EXHIBIT 2.1
COMMON STOCK PURCHASE AGREEMENT
This Common Stock Purchase Agreement (the "Agreement") is made and
entered into as of the 20th day of February, 2002, between CONSUMER CAPITAL
HOLDINGS, INC., an Nevada Corporation (the "Seller"), with its principal office
0000 X. Xxxxxxx Xxxxxx, Xxxxx Xxx, Xxxxxxxxxx 00000, and BLUE STAR COFFEE, INC.,
A NEVADA CORPORATION ("Buyer"), of 0000 Xxxx Xxxxxxx Xxxx, Xxxxx 000, Xxx Xxxxx,
Xxxxxx 00000.
RECITALS
1. The Company has authorized the exchange of a total of
12,989,000 Common Shares (the "Shares") of Common Stock of the
Company (as defined below).
2. The Buyer desires to exchange 20,957,985 Common Shares of the
Buyer's Common Stock for 12,989,000 Common Shares of the
Company, pursuant to the terms and conditions contained here.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
conditions, representations, and warranties contained in this agreement, the
Company and Buyer hereby each agree as follows:
DEFINITIONS
As used in this Agreement, and unless the context requires a different
meaning, the following terms shall have the meaning indicated:
"Affiliate" means, with respect to any specified Person, any Person
that, directly or indirectly, Controls, is controlled by, or is under common
Control with, such specified Person, whether by contract, through one or more
intermediaries or otherwise.
"Articles" means the Articles of Incorporation of the Company filed
with Secretary of State, in the form delivered to the Buyer, as the same may be
amended from time to time.
"Audit Date" means DECEMBER 31, 2001.
"Balance Sheet Date" means DECEMBER 31, 2001.
"Board of Directors" means the Board of Directors of the Company.
"Business Days" means all days other than Saturday or Sunday or any day
on which banking institutions in Las Vegas, Nevada, are authorized or obligated
to close.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor statute thereto.
"Common Stock" means (i) the common stock of the Company; (ii) any
other capital stock of the Company into which such common stock is converted,
exchanged, reclassified or reconstituted; (iii) any warrants or options
exercisable for any of the foregoing; and (iv) any right to receive any of the
foregoing other than upon conversion of any security convertible into any of the
foregoing.
"Control" means the possession, directly or indirectly, of the power to
direct or cause direction of the management and policies of a Person, whether
through ownership of voting securities, by contract or otherwise.
"Disclosure Materials" means the disclosure materials previously
delivered to the Buyer.
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"Environmental Laws" means any and all present and future laws (whether
common or statutory), compacts, treaties, conventions or rules, regulations,
codes, plans requirements, criteria, standards, orders, decrees, judgments,
injunctions, notices or demand letters issued, promulgated or entered thereunder
by any foreign federal, tribal, state or legal governmental entity relating to
public or employee health and safety, pollution or protection of the
environment, including without limitation, the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended by the Superfund
Amendment and Reauthorization Act of 1986 ("CERCLA"), the Resource conservation
and Recovery Act ("RCRA"), the Federal Safe Drinking Water Act, the Federal
Water Pollution Control Act, the Used Oil Recycling Act of 1980, the Solid Waste
Dispose Act, the Emergency Planning and Community Right-To-Know Xxx 0000, the
Clean Air Act and any and all other foreign, federal, state, tribal, and local
laws, rules, regulations and orders relating to the reclamation of land,
wetlands and waterways or relation to use, storage, emissions, discharges,
clean-up release or threatened release of pollutants, contaminants, chemicals or
industrial, toxic or Hazardous Substances on or into the workplace or the
environment (including without limitation, ambient air oceans, waterways,
wetlands, surface water, ground water {tributary and non-tributary] land surface
or subsurface strata) or otherwise, relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transportation or handling of
pollutants, contaminants, chemicals, or industrial, toxic, hazardous or similar
substances, as all of the foregoing may be amended, supplemented or
re-authorized from time to time.
"ERISA" means Employee Retirement Income Security Act of 1974, as
amended, or any successor statute thereto.
"Exchange Act" means the Securities Exchange Act of 1934, and the rules
and regulations there under, as amended from time to time.
"Financial Statements" means (i) the audited consolidated balances
sheet of the Company as of the Audit date, together with the audited
consolidated statements of operations, audited consolidated statements of
shareholders' equity, and audited consolidated statements of cash flows for the
fiscal year then ended, accompanied by the report of an independent audit; and
(ii) the unaudited balance sheet of the Company as of the Balance Sheet Date,
together with the unaudited consolidated statements of operations, unaudited
consolidated statements of shareholders' equity, and unaudited consolidated
statements of cash flows of the Company for the five months then-ended, both
monthly and annual.
"GAAP" means generally accepted accounting principles in effect from
time to time, consistently applied.
"Hazardous Substances" means (i) any and all "waste" and "hazardous
wastes", as defined by CERCLA; (ii) "solid wastes" and "hazardous wastes", as
defined by RCRA; (iii) any pollutant, contaminate or hazardous, dangerous or
toxic chemicals, materials or substances within the meaning of any Environmental
Law; (iv) any radioactive material, including any source, special nuclear or
by-product material; as defined at 42 U.S.C. 2011 et seq., as amended; and (v)
asbestos in any form or condition.
"Option Plan" means the Company's stock option plans, copies of which
have been provided to Buyer.
"Person" means any natural person, incorporated entity, limited or
general partnership, business trust, association, joint venture, limited
liability company, agency (government or private), division, political
sovereign, or subdivision or instrumentality, or any other entity of any kind,
including those groups identified as "persons" in 13 (d)(3) and 14(d)(2) of the
Exchange Act, and any successor, by merger or otherwise, of such entity.
"Registration Rights Agreements" means the Registration Rights
Agreement attached hereto as Exhibit A.
"Secretary of State" means the Secretary of State of the State of
Nevada.
"Securities Act" means the Securities Act of 1933 and rules and
regulations there under, as amended from time to time.
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Other Defined Terms. The following terms shall have the meanings
specified in the Sections set forth below:
Term Section
---- -------
Closing Date 2.3
Material Contracts 3.18
Proprietary information 3.26
Shares Recital A
PURCHASE AND SALE
2.1 Purchase and Sale. Subject to all the terms and conditions of
this Agreement, at the closing described below (the
"Closing"), the Company agrees to receive from the Buyer, and
Buyer agrees to issue to the Shareholders of the Company
20,957,985 Shares, in exchange for 12,987,000 shares of the
Common Stock of the Company.
2.2 Authorization. At the Closing, the Company will have
authorized the sale and issuance to Buyer of the Shares. The
Shares shall have the rights, preferences, privileges and
restrictions set forth in the Articles.
2.3 Closing; Delivery. The Closing shall take place on February
20, 2002, at 11:00 a.m., local time, at the offices of the
Company, or at such other time or place as the Company and
Buyer may mutually agree (the date of the Closing is
hereinafter referred to as the "Closing Date"). At the
Closing, the Company shall deliver to Pacific Stock Transfer a
Corporate resolution that will instruct the transfer agent
about the exchange ratio representing Buyer's Shares purchased
hereunder, and Buyer shall deliver to the Company a corporate
resolution that will be relayed to Pacific Stock Transfer.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
As a material inducement to Buyer to enter into this Agreement, the
Company makes the following representations and warranties to Buyer,
subject only to such disclosures and exceptions as set forth in the
Disclosure Materials.
Organization, Standing, and Qualification of the Company. The
Company is a Subchapter C corporation pursuant to the Code,
duly organized, validly existing, and in good standing under
the laws of the State of Nevada. The Company has all necessary
corporate power and authority to own and operate its
properties and assets, to execute and deliver this Agreement
and the Related Agreements, to issue and sell the shares and
to carry out the provisions of this Agreement and the Related
Agreements, and to carry on its business as now owned and
operated by it. The Company is duly qualified to do business
as a foreign corporation and is in good standing in all
jurisdictions, both nationally and internationally, in which
failure to so qualify would have a materially adverse effect
upon its operations or financial condition.
