SHARE PURCHASE AGREEMENT
THIS AGREEMENT is made as of the 16th day of March, 2006
AMONG:
AMERICAN UNITED GLOBAL, INC., a corporation formed pursuant to the
laws of the State of Delaware and having an office for business
located at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, #▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
("AUGI")
AND:
▇▇▇▇▇ ▇▇., a company formed pursuant to the laws of Hungary and
having an office for business located at ▇▇▇▇▇▇▇ ▇▇▇▇▇ u. ▇▇-▇▇
▇▇▇▇▇▇▇▇ ▇-▇▇▇▇
("▇▇▇▇▇")
AND:
The shareholders of Kraft, each of whom are set forth on the
signature page of this Agreement
(the "Kraft Shareholders")
WHEREAS:
A. The Kraft Shareholders own 2,375 registered ordinary shares, HUF 10,000 par
value each of Kraft, constituting HUF 50,000,000 registered capital of Kraft,
being 47.5% of the presently issued and outstanding Kraft Shares;
B. AUGI is a reporting company whose common stock is quoted on the Pink Sheets;
and
C. The respective Boards of Directors of AUGI, and Kraft deem it advisable and
in the best interests of AUGI and Kraft that AUGI acquire and Kraft Shareholders
sell (the "Acquisition") pursuant to this Agreement.
NOW THEREFORE THIS AGREEMENT WITNESSETH THAT in consideration of the premises
and the mutual covenants, agreements, representations and warranties contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATION
Definitions
1.1 In this Agreement the following terms will have the following meanings:
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(a) "Acquisition" means the Acquisition, at the Closing, of the ordinary
shares of Kraft held by the Kraft Shareholders by AUGI pursuant to this
Agreement;
(b) "Acquisition Shares" means the 47,500 AUGI Preferred Shares to be issued
to the Kraft Shareholders at Closing pursuant to the terms of the
Acquisition;
(c) "Agreement" means this share purchase agreement among AUGI, Kraft, and the
Kraft Shareholders;
(d) "AUGI Accounts Payable and Liabilities" means all accounts payable and
liabilities of AUGI, on a consolidated basis, due and owing or otherwise
constituting a binding obligation of AUGI and its subsidiaries (other than
a AUGI Material Contract) as of December 31, 2005 as set forth is Schedule
"A" hereto;
(e) "AUGI Accounts Receivable" means all accounts receivable and other debts
owing to AUGI, on a consolidated basis, as of December 31, 2005 as set
forth in Schedule "B" hereto;
(f) "AUGI Assets" means the undertaking and all the property and assets of the
AUGI Business of every kind and description wheresoever situated
including, without limitation, AUGI Equipment, AUGI Inventory, AUGI
Material Contracts, AUGI Accounts Receivable, AUGI Cash, AUGI Intangible
Assets and AUGI Goodwill, and all credit cards, charge cards and banking
cards issued to AUGI;
(g) "AUGI Bank Accounts" means all of the bank accounts, lock boxes and safety
deposit boxes of AUGI and its subsidiaries or relating to the AUGI
Business as set forth in Schedule "C" hereto;
(h) "AUGI Business" means all aspects of any business conducted by AUGI and
its subsidiaries;
(i) "AUGI Cash" means all cash on hand or on deposit to the credit of AUGI and
its subsidiaries on the Closing Date;
(j) "AUGI Common Shares" means the shares of common stock in the capital of
AUGI;
(k) "AUGI Debt to Related Parties" means the debts owed by AUGI to any
affiliate, director or officer of AUGI as described in Schedule "D"
hereto;
(l) "AUGI Equipment" means all machinery, equipment, furniture, and
furnishings used in the AUGI Business, including, without limitation, the
items more particularly described in Schedule "E" hereto;
(m) "AUGI Financial Statements" means, collectively, the audited consolidated
financial statements of AUGI for the fiscal year ended December 31, 2004,
together with the unqualified auditors' report thereon, and the unaudited
consolidated financial statements of AUGI for the nine month period ended
September 30, 2005, true copies of which are attached as Schedule "F"
hereto;
(n) "AUGI Goodwill" means the goodwill of the AUGI Business including the
right to all corporate, operating and trade names associated with the AUGI
Business, or any variations of such names as part of or in connection with
the AUGI Business, all books and records and other information relating to
the AUGI Business, all necessary licenses and authorizations and any other
rights used in connection with the AUGI Business;
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(o) "AUGI Insurance Policies" means the public liability insurance and
insurance against loss or damage to the AUGI Assets and the AUGI Business
as described in Schedule "G" hereto;
(p) "AUGI Intangible Assets" means all of the intangible assets of AUGI and
its subsidiaries, including, without limitation, AUGI Goodwill, all
trademarks, logos, copyrights, designs, and other intellectual and
industrial property of AUGI and its subsidiaries;
(q) "AUGI Inventory" means all inventory and supplies of the AUGI Business as
of December 31, 2005, as set forth in Schedule "H" hereto; and
(r) "AUGI Material Contracts" means the burden and benefit of and the right,
title and interest of AUGI and its subsidiaries in, to and under all trade
and non-trade contracts, engagements or commitments, whether written or
oral, to which AUGI or its subsidiaries are entitled whereunder AUGI or
its subsidiaries are obligated to pay or entitled to receive the sum of
$10,000 or more including, without limitation, any pension plans, profit
sharing plans, bonus plans, loan agreements, security agreements,
indemnities and guarantees, any agreements with employees, lessees,
licensees, managers, accountants, suppliers, agents, distributors,
officers, directors, attorneys or others which cannot be terminated
without liability on not more than one month's notice, and those contracts
listed in Schedule "I" hereto.
(s) "Closing" means the completion, on the Closing Date, of the transactions
contemplated hereby in accordance with Article 9 hereof;
(t) "Closing Date" means the day on which all conditions precedent to the
completion of the transaction as contemplated hereby have been satisfied
or waived, but in any event no later than 45 days from the completion and
delivery of the Kraft Financials to AUGI and Sichenzia ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ LLP; provided however;
(u) "Financing" is as defined in Section 7.3(i).
