STOCK PURCHASE AGREEMENT
Exhibit
10.4
This Stock
Purchase Agreement (the "Agreement") dated as of the 28th day of
September, 2009, is by and between PokerTek, Inc., a North Carolina
corporation (the “Seller”) and ICP Electronics, Inc., a corporation organized
and existing under the laws of Taiwan (hereinafter referred to as the
“Purchaser”), all of whom execute and deliver this Agreement based on the
following:
Recitals:
WHEREAS, the Seller desires to issue
to Purchaser a certain number of shares of common stock, no par value (the
“Common Stock”) of Seller (the “Shares”) at the price agreed upon herein in
payment for product and services rendered or to be rendered.
WHEREAS,
it is the intention of the parties that the Purchaser never owns more than 5% of
the issued and outstanding shares of Common Stock of Seller;
WHEREAS,
there were 13,741,432 issued and outstanding shares of Common Stock as of
September 25, 2009 including shares being issued in connection with the
Company’s Private Placement and Debt Conversion transactions having taken place
in September 2009.;
WHEREAS,
the respective parties deem the purchase of the Shares to be mutually
desirable;
NOW
THEREFORE, in consideration of the premises and the mutual agreements and
covenants herein contained, and for the purpose of prescribing the terms and
conditions of such purchase, the mode of carrying it into effect, and such other
details and provisions as are necessary or desirable, the parties hereto hereby
represent, warrant, covenant and agree as follows:
ARTICLE
I
PURCHASE
AND SALE OF THE SHARES; CLOSING
1.01 Purchase
and Sale of the Shares.
Subject to
the further conditions of this Agreement and the accuracy of the representations
and warranties contained herein, on the Closing Date (as defined below) (a)
Purchaser agrees to purchase from Seller, and Seller agrees to issue and sell to
the Purchaser, the Shares. The Shares will at no time represent more
than 5.0% of the issued and outstanding shares of Common Stock of the
Seller.
1.02
Consideration.
As
mentioned above, the purchase price for the Shares shall represent payment for
goods and services rendered or to be rendered.
1.03
The
Closing
The
parties agree that the Consideration and the corresponding number of the Shares
delivered by the Seller shall be non-refundable. In the event that
the Closing (as hereafter defined) does not occur prior to September 30, 2009,
any party may terminate this Agreement upon notice to the other parties, in
which event the parties shall have no further obligations to each
other. In the event of termination, each party shall bear its own
costs. The closing of the transactions contemplated by this Agreement (the
“Closing”) shall occur on September 18, 2009 (the “Closing Date”) at the offices
of Xxxxxx & Xxxxxxxxx, P.A., 00000 Xxxxxx Xxxxx, Xxxxx 000X, Xxxxxxxxx,
Xxxxx Xxxxxxxx, or at such other location as may be agreed to by the
parties.
ARTICLE
II
REPRESENTATIONS
AND WARRANTIES OF SELLER
The Seller
hereby represents and warrants to the Purchaser, as follows:
2.01 Organization.
Seller is,
and will be at the Closing, a corporation duly organized, validly existing, and
in good standing under the laws of the State of North Carolina and has the
corporate power and is and will be duly authorized, qualified, franchised, and
licensed under all applicable laws, regulations, ordinances, and orders of
public authorities to own all of its properties and assets and to carry on its
business in all material respects as it is now being conducted, and there are no
other jurisdictions in which it is not so qualified in which the character and
location of the assets owned by it or the nature of the material business
transacted by it requires qualification, except where failure to do so would not
have a material adverse effect on its business, operations, properties, assets
or condition. The execution and delivery of this Agreement does not,
and the consummation of the transactions contemplated by this Agreement in
accordance with the terms hereof will not, violate any provision of Seller’s
Articles of Incorporation or Bylaws, or other agreement to which it is a party
or by which it is bound.
2.02 Approval
of Agreement; Enforceability.
Seller has
full power, authority, and legal right and has taken, or will take, all action
required by law, its Articles of Incorporation, Bylaws, and otherwise to execute
and deliver this Agreement and to consummate the transactions herein
contemplated. The board of directors of Seller has authorized and
approved the execution, delivery, and performance of this
Agreement. This Agreement, when delivered in accordance with the
terms hereof, will constitute the valid and binding obligation of the Seller in
accordance with its terms, except as such enforceability may be limited by
general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of creditors’ rights and
remedies.
