SHARE PURCHASE AGREEMENT
This Share Purchase Agreement ("Agreement"), dated as of March 28, 2003
2002, among, Xxxxxxxx Xxxxxxx (the "Seller"), and Southern Group International,
Inc. ("SGI"), and National Coal Corporation. (the "Buyer").
W I T N E S S E T H:
A. WHEREAS, SGI is a corporation duly organized under the laws of
the State of Florida.
B. WHEREAS, the Seller owns 500,000 shares of common stock of SGI
in the aggregate.
C. WHEREAS, Buyer wishes to purchase an aggregate of 500,000
shares of common stock, the Seller (collectively, the "Purchase Shares"), and
the Seller desire to sell the Purchase Shares to Buyer free and clear of liens
and encumbrances.
D. SGI is joining in this agreement to provide certain covenants
warranties and representations.
NOW, THEREFORE, it is agreed among the parties as follows:
ARTICLE I
The Consideration
1.1 Subject to the conditions set forth herein, Seller shall sell to Buyer
and Buyer shall purchase an aggregate of 500,000 shares of common stock of SGI
from Seller. The purchase price for the shares to be paid by Buyer to Seller is
$50,000 (the "Consideration") which is herewith paid to Seller through escrow
agent, Business Financial Systems Inc. Escrow Account, and is deemed
non-refundable consideration for the Share Purchase Agreement. specified.
ARTICLE II
Closing and Conveyance of Shares
2.1 The Purchase Shares shall be conveyed by Seller to Buyer with duly
executed stock powers by depositing with escrow agent for delivery to buyer,
upon receipt of the Consideration by Seller, and satisfaction of a) the
1
conditions precedent in Article VI, and b) procedures in Article 5. The new
shares being subscribed for herein shall be issued and delivered to escrow agent
for delivery to buyer upon receipt of subscription consideration.
2.2 Closing hereunder shall be completed by delivery in escrow to Business
Financial Systems, Inc. Escrow Account, of the requisite closing documents, cash
consideration and share certificates on or before March 31, 2003 at 5:00 p.m.
PST ("Closing Date") subject to satisfaction of the terms and conditions set
forth herein. Consideration may be delivered by Federal Express or wire
transfers, and any closing documents may be delivered by facsimile, Federal
Express or other appropriate means.
ARTICLE III
Representations, Warranties and Covenants of Seller and SGI as to SGI
Seller and SGI each hereby, represents, warrants and covenants to Buyer
as follows:
3.1 SGI is a corporation duly organized, validly existing and in good
standing under the laws of the State of Florida, and has the corporate power and
authority to own or lease its properties and to carry on its business as it is
now being conducted. The Articles of Incorporation and Amendments and Bylaws of
SGI, are complete and accurate, and the minute books of SGI, copies of which
have also been made available to Buyer, contain a record, which is complete and
accurate in all material respects, of all meetings, and all corporate actions of
the shareholders and Board of Directors of SGI.
3.2 (a) The authorized capital stock of SGI consists of 50,000,000
shares of common stock 10 million preferred is authorized but none are
oustanding. There are 2,387,381 shares of Common Stock of SGI issued and
outstanding. All such shares of capital stock of SGI are validly issued, fully
paid, non-assessable and free of preemptive rights. SGI has no outstanding
options, warrants, or other rights to purchase, or subscribe to, or other
securities convertible into or exchangeable for any shares of capital stock of
SGI, or contracts or arrangements of any kind relating to the issuance, sale or
transfer of any capital stock or other equity securities of SGI. All of the
outstanding shares of capital stock of SGI have been offered, issued, sold and
delivered in compliance with applicable federal and state securities laws and
none of such securities were, at the time of issuance, subject to preemptive
rights. None of such issued and outstanding shares is the subject of any voting
trust agreement relating to the voting thereof or restricting in any way the
sale or transfer thereof.