(v) "Kraft Accounts Payable and Liabilities" means all accounts payable and
liabilities of Kraft, due and owing or otherwise constituting a binding
obligation of Kraft (other than a Kraft Material Contract) as of December
31, 2005 as set forth in Schedule "J" hereto;
(w) "Kraft Accounts Receivable" means all accounts receivable and other debts
owing to Kraft, as of December 31, 2005 as set forth in Schedule "K"
hereto;
(x) "Kraft Assets" means the undertaking and all the property and assets of
the Kraft Business of every kind and description wheresoever situated
including, without limitation, Kraft Equipment, Kraft Inventory, Kraft
Material Contracts, Kraft Accounts Receivable, Kraft Cash, Kraft
Intangible Assets and Kraft Goodwill, and all credit cards, charge cards
and banking cards issued to Kraft;
(y) "Kraft Bank Accounts" means all of the bank accounts, lock boxes and
safety deposit boxes of Kraft or relating to the Kraft Business as set
forth in Schedule "L" hereto;
(z) "Kraft Business" means all aspects of the business conducted by Kraft;
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(aa) "Kraft Cash" means all cash on hand or on deposit to the credit of Kraft
on the Closing Date;
(bb) "Kraft Debt to Related Parties" means the debts owed by Kraft and its
subsidiaries to the Kraft Shareholders or to any family member thereof, or
to any affiliate, director or officer of Kraft or the Kraft Shareholders
as described in Schedule "M";
(cc) "Kraft Equipment" means all machinery, equipment, furniture, and
furnishings used in the Kraft Business, including, without limitation, the
items more particularly described in Schedule "N" hereto;
(dd) "Kraft Financial Statements" means collectively, the audited consolidated
financial statements of Kraft for the period from inception to December
31, 2005 and any additional audited or interim financial statements as
required, true copies of which shall be attached as Schedule "O" hereto;
(ee) "Kraft Goodwill" means the goodwill of the Kraft Business together with
the exclusive right of AUGI to represent itself as carrying on the Kraft
Business in succession of Kraft subject to the terms hereof, and the right
to use any words indicating that the Kraft Business is so carried on
including the right to use the name "Kraft" or "Kraft International" or
any variation thereof as part of the name of or in connection with the
Kraft Business or any part thereof carried on or to be carried on by
Kraft, the right to all corporate, operating and trade names associated
with the Kraft Business, or any variations of such names as part of or in
connection with the Kraft Business, all telephone listings and telephone
advertising contracts, all lists of customers, books and records and other
information relating to the Kraft Business, all necessary licenses and
authorizations and any other rights used in connection with the Kraft
Business;
(ff) "Kraft Insurance Policies" means the public liability insurance and
insurance against loss or damage to Kraft Assets and the Kraft Business as
described in Schedule "P" hereto;
(gg) "Kraft Intangible Assets" means all of the intangible assets of Kraft,
including, without limitation, Kraft Goodwill, all trademarks, logos,
copyrights, designs, and other intellectual and industrial property of
Kraft and its subsidiaries;
(hh) "Kraft Inventory" means all inventory and supplies of the Kraft Business
as of December 31, 2005 as set forth in Schedule "Q" hereto;
(ii) "Kraft Material Contracts" means the burden and benefit of and the right,
title and interest of Kraft in, to and under all trade and non-trade
contracts, engagements or commitments, whether written or oral, to which
Kraft is entitled in connection with the Kraft Business whereunder Kraft
is obligated to pay or entitled to receive the sum of $10,000 or more
including, without limitation, any pension plans, profit sharing plans,
bonus plans, loan agreements, security agreements, indemnities and
guarantees, any agreements with employees, lessees, licensees, managers,
accountants, suppliers, agents, distributors, officers, directors,
attorneys or others which cannot be terminated without liability on not
more than one month's notice, and those contracts listed in Schedule "R"
hereto;
(jj) "Kraft Related Party Debts" means the debts owed by the Kraft Shareholders
or by any family member thereof, or by any affiliate, director or officer
of Kraft or the Kraft Shareholders, to Kraft as described in Schedule "S";
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(kk) "Kraft Shares" means all of the issued and outstanding shares of Kraft's
equity stock;
(ll) "Place of Closing" means the offices of Sichenzia ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
LLP, or such other place as AUGI and Kraft may mutually agree upon;
(mm) "AUGI Preferred Shares" means the shares of Series B-4 Preferred Stock of
AUGI, each share of which will be automatically convert into 350 shares of
common stock of AUGI upon the Company increasing its authorized shares of
common stock and, prior to such conversion, the AUGI Preferred Shares will
have all the voting rights of shares of common stock of AUGI and vote
together with the shares of common stock of AUGI on all matters which such
shares will not be affected by the reverse stock split of AUGI's shares of
common stock.
Any other terms defined within the text of this Agreement will have the meanings
so ascribed to them.
Captions and Section Numbers
1.2 The headings and section references in this Agreement are for convenience of
reference only and do not form a part of this Agreement and are not intended to
interpret, define or limit the scope, extent or intent of this Agreement or any
provision thereof.
Section References and Schedules
1.3 Any reference to a particular "Article", "section", "paragraph", "clause" or
other subdivision is to the particular Article, section, clause or other
subdivision of this Agreement and any reference to a Schedule by letter will
mean the appropriate Schedule attached to this Agreement and by such reference
the appropriate Schedule is incorporated into and made part of this Agreement.
The Schedules to this Agreement are as follows:
Information concerning AUGI
Schedule "A" AUGI Accounts Payable and Liabilities
Schedule "B" AUGI Accounts Receivable
Schedule "C" AUGI Bank Accounts
Schedule "D" AUGI Debts to Related Parties
Schedule "E" AUGI Equipment
Schedule "F" AUGI Financial Statements
Schedule "G" AUGI Insurance Policies
Schedule "H" AUGI Inventory
Schedule "I" AUGI Material Contracts
Information concerning Kraft
Schedule "J" Kraft Accounts Payable and Liabilities
Schedule "K" Kraft Accounts Receivable
Schedule "L" Kraft Bank Accounts
Schedule "M" Kraft Debts to Related Parties
Schedule "N" Kraft Equipment
Schedule "O" Kraft Financial Statements
Schedule "P" Kraft Insurance Policies
Schedule "Q" Kraft Inventory
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Schedule "R" Kraft Material Contracts
Schedule "S" Kraft Related Party Debts
Additional Information and Documents
Schedule "T" AUGI Derivative Securities
Severability of Clauses
1.4 If any part of this Agreement is declared or held to be invalid for any
reason, such invalidity will not affect the validity of the remainder which will
continue in full force and effect and be construed as if this Agreement had been
executed without the invalid portion, and it is hereby declared the intention of
the parties that this Agreement would have been executed without reference to
any portion which may, for any reason, be hereafter declared or held to be
invalid.
ARTICLE 2
THE ACQUISITION
Sale of Shares
2.1 The Kraft Shareholders hereby agree to sell to AUGI the Kraft Shares in
exchange for the Acquisition Shares on the Closing Date and to transfer to AUGI
on the Closing Date a 47.5% undivided interest in and to the Kraft Shares free
from all liens, mortgages, charges, pledges, encumbrances or other burdens with
all rights now or thereafter attached thereto.
Allocation of Consideration
2.2 The Acquisition Shares shall be allocated to the Kraft Shareholders on the
basis of 20 Acquisition Shares for each one Kraft Share held by a Kraft
Shareholder as set forth in Schedule 2.2 attached hereto.
Adherence with Applicable Securities Laws
2.2 The Kraft Shareholders agree that they are acquiring the Acquisition Shares
for investment purposes and will not offer, sell or otherwise transfer, pledge
or hypothecate any of the Acquisition Shares issued to them (other than pursuant
to an effective Registration Statement under the Securities Act of 1933, as
amended) directly or indirectly unless:
(a) the sale is to AUGI;
(b) the sale is made pursuant to the exemption from registration
under the Securities Act of 1933, as amended, provided by Rule
144 thereunder; or
(c) the Acquisition Shares are sold in a transaction that does not
require registration under the Securities Act of 1933, as
amended, or any applicable United States state laws and
regulations governing the offer and sale of securities, and
the vendor has furnished to AUGI an opinion of counsel to that
effect or such other written opinion as may be reasonably
required by AUGI.
The Kraft Shareholders acknowledge that the certificates representing
the Acquisition Shares shall bear the following legend:
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NO SALE, OFFER TO SELL, OR TRANSFER OF THE SHARES REPRESENTED
BY THIS CERTIFICATE SHALL BE MADE UNLESS A REGISTRATION
STATEMENT UNDER THE FEDERAL SECURITIES ACT OF 1933, AS
AMENDED, IN RESPECT OF SUCH SHARES IS THEN IN EFFECT OR AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SAID ACT IS
THEN IN FACT APPLICABLE TO SAID SHARES.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
OF AUGI
Representations and Warranties
3.1 AUGI hereby represents and warrants in all material respects to Kraft and
the Kraft Shareholders, with the intent that Kraft and the Kraft Shareholders
will rely thereon in entering into this Agreement and in approving and
completing the transactions contemplated hereby, that:
AUGI - Corporate Status and Capacity
(a) Incorporation. AUGI is a corporation duly incorporated and
upon filing and paying the franchise tax with the state of
Delaware AUGI will be validly subsisting under the laws of the
State of Delaware and in good standing with the office of the
Secretary of State for the State of Delaware;
(b) Carrying on Business. AUGI conducts the business described in
its filings with the Securities and Exchange Commission and
does not conduct any other business. AUGI is duly authorized
to carry on such business in New York, New York. The nature of
the AUGI Business does not require AUGI to register or
otherwise be qualified to carry on business in any other
jurisdictions;
(c) Corporate Capacity. AUGI has the corporate power, capacity and
authority to own the AUGI Assets and to enter into and
complete this Agreement;
(d) Reporting Status; Listing. AUGI is required to file current
reports with the Securities and Exchange Commission pursuant
to section 15(d) of the Securities Exchange Act of 1934, the
AUGI Common Shares are quoted on the Pink Sheets, and all
reports required to be filed by AUGI with the Securities and
Exchange Commission or NASD have been filed;
AUGI - Capitalization
(e) Authorized Capital. The authorized capital of AUGI consists of
40,000,000 AUGI Common Shares, $0.01 par value and 2,455,094
shares of preferred stock. $0.01 par value, of which
10,877,499 AUGI Common Shares, and 303,599 shares of preferred
stock are presently issued and outstanding;
(f) No Option, Warrant or Other Right. Except as set forth on
Schedule "T", no person, firm or corporation has any
agreement, option, warrant, preemptive right or any other
right capable of becoming an agreement, option, warrant or
right for the acquisition of AUGI Common Shares or for the
purchase, subscription or issuance of any of the unissued
shares in the capital of AUGI;
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AUGI - Records and Financial Statements
(g) Charter Documents. The charter documents of AUGI and its
subsidiaries have not been altered since the incorporation of
each, respectively, except as filed in the record books of
AUGI or its subsidiaries, as the case may be;
(h) Corporate Minute Books. The corporate minute books of AUGI and
its subsidiaries are complete and each of the minutes
contained therein accurately reflect the actions that were
taken at a duly called and held meeting or by consent without
a meeting. All actions by AUGI and its subsidiaries which
required director or shareholder approval are reflected on the
corporate minute books of AUGI and its subsidiaries. AUGI and
its subsidiaries are not in violation or breach of, or in
default with respect to, any term of their respective
Certificates of Incorporation (or other charter documents) or
by-laws.