2.03 Capitalization.
The
authorized capitalization of Seller consists of 100,000,000 shares of common
stock, no par value, of which 13,762,886 issued and outstanding shares of Common
Stock as of September 25, 2009 including shares being issued in connection with
the Company’s Private Placement and Debt Conversion transactions having taken
place in September 2009. There are also 5,000,000 authorized shares
of preferred stock, no par value, and no shares of preferred stock are issued
and outstanding. All of the outstanding shares of Seller are duly authorized,
validly issued, fully paid and non-assessable and not issued in violation of the
preemptive or other right of any person. There are no dividends due,
to be paid or in arrears with respect to any of the capital stock of
Company.
2.04 Financial
Statements.
(i) Seller
has previously delivered to the Purchaser an audited balance sheet of Seller as
of December 31, 2008, and the related statements of operations, stockholders’
equity (deficit), and cash flows for the fiscal year ended December 31, 2008,
including the notes thereto, and an unaudited balance sheet of Seller as of June
30 , 2009, and the related statements of operations, stockholders’ equity
(deficit), and cash flows for the quarter ended June 30, 2009, including the
notes thereto (collectively, the “Seller Financial Statements”).
2
(ii) The
Seller Financial Statements delivered pursuant to Section 2.04(i) have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved as explained in the notes
to such financial statements. The Seller Financial Statements present fairly, in
all material respects, as of the Closing Date, the financial position of Seller.
Seller will not have, as of the Closing Date, any liabilities, obligations or
claims against it (absolute or contingent), and all assets reflected on the
Seller Financial Statements present fairly the assets of Seller in accordance
with generally accepted accounting principles.
(iii) Seller
has filed or will file on or prior to the Closing Date its tax returns required
to be filed for its two most recent fiscal years and will pay all taxes due
thereon. All such returns and reports are accurate and correct in all
material respects. Seller has no liabilities with respect to the
payment of any federal, state, county, local, or other taxes (including any
deficiencies, interest, or penalties) accrued for or applicable to the period
ended on the Closing Date and all such dates and years and periods prior thereto
and for which Seller may at said date have been liable in its own right or as
transferee of the assets of, or as successor to, any other corporation or
entity, except for taxes accrued but not yet due and payable, and to the best
knowledge of Seller, no deficiency assessment or proposed adjustment of any such
tax return is pending, proposed or contemplated. None of such income
tax returns has been examined or is currently being examined by the Internal
Revenue Service and no deficiency assessment or proposed adjustment of any such
return is pending, proposed or contemplated. Seller has not made any
election pursuant to the provisions of any applicable tax laws (other than
elections that relate solely to methods of accounting, depreciation, or
amortization) that would have a material adverse affect on Seller, its financial
condition, its business as presently conducted or proposed to be conducted, or
any of its respective properties or material assets. There are no outstanding
agreements or waivers extending the statutory period of limitation applicable to
any tax return of Seller.
2.05 Information.
The
information concerning Seller set forth in this Agreement is complete and
accurate in all respects and does not contain any untrue statement of a fact or
omit to state a fact required to make the statements made, in light of the
circumstances under which they were made, not misleading. Seller
shall cause the information delivered by it pursuant hereto to the Purchaser to
be updated after the date hereof up to and including the Closing
Date.
2.06 Absence
of Certain Changes or Events.