(b) The Seller own the Purchase Shares that they are conveying
pursuant to this Agreement beneficially and of record, free and clear of any
lien, pledge, security interest or other encumbrance, and, upon payment for the
Purchase Shares as provided in this Agreement, the Buyer will acquire good and
valid title to the Purchase Shares, free and clear of any lien, pledge, security
interest or other encumbrance. None of the Purchase Shares are the subject of
any voting trust agreement or other agreement relating to the voting thereof or
restricting in any way the sale or transfer thereof except for this Agreement.
Each Seller has full right and authority to transfer such Purchase Shares
pursuant to the terms of this Agreement.
2
3.3 SGI does not own nor has it owned, in the last five years, any
outstanding shares of capital stock or other equity interests of any
partnership, joint venture, trust, corporation, limited liability company or
other entity and there are no obligations of SGI to repurchase, redeem or
otherwise acquire any capital stock or equity interest of another entity.
3.4 This Agreement has been duly authorized, validly executed and delivered
on behalf of the Seller and SGI and is a valid and binding agreement and
obligation of SGI and Seller enforceable against the parties in accordance with
its terms, subject to limitations on enforcement by general principles of equity
and by bankruptcy or other laws affecting the enforcement of creditors' rights
generally, and Seller and SGI have complete and unrestricted power to enter into
and, upon the appropriate approvals as required by law, to consummate the
transactions contemplated by this Agreement.
3.5 Neither the making of nor the compliance with the terms and provisions
of this Agreement and consummation of the transactions contemplated herein by
Seller or SGI will conflict with or result in a breach or violation of the
Articles of Incorporation or Bylaws of SGI, or of any material provisions of any
indenture, mortgage, deed of trust or other material agreement or instrument to
which SGI or Seller are a party, or of any material provision of any law,
statute, rule, regulation, or any existing applicable decree, judgment or order
by any court, federal or state regulatory body, administrative agency, or other
governmental body having jurisdiction over SGI or Seller, or any of its material
properties or assets, or will result in the creation or imposition of any
material lien, charge or encumbrance upon any material property or assets of SGI
pursuant to the terms of any agreement or instrument to which SGI is a party or
by which SGI may be bound or to which any of SGI property is subject and no
event has occurred with which lapse of time or action by a third party could
result in a material breach or violation of or default by SGI or Seller.
3.6 There is no claim, legal action, arbitration, governmental
investigation or other legal or administrative proceeding, nor any order, decree
or judgment in progress, pending or in effect, or to the best knowledge of the
Seller threatened against or relating to SGI or affecting any of its assets,
properties, business or capital stock. There is no continuing order, injunction
or decree of any court, arbitrator or governmental authority to which SGI is a
party or by which SGI or its assets, properties, business or capital stock are
bound.
3.7 SGI has accurately prepared and filed all federal, state and other tax
returns required by law, domestic and foreign, to be filed by it, has paid or
made provisions for the payment of all taxes shown to be due and all additional
assessments, and adequate provisions have been and are reflected in the
financial statements of SGI for all current taxes and other charges to which SGI
is subject and which are not currently due and payable. None of the Federal
income tax returns of SGI have been audited by the Internal Revenue Service or
other foreign governmental tax agency. SGI has no knowledge of any additional
assessments, adjustments or contingent tax liability (whether federal or state)
pending or threatened against SGI for any period, nor of any basis for any such
assessment, adjustment or contingency.
3.8 SGI has delivered to Buyer audited financial statements dated December
31, 2002. All such statements, herein sometimes called "SGI Financial
Statements" are complete and correct in all material respects and, together with
3
the notes to these financial statements, present fairly the financial position
and results of operations of SGI for the periods indicated. All financial
statements of SGI have been prepared in accordance with generally accepted
accounting principles. The December 31, 2002 10KSB will be completed and filed
on or before closing hereunder.
3.9 As of the date hereof, SGI, represents and warrants that all
outstanding indebtedness of SGI is as shown on the financial statements (except
for legal and accounting services related to this transaction) and all such
scheduled indebtedness, if any, which will be the sole responsibility of the
Seller and shall be paid by the Seller at the Closing hereunder.