(i) AUGI Financial Statements. The AUGI Financial Statements
present fairly, in all material respects, the assets and
liabilities (whether accrued, absolute, contingent or
otherwise) of AUGI, on a consolidated basis, as of the
respective dates thereof, and the sales and earnings of the
AUGI Business during the periods covered thereby, in all
material respects and have been prepared in substantial
accordance with generally accepted accounting principles
consistently applied;
(j) AUGI Accounts Payable and Liabilities. There are no material
liabilities, contingent or otherwise, of AUGI or its
subsidiaries which are not disclosed in Schedule "A" hereto or
reflected in the AUGI Financial Statements except those
incurred in the ordinary course of business since the date of
the said schedule and the AUGI Financial Statements, and
neither AUGI nor its subsidiaries have guaranteed or agreed to
guarantee any debt, liability or other obligation of any
person, firm or corporation. Without limiting the generality
of the foregoing, all accounts payable and liabilities of AUGI
as of December 31, 2005, are described in Schedule "A" hereto;
(k) AUGI Accounts Receivable. All the AUGI Accounts Receivable
result from bona fide business transactions and services
actually rendered without, to the knowledge and belief of
AUGI, any claim by the obligor for set-off or counterclaim.
Without limiting the generality of the foregoing, all accounts
receivable of AUGI as of December 31, 2005, are described in
Schedule "B" hereto;
(l) AUGI Bank Accounts. All of the AUGI Bank Accounts, their
location, numbers and the authorized signatories thereto are
as set forth in Schedule "C" hereto;
(m) No Debt to Related Parties. Except as disclosed in Schedule
"D" hereto, neither AUGI nor any of its subsidiaries is, and
on Closing will not be, indebted to any affiliate, director or
officer of AUGI except accounts payable on account of bona
fide business transactions of AUGI incurred in normal course
of the AUGI Business, including employment agreements, none of
which are more than 30 days in arrears;
(n) No Related Party Debt to AUGI. No director or officer or
affiliate of AUGI is now indebted to or under any financial
obligation to AUGI or any subsidiary on any account
whatsoever, except for advances on account of travel and other
expenses not exceeding $1,000 in total;
(o) No Dividends. No dividends or other distributions on any
shares in the capital of AUGI have been made, declared or
authorized since the date of AUGI Financial Statements;
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(p) No Payments. No payments of any kind have been made or
authorized since the date of the AUGI Financial Statements to
or on behalf of officers, directors, shareholders or employees
of AUGI or its subsidiaries or under any management agreements
with AUGI or its subsidiaries, except payments made in the
ordinary course of business and at the regular rates of salary
or other remuneration payable to them;
(q) No Pension Plans. There are no pension, profit sharing, group
insurance or similar plans or other deferred compensation
plans affecting AUGI;
(r) No Adverse Events. Since the date of the AUGI Financial
Statements
(i) there has not been any material adverse change in the
consolidated financial position or condition of AUGI,
its subsidiaries, its liabilities or the AUGI Assets or
any damage, loss or other change in circumstances
materially affecting AUGI, the AUGI Business or the AUGI
Assets or AUGI' right to carry on the AUGI Business,
other than changes in the ordinary course of business,
(ii) there has not been any damage, destruction, loss or
other event (whether or not covered by insurance)
materially and adversely affecting AUGI, its
subsidiaries, the AUGI Business or the AUGI Assets,
(iii) there has not been any material increase in the
compensation payable or to become payable by AUGI to any
of AUGI' officers, employees or agents or any bonus,
payment or arrangement made to or with any of them,
(iv) the AUGI Business has been and continues to be carried
on in the ordinary course,
(v) AUGI has not waived or surrendered any right of material
value,
(vi) neither AUGI nor its subsidiaries have discharged or
satisfied or paid any lien or encumbrance or obligation
or liability other than current liabilities in the
ordinary course of business, and
(vii) no capital expenditures in excess of $10,000
individually or $30,000 in total have been authorized or
made.
AUGI - Income Tax Matters
(s) Tax Returns. Except for the form 1120s for the years ended
2002, 2003 and 2004 to be filed with the Internal Revenue
Service, all tax returns and reports of AUGI and its
subsidiaries required by law to be filed have been filed and
are true, complete and correct, and any taxes payable in
accordance with any return filed by AUGI and its subsidiaries
or in accordance with any notice of assessment or reassessment
issued by any taxing authority have been so paid;
(t) Current Taxes. Adequate provisions have been made for taxes
payable for the current period for which tax returns are not
yet required to be filed and there are no agreements, waivers,
or other arrangements providing for an extension of time with
respect to the filing of any tax return by, or payment of, any
tax, governmental charge or deficiency by AUGI or its
subsidiaries. AUGI is not aware of any contingent tax
liabilities or any grounds which would prompt a reassessment
including aggressive treatment of income and expenses in
filing earlier tax returns;
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AUGI - Applicable Laws and Legal Matters
(u) Licenses. AUGI and its subsidiaries hold all licenses and
permits as may be requisite for carrying on the AUGI Business
in the manner in which it has heretofore been carried on,
which licenses and permits have been maintained and continue
to be in good standing except where the failure to obtain or
maintain such licenses or permits would not have a material
adverse effect on the AUGI Business;
(v) Applicable Laws. Neither AUGI nor its subsidiaries have been
charged with or received notice of breach of any laws,
ordinances, statutes, regulations, by-laws, orders or decrees
to which they are subject or which apply to them the violation
of which would have a material adverse effect on the AUGI
Business, and neither AUGI nor its subsidiaries are in breach
of any laws, ordinances, statutes, regulations, bylaws, orders
or decrees the contravention of which would result in a
material adverse impact on the AUGI Business;
(w) Pending or Threatened Litigation. There is no material
litigation or administrative or governmental proceeding
pending or threatened against or relating to AUGI, its
subsidiaries, the AUGI Business, or any of the AUGI Assets nor
does AUGI have any knowledge of any deliberate act or omission
of AUGI or its subsidiaries that would form any material basis
for any such action or proceeding;
(x) No Bankruptcy. Neither AUGI nor its subsidiaries have made any
voluntary assignment or proposal under applicable laws
relating to insolvency and bankruptcy and no bankruptcy
petition has been filed or presented against AUGI or its
subsidiaries and no order has been made or a resolution passed
for the winding-up, dissolution or liquidation of AUGI or its
subsidiaries;
(y) Labor Matters. Neither AUGI nor its subsidiaries are party to
any collective agreement relating to the AUGI Business with
any labor union or other association of employees and no part
of the AUGI Business has been certified as a unit appropriate
for collective bargaining or, to the knowledge of AUGI, has
made any attempt in that regard;
(z) Finder's Fees. Neither AUGI nor its subsidiaries are party to
any agreement which provides for the payment of finder's fees,
brokerage fees, commissions or other fees or amounts which are
or may become payable to any third party in connection with
the execution and delivery of this Agreement and the
transactions contemplated herein;
Execution and Performance of Agreement
(aa) Authorization and Enforceability. The execution and delivery of this
Agreement, and the completion of the transactions contemplated
hereby, have been duly and validly authorized by all necessary
corporate action on the part of AUGI;
(bb) No Violation or Breach. The execution and performance of this
Agreement will not:
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(i) violate the charter documents of AUGI or result in any breach
of, or default under, any loan agreement, mortgage, deed of
trust, or any other agreement to which AUGI or its
subsidiaries are party,
(ii) give any person any right to terminate or cancel any agreement
including, without limitation, the AUGI Material Contracts, or
any right or rights enjoyed by AUGI or its subsidiaries,
(iii) result in any alteration of AUGI' or its subsidiaries'
obligations under any agreement to which AUGI or its
subsidiaries are party including, without limitation, the AUGI
Material Contracts,
(iv) result in the creation or imposition of any lien, encumbrance
or restriction of any nature whatsoever in favor of a third
party upon or against the AUGI Assets,
(v) result in the imposition of any tax liability to AUGI or its
subsidiaries relating to the AUGI Assets, or
(vi) violate any court order or decree to which either AUGI or its
subsidiaries are subject;
The AUGI Assets - Ownership and Condition
(cc) Business Assets. The AUGI Assets comprise all of the property and