Except as
set forth in this Agreement, since the date of the most recent Seller balance
sheet described in Section 2.04 and included in the information referred to in
Section 2.05:
(a) There
has not been: (i) any adverse change in the business, operations, properties,
level of inventory, assets, or condition of Seller; or (ii) any damage,
destruction, or loss to Seller (whether or not covered by insurance) adversely
affecting the business, operations, properties, assets, or conditions of
Seller;
(b) Seller
has not: (i) amended its Articles of Incorporation or Bylaws; (ii) declared or
made, or agreed to declare or make, any payment of dividends or distributions of
any assets of any kind whatsoever to stockholders or purchased or redeemed, or
agreed to purchase or redeem, any of its capital stock; (iii) waived any rights
of value which in the aggregate are extraordinary or material considering the
business of Seller; (iv) made any material change in its method of management,
operation, or accounting; (v) entered into any other material transactions; (vi)
made any accrual or arrangement for or payment of bonuses or special
compensation of any kind or any severance or termination pay to any present or
former officer or employee; (vii) increased the rate of compensation payable or
to become payable by it to any of its officers or directors or any of its
employees whose monthly compensation exceeds $1,000; or (viii) made any increase
in any profit-sharing, bonus, deferred compensation, insurance, pension,
retirement, or other employee benefit plan, payment, or arrangement made to,
for, or with its officers, directors, or employees;
3
(c) Seller
has not: (i) granted or agreed to grant any options, warrants, or other rights
for its stocks, bonds, or other corporate securities calling for the issuance
thereof, except for employee stock options which have been
granted during September 2009; (ii) borrowed or agreed to borrow any funds or
incurred, or become subject to, any material obligation or liability (absolute
or contingent) except liabilities incurred in the ordinary course of business
and loans from its officers for the purpose of paying its costs of operation;
(iii) paid any material obligation or liability (absolute or contingent) other
than current liabilities reflected in or shown on the most recent Seller balance
sheet and current liabilities incurred since that date in the ordinary course of
business; (iv) sold or transferred, or agreed to sell or transfer, any of its
material assets, properties, or rights (except assets, properties, or rights not
used or useful in its business which, in the aggregate have a value of less than
$5,000 or canceled, or agreed to cancel, any debts or claims (except debts and
claims which in the aggregate are of a value of less than $5,000); (v) made or
permitted any amendment or termination of any contract, agreement, or license to
which it is a party if such amendment or termination is material, considering
the business of Seller; or (vi) issued, delivered, or agreed to issue or deliver
any stock, bonds, or other corporate securities including debentures (whether
authorized and unissued or held as treasury stock) except in connection with the
share exchange agreement to be entered into with the Purchaser and its
affiliates, and Seller and its affiliate.
(d) Seller
has not become subject to any law, order, investigation, inquiry, grievance or
regulation which materially and adversely affects, or in the future would be
reasonably expected to adversely affect, the business, operations, properties,
assets, or condition of Seller.
2.07 Litigation
and Proceedings.
There are
no material actions, suits, claims, or administrative or other proceedings
pending, asserted or unasserted, or to the best knowledge of Seller, threatened
by or against Seller or adversely affecting Seller or its properties, at law or
in equity, before any court or other governmental agency or instrumentality,
domestic or foreign, or before any arbitrator of any kind. Seller is
not in default of any judgment, order, writ, injunction, decree, award, rule, or
regulation of any court, arbitrator, or governmental agency or instrumentality,
except for Xxxxxxx vs PokerTek, which was filed in the state of Nevada on August
26, 2009.
2.08 Compliance
With Laws; Government Authorization.
(a) Seller
has complied with all federal, state, county and local laws, ordinances,
regulations, inspections, orders, judgments, injunctions, awards or decrees
applicable to it or its business, including federal and state securities laws,
except where the failure to so comply would not have a material adverse effect
on the business or financial condition of Seller. To the best
knowledge of Seller, it is not under investigation by any federal, state, county
or local authorities, including the Commission. Seller has not received
notification from any federal, state, county, or local authorities, including
the Commission, that it or any of its officers or directors will be the subject
of a legal action or that the Commission’s Division of Enforcement will be
recommending to the Commission that a Federal District Court or Commission
administrative action or any other action be filed or taken against Seller and
its officers, directors and beneficial owners.
4
(b) Seller
has all licenses, franchises, permits, and other governmental authorizations
that are legally required to enable it to conduct its business in all material
respects as conducted on the date of this Agreement. No
authorization, approval, consent, or order of, or registration, declaration, or
filing with, any court or other governmental body is required in connection with
the execution and delivery by Seller of this Agreement.
2.09 Securities
and Exchange Commission Compliance of Seller.
Seller has
a class of securities registered pursuant to Section 12 of the Securities
Exchange Act of 1934, as amended (“Exchange Act”) and has complied in all
material respects with Rule 14(a) and 14(c) of the Exchange Act, and with
Sections 13 and 15(d) of the Exchange Act, and to the best knowledge of Seller,
its management and beneficial owners have complied in all respects with Sections
13(d) and 16(a) of the Exchange Act.
2.10 No
Contract Defaults.
Seller is
not in default under the terms of any outstanding contract, agreement, lease, or
other commitment, and there is no event of default or other event which, with
notice or lapse of time or both, would constitute a default in any respect under
any such contract, agreement, lease, or other commitment.
