of the Company and not to vote for the removal of, and to vote for the
reappointment through the 2002 Fiscal Year of such individuals as directors.
14.3 Fringe Benefits. The Purchaser shall provide to the employees of the
Company such medical and life insurance and other benefits as the Purchaser
provides to its executive officers and the employees shall be eligible to share
on such basis as other executive officers of the Purchaser, in any additional
bonuses, options, restricted stock award programs or employee stock ownership
plans which the Purchaser has established for its executive officers, subject to
the determination of the Board of Directors of the Purchaser.
14.4 Issuance of Purchaser Shares. The Purchaser shall promptly issue any
additional Purchaser Shares to the Selling Shareholders or shareholders of the
Purchaser after the Closing Date in accordance with Section 2.2, "Total
Consideration."
ARTICLE 15.
Miscellaneous
15.1 Access and Information.
15.1.1 The Company and the Purchaser shall provide to each other and their
respective counsel, accountants and other representatives reasonable access upon
reasonable notice during normal business hours during the period between the
date hereof and the Closing Date, to all of the properties, books, records,
contracts and commitments of each other, and shall furnish, or, authorize their
respective counsel and accountants to furnish, to the Purchaser or the Company,
as the case may be, and their respective representatives all such information as
the parties may reasonably request of each other. The Purchaser hereby has the
permission of the Company to contact and carry on discussions with the
customers, prospective customers, suppliers, employees and all persons and
entities under contract with the Company upon reasonable notice. Both the
Purchaser and the Company and Selling Shareholders will cooperate with all
reasonable requests by the other party for information and shall use their best
efforts to secure the cooperation of third parties who may be reasonably
requested to furnish such information to each other.
15.1.2 The Purchaser and the Company and the Selling Shareholders shall keep all
Confidential Information derived from the other party relating to their
respective businesses confidential pending the Closing of the transaction
contemplated by this Agreement. The Purchaser and Selling Shareholders shall,
and the Purchaser and Selling Shareholders shall cause their respective
officers, directors, agents and representatives to, keep all Confidential
Information derived from the other party relating to the business of the
Purchaser and the Company confidential pending the Closing.
15.1.3 If this Agreement should be terminated pursuant to Article 12, the
Purchaser and the Selling Shareholders shall return all such Confidential
Information which they have received and agree not to disclose or use such
information in any manner, except to the extent required to so disclose the same
by law and except for information already publicly available.
15.2 Expenses.
15.2.1 The Purchaser shall be solely responsible for paying its own expenses and
costs incident to the preparation of this Agreement and to the consummation of
the transactions contemplated by this Agreement, and shall have no obligation
for paying such expenses or costs of the other parties.
15.2.2 The Company shall be solely responsible for paying its own expenses and
costs, and those of the Selling Shareholders, incident to the preparation of
this Agreement and to the consummation of the transactions contemplated by this
Agreement. The Selling Shareholders shall have no obligation to reimburse the
expenses or costs of the Purchaser.
15.2.3 Notwithstanding any of the other provisions hereof, in the event of
arbitration and/or litigation with respect to the interpretation or enforcement
of this Agreement or any provisions hereof, the prevailing party in any such
matter shall be entitled to recover from the other party his or its reasonable
costs and expense, including reasonable attorneys' fees, incurred in such
arbitration and/or litigation. For purposes of this Paragraph 15.2.3, a party
shall be deemed to be the prevailing party only if such party (A)(i) receives an
award or judgment in such arbitration and/or litigation for 50% or more of the
disputed amount involved in such matter, or (ii) is ordered to pay the other
party less than 50% of the disputed amount involved in such matter or (B)(i)
succeeds in having imposed a material equitable remedy on the other party (such
as an injunction or order compelling specific performance), or (ii) succeeds in
defeating the other party's request for such an equitable remedy.
15.3 Assignment. The rights and obligations of any party under this Agreement
may not be assigned or transferred without the prior written consent of the
Purchaser or the Selling Shareholders, as the case may be. Any assignment in
violation of this paragraph shall be void.
15.4 Construction. This Agreement shall be construed and enforced in accordance
with the laws of the State of Arizona.
15.5 Captions. Captions and headings used herein are for convenience only and
shall not be used in construing or interpreting this Agreement.
15.6 Gender and Number. Whenever the context of this Agreement so requires, the
masculine gender includes the feminine or neuter, the neuter includes the
masculine or feminine, and the singular number includes the plural.
15.7 Severability. Each provision hereof is severable from this Agreement, and
if one or more provisions hereof are declared invalid, the remaining provisions
shall nevertheless remain in full force and effect. If Section 7.1, "Resale of
Purchaser Shares," is declared excessively broad, as to time, area or otherwise,
it shall be construed as limited to the broadest time, area or other scope
permitted by applicable law.
15.8 No Third-Party Beneficiaries. Each of the provisions of this Agreement is
for the sole and exclusive benefit of the parties thereto, respectively, as
their interests appear, and shall not be deemed for the benefit of any other
person.