assets of the AUGI Business, and no other person, firm or
corporation owns any assets used by AUGI or its subsidiaries in
operating the AUGI Business, whether under a lease, rental agreement
or other arrangement, other than as disclosed in Schedules "E" or
"H" hereto;
(dd) Title. AUGI or its subsidiaries are the legal and beneficial owner
of the AUGI Assets, free and clear of all mortgages, liens, charges,
pledges, security interests, encumbrances or other claims
whatsoever, save and except as disclosed in Schedules "E" or "H"
hereto;
(ee) No Option. No person, firm or corporation has any agreement or
option or a right capable of becoming an agreement for the purchase
of any of the AUGI Assets;
(ff) AUGI Insurance Policies. AUGI and its subsidiaries maintain the
public liability insurance and insurance against loss or damage to
the AUGI Assets and the AUGI Business as described in Schedule "G"
hereto;
(gg) AUGI Material Contracts. The AUGI Material Contracts listed in
Schedule "I" constitute all of the material contracts of AUGI and
its subsidiaries;
(hh) No Default. There has not been any default in any material
obligation of AUGI or any other party to be performed under any of
the AUGI Material Contracts, each of which is in good standing and
in full force and effect and unamended (except as disclosed in
Schedule "I" hereto), and AUGI is not aware of any default in the
obligations of any other party to any of the AUGI Material
Contracts;
(ii) No Compensation on Termination. There are no agreements, commitments
or understandings relating to severance pay or separation allowances
on termination of employment of any employee of AUGI or its
subsidiaries. Neither AUGI nor its subsidiaries are obliged to pay
benefits or share profits with any employee after termination of
employment except as required by law;
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AUGI Assets - AUGI Equipment
(jj) AUGI Equipment. The AUGI Equipment has been maintained in a manner
consistent with that of a reasonably prudent owner and such
equipment is in good working condition;
AUGI Assets - AUGI Goodwill and Other Assets
(kk) AUGI Goodwill. AUGI and its subsidiaries does not carry on the AUGI
Business under any other business or trade names. AUGI does not have
any knowledge of any infringement by AUGI or its subsidiaries of any
patent, trademarks, copyright or trade secret;
The AUGI Business
(ll) Maintenance of Business. Since the date of the AUGI Financial
Statements, AUGI and its subsidiaries have not entered into any
material agreement or commitment except in the ordinary course and
except as disclosed herein;
(mm) Subsidiaries. AUGI does not own any subsidiaries and does not
otherwise own, directly or indirectly, any shares or interest in any
other corporation, partnership, joint venture or firm; and
AUGI - Acquisition Shares
(nn) Acquisition Shares. The Acquisition Shares when delivered to the
Kraft Shareholders pursuant to the Acquisition shall be validly
issued and outstanding as fully paid and non-assessable shares and
the Acquisition Shares shall be transferable upon the books of AUGI,
in all cases subject to the provisions and restrictions of all
applicable securities laws.
Non-Merger and Survival
3.2 The representations and warranties of AUGI contained herein will be true at
and as of Closing in all material respects as though such representations and
warranties were made as of such time. Notwithstanding the completion of the
transactions contemplated hereby, the waiver of any condition contained herein
(unless such waiver expressly releases a party from any such representation or
warranty) or any investigation made by Kraft or the Kraft Shareholders, the
representations and warranties of AUGI shall survive the Closing.
Indemnity
3.3 AUGI agrees to indemnify and save harmless Kraft and the Kraft Shareholders
from and against any and all claims, demands, actions, suits, proceedings,
assessments, judgments, damages, costs, losses and expenses, including any
payment made in good faith in settlement of any claim (subject to the right of
AUGI to defend any such claim), resulting from the breach by it of any
representation or warranty made under this Agreement or from any
misrepresentation in or omission from any certificate or other instrument
furnished or to be furnished by AUGI to Kraft or the Kraft Shareholders
hereunder.
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ARTICLE 4
COVENANTS OF AUGI
Covenants
4.1 AUGI covenants and agrees with Kraft and the Kraft Shareholders that it
will:
(a) Conduct of Business. Until the Closing, conduct the AUGI Business
diligently and in the ordinary course consistent with the manner in
which the AUGI Business generally has been operated up to the date
of execution of this Agreement;
(b) Preservation of Business. Until the Closing, use its best efforts to
preserve the AUGI Business and the AUGI Assets and, without
limitation, preserve for Kraft AUGI's and its subsidiaries'
relationships with any third party having business relations with
them;
(c) Access. Until the Closing, give Kraft, the Kraft Shareholders, and
their representatives full access to all of the properties, books,
contracts, commitments and records of AUGI, and furnish to Kraft,
the Kraft Shareholders and their representatives all such
information as they may reasonably request; and
(d) Procure Consents. Until the Closing, take all reasonable steps
required to obtain, prior to Closing, any and all third party
consents required to permit the Acquisition and to preserve and
maintain the AUGI Assets notwithstanding the change in control of
Kraft arising from the Acquisition.
Authorization
4.2 AUGI hereby agrees to authorize and direct any and all federal, state,
municipal, foreign and international governments and regulatory authorities
having jurisdiction respecting AUGI and its subsidiaries to release any and all
information in their possession respecting AUGI and its subsidiaries to the
Kraft Shareholders. AUGI shall promptly execute and deliver to the Kraft
Shareholders any and all consents to the release of information and specific
authorizations which the Kraft Shareholders reasonably requires to gain access
to any and all such information.
Survival
4.3 The covenants set forth in this Article shall survive the Closing for the
benefit of Kraft and the Kraft Shareholders.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF
THE KRAFT SHAREHOLDERS
Representations and Warranties
5.1 The Kraft Shareholders hereby jointly and severally represent and warrant in
all material respects to AUGI, with the intent that it will rely thereon in
entering into this Agreement and in approving and completing the transactions
contemplated hereby, that:
Kraft - Company Status and Capacity
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(a) Formation. Kraft is a company duly formed and validly subsisting
under the laws of Hungary;
(b) Carrying on Business. Kraft carries on the Kraft Business primarily
in Hungary and does not carry on any material business activity in
any other jurisdiction. Kraft is duly authorized to carry on the
Kraft Business in Hungary. The nature of the Kraft Business does not
require Kraft to register or otherwise be qualified to carry on
business in any other jurisdiction;
(c) Legal Capacity. Kraft has the legal power, capacity and authority to
own Kraft Assets, to carry on the Business of Kraft and to enter
into and complete this Agreement;
Kraft - Capitalization
(d) Authorized Capital. The authorized capital of Kraft consists of
5,000 shares of capital stock;
(e) Ownership of Kraft Shares. The issued and outstanding share capital
of Kraft will on Closing consist of 5,000 shares, each with HUF
10,000 par value, each ordinary registered shares (equivalent to
common stock under Delaware law) (being the Kraft Shares), which
shares on Closing shall be validly issued and outstanding as fully
paid and non-assessable shares. The Kraft Shareholders will be at
Closing the registered and beneficial owners of the 5,000 Kraft
Shares. The Kraft Shares owned by the Kraft Shareholders will on
Closing be free and clear of any and all liens, charges, pledges,
encumbrances, restrictions on transfer and adverse claims
whatsoever;
(f) No Option, Warrant or Other Right. No person, firm or corporation
has any agreement, option, warrant, preemptive right or any other
right capable of becoming an agreement, option, warrant or right for
the acquisition of Kraft Shares held by the Kraft Shareholders or
for the purchase, subscription or issuance of any of the unissued
shares in the capital of Kraft;
(g) No Restrictions. There are no restrictions on the transfer, sale or
other disposition of Kraft Shares contained in the charter documents
of Kraft or under any agreement;
Kraft - Records and Financial Statements
(h) Charter Documents. The charter documents of Kraft have not been
altered since its formation date, except as filed in the record
books of Kraft;
(i) Minute Books. The minute books of Kraft are complete and each of the
minutes contained therein accurately reflect the actions that were
taken at a duly called and held meeting or by consent without a
meeting. All actions by Kraft which required director or shareholder
approval are reflected on the corporate minute books of Kraft. Kraft
is not in violation or breach of, or in default with respect to, any
term of its Certificate of Incorporation (or other charter
documents) or by-laws.