3.10 Since the dates of the SGI Financial Statements, there have not been
any material adverse changes in the business or condition, financial or
otherwise, of SGI. SGI does not have any liabilities, commitments or
obligations, secured or unsecured except as shown on updated financials (whether
accrued, absolute, contingent or otherwise).
3.11 SGI is not a party to any contract performable in the future.
3.12 The representations and warranties of the SGI shall be true and
correct as of the date hereof.
3.13 SGI will have delivered to Buyer, all of its corporate books and
records for review.
3.14 SGI has no employee benefit plan in effect at this time, except ESOP
and officers and directors plans but no options are outstanding.
3.15 No representation or warranty by SGI or the Seller in this Agreement,
or any certificate delivered pursuant hereto contains any untrue statement of a
material fact or omits to state any material fact necessary to make such
representation or warranty not misleading.
3.16 Buyer has received copies of Form 10KSB as filed with the Securities
and Exchange Commission ("SEC") which included audits for the year ended
December 31, 2001 and each of its other reports to shareholders filed with the
SEC through the period ended September 30, 2002. SGI is a registered company
under the Securities Exchange Act of 1934, as amended.
3.17 SGI has filed reports required to be filed by it under the Securities
Exchange Act of 1934, as amended (the "Federal Securities Laws".) No such
reports, or any reports sent to the shareholders of SGI generally contained any
untrue statement of material fact or omitted to state any material fact required
to be stated therein or necessary to make the statements in such report, in
light of the circumstances under which they were made, not misleading.
3.18 The Buyer has not received any general solicitation or general
advertising regarding the shares of Seller's common stock.
3.19 SGI has conducted no business whatsoever since December 31, 2002, has
incurred no liabilities except as shown on the financial statements and fees in
conjunction with this transaction, which fees incurred in conjunction with this
transaction shall be paid at closing.
4
3.20 There have been no material changes, debts, or liabilities incurred by
SGI since the date of 10KSB for December 31, 2002.
ARTICLE IV
Termination of Representation and
Warranties and Certain Agreements; Indemnification
4.1 The respective representations and warranties of the parties hereto
shall survive this Agreement for two years and the continuing covenants shall
survive hereafter, pursuant to their terms.
4.2 The right to indemnification or payment of Damages (as defined in
section 4.4) or other remedy based on any representation, warranty, covenant or
obligation of a party hereunder shall not be waived by any investigation
conducted with respect to, or any knowledge acquired (or capable of being
acquired) at any time, whether before or after the execution and delivery of
this Agreement, with respect to the accuracy or inaccuracy of or compliance
with, any such representation, warranty, covenant or obligation.
4.3 The waiver of any condition to a party's obligation to consummate the
transactions contemplated hereunder, where such condition is based on the
accuracy of any representation or warranty, or on the performance of or
compliance with any covenant or obligation, will not affect the right to
indemnification, or payment of Damages, or other remedy based on such
representation, warranty, covenant or obligation.
4.4 Seller and SGI, jointly and severally, shall indemnify and hold
harmless the Buyer and its respective officers, directors and affiliates (the
"Buyer Indemnified Persons") for, and will pay to the Buyer Indemnified Persons,
the amount of, any loss, liability, claim, damage (including, without
limitation, incidental and consequential damages), cost, expense (including,
without limitation, interest, penalties, costs of investigation and defense and
the reasonable fees and expenses of attorneys and other professional experts) or
diminution of value, whether or not involving a third-party claim (collectively,
"Damages"), directly or indirectly arising from, attributable to or in
connection with:
(a) any representation or warranty made by Seller or SGI in this
agreement or any closing deliveries, that is, or was at the time
made, false or inaccurate, or any breach of, or misrepresentation
with respect to, any such representation or warranty; and
(b) any breach by any of the Seller or SGI of any covenant, agreement
or obligation of SGI or Seller contained in this agreement.
(c) any claims or litigation relating to SGI now pending or
threatened or which may hereafter be brought against Buyer and/or
SGI or Seller based upon events occurring prior to the date
hereof and not attributable to the acts of the Buyer.
5
(d) any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs, losses, liabilities and reasonable
legal and other expenses incident to any of the foregoing.
