1
EXHIBIT 12B
REORGANIZATION AGREEMENT BY AND BETWEEN
XXXXXXXXX00.XXX, INC.
(FORMERLY UNION CHEMICAL CORPORATION)
A NEVADA CORPORATION
AND
NETSURF, INC.
AN ONTARIO, CANADA CORPORATION
AND THE SELLING SHAREHOLDERS
----------------------------------
This Reorganization Agreement dated as of the 15th day of July 1999 among
Xxxxxxxxx00.xxx Corporation formerly Union Chemical Corporation, a Nevada
corporation (the "COMPANY") and NetSurf, Inc. an Ontario, Canada Corporation
("NETSURF") and its shareholders, (the "Selling Shareholders").
Whereas, the respective Boards of Directors of the business entities party to
this Reorganization Agreement, with the satisfaction of certain conditions, have
determined to effect a business combination by and among the parties to this
Reorganization Agreement through the tax free exchange of securities between the
shareholders of NETSURF and the COMPANY; and,
Whereas, the parties have determined to set forth the terms and conditions upon
which the aforementioned business combination shall be completed in this
Reorganization Agreement.
Now, Therefore, in consideration of the mutual promises, covenants and
conditions contained herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Terms. As used in the Reorganization Agreement, the following terms shall
have the following meanings:
a. "Company" shall mean Xxxxxxxxx00.xxx Corporation, formerly Union
Chemical Corporation, a publicly held Nevada corporation which is non
reporting under the Securities Act of 1933, as amended, and the
Securities Exchange Act of 1934.
b. "Company Common Stock" shall mean the $.001 par value common stock of
Xxxxxxxxx00.xxx Corporation.
c. "Selling Shareholders" shall mean the individual shareholders of
NetSurf, Inc. as fully set forth in Exhibit A.
d. "Effective date" shall mean the closing date.
e. "Reorganization Agreement" shall mean this Reorganization Agreement.
f. "NetSurf" shall mean NetSurf, Inc., a privately held Ontario, Canada
corporation
g. "Closing Date" shall mean the date of execution of this
Reorganization Agreement and satisfaction of the conditions set forth
in Article IX, hereof.
2
ARTICLE II
REORGANIZATION OF NETSURF
2.1 Tax Free Reorganization. A tax free Plan of Reorganization pursuant to the
provisions of Xxxxxxx 000 xx xxx Xxxxxx Xxxxxx Internal Revenue Code of
1986, as amended, is hereby adopted to effectuate the following:
a. Subject to the terms and conditions hereinafter set forth on the
Effective Date of the Reorganization, and in the manner
hereinafter provided: (i) COMPANY shall acquire 80 percent of the
issued and outstanding share capital of NETSURF from the Selling
Shareholders; (ii) NETSURF shall thereafter be 80 percent owned by
the Company; (iii) to effect the Reorganization, COMPANY shall pay
the Selling Shareholders $ 500,000 in value by the issuance of
100,000 shares of COMPANY common stock in exchange for 80 percent
of all the issued and outstanding share capital of NETSURF; and
(iv) all corporate acts, plans, policies, contracts, approvals and
authorizations of NETSURF and its shareholders, board of
directors, officers and agents which were valid and effective
immediately prior to the Effective Date of the Reorganization,
shall be as effective and binding thereon as the same were prior
to the Effective Date of the Reorganization with respect to
NETSURF.
b. In the event that the bid price of COMPANY common stock is less
than $5.00 per share for the five trading days immediately prior to a date 12
months from the date of this Agreement, COMPANY will, within ten (10) business
days after said date, authorize the issuance to the Selling Shareholders, in the
same proportion as the original shares were issued to the Selling Shareholders,
additional number of shares of COMPANY common stock, up to a maximum of
1,000,000 additional shares, to compensate for the evaluation shortfall. It is
the intent of this Section that NETSURF receive value of no less than $500,000
USD, but no more than 1,000,000 additional shares of the COMPANY's common stock
will be issued to fulfill any evaluation shortfall. Example: In the event that
the average trading bid in the five days prior to the anniversary date is $4.00
USD the shortfall is $100,000, and COMPANY would issue an additional 25,000
shares.