Capitalization. As of the date of and taking into account the
transactions occurring by or at the initial Closing, the
authorized capital stock of the Buyer consists of 60,000,000
shares of Common stock and 15,000,000 authorized shares of
Undesignated Preferred Stock. Immediately after the Closing,
the outstanding capital stock of the Buyer shall be 23,286,650
shares of Common Stock and no shares of Undesignated Preferred
Stock outstanding. A schedule listing all shareholders of
record of the Buyer and the numbers of shares of capital stock
held or recorded by each such shareholder, and a listing of
all outstanding options and warrants and other obligation of
the Buyer to issue capital stock or securities convertible
into capital stock of the Buyer is contained in the Disclosed
Materials. Such schedule is complete and accurate as of the
Closing Date. Except as set forth in the Disclosure Materials,
and taking into account the transactions occurring by or at
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the Closing Date, there are no outstanding rights,
subscriptions, options, warrants, conversion privileges,
preemptive rights, or other agreements or commitments
obligating the Buyer to issue or transfer any additional
equity securities.
Validity of Stock. The Shares, when issued, sold, and delivered by
the Company in accordance with the terms of this Agreement, as
well as all prior issuances of the Buyer's capital stock,
shall be (or have been) duly authorized, validly issued, fully
paid, and non-assessable and free of any liens or
encumbrances.
Authorization: Enforceability All corporate action on the part of
the Company necessary for (i) the authorization, execution,
delivery, and performance of all the obligations of the
Company under this Agreement and the consummation of the
transactions contemplated herein and thereunder, and (ii) and
the authorization, issuance, execution, the delivery of the
shares being sold by the Company hereunder has been taken.
This Agreement constitutes a valid and binding obligation of
the Company, enforceable against the company in accordance
with their terms, subject to applicable bankruptcy,
insolvency, reorganization, and moratorium laws and other laws
of general application affecting enforcement of creditors'
rights generally and to general equitable principles.
Affiliates. The Company does own, directly and indirectly,
interests and investments (debt or equity) in other
corporations, partnerships, businesses, trusts, or other
entities, and is a party to agreements related thereto, as
disclosed in the Disclosure Materials.
Financial Statements. The Company has provided to Buyer the
Financial Statements. The Financial Statements have been
prepared in accordance with GAAP throughout the periods
indicated and with each other, except that unaudited Financial
Statements may not contain all footnotes required by GAAP. The
Financial Statements present fairly the financial condition
and operating results of the Company as of the dates, and for
the periods indicated therein, subject in the case of
unaudited Financial Statements to normal year-end audit
adjustments. Except as set forth in the Financial Statements,
the Company has no material liabilities, contingent or
otherwise, other than (i) liabilities incurred in the ordinary
course of business after the Balance Sheet Date, and (ii)
obligations under contracts and commitments incurred in the
ordinary course of business and not required under GAAP to be
reflected in the Financial Statements, which, in both cases,
individually or in the aggregate, are not material to the
financial condition or operating results of the Company.
Except as disclosed in the Financial Statements, the Company
is not a guarantor or indemnitor of any indebtedness of any
other person, firm or corporation. The Company knows of no
information or fact, which has or would have a material
adverse effect on the financial condition, business or
business prospects of the Company, which has not been
disclosed to the Buyer. The Company maintains and will
continue to maintain a standard system of accounting
established and administered in accordance with GAAP.
Conduct of Business in the Ordinary Course. Since the Balance
Sheet Date, and excluding the transactions contemplated in
this Agreement there has not been:
(a) any change in the assets, liabilities, financial
condition, or operating results of the Company from
that reflected in the Financial Statements, other
than changes in the ordinary course of business that
have not been, in the aggregate, materially adverse;
(b) any damage, destruction or loss, whether or not
covered by insurance, that has materially and
adversely affected the business, properties,
prospects, of financial condition of the Company (as
such business is presently conducted and as it is
presently proposed to be conducted);
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(c) any waiver or compromise by the Company of a valuable
right or of a material debt owed to it;
(d) any satisfaction or discharge of any lien, claim, or
encumbrance or payment of any obligation by the
Company, except in the ordinary course of business
and that is not material to the business, properties,
prospects, of financial condition of the Company (as
such business is presently conducted and as it is
presently proposed to be conducted);
(e) any material changes to a Material Contract or
arrangement by which the Company or any of its assets
is bound or subject;
(f) any material change in any compensation arrangement
or agreement with any employee, officer, director, or
shareholder;
(g) any sale, assignment, or transfer of any patents,
trademarks, copy rights, trade secrets, or other
intangible assets;
(h) any resignation or termination of employment of any
key officer of the Company, and the Company, to the
best of its knowledge, does not know of the impending
resignation or termination of employment of any such
officer;
(i) receipt of notice that there has been a loss of, or
material order cancellation by, any major customer of
the Company;
(j) any mortgage, pledge, transfer of a security interest
in, or lien, created by the Company, with respect to
any of its material properties or assets, except
liens for taxes not yet due or payable;
(k) any loans or guarantees made by the Company to or for
the benefit of its employees, shareholders, officers,
or directors, or any members of their immediate
families, other than travel advances and other
advances made in the ordinary course of its business;
(l) any declaration, setting aside, or payment of any
dividend or other distribution of the Company's
assets in respect to any of the Company's capital
stock, or any direct or indirect redemption,
purchase, or other acquisition of any such stock by
the Company;
(m) to the best of the Company's knowledge, any other
events or condition of any character that might
materially and adversely affect the business,
properties, prospects, or financial condition of the
Company (as such business is presently conducted and
as it is presently proposed to be conducted); or
(n) any agreement or commitment by the Company to do any
of the things described in this Section 3.7.
Absence of Undisclosed Liabilities. To the Company's knowledge,
the Company does not have any material liabilities (fixed or
contingent, including any material tax liabilities due or to
become due), which are not reflected or provided for in the
Financial Statements.
Tax Returns and Audits. The Company has timely filed all federal,
state, county, local and foreign tax returns and reports
within the times and in the manner prescribed by law and has
paid (or made adequate provision in the Financial Statements)
for: all taxes shown due on such returns, as well as all other
assessments and penalties which have become due and payable.
The Company's
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federal income and other tax returns have not been audited by
the Internal Revenue Service or any other taxing authority and
no notice of audit has been received. To the Company's
knowledge, the provisions for taxes in the Financial
Statements are adequate for any and all federal, state,
county, local and foreign taxes for the period ending on the
Balance Sheet Date and for all prior periods, whether or not
disputed. The Company has not received notice of any disputes,
deficiency assessments, or proposed adjustments to taxes
payable by the Company.
Assets. The Company has good and marketable title to all of its
personal property, including all assets reflected on the
balance sheets included in the Financial Statements or
acquired by the Company since the Balance Sheet Date, all of
which are in good operating condition and free and clear of
material restrictions on or conditions to transfer or
assignment, and free and clear of all liens, claims,
mortgages, pledges, charges, equities, easements, rights of
way, covenants, conditions, security interests, encumbrances,
or restrictions, except for liens for current taxes or
material men not yet due and payable or being contested in
good faith. The Company does not own any real property. The
properties of the Company are sufficient for the conduct of
the Company business as not being and presently planned to be
conducted. The Company holds a valid leasehold interest in all
leased properties listed in the Disclosure Materials, free of
any liens, claims, or encumbrances granted by the Company and
is not in default under any such lease. The Company enjoys
peaceful and undisturbed possession of all premises owned by
it, or leased to it from others, and does not occupy any real
property in material violation of any law, regulations, or
decree.
Insurance Policies. The Company has in full force and effect (i)
adequate insurance policies to protect its assets and
businesses covering property damage by fire, business
interruption or other casualty, sufficient in amount to allow
it to replace any of its properties damaged or destroyed; and
(ii) insurance policies to protect against all liabilities,
claims, and risks against which it is customary in amounts
customary for companies similarly situated with the Company.
Articles and Bylaws. The Company is not currently in violation of
any provision of the Articles or its Bylaws, as in effect on
each Closing Date. There is no default or event that, with
notice or lapse of time, or both, would conflict with or
constitute a breach of the Articles of the Company's Bylaws.
Material Contracts.