4.5 Seller and SGI shall have no liability for indemnification with respect
to any representation or warranty, unless, on or before the second anniversary
of the date hereof, the Buyer notifies the Seller of a claim specifying the
basis thereof in reasonable detail to the extent then known by Buyer. A claim
with respect to any covenant, agreement or obligation contained in this
agreement, may be made at any time without any time limitation.
4.6 Promptly after receipt by an indemnified party of written notice (the
"Notice of Claim") of the commencement of any action, suit or proceeding against
it, or written threat thereof, such indemnified party will, if a claim is to be
made against an indemnifying party under either of said sections, as applicable,
give notice to the indemnifying party of the commencement of such action, suit
or proceeding. The indemnified party shall furnish to the indemnifying party in
reasonable detail such information as the indemnified party may have with
respect to such indemnification claims (including copies of any summons,
complaint or other pleading which may have been served on it and any written
claim, demand, invoice, billing or other document evidencing or assenting the
same). Subject to the limitations set forth in this section, no failure or delay
by the indemnified party in the performance of the foregoing shall reduce or
otherwise affect the obligation of the indemnifying party to indemnify and hold
the indemnified party harmless except to the extent that such failure or delay
shall have materially and adversely affected the indemnifying party's ability to
defend against, settle or satisfy any action, suit or proceeding the claim for
which the indemnified party is entitled to indemnification hereunder. The
foregoing shall not apply to the extent inconsistent with the provisions of
section 4.8 relating to Proceedings.
4.7 If the claim or demand set forth in the Notice of Claim given by the
indemnified party is a claim or demand asserted by a third party, the
indemnifying party shall have 30 days after the Date of Notice of Claim to
notify the indemnified party in writing of its election to defend such third
party claim or demand on behalf of the indemnified party (the "Notice Period");
provided, however, that the indemnified party is authorized to file any motion,
answer or other pleading which it deems necessary or appropriate to protect its
interests during the Notice Period. If the indemnifying party elects to defend
such third party claim or demand, the indemnified party shall make available to
the indemnifying party and its agents and representatives all records and other
materials which are reasonably required in the defense of such third party claim
or demand and shall otherwise cooperate (at the sole cost and expense of the
indemnifying party) with, and assist (at the sole cost and expense of the
indemnifying party) the indemnifying party in the defense of, such third party
claim or demand, and so long as the indemnifying party is diligently defending
such third party claim in good faith, the indemnified party shall not pay,
settle or compromise such third party claim or demand. If the indemnifying party
elects to defend such third party claim or demand, the indemnified party shall
have the right to control the defense of such third party claim or demand, at
the indemnified party's own expense. If the indemnifying party does not elect to
defend such third party claim or demand or does not defend such third party
claim or demand in good faith, the indemnified party shall have the right, in
addition to any other right or remedy it may have hereunder at the indemnifying
party's expense, to defend such third party claim or demand.
6
4.8 The term "Date of Notice of Claim" shall mean the date the Notice of
Claim is effective pursuant to section 4.6 of this Agreement.
4.9 A claim for indemnification for any matter not involving a third-party
claim may be asserted by notice to the party from whom indemnification is
sought.
4.10 Any legal action or proceeding with respect to this Agreement or any
matters arising out of or in connection with this Agreement or the transactions
contemplated hereby or the documents executed and delivered in connection
herewith, and any action for enforcement of any judgment in respect thereof may
be brought in the courts of the State of Colorado or of the United States of
America for the District of Colorado, and, by execution and delivery of this
Agreement, the parties each hereby accepts for itself and in respect of its
property, generally and unconditionally, the jurisdiction of the aforesaid
courts and appellate courts thereof. The parties irrevocably consent to service
of process out of any of the aforementioned courts in any such action or
proceeding in accordance with the notice provisions set forth in Section 9.5.