(j) Kraft Financial Statements. The Kraft Financial Statements present
fairly, in all material respects, the assets and liabilities
(whether accrued, absolute, contingent or otherwise) of Kraft as of
the date thereof, and the sales and earnings of the Kraft Business
during the periods covered thereby, in all material respects, and
have been prepared in substantial accordance with generally accepted
accounting principles consistently applied;
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(k) Kraft Accounts Payable and Liabilities. There are no material
liabilities, contingent or otherwise, of Kraft which are not
disclosed in Schedule "J" hereto or reflected in the Kraft Financial
Statements except those incurred in the ordinary course of business
since the date of the said schedule and the Kraft Financial
Statements, and Kraft has not guaranteed or agreed to guarantee any
debt, liability or other obligation of any person, firm or
corporation. Without limiting the generality of the foregoing, all
accounts payable and liabilities of Kraft as of March 31, 2004 are
described in Schedule "J" hereto;
(l) Kraft Accounts Receivable. All the Kraft Accounts Receivable result
from bona fide business transactions and services actually rendered
without, to the knowledge and belief of the Kraft Shareholders, any
claim by the obligor for set-off or counterclaim. Without limiting
the generality of the foregoing, all accounts receivable of Kraft as
of December 31, 2005, are described in Schedule "K" hereto;
(m) Kraft Bank Accounts. All of the Kraft Bank Accounts, their location,
numbers and the authorized signatories thereto are as set forth in
Schedule "L" hereto;
(n) No Debt to Related Parties. Except as disclosed in Schedule "M"
hereto, Kraft is not and on Closing will not be, indebted to the
Kraft Shareholders nor to any family member thereof, nor to any
affiliate, director or officer of Kraft or the Kraft Shareholders
except accounts payable on account of bona fide business
transactions of Kraft incurred in normal course of Kraft Business,
including employment agreements with the Kraft Shareholders, none of
which are more than 30 days in arrears;
(o) No Related Party Debt to Kraft. Except as set forth on Schedule "M"
hereto, no Kraft Shareholder nor any director, officer or affiliate
of Kraft is now indebted to or under any financial obligation to
Kraft on any account whatsoever, except for advances on account of
travel and other expenses not exceeding $5,000 in total;
(p) No Dividends. No dividends or other distributions on any shares in
the capital of Kraft have been made, declared or authorized since
the date of the Kraft Financial Statements;
(q) No Payments. No payments of any kind have been made or authorized
since the date of the Kraft Financial Statements to or on behalf of
the Kraft Shareholders or to or on behalf of officers, directors,
shareholders or employees of Kraft or under any management
agreements with Kraft, except payments made in the ordinary course
of business and at the regular rates of salary or other remuneration
payable to them;
(r) No Pension Plans. There are no pension, profit sharing, group
insurance or similar plans or other deferred compensation plans
affecting Kraft, except as set forth in the Kraft Financial
Statements;
(s) No Adverse Events. Since the date of the Kraft Financial Statements:
(i) there has not been any material adverse change in the
consolidated financial position or condition of Kraft, its
liabilities or the Kraft Assets or any damage, loss or other
change in circumstances materially affecting Kraft, the Kraft
Business or the Kraft Assets or Kraft's right to carry on the
Kraft Business, other than changes in the ordinary course of
business,
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(ii) there has not been any damage, destruction, loss or other
event (whether or not covered by insurance) materially and
adversely affecting Kraft, the Kraft Business or the Kraft
Assets,
(iii) there has not been any material increase in the compensation
payable or to become payable by Kraft to the Kraft
Shareholders or to any of Kraft's officers, employees or
agents or any bonus, payment or arrangement made to or with
any of them,
(iv) the Kraft Business has been and continues to be carried on in
the ordinary course,
(v) Kraft has not waived or surrendered any right of material
value,
(vi) Kraft has not discharged or satisfied or paid any lien or
encumbrance or obligation or liability other than current
liabilities in the ordinary course of business, and
(vii) no capital expenditures in excess of $10,000 individually or
$30,000 in total have been authorized or made;
Kraft - Income Tax Matters
(t) Tax Returns. All tax returns and reports of Kraft required by law to
be filed have been filed and are true, complete and correct, and any
taxes payable in accordance with any return filed by Kraft or in
accordance with any notice of assessment or reassessment issued by
any taxing authority have been so paid;
(u) Current Taxes. Adequate provisions have been made for taxes payable
for the current period for which tax returns are not yet required to
be filed and there are no agreements, waivers, or other arrangements
providing for an extension of time with respect to the filing of any
tax return by, or payment of, any tax, governmental charge or
deficiency by Kraft. Kraft is not aware of any contingent tax
liabilities or any grounds which would prompt a reassessment
including aggressive treatment of income and expenses in filing
earlier tax returns;
Kraft - Applicable Laws and Legal Matters
(v) Licenses. Kraft holds all licenses and permits as may be requisite
for carrying on the Kraft Business in the manner in which it has
heretofore been carried on, which licenses and permits have been
maintained and continue to be in good standing except where the
failure to obtain or maintain such licenses or permits would not
have a material adverse effect on the Kraft Business;
(w) Applicable Laws. Kraft has not been charged with or received notice
of breach of any laws, ordinances, statutes, regulations, by-laws,
orders or decrees to which they are subject or which applies to them
the violation of which would have a material adverse effect on the
Kraft Business, and, to the knowledge of the Kraft Shareholders,
Kraft is not in breach of any laws, ordinances, statutes,
regulations, by-laws, orders or decrees the contravention of which
would result in a material adverse impact on the Kraft Business;
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(x) Pending or Threatened Litigation. There is no material litigation or
administrative or governmental proceeding pending or threatened
against or relating to Kraft, the Kraft Business, or any of the
Kraft Assets, nor do the Kraft Shareholders have any knowledge of
any deliberate act or omission of Kraft that would form any material
basis for any such action or proceeding;
(y) No Bankruptcy. Kraft has not made any voluntary assignment or
proposal under applicable laws relating to insolvency and bankruptcy
and no bankruptcy petition has been filed or presented against Kraft
and no order has been made or a resolution passed for the
winding-up, dissolution or liquidation of Kraft;
(z) Labor Matters. Kraft is not party to any collective agreement
relating to the Kraft Business with any labor union or other
association of employees and no part of the Kraft Business has been
certified as a unit appropriate for collective bargaining or, to the
knowledge of the Kraft Shareholders, has made any attempt in that
regard;
(aa) Finder's Fees. Other than an agreement with Niklai & Partners in
connection with raising capital in Hungary, such that Niklai &
Partners will become eligible to receive 7.5% of the capital raised
in Hungary, in the event that such capital will be added to the US
$5,250,000 raised in the US, or 10% in the event that capital raised
in Hungary will be included in the US $5,250,000 to be raised in the
US, Kraft is not a party to any agreement which provides for the
payment of finder's fees, brokerage fees, commissions or other fees
or amounts which are or may become payable to any third party in
connection with the execution and delivery of this Agreement and the
transactions contemplated herein;
Execution and Performance of Agreement
(bb) Authorization and Enforceability. The execution and delivery of this
Agreement, and the completion of the transactions contemplated
hereby, have been duly and validly authorized by all necessary
corporate action on the part of Kraft;
(cc) No Violation or Breach. The execution and performance of this
Agreement will not
(i) violate the charter documents of Kraft or result in any breach
of, or default under, any loan agreement, mortgage, deed of
trust, or any other agreement to which Kraft is a party,