2.11 No
Conflict With Other Instruments.
The
execution of this Agreement and the consummation of the transactions
contemplated by this Agreement will not result in the breach of any term or
provision of, or constitute an event of default under, any material indenture,
mortgage, deed of trust, or other material contract, agreement, or instrument to
which Seller is a party or to which any of its properties or operations are
subject.
2.12 Subsidiary.
Seller
does not own beneficially or of record, any equity securities in any other
entity, other than PokerTek Canada, Inc., its wholly owned
subsidiary. Seller does not have a predecessor as that term is
defined under generally accepted accounting principles or Regulation S-X
promulgated by the Securities and Exchange Commission.
2.13 Seller
Documents.
The Seller
has delivered to the Purchaser copies of the following documents of Seller,
which are collectively referred to as the "Seller Documents" and which consist
of the following dated as of the date of execution of this Agreement, all
certified by a duly authorized officer of Seller as complete, true, and
accurate:
(a) A
copy of the Articles of Incorporation and Bylaws of Seller in effect as of the
date of this Agreement;
(b) A
copy of resolutions adopted by the board of directors of Seller approving this
Agreement and the transactions herein contemplated;
(c) A
document setting forth a description of any material adverse change, if any, in
the business, operations, property, inventory, assets, or condition of Seller
since the most recent Seller balance sheet required to be provided pursuant to
Section 2.04 hereof, updated to the Closing Date;
2.14 Listing
on NASDAQ Capital Market.
Seller’s
Common Stock is listed on the NASDAQ’s Capital Market and the Seller will use
its best efforts to retain such listing in good standing until the
closing of the transactions contemplated herein, without there being imposed any
warning or limitation by NASDAQ such as a non-compliance event or citation with
respect to NASDAQ’s listing requirements. On September 15, 2009
Seller received a notice from The NASDAQ Stock Market indicating that the
closing bid price of its common stock had fallen below $1.00 for the 30
consecutive business days from August 5, 2009 to September 14, 2009, and
therefore, the Company was not in compliance with NASDAQ Listing Rule 5550(a)(2)
as of September 14, 2009. NASDAQ provides an automatic 180 day grace period,
through March 15, 2010, to regain compliance with the Bid Price Rule by
maintaining a closing bid price of $1.00 per share for a minimum of ten
consecutive business days. At that time, if the company has not
regained compliance, it may be eligible for an additional grace period if it
meets the initial listing standards, with the exception of bid price, for The
NASDAQ Capital Market, or it may appeal to the NASDAQ Listing Qualifications
panel, or it may file a plan to regain compliance.
5
2.15
Ownership of the Shares.
The Seller
owns the Shares free and clear of any liens or encumbrances of any kind or
nature except for any applicable federal and state securities law restrictions
such as those imposed by Rule 144. At the Closing, the Seller will
deliver good and marketable title to the Shares to the Purchaser.
The
Purchaser acknowledges and agrees that the Seller does not make or has not made
any representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in Section 2.01 to Section
2.15.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF THE PURCHASER
The
Purchaser represents and warrants to the Seller as follows:
3.01
Authority;
Enforceability.
The
execution, delivery and performance by the Purchaser of the transactions
contemplated by this Agreement have been duly authorized by all necessary action
on the part of the Purchaser. This Agreement has been duly executed
by the Purchaser, and when delivered by the Purchaser in accordance
with the terms hereof, will constitute the valid and legally binding obligation
of the Purchaser, enforceable against it in accordance with its terms, except as
such enforceability may be limited by general principles of equity or applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally, the enforcement of creditors’ rights and
remedies.
3.02
Investment
Intent.
The
Purchaser understands that the Shares are “restricted securities” that have not
been registered under the Securities Act or any applicable state securities law
and it is acquiring the Shares as principal for its own account for investment
purposes and not for distribution.
3.03
No
Conflicts.
Neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby, will violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which the
Purchaser is subject.
3.04
No
Advice.
The
Purchaser understands that nothing in this Agreement or any other materials
presented to Purchaser in connection with the purchase and sale of the Shares
constitutes legal, tax or investment advice. The Purchaser has consulted such
legal, tax and investment advisors as it, in its sole discretion, has deemed
necessary or appropriate in connection with its purchase of the
Shares.
6
3.05
No
Litigation, Etc.