(a) Except as set forth in the Disclosure Materials,
the Company does not have, nor is it bound by,
any contract, agreement, lease, commitment, or
proposed transaction, judgment, order, writ or
decree, written or oral, absolute or contingent,
other than (i) contracts for the purchase of
supplies and services that were entered into in
the ordinary course of business and that does not
involve more than $10,000 and do not extend for
more than one year beyond the date hereof; (ii)
sales contracts entered into in the ordinary
course of business; and (iii) contracts
terminable at will by the Company on no more than
30 days' notice without cost or liability to the
Company and that do not involve any employment or
consulting arrangement and are not material to
the conduct of the Company's business. For the
purpose of this paragraph, employment and
consulting contracts and contracts with labor
unions, and license agreements and any other
agreements relating to the Company's acquisition
or disposition of patent, copyright, trade secret
or other proprietary rights or technology (other
than standard end-user license agreements) shall
not be considered to be contracts entered into in
the ordinary course of business. Every contract
disclosed in the Disclosure Materials
(collectively, the "Material Contracts") is a
legal, valid and binding obligation, enforceable
in accordance with its terms with respect to the
Company and any other parties bound thereby, and
true and complete copies of all Material
Contracts have been provided to the Buyer. The
Company is not, nor has it given or been given
notice that any other party is, currently in
breach of any of the terms of any Material
Contract. There is no default or event that, with
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notice or lapse of time, or both, would conflict
with or constitute a breach of any Material
Contract or would result in the creation or
imposition of any lien or encumbrance on any of
the Company's property. The Company has not
received notice that any party to any Material
Contract intends to cancel, amend or terminate
any such agreement.
(b) As previously disclosed, the Company is not
presently engaged in any discussion, unless
previously disclosed (i) with any representative
of any corporation or corporations regarding the
consolidation or merger of the Company with or
into any such corporation or corporations; (ii)
with any corporation, partnership, association or
other business entity or any individual regarding
the sale, conveyance or disposition of all or
substantially all of the assets of the Company,
or a transaction or series of related
transactions in which more than 50% of the voting
power of the Company is or was to be disposed; or
(iii) regarding any other form of acquisition,
liquidation, dissolution or winding up or the
Company.
Litigation. There are no actions, suits, or legal, administrative,
or other proceedings or investigations pending, or, to the
best of the Company's knowledge, threatened before any court,
agency, or other tribunal to which the Company is a party or
against or affecting any of the property, assets, businesses,
or financial condition of the Company, except as set forth in
the Disclosure Materials. The Company is not in default with
respect to any other, writ, injunction, or decree of any
federal, state, local or foreign court, department, agency, or
instrumentality to which it is a party. The Company has
provided Buyer and its counsel with true and accurate copies
of material documents relating to any of these matters that
are disclosed in the Disclosure Materials.
Related Transaction. Except as set forth in the Disclosure
Materials, there are no obligations of the Company to
officers, directors, shareholders or employees of the Company
other than (a) for payment of salary for services rendered;
(b) reimbursement for reasonable expenses incurred on behalf
of the Company; and (c) for other standard employee benefits
made generally available to all employees (including any stock
options outstanding under the Option Plan). None of the
officers, directors of shareholders of the Company, or any
members of their immediate families, are indebted to the
Company or have any direct or indirect ownership interest in
any firm or corporation with which the Company has a business
relationship, or any firm or corporation which competes with
the Company, except that officers, directors and/or
shareholders of the Company may own stock in publicly traded
companies which may compete with the Company. No officer,
director or shareholder, or any member of their immediate
families, is, directly or indirectly, interested in any
material contract with the Company (other than such contracts
as relate to any such person's ownership of capital stock or
other securities of the Company). Except as may be disclosed
in the Financial Statements, the Company is not a guarantor or
indemnitor of any indebtedness of any other person, firm or
corporation.
Agreement Will Not Cause Breach or Violation. The consummation of
the transactions contemplated by this Agreement (including the
issuance and sale of the Shares) will not result in any
violation of or constitute a default or any event that, with
notice or lapse of time, or both, would conflict with or
constitute a breach or default of the Bylaws of the Company or
of any Material Contract or any material provision of local,
state, federal or foreign law, rule or regulation and will not
result in the creation or imposition of any lien or
encumbrance on any of the Company's property or on the Shares.
Governmental Approvals/Third Party Consents. All consents,
approvals, or authorizations of, or registrations,
qualifications, designations, declarations, or filings with
any federal or state governmental authority, and all consents,
approvals or authorizations of any third party required in
connection with the execution of this Agreement, the
Registration Rights Agreement and the performance of the
transactions contemplated hereby (including the issuance and
sale of the
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Shares) have been obtained by the Company. The Company has, or
has rights to acquire, all licenses, permits, and other
similar authority necessary for the conduct of its business as
now being conducted by it and as planned to be conducted, the
lack of which could materially and adversely affect the
operations or condition, financial or otherwise, of the
Company, and it is not in default in any material respect
under any of such licenses, permits or other similar
authority.
Environmental Matters. The company is in compliance in
all-material respects with all Environmental Laws and, to its
knowledge no material expenditures are or will be required in
order to comply with any Environmental Law. The Company has
not knowingly handled, stored or released, or exposed any
person to, any Hazardous Substances. The Company is not, and
has no knowledge that it will be in the future, liable, or
responsible for clean-up costs, remedial work or damages in
connection with the handling, storage, release, or exposure by
the Company of any Hazardous Substances. To the Company's
knowledge, no claims for clean-up costs, remedial work or
damages have been made by any person or entity in connection
with the handling, storage, release, or exposure by the
Company of any Hazardous Substances, or in connection with any
Environmental Law.
Bankruptcy. The Company has not admitted in writing its inability
to pay its debts generally as they become due, filed or
consented to the filing against it of a petition in bankruptcy
or a petition to take advantage of any insolvency act, made an
assignment for the benefit of creditors, consented to the
appointment of a receiver for itself or for the whole or any
substantial part of its property, or had a petition in
bankruptcy filed against it, been adjudicated a bankrupt, or
filed a petition or answer seeking reorganization or
arrangement under the federal bankruptcy laws or any other law
or statute of the United States of America or any other
jurisdiction.
Intellectual Property.
(a) The company owns rights to all intellectual property
necessary to conduct its business as now being
conducted and as planned to be conducted, including
all such rights relating to patents, trademarks,
service marks, copyrights, applications therefor,
trade names, trade secrets, export of technology and
other information (collectively "Proprietary
Information").
(b) The Company possesses commercial rights to all
Proprietary Information and the Proprietary
Information is not subject to any kind of lien,
judgment or other encumbrance, except as otherwise
disclosed in the Disclosure Materials.
(c) There is no pending or, to the knowledge of the
Company, threatened claim or litigation against the
Company or its Proprietary Information asserting the
infringement or other violation of any intellectual
property rights of any third party or past or current
employee of the Company.
(d) To the best of the Company's knowledge and belief,
there is no claim that can be asserted by or against
a third party for infringement, misappropriation,
breach or otherwise relating to the Proprietary
Information.
(e) None of the Company's employees has any ownership
rights in any Proprietary Information or any other
intellectual property rights related to the business,
products or services of the Company.
(f) No shareholder, director, officer or employee of the
Company has any right, title or interest in or to any
of the Proprietary Information.
Employees and Consultants. Except as set forth in the Disclosure
Materials, the Company has not entered into any arrangement
with any present or former employee that will result in any
8
obligation of the Company to make any payment to such employee
upon termination. True and complete copies of all written
employment agreements with the key executive officers of the
Company have been delivered to Buyer prior to the Closing
Date. To the Company's knowledge, no employee of or consultant
to the Company is in material violation of any term of any
employment contract or any other contract or agreement
relating to the relationship of any such employee or
consultant with the Company. The Company has not received
notice that any executive officer intends to terminate his
employment with the Company, nor does the Company have any
present intention to terminate the employment of any executive
officer. To the Company's knowledge, none of its employees are
obligated under any contract (including licenses, covenants,
or commitments of any nature) or other agreement, or subject
to any judgment, decree, or order of any court of
administrative agency, that would interfere with the use of
his/her reasonable diligence to promote the interests of the
Company that would conflict with the Company's business as
proposed to be conducted. Neither the execution nor delivery
of this Agreement, nor the conduct of the Company's business
as proposed, will, to the Company's knowledge, conflict with
or result in a breach of terms, conditions or provisions of,
or constitute a default under, any contract, covenant, or
instrument under which any of such employees is obligated,
which conflict, breach, or default would be materially adverse
to the Company.
Employee Benefits Matters. The Company does not maintain or
contribute to any plan or arrangement that constitutes an
"employee pension benefit plan" as defined in Section 3(2) of
ERISA, and is not obligated to contribute to or accrue or pay
benefits under any deferred compensation or retirement funding
arrangement.
Compliance with Laws. (a) The Company has complied with and is in
compliance in all material respects with all foreign, federal,
state and local statutes, laws, ordinances, regulations,
rules, judgments, order and decrees applicable to it and its
assets, business and operations, and (b) the Company has not
received written notice of any claim of default under or
violation of any statute, law, ordinance, regulation, rule,
judgment, order or decree except for any such noncompliance or
claim of default or violation, if any, which in the aggregate
do not and will not have a material adverse affect on the
property, operations, financial condition or prospects of the
Company.