(ii) give any person any right to terminate or cancel any agreement
including, without limitation, Kraft Material Contracts, or
any right or rights enjoyed by Kraft,
(iii) result in any alteration of Kraft's obligations under any
agreement to which Kraft is a party including, without
limitation, the Kraft Material Contracts,
(iv) result in the creation or imposition of any lien, encumbrance
or restriction of any nature whatsoever in favor of a third
party upon or against the Kraft Assets,
(v) result in the imposition of any tax liability to Kraft
relating to Kraft Assets or the Kraft Shares, or
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(vi) violate any court order or decree to which either Kraft is
subject;
Kraft Assets - Ownership and Condition
(dd) Business Assets. The Kraft Assets, comprise all of the property and
assets of the Kraft Business, and neither the Kraft Shareholders nor
any other person, firm or corporation owns any assets used by Kraft
in operating the Kraft Business, whether under a lease, rental
agreement or other arrangement, other than as disclosed in Schedules
"N" or "Q" hereto;
(ee) Title. Kraft is the legal and beneficial owner of the Kraft Assets,
free and clear of all mortgages, liens, charges, pledges, security
interests, encumbrances or other claims whatsoever, save and except
as disclosed in Schedules "N" or "Q" hereto;
(ff) No Option. No person, firm or corporation has any agreement or
option or a right capable of becoming an agreement for the purchase
of any of the Kraft Assets;
(gg) Kraft Insurance Policies. Kraft maintains the public liability
insurance and insurance against loss or damage to the Kraft Assets
and the Kraft Business as described in Schedule "P" hereto;
(hh) Kraft Material Contracts. The Kraft Material Contracts listed in
Schedule "R" constitute all of the material contracts of Kraft;
(ii) No Default. There has not been any default in any material
obligation of Kraft or any other party to be performed under any of
Kraft Material Contracts, each of which is in good standing and in
full force and effect and unamended (except as disclosed in Schedule
"R"), and Kraft is not aware of any default in the obligations of
any other party to any of the Kraft Material Contracts;
(jj) No Compensation on Termination. There are no agreements, commitments
or understandings relating to severance pay or separation allowances
on termination of employment of any employee of Kraft. Kraft is not
obliged to pay benefits or share profits with any employee after
termination of employment except as required by law;
Kraft Assets - Kraft Equipment
(kk) Kraft Equipment. The Kraft Equipment has been maintained in a manner
consistent with that of a reasonably prudent owner and such
equipment is in good working condition;
Kraft Assets - Kraft Goodwill and Other Assets
(ll) Kraft Goodwill. Kraft carries on the Kraft Business only under the
name " ▇▇▇▇▇ ▇▇." and variations thereof and under no other business
or trade names. The Kraft Shareholders do not have any knowledge of
any infringement by Kraft of any patent, trademark, copyright or
trade secret;
The Business of Kraft
(mm) Maintenance of Business. Since the date of the Kraft Financial
Statements, the Kraft Business has been carried on in the ordinary
course and Kraft has not entered into any material agreement or
commitment except in the ordinary course; and
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(nn) Subsidiaries. Kraft does not own any subsidiaries and does not
otherwise own, directly or indirectly, any shares or interest in any
other corporation, partnership, joint venture or firm and Kraft does
not own any subsidiary and does not otherwise own, directly or
indirectly, any shares or interest in any other corporation,
partnership, joint venture or firm.
Non-Merger and Survival
5.2 The representations and warranties of Kraft contained herein will be true at
and as of Closing in all material respects as though such representations and
warranties were made as of such time. Notwithstanding the completion of the
transactions contemplated hereby, the waiver of any condition contained herein
(unless such waiver expressly releases a party from any such representation or
warranty) or any investigation made by AUGI, the representations and warranties
of Kraft shall survive the Closing.
Indemnity
5.3 The Kraft Shareholders agree to indemnify and save harmless AUGI from and
against any and all claims, demands, actions, suits, proceedings, assessments,
judgments, damages, costs, losses and expenses, including any payment made in
good faith in settlement of any claim (collectively, the "Claims") (subject to
the right of the Kraft Shareholders to defend any such claim), resulting from
the breach by any of them of any representation or warranty of such party made
under this Agreement or from any misrepresentation in or omission from any
certificate or other instrument furnished or to be furnished by Kraft or the
Kraft Shareholders to AUGI hereunder; provided, however, the Kraft Shareholders
shall not be required to indemnify AUGI for any such Claims in excess of the
value of the Kraft Shares.
ARTICLE 6
COVENANTS OF KRAFT AND
THE KRAFT SHAREHOLDERS
Covenants
6.1 Kraft and the Kraft Shareholders covenant and agree with AUGI that they
will:
(a) Conduct of Business. Until the Closing, conduct the Kraft Business
diligently and in the ordinary course consistent with the manner in
which the Kraft Business generally has been operated up to the date
of execution of this Agreement;
(b) Preservation of Business. Until the Closing, use their best efforts
to preserve the Kraft Business and the Kraft Assets and, without
limitation, preserve for AUGI Kraft's relationships with their
suppliers, customers and others having business relations with them;
(c) Access. Until the Closing, give AUGI and its representatives full
access to all of the properties, books, contracts, commitments and
records of Kraft relating to Kraft, the Kraft Business and the Kraft
Assets, and furnish to AUGI and its representatives all such
information as they may reasonably request;
(d) Procure Consents. Until the Closing, take all reasonable steps
required to obtain, prior to Closing, any and all third party
consents required to permit the Acquisition and to preserve and
maintain the Kraft Assets, including the Kraft Material Contracts,
notwithstanding the change in control of Kraft arising from the
Acquisition;
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(e) Reporting and Internal Controls. From and after the Closing, the
Kraft Shareholders shall forthwith take all required actions to
implement internal controls on the business of Kraft to ensure that
Kraft and AUGI comply with Section 13(b)(2) of the Securities and
Exchange Act of 1934;
(f) 1934 Act Reports. From and after the Closing Date, take all such
steps as are necessary to discharge all reporting obligations
imposed upon them by the Securities Exchange Act of 1934; and
(g) Standstill; Proxy. From the date hereof until the Closing Date, the
Kraft Shareholders will take no action that will in any way affect
or negatively impact this Agreement, the Acquisition or the
Financing and they will not take any other action with respect to
their shares of Kraft including entering into any agreement with
respect to the disposition of such shares unless such other party
agrees to the terms of this Agreement. Further, provided that AUGI
successfully completes the Financing prior to the Closing Date, each
Kraft Shareholder constitutes and appoints ▇▇▇▇▇▇ ▇▇▇▇▇ or such
other designee of AUGI, his, her or its true and lawful
attorney-in-fact and agent, acting alone, with full powers of
substitution and resubstitution, for him, her or it and in his, her
or its name, place and stead, in any and all capacities, to sign any
and all documents and to take the required action to close the
Acquisition, granting unto said attorney-in-fact and agent, each
acting alone, full powers and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to
all intents and purposes as he, she or it might or could do in
person, hereby ratifying and confirming all said attorney-in-fact
and agent, acting alone, or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Authorization
6.2 Kraft hereby agrees to authorize and direct any and all federal, state,
municipal, foreign and international governments and regulatory authorities
having jurisdiction respecting Kraft to release any and all information in their
possession respecting Kraft to AUGI. Kraft shall promptly execute and deliver to
AUGI any and all consents to the release of information and specific
authorizations which AUGI reasonably require to gain access to any and all such
information.
Survival
6.3 The covenants set forth in this Article shall survive the Closing for the
benefit of AUGI.