There is
no action, suit, proceeding, judgment, claim or investigation pending or, to the
knowledge of the Purchaser, threatened against the Purchaser which could
reasonably be expected in any manner to challenge or seek to prevent, enjoin,
alter or materially delay any of the transactions contemplated by this
Agreement.
3.06
Approvals.
The
execution, delivery and performance by the Purchaser of this Agreement, and the
consummation of the transactions set forth herein require no material action by
or in respect of, or material filing with, any governmental body, agency,
official or authority, by the Purchaser other than (i) the filing by the
Purchaser with the Commission of such reports under the Exchange Act as may be
required in connection with this Agreement, and (ii) any filings required by the
securities or blue sky laws of the various states, if applicable.
3.07 Regulation
S Representations, Warranties and Covenants; Accredited Investor
Status
(a) The
Purchaser represents and warrants to, and covenants with, Seller as
follows:
|
(1)
|
The
Purchaser is not a U.S. person and is not acquiring the shares of common
stock of Seller for the account or for the benefit of any U.S. person and
is not a U.S. person who purchased the shares of common stock in a
transaction that did not require registration under the
Act.
|
|
(2)
|
The
Purchaser agrees to resell such common stock only in accordance with the
provisions of Regulation S, pursuant to registration under the Act, or
pursuant to an available exemption from
registration.
|
|
(3)
|
The
Purchaser agrees not to engage in hedging transactions with regard to such
securities unless in compliance with the
Act.
|
|
(4)
|
The
Purchaser consents to the certificate for the shares of common stock of
Seller to contain a legend to the effect that transfer is prohibited
except in accordance with the provisions of Regulation S, pursuant to
registration under the Act, or pursuant to an available exemption from
registration, and that hedging transactions involving the shares of common
stock may not be conducted unless in compliance with the
Act.
|
|
(5)
|
The
Purchaser acknowledges that Seller will refuse to register any transfer of
the shares of common stock not made in accordance with the provisions of
Regulation S, pursuant to registration under the Act, or pursuant to an
available exemption from
registration.
|
|
(6)
|
The
Purchaser covenants and represents and warrants in favor of the Seller
that all of the representations and warranties set forth herein shall be
true and correct at the time of the Closing as if made on that
date.
|
(b) The
Purchaser represents and warrants to, and covenants with, Seller that Purchaser
is an “accredited investor" within the meaning of such term under paragraph (a)
of Rule 501 of Regulation D under the Act. Specifically, the
Purchaser represents and warrants to, and covenants with, Seller, that the
Purchaser is “any organization described in Section 501(c)(3) of the Internal
Revenue Code, corporation, Nevada or similar business trust, or partnership, not
formed for the specific purpose of acquiring the securities offered, with total
assets in excess of $5,000,000.”
7
3.08 The
Purchaser has been furnished with and has carefully read the periodic reports on
Forms 10-K, 10-Q and 8-K filed by Seller with the Securities and Exchange
Commission during the preceding three years. With respect to
individual or partnership tax and other economic considerations involved in this
investment, the Purchaser confirms that it is not relying on the Seller or
Seller (or any agent or representative of the Company). The Purchaser
has carefully considered and has, to the extent such Purchaser believes such
discussion necessary, discussed with its own legal, tax, accounting and
financial advisers the suitability of an investment in the Shares for the
Purchaser’s particular tax and financial situation.
3.09 The
Purchaser has had an opportunity to inspect relevant documents relating to the
organization and business of Seller. The Purchaser acknowledges that
all documents, records and books pertaining to this investment which the
Purchaser has requested have been made available for inspection by the Purchaser
and his respective attorney, accountant or other adviser(s).
3.10 The
Purchaser and/or its respective advisor(s) has/have had a reasonable opportunity
to ask questions of, and receive answers and request additional relevant
information from, the officers of Seller concerning the transactions
contemplated by this Agreement.
3.11 The
Purchaser confirms that it is not purchasing the Shares as a result of or
subsequent to any advertisement, article, notice or other communication
published in any newspaper, magazine or similar media or broadcast over
television or radio or presented at any seminar.
3.12 The
Purchaser, by reason of the Purchaser’s business or financial experience, has
the capacity to protect his own interests in connection with the transactions
contemplated by this Agreement.