Brokers. All negotiations relating to this Agreement and the
transactions contemplated hereby have been carried on by the
Company directly with the Buyer and without the intervention
of any person on behalf of the Company, and in such manner as
not to give rise to any valid claim against any of the parties
for a finder's fee, brokerage commission or like payment.
Accuracy of Information Furnished. This Agreement, the Disclosure
Materials, the Financial Statements, as well as any exhibit,
certificate, written statement, material or information
furnished by or on behalf of the Company pursuant hereto or in
connection with the transactions contemplated hereby to the
Buyer, do not contain any untrue statement of a material fact
or omit to state any material fact that is necessary to make
the statements contained herein or therein not misleading.
REPRESENTATIONS AND WARRANTIES OF BUYER
The Buyer makes the following representations and warranties
to the Company as to itself that:
Requisite Power and Authority. Buyer is a corporation, duly
organized, validly existing and in good standing under the
laws of the jurisdiction of Nevada, and has all requisite
partnership or corporate power and authority to own its assets
and operate its business. Buyer has all necessary corporate or
partnership power and authority under all applicable
provisions of law to execute and deliver this Agreement and to
carry out their provisions. All action on Buyer's part
required for the lawful execution and delivery of this
Agreement has been or will be effectively taken prior to the
Closing Date. Upon its execution and delivery, this Agreement
will be a valid and binding
9
obligations of the Buyer, enforceable in accordance with its
terms, except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of
general application affecting enforcement of creditors'
rights; (ii) general principles of equity that restrict the
availability of equitable remedies.
Organization, Standing, and Qualification of the Buyer. The Buyer
has all necessary corporate power and authority to own and
operate its properties and assets, to execute and deliver this
Agreement and the Related Agreements, to issue and sell the
shares and to carry out the provisions of this Agreement and
the Related Agreements, and to carry on its business as now
owned and operated by it. The Company is duly qualified to do
business as a foreign corporation and is in good standing in
all jurisdictions, both nationally and internationally, in
which failure to do so qualify would have a materially adverse
effect upon its operations or financial condition.
Capitalization. As of the date of and taking into account the
transactions occurring by or at the initial Closing, the
authorized capital stock of the Buyer consists of 60,000,000
shares of Common stock and 15,000,000 authorized shares of
Undesignated Preferred Stock. Immediately after the Closing,
the outstanding capital stock of the Buyer shall be 23,286,650
shares of Common Stock and no shares of Undesignated Preferred
Stock outstanding. A schedule listing all shareholders of
record of the Buyer and the numbers of shares of capital stock
held or recorded by each such shareholder, and a listing of
all outstanding options and warrants and other obligation of
the Buyer to issue capital stock or securities convertible
into capital stock of the Buyer is contained in the Disclosed
Materials. Such schedule is complete and accurate as of the
Closing Date. Except as set forth in the Disclosure Materials,
and taking into account the transactions occurring by or at
the Closing Date, there are no outstanding rights,
subscriptions, options, warrants, conversion privileges,
preemptive rights, or other agreements or commitments
obligating the Buyer to issue or transfer any additional
equity securities.
Validity of Stock. The Shares, when issued, sold, and delivered by
the Buyer in accordance with the terms of this Agreement, as
well as all prior issuances of the Buyer's capital stock,
shall be (or have been) duly authorized, validly issued, fully
paid, and non-assessable and free of any liens or
encumbrances.
Authorization: Enforceability. All corporate action on the part of
the Buyer necessary for (i) the authorization, execution,
delivery, and performance of all the obligations of the Buyer
under this Agreement and the consummation of the transactions
contemplated herein and thereunder, and (ii) and the
authorization, issuance, execution, the delivery of the shares
being exchanged by the Buyer hereunder has been taken. This
Agreement constitute a valid and binding obligation of the
Buyer, enforceable against the company in accordance with
their terms, subject to applicable bankruptcy, insolvency,
reorganization, and moratorium laws and other laws of general
application affecting enforcement of creditors' rights
generally and to general equitable principles.
Affiliates. The Buyer does not own, directly and indirectly,
interests and investments (debt or equity) in other
corporations, partnerships, businesses, trusts, or other
entities, and is not a party to agreements related thereto.
Financial Statements. The Buyer has provided to Company the
Financial Statements. The Financial Statements have been
prepared in accordance with GAAP throughout the periods
indicated and with each other, except that unaudited Financial
Statements may not contain all footnotes required by GAAP. The
Financial Statements present fairly the financial condition
and operating results of the Company as of the dates, and for
the periods indicated therein, subject in the case of
unaudited Financial Statements to normal year-end audit
adjustments. Except as set forth in the
10
Financial Statements, the Company has no material liabilities,
contingent or otherwise, other than (i) liabilities incurred
in the ordinary course of business after the Balance Sheet
Date, and (ii) obligations under contracts and commitments
incurred in the ordinary course of business and not required
under GAAP to be reflected in the Financial Statements, which,
in both cases, individually or in the aggregate, are not
material to the financial condition or operating results of
the Company. Except as disclosed in the Financial Statements,
the Buyer is not a guarantor or indemnitor of any indebtedness
of any other person, firm or corporation. The Buyer knows of
no information or fact, which has or would have a material
adverse effect on the financial condition, business or
business prospects of the Buyer, which has not been disclosed
to the Company. The Buyer maintains and will continue to
maintain a standard system of accounting established and
administered in accordance with GAAP.
Conduct of Business in the Ordinary Course. Since the Balance
Sheet Date, and excluding the transactions contemplated in
this Agreement there has not been:
(b) any change in the assets, liabilities, financial
condition, or operating results of the Buyer from
that reflected in the Financial Statements, other
than changes in the ordinary course of business that
have not been, in the aggregate, materially adverse;
(b) any damage, destruction or loss, whether or not
covered by insurance, that has materially and
adversely affected the business, properties,
prospects, of financial condition of the Buyer (as
such business is presently conducted and as it is
presently proposed to be conducted);
(c) any waiver or compromise by the Buyer of a valuable
right or of a material debt owed to it;
(d) any satisfaction or discharge of any lien, claim, or
encumbrance or payment of any obligation by the
Buyer, except in the ordinary course of business and
that is not material to the business, properties,
prospects, of financial condition of the Buyer (as
such business is presently conducted and as it is
presently proposed to be conducted);
(e) any material changes to a Material Contract or
arrangement by which the Buyer or any of its assets
is bound or subject;
(f) any material change in any compensation arrangement
or agreement with any employee, officer, director, or
shareholder;
(g) any sale, assignment, or transfer of any patents,
trademarks, copy rights, trade secrets, or other
intangible assets;
(h) any resignation or termination of employment of any
key officer of the Buyer, and the Buyer, to the best
of its knowledge, does not know of the impending
resignation or termination of employment of any such
officer;
(i) any mortgage, pledge, transfer of a security interest
in, or lien, created by the Buyer, with respect to
any of its material properties or assets, except
liens for taxes not yet due or payable;
(j) any loans or guarantees made by the Buyer to or for
the benefit of its employees, shareholders, officers,
or directors, or any members of their immediate
families, other than travel advances and other
advances made in the ordinary course of its business;
11
(k) any declaration, setting aside, or payment of any
dividend or other distribution of the Buyer's assets
in respect to any of the Buyer's capital stock, or
any direct or indirect redemption, purchase, or other
acquisition of any such stock by the Buyer;
(l) to the best of the Buyer's knowledge, any other
events or condition of any character that might
materially and adversely affect the business,
properties, prospects, or financial condition of the
Buyer (as such business is presently conducted and as
it is presently proposed to be conducted); or
(m) any agreement or commitment by the Buyer to do any of
the things described in this Section 4.8.
Absence of Undisclosed Liabilities. To the Buyer's knowledge, the
Buyer does not have any material liabilities (fixed or
contingent, including any material tax liabilities due or to
become due), which are not reflected or provided for in the
financial Statements.