2.2 Supplemental Corporate Action. COMPANY and NETSURF respectively, shall
take, or cause to be taken, all such actions as may be necessary or
appropriate in order to effectuate the transactions contemplated hereby. In
the event at any time after the Effective Date of the Reorganization any
further action is necessary or desirable to carry out the purpose of the
Reorganization Agreement and to vest COMPANY with full title to 80 percent
of NETSURF issued and outstanding stock, the officers and directors of such
corporation shall take all such necessary action. In the event at any time
after the Effective Date of the Reorganization any further action is
necessary or desirable to carry out the purpose of the Reorganization
Agreement and to vest NETSURF with full title to COMPANY issued and
outstanding stock as enumerated in Sections 2.1.a. and 2.1.b., the officers
and directors of such corporation shall take all such necessary action.
2.3 Federal Securities Laws Exemption. The parties hereto intend that the
COMPANY Common Stock to be issued to the Selling Shareholders shall be
exempt from the registration requirements of the Securities Act of 1933, as
amended, and pursuant to Section 4 (2) and/or Section 3 (b) thereof, and
the rules and regulations promulgated thereunder.
2.4 Effective Date of the Reorganization for Accounting Purposes. The
transactions contemplated by this Reorganization Agreement shall be
effective as of the Effective Date of the Reorganization for accounting and
all other purposes to the extent permissible by law.
3
ARTICLE III
INVESTMENT REPRESENTATIONS
As a condition to the issuance by COMPANY to the Selling Shareholders of share
certificates for COMPANY common stock, the Selling Shareholders shall each
execute and deliver to COMPANY an Investment Letter containing the investment
representations contained in Section 3.1 and acknowledging receipt of the
disclosure materials referred to in Section 3.2.
3.1 Investment Representation to be given by Selling Shareholders to COMPANY.
Selling Shareholders hereby agree to execute and deliver on the Effective Date
of Reorganization, an Investment Letter and acknowledgment in a form
substantially as follows:
a. Selling Shareholders are acquiring COMPANY common stock for their
own account for the purpose of investment, and not with view to,
or for sale in connection with, any distribution thereof; and
b. Selling Shareholder: (i) has such knowledge and experience in
financial and business matters that he is capable of evaluating
the merits and risks of his proposed investment in COMPANY common
stock; or (ii) has been advised by attorneys, accountants or other
representatives having such knowledge and experience. Selling
Shareholder acknowledges that his attorneys, accountants and other
representatives, had, prior to his actions as Selling Shareholder
in voting upon or otherwise consenting to the Reorganization, the
opportunity to ask questions of, and to receive answers from
COMPANY concerning COMPANY, its affiliates and their business and
financial condition; and
c. Selling Shareholders understand and acknowledge that shares of
COMPANY common stock to be delivered to him pursuant to the
provisions of Article II and Article III of this Reorganization
Agreement will be "restricted securities" within the meaning of
the Securities Act of 1933, as amended (the "1933 Act"), and
agrees that the certificates therefore shall bear the following
legend:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 AND MAY NOT BE TRANSFERRED WITHIN TWELVE MONTHS AFTER ISSUANCE
UNLESS COVERED BY AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT, OR A NO
ACTION LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION WITH RESPECT TO SUCH
TRANSFER MEETING THE REQUIREMENTS OF RULE 144 OF THE SECURITIES AND EXCHANGE
COMMISSION OR IS ACCOMPANIED BY AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER
TO THE EFFECT THAT ANY SUCH TRANSFER IS EXEMPT FROM SUCH REGISTRATION.
Selling Shareholders further understand and acknowledge that stop transfer
instructions will be issued by COMPANY to its transfer agent with respect to all
of COMPANY common stock to be delivered to him pursuant to the provisions of
this Reorganization Agreement; and
(d) Selling Shareholders understand and acknowledge that shares of the
COMPANY common stock to be delivered pursuant to the provisions of this
Reorganization Agreement will not have been registered under the 1933 Act and,
accordingly Selling Shareholders recognize that they may be required to bear the
economic risk of their investment until such shares are registered. Selling
Shareholders agree on behalf of themselves, and their heirs, executors,
successors and assigns, that they will only sell, transfer, pledge or
hypothecate any of the COMPANY common stock to be acquired by them under the
4
provisions of this Reorganization Agreement pursuant to an effective
registration statement under the 1933 Act, in a transaction wherein registration
under the 1933 Act is not required or after the anniversary date hereof. Selling
Shareholders understand that COMPANY has no obligation to register such COMPANY
common stock under the 1933 Act. However, COMPANY agrees that, in the event it
undertakes to register any stock under said Act during the twelve months after
the date of this Agreement, it will include the stock issued (or expected to be
issued under Section 2.1(b) of this Agreement) to the Selling Shareholders in
such registration process.