The parties each hereby irrevocably waive any objection that it may now or
hereafter have to the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this Agreement or the
transactions contemplated hereby or the documents execute and delivered in
connection herewith brought in the courts referred to above and hereby further
irrevocably waive and agree, to the extent permitted by applicable law, not to
plead or claim in any such court that any such action or proceeding brought in
any such court has been brought in an inconvenient forum. Nothing herein shall
affect the right of any party hereto to serve process in any other manner
permitted by law
ARTICLE V
Procedure for Closing
5.1 At the Closing Date, the purchase and sale shall be consummated after
satisfaction of all conditions precedent set forth in Article VI, by Seller'
common stock certificates for the Purchase Shares being delivered, duly
executed, for 500,000 shares of common stock to escrow agent, and the delivery
of the Consideration for share purchase to escrow agent from the Buyer, together
with delivery of all other items, agreements, stock powers, warranties, and
representations set forth in this Agreement.
5.2 Escrow Agent is Business Financial Systems, Inc. and the escrow account
is Business Financial Systems. Inc. Escrow Account @ First Bank, 0000 Xxxxxxxxx
Xxxx., Xxxxx Xxxxx, XX 00000-0000, (000) 000-0000.
ARTICLE VI
Conditions Precedent to the
Consummation of the Purchase
The following are conditions precedent to the consummation of the
Agreement on or before the Closing Date:
7
6.1 Seller and SGI shall have performed and complied with all of their
respective obligations hereunder which are to be complied with or performed on
or before the Closing Date.
6.2 No action, suit or proceeding shall have been instituted or shall have
been threatened before any court or other governmental body or by any public
authority to restrain, enjoin or prohibit the transactions contemplated herein,
or which might subject any of the parties hereto or their directors or officers
to any material liability, fine, forfeiture or penalty on the grounds that the
transactions contemplated hereby, the parties hereto or their directors or
officers, have violated any applicable law or regulation or have otherwise acted
improperly in connection with the transactions contemplated hereby, and the
parties hereto have been advised by counsel that, in the opinion of such
counsel, such action, suit or proceeding raises substantial questions of law or
fact which could reasonably be decided adversely to any party hereto or its
directors or officers.
6.3 The representations and warranties made by Seller and SGI in this
Agreement shall be true as though such representations and warranties had been
made or given on and as of the Closing Date, except to the extent that such
representations and warranties may be untrue on and as of the Closing Date
because of changes caused by transactions suggested or approved in writing by
the Buyer.
ARTICLE VII
Termination and Abandonment
7.1 Anything contained in this Agreement to the contrary notwithstanding,
the Agreement may be terminated and abandoned at any time prior to or on the
Closing Date:
(a) By mutual consent of parties;
(b) By Seller or Buyer, if any condition set forth in Article VI
relating to the other party has not been met or has not been
waived;
(c) By Seller or Buyer, if any suit, action, or other proceeding
shall be pending or threatened by the federal or a state
government before any court or governmental agency, in which it
is sought to restrain, prohibit, or otherwise affect the
consummation of the transactions contemplated hereby;
(d) By Seller or Buyer, if there is discovered any material error,
misstatement or omission in the representations and warranties of
another party; or
(e) By the Seller, if the Closing does not occur, through no failure
to act by Seller, on March 31, 2003, or if Buyer fails to
deliver the consideration required herein.
8
7.2 Any of the terms or conditions of this Agreement may be waived at
any time by the party which is entitled to the benefit thereof, by action taken
by its Board of Directors provided; however, that such action shall be taken
only if, in the judgment of the Board of Directors taking the action, such
waiver will not have a materially adverse effect on the benefits intended under
this Agreement to the party waiving such term or condition.
ARTICLE VIII
Continuing Representations and
Warranties and Covenants
8.1 The respective representations, warranties, and covenants of the
parties hereto and the covenants and agreements of the parties hereto shall
survive after the closing under this Agreement in accordance with the terms
thereof.
ARTICLE IX
Miscellaneous
9.1 This Agreement embodies the entire agreement between the parties, and
there have been and are no agreements, representations or warranties among the
parties other than those set forth herein or those provided for herein, except
that a companion document, the Reorganization Agreement, has been executed
concurrently which contains numerous warranties and representations.