Tax Returns and Audits-Buyer. The Buyer has timely filed all
federal, state, county, local and foreign tax returns and
reports within the times and in the manner prescribed by law
and has paid (or made adequate provision in the Financial
Statements) for: all taxes shown due on such returns, as well
as all other assessments and penalties which have become due
and payable. The Buyer's federal income and other tax returns
have not been audited by the Internal Revenue Service or any
other taxing authority and no notice of audit has been
received. To the Buyer's knowledge, the provisions for taxes
in the Financial Statements are adequate for any and all
federal, state, county, local and foreign taxes for the period
ending on the Balance Sheet Date and for all prior periods,
whether or not disputed. The Buyer has not received notice of
any disputes, deficiency assessments, or proposed adjustments
to taxes payable by the Buyer.
Assets. The Buyer has good and marketable title to all of its
personal property, including all assets reflected on the
balance sheets included in the Financial Statements or
acquired by the Company since the Balance Sheet Date, all of
which are in good operating condition and free and clear of
material restrictions on or conditions to transfer or
assignment, and free and clear of all liens, claims,
mortgages, pledges, charges, equities, easements, rights of
way, covenants, conditions, security interests, encumbrances,
or restrictions, except for liens for current taxes or
materialmen not yet due and payable or being contested in good
faith. The Buyer does not own any real property. The Buyer
enjoys peaceful and undisturbed possession of all premises
owned by it, or leased to it from others, and does not occupy
any real property in material violation of any law,
regulations, or decree.
Articles and Bylaws-Buyer. The Buyer is not currently in violation
of any provision of the Articles or its Bylaws, as in effect
on each Closing Date. There is no default or event that, with
notice or lapse of time, or both, would conflict with or
constitute a breach of the Articles of the Buyer's Bylaws.
Material Contracts.
(a) Except as set forth in the Disclosure Materials, the Buyer
does not have, nor is it bound by, any contract,
agreement, lease, commitment, or proposed transaction,
judgment, order, writ or decree, written or oral, absolute
or contingent, other than (i) contracts for the purchase
of supplies and services that were entered into in the
ordinary course of business and that does not involve more
than $10,000 and do not extend for more than one year
beyond the date hereof; (ii) sales contracts entered into
in the ordinary course of business; and (iii) contracts
terminable at will by the Buyer on no more than 30 days'
notice without cost or liability to
12
the Buyer and that do not involve any employment or
consulting arrangement and are not material to the conduct
of the Buyer's business. For the purpose of this
paragraph, employment and consulting contracts and
contracts with labor unions, and license agreements and
any other agreements relating to the Buyer's acquisition
or disposition of patent, copyright, trade secret or other
proprietary rights or technology (other than standard
end-user license agreements) shall not be considered to be
contracts entered into in the ordinary course of business.
Every contract disclosed in the Disclosure Materials
(collectively, the "Material Contracts") is a legal, valid
and binding obligation, enforceable in accordance with its
terms with respect to the Buyer and any other parties
bound thereby, and true and complete copies of all
Material Contracts have been provided to the Company. The
Buyer is not, nor has it given or been given notice that
any other party is, currently in breach of any of the
terms of any Material Contract. There is no default or
event that, with notice or lapse of time, or both, would
conflict with or constitute a breach of any Material
Contract or would result in the creation or imposition of
any lien or encumbrance on the Buyers, any of the Buyer's
property. The Buyer has not received notice that any party
to any Material Contract intends to cancel, amend or
terminate any such agreement.
(b) As previously disclosed, the Buyer is not presently
engaged in any discussion, unless previously disclosed (i)
with any representative of any corporation or corporations
regarding the consolidation or merger of the Company with
or into any such corporation or corporations; (ii) with
any corporation, partnership, association or other
business entity or any individual regarding the sale,
conveyance or disposition of all or substantially all of
the assets of the Buyer, or a transaction or series of
related transactions in which more than 50% of the voting
power of the Buyer is or was to be disposed; or (iii)
regarding any other form of acquisition, liquidation,
dissolution or winding up or the Buyer.
Litigation. There are no actions, suits, or legal, administrative,
or other proceedings or investigations pending, or, to the
best of the Buyer's knowledge, threatened before any court,
agency, or other tribunal to which the Buyer is a party or
against or affecting any of the property, assets, businesses,
or financial condition of the Buyer, except as set forth in
the Disclosure Materials. The Buyer is not in default with
respect to any other, writ, injunction, or decree of any
federal, state, local or foreign court, department, agency, or
instrumentality to which it is a party. The Buyer has provided
Company and its counsel with true and accurate copies of
material documents relating to any of these matters that are
disclosed in the Disclosure Materials.
Related Transaction. Except as set forth in the Disclosure
Materials, there are no obligations of the Buyer to officers,
directors, shareholders or employees of the Buyer other than
(a) for payment of salary for services rendered; (b)
reimbursement for reasonable expenses incurred on behalf of
the Buyer; and (c) for other standard employee benefits made
generally available to all employees (including any stock
options outstanding under the Option Plan). None of the
officers, directors of shareholders of the Buyer, or any
members of their immediate families, are indebted to the Buyer
or have any direct or indirect ownership interest in any firm
or corporation with which the Buyer has a business
relationship, or any firm or corporation which competes with
the Buyer, except that officers, directors and/or shareholders
of the Buyer may own stock in publicly traded companies which
may compete with the Company. No officer, director or
shareholder, or any member of their immediate families, is,
directly or indirectly, interested in any material contract
with the Buyer (other than such contracts as relate to any
such person's ownership of capital stock or other securities
of the Buyer). Except as may be disclosed in the Financial
Statements, the Buyer is not a guarantor or indemnitor of any
indebtedness of any other person, firm or corporation.
Agreement Will Not Cause Breach or Violation. The consummation of
the transactions contemplated by this Agreement (including the
issuance and sale of the Shares) will not result in any
violation
13
of or constitute a default or any event that, with notice or
lapse of time, or both, would conflict with or constitute a
breach or default of the Bylaws of the Buyer or of any
Material Contract or any material provision of local, state,
federal or foreign law, rule or regulation and will not result
in the creation or imposition of any lien or encumbrance on
any of the Buyer's property or on the Shares.
Governmental Approvals/Third Party Consents. All consents,
approvals, or authorizations of, or registrations,
qualifications, designations, declarations, or filings with
any federal or state governmental authority, and all consents,
approvals or authorizations of any third party required in
connection with the execution of this Agreement, and the
performance of the transactions contemplated hereby (including
the issuance of the Shares) have been obtained by the Buyer.
The Buyer has, or has rights to acquire, all licenses,
permits, and other similar authority necessary for the conduct
of its business as now being conducted by it and as planned to
be conducted, the lack of which could materially and adversely
affect the operations or condition, financial or otherwise, of
the Buyer, and it is not in default in any material respect
under any of such licenses, permits or other similar
authority.
Environmental Matters. The Buyer is in compliance in all material
respects with all Environmental Laws and, to its knowledge no
material expenditures are or will be required in order to
comply with any Environmental Law. The Buyer has not knowingly
handled, stored or released, or exposed any person to, any
Hazardous Substances. The Buyer is not, and has no knowledge
that it will be in the future, liable, or responsible for
clean-up costs, remedial work or damages in connection with
the handling, storage, release, or exposure by the Buyer of
any Hazardous Substances. To the Buyer's knowledge, no claims
for clean-up costs, remedial work or damages have been made by
any person or entity in connection with the handling, storage,
release, or exposure by the Buyer of any Hazardous Substances,
or in connection with any Environmental Law.
Bankruptcy. The Buyer has not admitted in writing its inability to
pay its debts generally as they become due, filed or consented
to the filing against it of a petition in bankruptcy or a
petition to take advantage of any insolvency act, made an
assignment for the benefit of creditors, consented to the
appointment of a receiver for itself or for the whole or any
substantial part of its property, or had a petition in
bankruptcy filed against it, been adjudicated a bankrupt, or
filed a petition or answer seeking reorganization or
arrangement under the federal bankruptcy laws or any other law
or statute of the United States of America or any other
jurisdiction.
Employees and Consultants. Except as set forth in the Disclosure
Materials, the Buyer has not entered into any arrangement with
any present or former employee that will result in any
obligation of the Buyer to make any payment to such employee
upon termination. True and complete copies of all written
employment agreements with the key executive officers of the
Company have been delivered to Company prior to the Closing
Date. To the Buyer's knowledge, no employee of or consultant
to the Buyer is in material violation of any term of any
employment contract or any other contract or agreement
relating to the relationship of any such employee or
consultant with the Buyer. The company has not received notice
that any executive officer intends to terminate his employment
with the Buyer, nor does the Buyer have any present intention
to terminate the employment of any executive officer. To the
Buyer's knowledge, none of its employees are obligated under
any contract (including licenses, covenants, or commitments of
any nature) or other agreement, or subject to any judgment,
decree, or order of any court of administrative agency, that
would interfere with the use of his/her reasonable diligence
to promote the interests of the Buyer that would conflict with
the Buyer's business as proposed to be conducted. Neither the
execution nor delivery of this Agreement, nor the conduct of
the Buyer's business as proposed, will, to the Buyer's
knowledge, conflict with or result in a breach of terms,
conditions or provisions of, or constitute a default under,
any contract, covenant, or instrument
14
under which any of such employees is obligated, which
conflict, breach, or default would be materially adverse to
the Buyer.