ARTICLE 7
CONDITIONS PRECEDENT
Conditions Precedent in favor of AUGI
7.1 AUGI's obligations to carry out the transactions contemplated hereby are
subject to the fulfillment of each of the following conditions precedent on or
before the Closing:
(a) all documents or copies of documents required to be executed and
delivered to AUGI hereunder will have been so executed and
delivered;
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(b) all of the terms, covenants and conditions of this Agreement to be
complied with or performed by Kraft or the Kraft Shareholders at or
prior to the Closing will have been complied with or performed;
(c) title to the Kraft Shares held by the Kraft Shareholders and to the
Kraft Assets will be free and clear of all mortgages, liens,
charges, pledges, security interests, encumbrances or other claims
whatsoever, save and except as disclosed herein, and the Kraft
Shares shall be duly transferred to AUGI;
(d) subject to Article 8 hereof, there will not have occurred
(i) any material adverse change in the financial position or
condition of Kraft, its liabilities or the Kraft Assets or any
damage, loss or other change in circumstances materially and
adversely affecting Kraft, the Kraft Business or the Kraft
Assets or Kraft's right to carry on the Kraft Business, other
than changes in the ordinary course of business, none of which
has been materially adverse, or
(ii) any damage, destruction, loss or other event, including
changes to any laws or statutes applicable to Kraft or the
Kraft Business (whether or not covered by insurance)
materially and adversely affecting Kraft, the Kraft Business
or the Kraft Assets;
(e) the transactions contemplated hereby shall have been approved by all
other regulatory authorities having jurisdiction over the subject
matter hereof, if any
(f) the transactions contemplated hereby shall have been approved by the
Board of Directors and shareholders of Kraft; and
(g) on or prior to the Closing Date, Kraft shall have delivered the
Kraft Financial Statements.
Waiver by AUGI
7.2 The conditions precedent set out in the preceding section are inserted for
the exclusive benefit of AUGI and any such condition may be waived in whole or
in part by AUGI at or prior to the Closing by delivering to Kraft a written
waiver to that effect signed by AUGI. In the event that the conditions precedent
set out in the preceding section are not satisfied on or before the Closing,
AUGI shall be released from all obligations under this Agreement.
Conditions Precedent in Favor of Kraft and the Kraft Shareholders
7.3 The obligations of Kraft and the Kraft Shareholders to carry out the
transactions contemplated hereby are subject to the fulfillment of each of the
following conditions precedent on or before the Closing:
(a) all documents or copies of documents required to be executed and
delivered to Kraft hereunder will have been so executed and
delivered;
(b) all of the terms, covenants and conditions of this Agreement to be
complied with or performed by AUGI at or prior to the Closing will
have been complied with or performed;
(c) AUGI will have delivered the Acquisition Shares to be issued
pursuant to the terms of the Acquisition to Kraft at the Closing and
the Acquisition Shares will be registered on the books of AUGI in
the name of the holder of Kraft Shares at the time of Closing;
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(d) title to the Acquisition Shares will be free and clear of all
mortgages, liens, charges, pledges, security interests, encumbrances
or other claims whatsoever;
(e) subject to Article 8 hereof, there will not have occurred
(i) any material adverse change in the financial position or
condition of AUGI, its subsidiaries, their liabilities or the
AUGI Assets or any damage, loss or other change in
circumstances materially and adversely affecting AUGI, the
AUGI Business or the AUGI Assets or AUGI' right to carry on
the AUGI Business, other than changes in the ordinary course
of business, none of which has been materially adverse, or
(ii) any damage, destruction, loss or other event, including
changes to any laws or statutes applicable to AUGI or the AUGI
Business (whether or not covered by insurance) materially and
adversely affecting AUGI, its subsidiaries, the AUGI Business
or the AUGI Assets;
(f) the transactions contemplated hereby shall have been approved by all
other regulatory authorities having jurisdiction over the subject
matter hereof, if any;
(g) the transactions contemplated hereby shall have been approved by the
Board of Directors of AUGI;
(i) on or prior to the Closing Date, close on a minimum of US $6,000,000
financing in the form of a convertible debenture financing (the
"Financing"), in accordance with the Term Sheet annexed hereto as
Schedule 7.3(i);
(h) Zoltan Kiss shall have been appointed as the Chairman of the Board
of the Board of Directors of AUGI;
(i) on or prior to the Closing Date, AUGI shall have entered into a
settlement agreement with The ▇▇▇▇▇ Family Trust (the "Trust")
whereby the Trust shall forgive all debt and related interest owed
to it by AUGI in consideration of the transfer of all shares of AUGI
received by AUGI from ▇▇▇▇▇▇▇ Vox, if any, and all securities of
Informedix Holdings, Inc., Spongtech Delivery Systems, Inc. and
ScanTek Medical, Inc. held by AUGI and transfer of any rights held
by AUGI with respect to any litigation that may be brought by AUGI
against New York Medical Inc.; and
(j) on or prior to the Closing Date, ▇▇▇▇▇ Family Irrevocable Trust (the
"Trust") and AUGI shall enter into a pledge agreement whereby the
Trust shall agree to place 1,000,000 shares of AUGI common stock in
an escrow account for a period of one (1) year from the Closing (the
"Pledge Period"), which such shares shall be utilized to satisfy any
claim commenced by United Parcel Service in connection with the UPS
Note. In the event that United Parcel Service commences an action
against AUGI with respect to the UPS Note, the Trust agrees that
during the Pledge Period the Trust shall pledge further shares of
AUGI common stock equal to the value of the claim divided the market
price of AUGI at that time. The Trust shall retain the ability to
settle any action commenced by United Parcel Service.
Waiver by Kraft and the Kraft Shareholders
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7.4 The conditions precedent set out in the preceding section are inserted for
the exclusive benefit of Kraft and the Kraft Shareholders and any such condition
may be waived in whole or in part by Kraft or the Kraft Shareholders at or prior
to the Closing by delivering to AUGI a written waiver to that effect signed by
Kraft and the Kraft Shareholders. In the event that the conditions precedent set
out in the preceding section are not satisfied on or before the Closing, Kraft
and the Kraft Shareholders shall be released from all obligations under this
Agreement.
Nature of Conditions Precedent
7.5 The conditions precedent set forth in this Article are conditions of
completion of the transactions contemplated by this Agreement and are not
conditions precedent to the existence of a binding agreement. Each party
acknowledges receipt of the sum of $1.00 and other good and valuable
consideration as separate and distinct consideration for agreeing to the
conditions of precedent in favor of the other party or parties set forth in this
Article.
Termination
7.6 Notwithstanding any provision herein to the contrary, if the Closing does
not occur on or before 45 days from the completion and delivery of the Kraft
Financials to AUGI and Sichenzia ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP (the "Termination
Date"), this Agreement will be at an end and will have no further force or
effect, unless otherwise agreed upon by the parties in writing.
Confidentiality
7.7 Notwithstanding any provision herein to the contrary, the parties hereto
agree that the existence and terms of this Agreement are confidential and that
if this Agreement is terminated pursuant to the preceding section the parties
agree to return to one another any and all financial, technical and business
documents delivered to the other party or parties in connection with the
negotiation and execution of this Agreement and shall keep the terms of this
Agreement and all information and documents received from Kraft and AUGI and the
contents thereof confidential and not utilize nor reveal or release same,
provided, however, that AUGI will be required to issue a news release regarding
the execution and consummation of this Agreement and file a Current Report on
Form 8-K with the Securities and Exchange Commission respecting the proposed
Acquisition contemplated hereby together with such other documents as are
required to maintain the currency of AUGI's filings with the Securities and
Exchange Commission.
ARTICLE 8
RISK
Material Change in the Business of Kraft
8.1 If any material loss or damage to the Kraft Business occurs prior to Closing
and such loss or damage, in AUGI' reasonable opinion, cannot be substantially
repaired or replaced within sixty (60) days, AUGI shall, within two (2) days
following any such loss or damage, by notice in writing to Kraft, at its option,
either:
(a) terminate this Agreement, in which case no party will be under any
further obligation to any other party; or
(b) elect to complete the Acquisition and the other transactions
contemplated hereby, in which case the proceeds and the rights to
receive the proceeds of all insurance covering such loss or damage
will, as a condition precedent to AUGI' obligations to carry out the
transactions contemplated hereby, be vested in Kraft or otherwise
adequately secured to the satisfaction of AUGI on or before the
Closing Date.