3.13 Except
as set forth in this Agreement, the Purchaser represents that no representations
or warranties have been made to it by the Seller, Seller, or any officer
director, agent, employee, or affiliate of Seller,, and the Purchaser has not
relied on any oral representation by Seller or by any officer, director or agent
of Seller in connection with its decision to enter into this
Agreement.
3.14 The
Purchaser represents that neither it nor any of the directors, officers,
managers, members, trustees or affiliates or any affiliated companies is subject
to any of the events described in Section 262(b) of Regulation A promulgated
under the Act.
3.15 The
Purchaser has adequate means of providing for its current financial needs and
contingencies, is able to bear the substantial economic risks of an investment
in the Shares for an indefinite period of time, has no need for liquidity in
such investment and, at the present time, could afford a complete loss of such
investment.
3.16 The
Purchaser has such knowledge and experience in financial, tax and business
matters so as to enable the Purchaser to use the information made available to
it in connection with the transaction to evaluate the merits and risks of an
investment in the Shares and to make an informed investment decision with
respect thereto.
3.17 The
Purchaser acknowledges that the Shares have not been registered under the Act or
under securities legislation of any other state or country. The
Purchaser understands further that in absence of an effective registration
statement, the Shares can only be sold pursuant to some exemption from
registration.
8
3.18 The
Purchaser recognizes that an investment in the Shares involves substantial
risks. The Purchaser acknowledges that it has reviewed the risk
factors identified in the periodic reports filed by Seller with the Securities
and Exchange Commission. The Purchaser further confirms that it is aware that no
federal or state agencies have passed upon this transaction or made any finding
or determination as to the fairness of this investment.
3.19 The
Purchaser acknowledges that each stock certificate representing the Shares shall
contain a legend substantially in the following form:
THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
“SECURITIES ACT”) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY
REGULATION S, AND HAVE NOT BEEN REGISTERED UNDER APPLICABLE STATE
SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS
REGISTERED UNDER THE SECURITIES ACT, SOLD TRANSFERRED OR OTHERWISE DISPOSED OF
PURSUANT TO REGULATION S OR PURSUANT TO APPLICABLE STATE SECURITIES
LAWS OR PURSUANT TO AVAILABLE EXEMPTIONS FROM SUCH REGISTRATION, PROVIDED THAT
THE PURCHASER DELIVERS TO THE COMPANY AN OPINION OF COUNSEL (WHICH OPINION AND
COUNSEL ARE REASONABLY SATISFACTORY TO THE COMPANY) CONFIRMING THE AVAILABILITY
OF SUCH EXEMPTION. THE HOLDER AGREES THAT IT WILL NOT ENGAGE IN HEDGING
TRANSACTIONS IN CONTRAVENTION OF REGULATION S.
The Seller
acknowledges and agrees that the Purchaser does not make or has not made any
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in Section 3.01 to Section
3.19.
ARTICLE
IV
CONDITIONS
TO THE OBLIGATIONS OF PURCHASER TO CLOSE
The
obligations of Purchaser under this Agreement are subject to the fulfillment of
the following conditions at, or prior to, the Closing Date.
4.01 Accuracy
of Representations. The representations and warranties made by Seller in this
Agreement were true when made and shall be true at the Closing Date (except for
changes therein permitted by this Agreement) with the same force and effect as
if such representations and warranties were made at and as of the Closing Date,
and Seller shall have performed or complied with all covenants and conditions
required by this Agreement to be performed or complied with by them prior to or
at the Closing.
4.02 No
Litigation.
As of the
Closing, there shall not be pending any litigation to which Seller, the Seller
and the Purchaser is a party and which is reasonably likely to have a material
adverse effect on the business of Seller or the contemplated transactions. Refer
to item 2.07 above.
4.03 Seller’s
Outstanding Capital Stock at Closing.
As of the
Closing, the total outstanding capital stock of Seller shall consist of
11,021,429 shares of common stock.
4.04 No
Material Adverse Change.
There
shall not be any change in, or effect on, Seller’s assets, financial condition,
operating results, customer and employee relations, or business prospects or the
financial statements previously supplied by Seller which is, or may reasonably
be expected to be, materially adverse to the business, operations (as now
conducted), assets, prospects or condition (financial or otherwise), of Seller
or to the transactions contemplated by this Agreement.
9
4.05 Seller’s
NASDAQ Capital Market Listing
As of the
Closing, the common stock of Seller shall be listed on NASDAQ’s Capital Market
without any restriction or limitation being imposed by NASDAQ. Refer
to item 2.14 above.