15.9 Amendment. This Agreement may be amended only by the mutual written
agreement of the Purchaser, the Selling Shareholders and the Company. Any such
written amendment executed as set forth in the preceding sentence shall be
binding upon all parties hereto. The failure of any party to enforce at any time
any of the provisions of this Agreement shall in no way be deemed a waiver of
any such provision, nor in any way affect the validity of this Agreement or any
part thereof.
15.10 Successors and Assigns. Subject to Section 15.3, "Assignment," this
Agreement shall be binding upon and inure to the benefit of the successors and
assigns and heirs of the parties hereto.
15.11 Counterparts. This Agreement may be executed in two or more counterparts,
and by the different parties hereto on separate counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
15.12 Entire Agreement. This Agreement and its Schedules constitute the entire
contract among the parties hereto with respect to the subject matter thereof,
superseding all prior communications and discussions, and no party hereto shall
be bound by any communication on the subject matter hereof unless such is in
writing signed by any necessary party thereto and bears a date subsequent to the
date hereof. The exhibits and schedules shall be construed with and deemed as an
integral part of this Agreement to the same extent as if the same had been set
forth verbatim herein. Information set forth in any exhibit, schedule or
provision of this Agreement shall be deemed to be set forth in every other
exhibit, schedule or provision of this Agreement and therefore shall be deemed
to be disclosed for all purposes of this Agreement.
15.13 Public Announcements. No party shall issue any press release or public
announcement in connection with this Agreement or the transactions contemplated
hereby without prior notice to and written consent of the other party.
15.14 Further Assurances. Each of the parties hereto shall use commercially
practicable efforts to fulfill all of the conditions set forth in this Agreement
over which it has control or influence (including obtaining any consents
necessary for the performance of such party's obligations hereunder) and to
consummate the transactions contemplated hereby, and shall execute and deliver
such further instruments and provide such documents as are necessary to effect
this Agreement.
15.15 Notices. All notices or other communications required or permitted
hereunder shall be in writing and shall be validly given if delivered
personally, or if delivered by courier, or if delivered by telex or telecopier
with receipt confirmed, or if sent by certified or registered air mail return
receipt requested, addressed, if to the Purchaser to:
Sino Pharmaceuticals Corporation
(formerly known as Unimann, Inc.)
00000 Xxxx Xxxxxxxx Xxxxx
Xxxxxx, Xxxxxxx 00000
or to such other person or at such other place as the Purchaser shall furnish to
the Selling Shareholders in writing; if to the Selling Shareholders or the
Company to them at:
Sino Pharmaceuticals Corporation
Unit 152 - 11782 Xxxxx Xxxx
Xxxxxxxx, Xxxxxxx Xxxxxxxx
X0X000, Xxxxxx
or to such other person or at such other place as the Selling Shareholders shall
furnish the Purchaser in writing. Notice given by telex shall be deemed
delivered when received as evidenced by their answer back. Notice given by
telecopier shall be deemed delivered when receipt thereof is confirmed by
subsequent telephone call. Notice given by certified or registered air mail as
set out above shall be deemed delivered at the earlier of (i) actual receipt as
evidenced by the return receipts, or (ii) five (5) business days after the date
the same is postmarked (if postmarked in the United States and addressed to a
recipient in the United States) or seven (7) business days after the date the
same is postmarked (if postmarked outside the United States or addressed to a
recipient outside the United States).
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the day and year first above written.
SELLING SHAREHOLDERS:
/s/ Xxxxxxx X. Xxxx
---------------------------
XXXXXXX X. XXXX
/s/ Xxxxxxxx Xxx
---------------------------
XXXXXXXX XXX
/s/Xxxxxx Xxx
---------------------------
XXXXXX XXX
/s/ Xxxxx Xxxxx
---------------------------
XXXXX XXXXX
/s/ Xxxxxxx Xxxx
---------------------------
XXXXXXX XXXX
/s/ Xxxxxx Xxxxxx
---------------------------
XXXXXX XXXXXX
/s/ Xxxx Xxxx Xxxxx
---------------------------
XXXX XXXX XXXXX
COMPANY:
SINO PHARMACEUTICALS CORPORATION, a Nevada corporation
By /s/ Xxxxxxx X. Xxxx
Xxxxxxx X. Xxxx
Its President
PURCHASER:
Sino Pharmaceuticals Corporation
(formerly known as Unimann, Inc.),
a Wyoming corporation
By /s/Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
Its President
EXHIBIT "A"
SELLING SHAREHOLDERS
Xxxxxxx X. Xxxx
Xxxxxxxx Xxx
Xxxxxx Xxx
Xxxxx Xxxxx
Xxxxxxx Xxxx
Xxxxxx Xxxxxx
Xxxx Xxxx Xxxxx
SCHEDULE 2.1
Name of Shareholder Company Shares Purchaser Shares
Xxxxxxx X. Xxxx 623,639 6,080,480
Xxxxxxxx Xxx 133,052 1,297,257
Xxxxxx Xxx 20,513 200,002
Xxxxx Xxxxx 61,539 600,005
Xxxxxx Xxxxxx 10,257 100,006
Xxxxxxx Xxxx 100,000 975,000
Xxxx Xxxx Xxxxx 51,000 497,250
------ -------
Total 1,000,000 9,750,000