Employee Benefits Matters. The Buyer does not maintain or
contribute to any plan or arrangement that constitutes an
"employee pension benefit plan" as defined in Section 3(2) of
ERISA, and is not obligated to contribute to or accrue or pay
benefits under any deferred compensation or retirement funding
arrangement.
Compliance with Laws. (a) The Buyer has complied with and is in
compliance in all material respects with all foreign, federal,
state and local statutes, laws, ordinances, regulations,
rules, judgments, order and decrees applicable to it and its
assets, business and operations, and (b) the Buyer has not
received written notice of any claim of default under or
violation of any statute, law, ordinance, regulation, rule,
judgment, order or decree except for any such noncompliance or
claim of default or violation, if any, which in the aggregate
do not and will not have a material adverse affect on the
property, operations, financial condition or prospects of the
Buyer.
Brokers. All negotiations relating to this Agreement and the
transactions contemplated hereby have been carried on by the
Buyer directly with the Company and without the intervention
of any person on behalf of the Company, and in such manner as
not to give rise to any valid claim against any of the parties
for a finder's fee, brokerage commission or like payment.
Accuracy of Information Furnished. This Agreement, the Disclosure
Materials, the Financial Statements, as well as any exhibit,
certificate, written statement, material or information
furnished by or on behalf of the Buyer pursuant hereto or in
connection with the transactions contemplated hereby to the
Company, do not contain any untrue statement of a material
fact or omit to state any material fact that is necessary to
make the statements contained herein or therein not
misleading.
Investment Representations. Buyer understands that the Shares have
not been registered under the Securities Act. Buyer also
understands that the Shares are being exchanged pursuant to an
exemption from registration contained in the Securities Act
based in part upon Buyer's representations contained in this
Agreement. BUYER HEREBY REPRESENTS AND WARRANTS AS FOLLOWS:
(a) Company Information. Company has received and read
the Financial Statements and has had an opportunity
to discuss the Buyer's business, management and
financial affairs with directors, officers and
management of the Buyer and has had the opportunity
to review the Buyer's operations and facilities.
Company also has had the opportunity to ask questions
of and receive answers from the Buyer and its
management regarding the terms and conditions of this
exchange.
CONDITIONS TO BUYER'S OBLIGATIONS AT CLOSING.
The obligation of Buyer to consummate the transactions
contemplated hereby on the Closing Date is subject to the satisfaction on or
before the Closing Date of the following conditions (unless such condition
provides specifically that it shall relate solely to a later date):
5.1 Representation and Warranties. All representations and
warranties of the company herein or in any exhibit or
certificate delivered hereunder shall be true and correct as
of the date hereof, and as of the Closing Date, with the same
force and effect as if made on and as of such Closing Date,
subject to such disclosures and exceptions as may be
specifically described in the Disclosure Materials.
15
5.2 Performance. All covenants, obligations and conditions
required by the terms of this Agreement to be performed or
complied with by the Buyer at or before the Closing Date shall
have been duly and properly performed.
5.3 Approval of Documentation. All corporate and other proceedings
in connection with the transactions contemplated by this
Agreement and the form and substance of all documents
delivered hereunder shall be reasonably satisfactory to Buyer
and to its counsel.
5.4 Consents. All necessary agreements and consents of any third
parties to the consummation of the transactions contemplated
by this Agreement shall have been obtained by the Company and
delivered to Company.
5.5 Approvals. All necessary approvals or authorizations of any
governmental authority of the United States or of any state
therein or of any foreign governmental authority that are
required in connection with the execution and performance of
this Agreement, including the issuance and sale of the Shares,
shall have been obtained and shall be effective as of the
Closing Date.
5.6 Board of Director Resolutions. All resolutions required by the
Board of Directors pertaining to this Agreement shall have
been delivered to Buyer and Company on or before the Closing
Date, and approved by it.
5.7 Buyer Review. The Company shall have completed its review of,
and shall be satisfied with its conclusions regarding, the
Company's business, operations and projections on or before
the closing Date.
5.8 Maintenance of Corporate Status. The Company and Buyer shall
maintain its corporate or partnership existence in good
standing or effective under the laws of its jurisdiction of
organization and any other states or jurisdictions in which
its failure to qualify as a foreign corporation or entity
would have a material adverse effect on its operations or
financial condition.
5.9 Compliance with Governing Documents. The Company shall comply
in all material respects with its Articles; Bylaws or other
governing documents.
5.10 Compliance with Laws, Licenses and Permits: No infringement.
The Buyer and Company shall comply with all applicable
federal, state, local, foreign and other laws, regulations and
ordinances, and with all applicable federal, state, local and
foreign governmental licenses and permits necessary for
conducting its business, except to the extent that any
noncompliance would not have a material adverse effect upon
the Company. The Company shall not knowingly engage in any
activities that infringe upon the intellectual property rights
of any other person, corporation, partnership or other entity
which could have a material adverse effect upon the Company.
5.11 Discharge of Obligations. The Company shall pay and discharge
all taxes, assessments, and governmental charges lawfully
levied or imposed upon it (in each case before they become
delinquent and before penalties accrue), all lawful claims for
labor, materials, supplies and rents, and all other debts and
liabilities that if unpaid would by law be a lien or charge
upon any of the assets or properties of the Company or lead to
suspension of the business of the Company (except to the
extent contested in good faith by the Company and for which
adequate reserves are established).
5.12 Maintenance of Properties. The Company shall maintain all real
and personal property used in the business of the Company in
good operating condition, and shall make all repairs,
renewals,
16
replacements, additions and improvements to those properties
as are necessary or appropriate in the ordinary course of
business.
5.13 Maintenance of Proprietary Information. The Company shall
maintain all Proprietary Information, and all applications and
registrations therefor owned or held by the Company, in full
force and effect, except as otherwise determined in the
ordinary course of business. The Company shall not encumber or
license others to use the Proprietary Information owned by it
except in the ordinary course of the Company's business and
shall maintain the confidentiality and trade secret status of
all Proprietary Information that is confidential except where
disclosure is necessary to obtain copyright registrations or
patents, or is necessary or desirable in the ordinary course
of the Company's business. The Company shall cause each key
management employee of the Company and each Consultant to
enter into confidentiality agreements in a form approved in
writing by the Buyer within 30 days of the Closing. The
Company shall consult with the Buyer and shall take such
actions in accordance with the Buyer's advice as may be
necessary or desirable to protect and enhance the Proprietary
Information of the Company.
5.14 Insurance. The company shall maintain in full force and effect
(a) adequate insurance policies to protect its assets and
businesses covering property damage by fire, business
interruption or other casualty, sufficient in amount to allow
it to replace any of its properties damaged or destroyed; (b)
insurance policies to protect against all liabilities, claims,
and risks against which it is customary, in amounts customary
for companies similarly situated with the Company; and (c)
customary liability insurance policies for its directors and
officers.
5.15 Compensation of Directors. Each member of the Board of
Directors shall be entitled to (a) customary liability
insurance obtained at commercially reasonable rates, and (b)
reimbursement by the Company for all out-of-pocket expenses,
including, without limitation, travel expenses, incurred by
such director in connection with the performance of such
director's duties, subject to approval by the Board of
Directors, such approval not to be unreasonably withheld.
5.16 Books and Records. The Company shall keep proper books of
records and account, in which full and correct entries shall
be made of all financial transactions and the assets and
business of the Company in accordance with GAAP. The Company
shall provide Buyer with access to all such books and records
and allow Buyer to make copies and abstracts thereof at
reasonable times.
5.17 Stock Redemptions. The Company shall not apply any of its
assets for the redemption, retirement, purchase or acquisition
of any shares of any series or class of stock of the company,
except as provided in the Articles.
5.18 Further Assurances. The Company, at its expense, will execute
and deliver promptly to the Buyer upon request all such other
and further documents, agreements and instruments in
compliance with or pursuant to its covenants and agreements
herein, and will make any recordings, file any notices, and
obtain any consents as may be necessary or appropriate in
connection therewith.