9.2 To facilitate the execution of this Agreement, any number of
counterparts hereof may be executed, and each such counterpart shall be deemed
to be an original instrument, but all such counterparts together shall
constitute but one instrument.
9.3 All parties to this Agreement agree that if it becomes necessary or
desirable to execute further instruments or to make such other assurances as are
deemed necessary, the party requested to do so will use its best efforts to
provide such executed instruments or do all things necessary or proper to carry
out the purpose of this Agreement.
9.4 This Agreement may not be amended except by written consent of both
parties.
9.5 Any notices, requests, or other communications required or permitted
hereunder shall be delivered personally or sent by overnight courier service,
prepaid, addressed as follows:
To Seller: Xxxxxxxx Xxxxxxx
To SGI: Xxxxxxxx Xxxxxxx
To Buyer: National Coal Corporation
Attn: Xxx Xxx
9
Copy to: Escrow Agent: Business Financial Systems, Inc.,
0000 Xxxxxxxxx Xxxx., Xxxxx Xxxxx, XX 00000-0000
(000) 000-0000
or such other addresses as shall be furnished in writing by any party, and any
such notice or communication shall be deemed to have been given as of the date
received.
9.6 No press release or public statement will be issued relating to the
transactions contemplated by this Agreement without prior approval of the Buyer
and Seller. However, SGI may issue at any time any press release or other public
statement it believes on the advice of its counsel it is obligated to issue to
avoid liability under the law relating to disclosures, but the party issuing
such press release or public statement shall make a reasonable effort to give
the other party prior notice of and opportunity to participate in such release
or statement.
9.7 This Agreement shall be governed by and construed in accordance with
and enforced under the laws of the state of Colorado applicable to all
agreements made hereunder. Venue and jurisdiction for any legal actions
hereunder shall be District Court in and for Jefferson County, Colorado.
9.8 In connection with this Agreement the parties have appointed the escrow
agent, Business Financial Systems, Inc. which shall be authorized by this
agreement to do the following:
1) Accept the purchase price of $50,000 from buyers, and disburse it
in accordance with Seller written instructions, upon receipt of a
copy of this agreement signed by sellers and SGI.
2) Accept the common stock certificates of SGI with duly signed and
guaranteed signatures and for 500,000 common shares from sellers
and,
3) Upon receipt of the certificates for the purchase shares disburse
the proceeds received at closing from the escrow as follows:
i) $50,000 to sellers
4) Transmit by Federal Express the stock certificates to buyers at:
_________________________
5) In the event of default in delivery of cash or certificates by a
party under this agreement, any cash or certificates received
from the other party shall be returned to the remitting party 3
business days after default.
6) Escrow Agent is specifically indemnified and held harmless hereby
for its actions or inactions in following these instructions. In
the event of a dispute involving the escrow instructions or the
consideration to be delivered in escrow, the escrow agent is
authorized to implead the consideration received into the
District Court of Jefferson County, Colorado upon ten days
written notice, and be relieved of any further escrow duties
thereupon. Any and all costs of attorneys fees and legal actions
of escrow agent for any dispute resolution or impleader action
shall be paid in equal shares by the parties to this agreement.
10
The buyer agrees to pay escrow agent fees of $500 and out of
pocket costs related to these escrow services, at disbursement.
9.10 As part of the consideration hereunder, Buyer agrees that they shall
assume and agree to pay the $12,500 note payable from SGI to Seller. Such
payment shall be made within 30 days after closing.
9.11 Concurrent with closing SGI shall execute a consulting agreement with
Seller for a period of 1 year at the rate of $2,500 per month.
11
IN WITNESS WHEREOF, the parties have executed this Agreement this 28th
day of March, 2003.
Seller: Southern Group International, Inc.
/s/ Xxxxxxxx Xxxxxxx
-------------------------- By: /s/ Xxxxxx Xxx
------------------------------
Name: Xxxxxx Xxx
Title:
--------------------------
BUYER: National Coal Corporation
____________________________
____________________________
By: Xxx Xxx
----------------------------
Name: Xxx Xxx
Title: President