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Material Change in the AUGI Business
8.2 If any material loss or damage to the AUGI Business occurs prior to Closing
and such loss or damage, in Kraft's reasonable opinion, cannot be substantially
repaired or replaced within sixty (60) days, Kraft shall, within two (2) days
following any such loss or damage, by notice in writing to AUGI, at its option,
either:
(a) terminate this Agreement, in which case no party will be under any
further obligation to any other party; or
(b) elect to complete the Acquisition and the other transactions
contemplated hereby, in which case the proceeds and the rights to
receive the proceeds of all insurance covering such loss or damage
will, as a condition precedent to Kraft's obligations to carry out
the transactions contemplated hereby, be vested in AUGI or otherwise
adequately secured to the satisfaction of Kraft on or before the
Closing Date.
ARTICLE 9
CLOSING
Closing
9.1 The Acquisition and the other transactions contemplated by this Agreement
will be closed at the Place of Closing on Closing Date in accordance with the
closing procedure set out in this Article.
Documents to be Delivered by Kraft
9.2 On or before the Closing, Kraft and the Kraft Shareholders will deliver or
cause to be delivered to AUGI:
(a) the original or certified copies of the charter documents of Kraft,
including amendments thereof, and all corporate records documents
and instruments of Kraft, the corporate seal of Kraft and all books
and accounts of Kraft;
(b) all reasonable consents or approvals required to be obtained by
Kraft for the purposes of completing the Acquisition and preserving
and maintaining the interests of Kraft under any and all Kraft
Material Contracts and in relation to Kraft Assets;
(c) certified copies of such resolutions and minutes of the shareholders
and directors of Kraft as are required to be passed to authorize the
execution, delivery and implementation of this Agreement;
(d) an acknowledgement from Kraft and the Kraft Shareholders of the
satisfaction of the conditions precedent set forth in section 7.3
hereof;
(e) the certificates or other evidence of ownership of the Kraft Shares,
together with such other documents or instruments required to effect
transfer of ownership of the Kraft Shares to AUGI; and
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(f) such other documents as AUGI may reasonably require to give
effect to the terms and intention of this Agreement.
Documents to be Delivered by AUGI
9.3 On or before the Closing, AUGI shall deliver or cause to be delivered to
Kraft and the Kraft Shareholders:
(a) share certificates representing the Acquisition Shares duly
registered in the names of the holders of shares of Kraft Common
Stock;
(b) certified copies of such resolutions of the directors of AUGI as are
required to be passed to authorize the execution, delivery and
implementation of this Agreement;
(c) a certified copy of a resolution of the directors of AUGI dated as
of the Closing Date appointing the nominees of Kraft as officers of
Kraft and appointing the nominee of the Kraft Shareholders to the
board of directors of AUGI;
(d) an acknowledgement from AUGI of the satisfaction of the conditions
precedent set forth in section 7.1 hereof;
(e) certificate or incorporation and good standing certificate of AUGI;
and
(f) such other documents as Kraft may reasonably require to give effect
to the terms and intention of this Agreement.
ARTICLE 10
POST-CLOSING MATTERS
Forthwith after the Closing, AUGI, Kraft and the Kraft Shareholders,
as the case may be, agree to use all their best efforts to:
(a) issue a news release reporting the Closing;
(b) file a Form 8-K with the Securities and Exchange Commission
disclosing the terms of this Agreement within 4 days of the Closing
and, not more than 71 days following the filing of the Form 8-K,
file an amended Form 8-K which includes the audited financial
statements of Kraft as well as pro forma financial information of
Kraft and AUGI as required by Item 310 of Regulation SB as
promulgated by the Securities and Exchange Commission;
(c) file reports on Forms 13D and 3 with the Securities and Exchange
Commission disclosing the acquisition of the Acquisition Shares by
the Kraft Shareholders;
(d) prepare and deliver the Kraft Financial Statements;
(e) change the name of AUGI to "Energy Solutions, Inc." of such other
name as determined by the Board of Directors of AUGI; and
(f) use its best efforts to enter into agreements with Terra Solar for
the exclusive licensing rights to market Terra Solar technology in
North America, South America , Europe and Africa and to install
Terra Solar technology and equipment.
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ARTICLE 11
GENERAL PROVISIONS
Arbitration
11.1 The parties hereto shall attempt to resolve any dispute, controversy,
difference or claim arising out of or relating to this Agreement by negotiation
in good faith. If such good negotiation fails to resolve such dispute,
controversy, difference or claim within fifteen (15) days after any party
delivers to any other party a notice of its intent to submit such matter to
arbitration, then any party to such dispute, controversy, difference or claim
may submit such matter to arbitration in the City of New York, New York.
Notice
11.2 Any notice required or permitted to be given by any party will be deemed to
be given when in writing and delivered to the address for notice of the intended
recipient by personal delivery, prepaid single certified or registered mail, or
telecopier. Any notice delivered by mail shall be deemed to have been received
on the fourth business day after and excluding the date of mailing, except in
the event of a disruption in regular postal service in which event such notice
shall be deemed to be delivered on the actual date of receipt. Any notice
delivered personally or by telecopier shall be deemed to have been received on
the actual date of delivery.
Addresses for Service
11.3 The address for service of notice of each of the parties hereto is as
follows:
(a) AUGI:
American United Global, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, #▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Sichenzia ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
(b) Kraft or the Kraft Shareholders:
▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇ ▇▇▇▇▇ u. ▇▇-▇▇
▇▇▇▇▇▇▇▇ ▇-▇▇▇▇
▇▇▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇/▇▇▇▇▇▇ Kiss, directors
Change of Address
11.4 Any party may, by notice to the other parties change its address for notice
to some other address in North America and will so change its address for notice
whenever the existing address or notice ceases to be adequate for delivery by
hand. A post office box may not be used as an address for service.
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Further Assurances
11.5 Each of the parties will execute and deliver such further and other
documents and do and perform such further and other acts as any other party may
reasonably require to carry out and give effect to the terms and intention of
this Agreement.
Time of the Essence
11.6 Time is expressly declared to be the essence of this Agreement.
Entire Agreement
11.7 The provisions contained herein constitute the entire agreement among
Kraft, the Kraft Shareholders and AUGI respecting the subject matter hereof and
supersede all previous communications, representations and agreements, whether
verbal or written, among Kraft, the Kraft Shareholders and AUGI with respect to
the subject matter hereof.
Enurement
11.8 This Agreement will enure to the benefit of and be binding upon the parties
hereto and their respective heirs, executors, administrators, successors and
permitted assigns.
Assignment
11.9 This Agreement is not assignable without the prior written consent of the
parties hereto.
Counterparts
11.10 This Agreement may be executed in counterparts, each of which when
executed by any party will be deemed to be an original and all of which
counterparts will together constitute one and the same Agreement. Delivery of
executed copies of this Agreement by telecopier will constitute proper delivery,
provided that originally executed counterparts are delivered to the parties
within a reasonable time thereafter.
Applicable Law
11.11 This Agreement is subject to the laws of the State of New York.
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF the parties have executed this Agreement effective
as of the day and year first above written.
AMERICAN UNITED GLOBAL, INC.
By: /s/▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, CEO
▇▇▇▇▇ ▇▇.
By:/s/ Zoltan Kiss
---------------
Zoltan Kiss, Director
SHAREHOLDERS OF ▇▇▇▇▇ ▇▇.
/s/▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇ /s/Zoltan Kiss
▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇ (525 ▇▇▇▇▇ Shares) Zoltan Kiss (1,850 Kraft Shares)
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Schedule 2.2
--------------------------------- ---------------------------- ------------------------- -----------------------------
Name of Shareholder of ▇▇▇▇▇ ▇▇. Shares of ▇▇▇▇▇ ▇▇. Owned Shares of American Shares of American United
United Global, Inc. Global, Inc. to be Issued
Upon Conversion of the
Preferred Share
--------------------------------- ---------------------------- ------------------------- -----------------------------
▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇ 525 10,500 3,675,000
--------------------------------- ---------------------------- ------------------------- -----------------------------
▇▇▇▇▇▇ ▇. Kiss 1,850 37,000 12,950,000
--------------------------------- ---------------------------- ------------------------- -----------------------------
Total 2,375 16,625,000
--------------------------------- ---------------------------- ------------------------- -----------------------------