5.19 Notices. Within five business days of obtaining knowledge of
any of the events described below, the Company shall give
written notice to each member of the Board of Directors of:
(a) any (i) default or event of default under any
Material Contract of the Company; (ii) initiation or
resolution of any material dispute, litigation,
investigation, or proceeding which may exist at any
time between the Company and any private third party
or governmental authority; (iii) any default or
breach of the terms of this Agreement or any of the
Registration Rights Agreement by the Company; (iv)
any events which would render any of the
representations, warranties and covenents of the
Company contained
17
herein to be untrue; and (v) any other matter that
has resulted in a material adverse effect in the
condition of the Company, whether financial or
otherwise.
(b) Each notice pursuant to this Section 5.21 shall be
accompanied by a statement on behalf of the Company
by the Chief Executive Officer, President or Chief
Financial Officer of the Company setting forth
details of the occurrence referred to therein,
stating what action the Company proposes to take with
respect thereto, the Company officer responsible for
such action and the timetable with respect to such
action.
6 SURVIVAL
All covenants, agreements, representations and warranties and
other statements of the Company made herein and in the certificates, lists,
exhibits, schedules or other written information delivered or furnished to the
Buyer in connection herewith shall be deemed material and to have been relied
upon by the Buyer, and, except as may be provided otherwise in this Agreement,
shall survive the execution and delivery of this Agreement, the Closing, the
delivery of the Shares, and any investigation at any time (or any statement as
to the results thereof) made by or on behalf of the Buyer and shall remain in
full force and effect, and shall bind the Company's successors and assigns,
whether so expressed or not, and all such covenants, agreements, representations
and warranties shall inure to the benefit of the Buyer's successors and assigns
and to transferees of the Shares, whether so expressed or not.
7 INDEMNIFICATION
7.1 Indemnification from the Company.
(a) Without limitation of any other provision of this Agreement,
the Company agrees to defend, indemnify and hold the Buyer and
is Affiliates and their respective direct and indirect
partners, members, shareholders, directors, officers,
employees and agents and each person who controls any of them
within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act (parties receiving the benefit
of the indemnification provisions herein shall be referred to
collectively as "Indemnified Parties" and individually as an
"Indemnified Party") harmless from and against any and all
losses, claims, damages, obligations, liens, assessments,
judgments, fines, liabilities, and other costs and expenses
(including without limitation interest, penalties and any
investigation, legal and other expenses incurred in connection
with, and any amount paid in settlement of, any action, suit
or proceeding or any claim asserted, as the same are incurred,
and including any diminution in the value of the Shares) of
any kind or nature whatsoever (collectively, "Liabilities")
which may be sustained or suffered by any such indemnified
Party, based upon, arising out of, by reason of or otherwise
in respect of or in connection with (i) any inaccuracy in or
breach of any representation or warranty made by the Company
in this Agreement, in the Registration Rights Agreement, or in
any other agreement, instrument or other document delivered
pursuant to this Agreement or the Registration Rights
Agreement, (ii) any breach of any covenant or agreement made
by the Company in this Agreement, in the Registration Rights
Agreement, or in any other agreement, instrument or other
document delivered pursuant to this Agreement or the
Registration Rights Agreement, or (iii) any third party or
governmental action relating to any action taken or omitted to
be taken or alleged to have been taken or omitted to have been
taken by an Indemnified Party as Shareholder, director, agent,
representative or controlling person of the Company,
including, without limitation, any and all losses, claims,
damages, expenses and liabilities, joint or several (including
any investigation, legal and other expenses incurred in
connection with, and any amount paid in settlement of, any
action, suit or proceeding or any claim asserted as the same
may be incurred) arising or alleged to arise under the
Securities Act, the Exchange Act or other federal or state
statutory law or regulation, at common law or otherwise,
including without limitation any such claim alleging so-called
control person liability or securities law liability;
provided, however, that the Company
18
will not be liable to an Indemnified Party (A) to the extent
that it is finally judicially determined that such Liabilities
resulted from the willful misconduct or gross negligence of
such Indemnified Party; or (B) to the extent that it is
finally judicially determined that such Liabilities resulted
from the material breach by such Indemnified Party of any
representation, warranty, covenant or other agreement of such
Indemnified Party contained in this Agreement or the
Registration Rights Agreement; provided, further that if and
to the extent that such indemnification is unenforceable for
any reason, the Company shall make the maximum contribution to
the payment and satisfaction of such indemnified liability
which shall be permissible under applicable laws.
(b) The indemnification and contribution provided for in this
Section 7.1 will remain in full force and effect regardless of
any investigation made by or on behalf of the Indemnified
Parties or any officer, director, partner, employee, agent or
controlling person of the Indemnified Parties.
(c) The Company agrees to pay any and all stamp, transfer and
other similar taxes, if any, payable or determined to be
payable in connection with the execution and delivery of this
Agreement and the issuance of securities hereunder.
7.2 Indemnification from the Buyer.
(a) Without limitation of any other provision of this Agreement,
the Buyer agrees to defend, indemnify and hold the Company and
is Affiliates and their respective direct and indirect
partners, members, shareholders, directors, officers,
employees and agents and each person who controls any of them
within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act (parties receiving the benefit
of the indemnification provisions herein shall be referred to
collectively as "Indemnified Parties" and individually as an
"Indemnified Party") harmless from and against any and all
losses, claims, damages, obligations, liens, assessments,
judgments, fines, liabilities, and other costs and expenses
(including without limitation interest, penalties and any
investigation, legal and other expenses incurred in connection
with, and any amount paid in settlement of, any action, suit
or proceeding or any claim asserted, as the same are incurred,
and including any diminution in the value of the Shares) of
any kind or nature whatsoever (collectively, "Liabilities")
which may be sustained or suffered by any such indemnified
Party, based upon, arising out of, by reason of or otherwise
in respect of or in connection with (i) any inaccuracy in or
breach of any representation or warranty made by the Company
in this Agreement, in the Registration Rights Agreement, or in
any other agreement, instrument or other document delivered
pursuant to this Agreement or the Registration Rights
Agreement, (ii) any breach of any covenant or agreement made
by the Company in this Agreement, in the Registration Rights
Agreement, or in any other agreement, instrument or other
document delivered pursuant to this Agreement or the
Registration Rights Agreement, or (iii) any third party or
governmental action relating to any action taken or omitted to
be taken or alleged to have been taken or omitted to have been
taken by an Indemnified Party as Shareholder, director, agent,
representative or controlling person of the Buyer, including,
without limitation, any and all losses, claims, damages,
expenses and liabilities, joint or several (including any
investigation, legal and other expenses incurred in connection
with, and any amount paid in settlement of, any action, suit
or proceeding or any claim asserted as the same may be
incurred) arising or alleged to arise under the Securities
Act, the Exchange Act or other federal or state statutory law
or regulation, at common law or otherwise, including without
limitation any such claim alleging so-called control person
liability or securities law liability; provided, however, that
the Buyer will not be liable to an Indemnified Party (A) to
the extent that it is finally judicially determined that such
Liabilities resulted from the willful misconduct or gross
negligence of such Indemnified Party; or (B) to the extent
that it is finally judicially determined that such Liabilities
resulted from the material breach by such Indemnified Party of
any representation, warranty, covenant or other agreement of
such Indemnified Party contained in this Agreement or the
Registration Rights Agreement; provided, further that if and
to the extent that such indemnification is unenforceable
19
for any reason, the Buyer shall make the maximum contribution
to the payment and satisfaction of such indemnified liability
which shall be permissible under applicable laws.
(b) The indemnification and contribution provided for in this
Section 7.2 will remain in full force and effect regardless of
any investigation made by or on behalf of the Indemnified
Parties or any officer, director, partner, employee, agent or
controlling person of the Indemnified Parties.
(c) The Buyer agrees to pay any and all stamp, transfer and other
similar taxes, if any, payable or determined to be payable in
connection with the execution and delivery of this Agreement
and the issuance of securities hereunder.