4.06
Good Standing.
Purchaser
shall have received a certificate of good standing from the appropriate
authority, dated as of the date within five days prior to the Closing Date,
certifying that Seller is in good standing as a corporation in the State of
North Carolina.
4.07
Other Items.
Purchaser
shall have received from the Seller such other documents, legal opinions,
certificates, or instruments relating to the transactions contemplated hereby as
Purchaser may reasonably request.
ARTICLE
V
CONDITIONS
TO THE OBLIGATIONS OF THE SELLER TO CLOSE
The
obligations of the Seller under this Agreement are subject to the fulfillment of
the following conditions at or prior to the Closing Date.
5.01 Accuracy
of Representations.
The
representations and warranties made by Purchaser in this Agreement were true
when made and shall be true at the Closing Date with the same force and affect
as if such representations and warranties were made at and as of the Closing
Date (except for changes therein permitted by this Agreement), and the Purchaser
shall have performed or complied with all covenants and conditions required by
this Agreement to be performed or complied with by him prior to or at the
Closing. Seller shall be furnished with certificates, signed by the
Purchaser and dated the Closing Date, to the foregoing effect.
5.02 Purchaser’s
Certificates.
The Seller
shall have been furnished with a certificate dated the Closing Date and signed
by the Purchaser to the effect that no litigation, proceeding,
investigation, or inquiry is pending or, to the best knowledge of such person,
threatened, which might result in an action to enjoin or prevent the
consummation of the transactions contemplated by this
Agreement. Furthermore, the certificate shall represent, to the best
knowledge of the Purchaser, that:
(a) This
agreement has been duly approved by the Purchaser and has been duly executed and
delivered in the name and on behalf of the Purchaser.
(b) Except
as provided or permitted herein, there have been no material adverse changes in
the Purchaser up to and including the date of the certificate;
(c) All
material conditions required by this Agreement have been met, satisfied, or
performed by the Purchaser;
10
(d) All
authorizations, consents, approvals, registrations, and/or filings with any
governmental body, agency, or court required in connection with the execution
and delivery of this Agreement and related documents by the Purchaser have been
obtained and are in full force and effect or, if not required to have been
obtained will be in full force and effect by such time as may be required;
and
(e) There
is no material action, suit, proceeding, inquiry, or investigation at law or in
equity by any public board or body pending or threatened against the Purchaser
wherein an unfavorable decision, ruling, or finding would have a material
adverse affect on the financial condition of the Purchaser, for the
transactions contemplated herein, or any material agreement or instrument by
which the Purchaser is bound.
5.03 No
Litigation.
As of the
Closing, there shall not be pending any litigation to which Purchaser, or the
Seller is a party and which is reasonably likely to have a material adverse
effect on the business of the Purchaser or the contemplated
transactions.
5.04 No
Material Adverse Change.
There
shall not be any change in, or effect on, the Purchaser’s or Seller’s assets,
financial condition, operating results, customer and employee relations, or
business prospects or the financial statements previously supplied by Seller
which is, or may reasonably be expected to be, materially adverse to the
business, operations (as now conducted), assets, prospects or condition
(financial or otherwise), of the Purchaser or Seller or to the transactions
contemplated by this Agreement.
5.05 Other
Items.
The Seller
shall have received from the Purchaser such other documents, legal opinions,
certificates, or instruments relating to the transactions contemplated hereby as
Seller may reasonably request.
ARTICLE
VI
INDEMNIFICATION
6.03 Indemnification
by the Seller.
The Seller
will indemnify and hold harmless the Purchaser, and each person, if any, who
controls the Purchaser within the meaning of the Securities Act from and against
any and all losses, claims, damages, expenses, liabilities, or other actions to
which any of them may become subject under applicable law (including the
Securities Act and the Securities Exchange Act) and will reimburse them for any
legal or other expenses reasonably incurred by them in connection with
investigating or defending any claims or actions, whether or not resulting in
liability, insofar as such losses, claims, damages, expenses, liabilities, or
actions arise out of or are based upon: (i) any untrue statement or alleged
untrue statement of a material fact contained in any of the representations,
covenants and warranties of Seller set forth herein; or (ii) the breach of any
covenant or agreement of Seller set forth herein. The indemnity set
forth herein shall survive the consummation of all of the transactions herein
for a period of one year.