7.3 Notification. Each Indemnified Party under this Section 7
shall promptly, after the receipt of notice of the
commencement of any action, investigation, claim or other
proceeding against such Indemnified Party in respect of which
indemnity may be sought from the Company under this Section 7,
notify the Company in writing of the commencement thereof. The
failure of any Indemnified Party to so notify the Company of
any such action shall not relieve the Company from any
liability to such Indemnified Party under this Section 7
except to the extent that such failure to notify results in a
loss of a material defense of such Indemnified Party or in
actual prejudice due to such action. In case any such action,
claim or other proceeding shall be brought against any
Indemnified Party and such Indemnified Party shall notify the
company of the commencement thereof, the Company shall be
entitled to assume the defense thereof at its own expense,
with counsel satisfactory to such Indemnified Party in its
reasonable judgment; provided, however, that any Indemnified
Party may, at its own expense, retain separate counsel to
participate in such defense. Notwithstanding the foregoing, in
any action, claim or proceeding in which both the Company on
the one hand and an Indemnified Party on the other hand is, or
is reasonably likely to become, a party, such Indemnified
Party shall have the right to employ separate counsel at the
Company's expense and to control its own defense of such
action, claim or proceeding if, in the reasonable opinion of
counsel to the Company, a conflict or potential conflict
exists between the parties makes separate representation
advisable. The Company agrees that it will not, without the
prior written consent of the Buyer (such consent not to be
unreasonably withheld), settle, compromise or consent to the
entry of any judgment in any pending or threatened claim,
action or proceeding relating to the matters contemplated
hereby (if any Indemnified Party is a party thereto or has
been actually threatened to be made a party thereto) unless
such settlement, compromise or consent includes an
unconditional release of the Buyer and each other Indemnified
Party from all liability arising or that may arise out of such
claim, action or proceeding. The rights accorded to
Indemnified Party hereunder shall be in addition to any rights
that any Indemnified Party may have at common law, by separate
agreement or otherwise.
7.4 Registration Rights Agreement. Notwithstanding anything to the
contrary in this Section 7, the Indemnification and
contribution provisions of the Registration Rights Agreement
shall govern any claim made with respect to registration
statement filed pursuant thereto or sales made there under.
8. MISCELLANEOUS PROVISIONS
8.1 Termination. This Agreement may be terminated at any time
prior to the Closing Date: (a) by the mutual written consent
of the Buyer and the Company;
(b) by either Buyer or the Company if the Closing shall not
have occurred prior to March 2, 2002 (the "Termination Date")
unless such Termination Date is extended by mutual written
consent of the Buyer and the Company, provided that the right
to terminate this Agreement under this Section 8.1 (b) shall
not be available to any party whose failure to fulfill any
obligation under this
20
Agreement has been the cause of, or results in, the failure of
the Closing to have occurred by the Termination Date.
8.2 Modification and Waivers. This Agreement may not be amended or
modified, nor may the right of any party be waived, except by
a written document that is executed by Buyer and the Company.
8.3. Assignment. This Agreement is and shall be binding upon and
inure to the benefit of the parties and their respective
successors and permitted assigns. Neither party may assign the
Agreement to any third party without the prior written consent
of the other parties.
8.4 Rights and Obligations of Third Parties. Nothing in this
Agreement, whether express or implied, is intended to confer
any rights or remedies under or by reason of this Agreement on
any persons other than the parties to it and their respective
successors and permitted assigns, nor is anything in this
Agreement intended to relieve or discharge the obligation or
liability of any third parties to any party to this Agreement,
nor shall any provision give any third party any right of
subrogation against any party to this Agreement.
8.5 Notices. Any notice, request, consent, or other communication
hereunder shall be in writing, and shall be sent by one of the
following means: (a) by registered or certified first class
mail, postage prepaid, return receipt requested; (b) by
facsimile transmission with confirmation of receipt; (c) by
overnight courier service; or (d) by personal delivery, and
shall be properly addressed as follows:
If to the Company, to: Consumer Capital Holdings, Inc.
0000 X. Xxxxxxx Xxxxxx
Xxxxx Xxx, Xxxxxxxxxx, 00000
Attention: Xxxxxxx Xxxxxx
Telephone: 000-000-0000 x000
Facsimile: 000-000-0000
If to the Buyer, to: Blue Star Coffee, Inc.
0000 Xxxx Xxxxxxx Xxxx
Xxx Xxxxx, Xxxxxx 00000
Attention: Xxxxxx X. Xxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
21
Or to such other address or addresses as the Company or Buyer
shall hereafter designate to the other parties in writing.
Notices sent by mail shall be effective five days after they
are sent, and notices delivered personally, by facsimile or by
courier shall be effective at the time of delivery thereof.
8.6 Entire Agreement. This Agreement, including the exhibits to
the Agreement, constitutes the entire agreement between the
parties hereto in relation to the subject matter hereof, any
prior written or oral negotiations, correspondent, or
understandings relating to the subject matter hereof shall be
superseded by this Agreement and shall have no force or
effect. The representations, warranties, covenants and
agreements made herein shall survive any investigation made by
Buyer.
8.7 Severability. If any provision that is not essential to the
effectuation of the basic purpose of this Agreement is
determined by a court of competent jurisdiction to be invalid
and contrary to any existing or future law, such invalidity
shall not impair the operation of the remaining provisions of
this Agreement.
8.8 Headings. The headings of the Sections of this Agreement are
inserted for convenience of reference only and shall not
affect the construction or interpretation of any provisions
hereof.
8.9 Exhibits. The exhibits to this Agreement are a part of this
Agreement for all purposes. Terms that are defined in this
Agreement shall have the same meanings when used in such
exhibits.
8.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when executed and delivered shall
be an original, but all of which together shall constitute one
and the same instrument.
8.11 Expenses. The Company shall pay reasonable expense incurred in
preparation of this Agreement.
8.12 Governing Law. This Agreement shall be construed in accordance
with and governed by the laws of the State of Nevada (as
applied to contracts entered into wholly within such state).
8.13 Delays or Omissions. No delay or omission to exercise any
right, power, or remedy accruing to either party, upon any
breach or default of the other party under this Agreement,
shall impair any such right, power, or remedy, nor shall it be
construed to be a waiver of any such breach or default, or an
acquiescence therein or of or in any similar breach of default
thereafter occurring; nor shall any waiver of any single
breach or default be deemed a waiver of any other breach or
default theretofore or thereafter occurring. Any waiver,
permit, consent, or approval on the part of either party of
any breach or default by the other party under this Agreement,
or any waiver of any provisions or conditions of this
Agreement must be made in writing signed by the parties and
shall be effective only to the extent specifically set forth
in such writing. All remedies either under this Agreement or
by law or otherwise afforded to either party, shall be
cumulative and not alternative.
8.14 Arbitration. Except as set forth in Section 7 hereof, the
parties hereby covenant and agree that any legal suit,
dispute, claim, demand, controversy or cause of action of any
kind and nature whatsoever, known or unknown, fixed or
contingent, that either a Shareholder or the Company may have
or any time in the future claim to have based in whole or in
part, or arising from or out of or that in any way is related
to the negotiations, execution, interpretation or enforcement
of this Agreement (collectively, the "Disputes") shall be
completely and finally settled by submission of any such
Disputes to arbitration under the rules of the American
Arbitration Association ("AAA") then in effect. There shall be
one arbitrator, and such arbitrator shall be chosen my mutual
agreement of the parties in accordance with AAA rules. Unless
the parties agree otherwise, the arbitration proceedings shall
take place in Las Vegas, Nevada. The arbitrator shall
22
apply Nevada law to all issues in dispute, in accordance with
Section 8.14 above. Notice of demand for arbitration shall be
filed in writing with the other party to this Agreement and
with the AAA. In no event shall the demand for arbitration be
made after the date when institution of legal or equitable
proceedings based on such Dispute would be barred by the
applicable statute of limitations. The finding of the
arbitrator shall be final and binding on the parties. Judgment
on such award may be entered in any court of competent
jurisdiction, or application may be made to that court for a
judicial acceptance of the award and an order or enforcement,
as the party seeking to enforce that award may elect. The
prevailing party in any such action shall be entitled to
receive from the losing party all reasonable costs and
expenses, including the reasonable fees of attorneys,
accountants, and other experts, incurred by the prevailing
party in investigating and prosecuting (or defending) such
action, together with any such fees which may be incurred in
enforcing any award of judgment.
IN WITNESS WHEREOF, the undersigned have executed this Stock Purchase
Agreement by an authorized representative as of the day and year first above
written.
COMPANY: Consumer Capital Holdings, Inc.
By____________________________________
Xxxxxxx X. Xxxxxx, President & CEO
BUYER: Blue Star Coffee, Inc.
By____________________________________
Xxxxxx X. Xxxxx, President & CEO
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