6.04 Indemnification
by the Purchaser.
The
Purchaser will indemnify and hold harmless the Seller, and each person, if any,
who controls the Seller within the meaning of the Securities Act from and
against any and all losses, claims, damages, expenses, liabilities, or actions
to which any of them may become subject under applicable law (including the
Securities Act and the Securities Exchange Act) and will reimburse them for any
legal or other expenses reasonably incurred by them in connection with
investigating or defending any claims or actions, whether or not resulting in
liability, insofar as such losses, claims, damages, expenses, liabilities, or
actions arise out of or are based upon: (i) any untrue statement or
alleged untrue statement of a material fact contained in any of the
representations, covenants and warranties of the Purchaser set forth herein; or
(ii) the breach of any covenant or agreement of Purchaser set forth
herein. The indemnity set forth herein shall survive the consummation
of all of the transactions herein for a period of one year.
11
ARTICLE
VII
MISCELLANEOUS
PROVISIONS
6.01 Abandonment
of Agreement.
This
Agreement may be terminated and the transaction hereby contemplated abandoned at
any time prior to the Closing Date, whether before or after the approval and
adoption hereof by a party by (a) the mutual consent of the parties, (b) by
Purchaser, if any condition to his obligations provided in this Agreement has
not been met at the time such condition is to be met and has not been waived by
him and (c) by the Seller, if any condition to its obligations provided in this
Agreement has not been met at the time such condition is to be met and has not
been waived by him.
6.02 Liability.
In the
event this Agreement is terminated pursuant to Section 6.01, no party hereto
shall have any liability to the other and each party shall bear their own costs
incurred.
6.03 Survival
of Representations and Warranties.
Seller and
the Purchaser agree all representations and warranties contained herein or made
hereunder shall survive until the first anniversary of the closing, except that
any breach disclosed in writing to either party prior to the closing is waived
by such party if it elects to close notwithstanding such breach.
6.04 Governing
Law.
This
Agreement shall be governed by and construed in accordance with the domestic
laws of the State of North Carolina without giving effect to any choice or
conflict of law provision or rule (whether of the State of North Carolina or of
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of North Carolina.
6.05 Entire
Agreement.
This
Agreement constitutes the entire agreement between the parties and supersedes
any prior understandings, agreements, or representations by or between the
parties, written or oral, to the extent they related in any way to the subject
matter hereof.
6.06 Successors
and Assignment.
This
Agreement shall be binding upon and insure to the benefit of the parties named
herein and their respective successors and permitted assigns. No
party may assign either this Agreement or any of its rights, interests, or
obligations hereunder without the prior written approval of the other
party.
6.07
No Third Party Beneficiaries.
This
Agreement shall not confer any rights or remedies upon any person other than the
parties and their respective successors and permitted assigns.
12
6.08
Counterparts.
This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original but all of which together will constitute one and the same
instrument. In addition, facsimile or electronic signatures shall
have the same legally binding effect as original signatures.
6.09
Section
Headings.
The
section headings contained in this Agreement are inserted for convenience only
and shall not affect in any way the meaning or interpretation of this
Agreement.
IN WITNESS
WHEREOF, the parties hereto have executed this Agreement as of the date first
written above.
PURCHASER:
ICP
Electronics, Inc.
By
/s/ Xxxxxx
Xxxxx
Name:
Xxxxxx Xxxxx
Title:
General Manager
SELLER:
By
/s/ Xxxx
Xxxxxxxx
Name: Xxxx
Xxxxxxxx
Title: Acting
CEO & CFO
13
SCHEDULE
A
INVENTORY TO BE
PURCHASED
As payment
for outstanding invoices totaling $77,115, Seller shall deliver 85,683 shares of
common stock. In addition, Seller shall deliver 34,317 shares of
common stock as pre-payment for $30,885 of engineering, production and other
services to be performed by Buyer at Sellers direction.
The
purchase price of the Seller’s shares amounts to $0.90 per share.
The
balance of Sellers inventory commitment shall be amortized over a 24
month
period, with payments of $39,389 per month beginning on October 10, 2009.
It is
contemplated that additional shares may be issued at later date(s) only if such
transactions can be consummated without causing Purchasers’ total ownership
percentage to exceed 5.0% of the issued and outstanding shares of Common Stock
of the Seller.
14