3.2 Disclosure Materials
COMPANY has distributed to the Selling Shareholders or a representative of the
Selling Shareholders and given each the opportunity to review, prior to their
execution of and closing under this Reorganization Agreement: (i) a copy of the
Articles of Incorporation, (ii) copy of the by-laws, (iii) copy of the most
recent financial statements and (iv) such other data in the possession of
COMPANY regarding the business and or finances of COMPANY as the Selling
Shareholders have reasonably requested.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF COMPANY
COMPANY hereby, as of the Effective Date of the Reorganization hereof,
represents and warrants as follows:
4.1 Full Disclosure None of the representations and warranties made by COMPANY
herein, or in any exhibit, certificate of memorandum, furnished or to be
furnished by COMPANY, or on its behalf by officers and directors of
COMPANY, contains or will contain any untrue statement of material fact, or
omit any material fact the omission of which would be misleading.
4.2 No Governmental Consents. No consent, authorization or approval of,
exemption by, filing with, any domestic governmental or administrative
authority, or any court, is required to be obtained or made by COMPANY in
connection with the execution, delivery and performance of this
Reorganization Agreement or the consummation of the transactions
contemplated hereby.
4.3 Finder. There is no firm, corporation, agency or other person that is
entitled to a finder's fee or any type of brokerage commission in relation
to or in connection with the transactions contemplated by this
Reorganization Agreement as a result of any agreement or understanding with
COMPANY.
4.4 Organization and Good Standing. COMPANY is a corporation duly organized,
validly existing and in good standing under the laws of the State of Nevada
and has full corporate power and authority to conduct its business as now
conducted and to own or lease and operate the assets and properties now
owned or leased and operated by it. COMPANY is duly qualified to do
business and is in good standing in each jurisdiction in which the nature
of its business or the character of its properties requires such
qualifications.
4.5 Capitalization of COMPANY. The total authorized capital stock of COMPANY
consists of 100,000,000 shares of common stock, $.001 par value, of which
as of 1 July 1999 there were 22,800,840 shares of common stock outstanding:
all of such issued and outstanding shares have been duly authorized and
validly issued, and are fully paid and non-assessable. It is understood and
agreed that COMPANY, as an operating Company may from time to time issue
additional shares to provide working capital. There are no preemptive
rights with respect to any prior issuance of any shares of the capital
stock of COMPANY.
4.6 Subsidiaries of COMPANY. COMPANY has no subsidiaries or ownership interest
in any other entities as of the effective date of this Reorganization
Agreement.
5
4.7 Options, Warrants and Other Agreements . COMPANY has no outstanding
Warrants, Options or any agreements with respect to the issuance of
additional shares of Common Stock except for the shares to be issued to
Project Finance Associates, Inc. pursuant to a consulting agreement.
4.8 Directors and Officers. Immediately prior to the Effective Date of the
Reorganization, names, addresses, and title of all officers and directors
of COMPANY are as follows:
Name/Title Address
J. Xxxxxx Xxx 0000 X.Xxxxxxxx Xx, Xxxxx 000
Xxxxxxxxx/XXX Xxxxxxxxxx, XX 00000
Xxxxxx X. Xxxxxx 00000 Xxxxxxxx Xx
Chairman of the Board Xxxxxxxx Xxxxx, XX 00000
Xxxxxxxx X. Xxxxxx 0000 Xxxx Xxxxx Xx
Xxxxxxxx Xxxxxxxxxx, XX 00000
Xxxxxxx X. Law 00 Xxxxxxxxx Xx
Secretary & Treasurer Xxxxxxxxxxxxx, XX 00000
4.10 Financial Statements. COMPANY has delivered their unaudited financial
statements for the period ending March 31, 1999.
4.11 Books and Records.
a. The books of account and other financial records of COMPANY are,
in all material respects, complete and correct and are maintained
in accordance with good business practices.
b. The minute books of COMPANY contain accurate records of all
meetings and accurately reflect all other corporate action of the
shareholders and directors and any committees of directors of
COMPANY.
4.12 Absence of Certain Events. As of the Effective Date of the Reorganization
Agreement, COMPANY has not:
a. Amended its Certificate of Incorporation or By-laws;
b. Changed its authorized capital stock or issued or sold, or purchased,
redeemed or otherwise acquired, or issued any rights to subscribe
for, or warrants to purchase, or entered into any agreement,
commitment or obligation (including, without limitation, any
convertible securities) to issue, sell, purchase, redeem or
otherwise acquire, any share of its capital stock, or made any
declaration or any payment or distribution of any dividend or any
other distribution with respect to its capital stock;
c. Incurred any liabilities, other than liabilities incurred in the
ordinary course of business consistent with past practice, or
discharged or satisfied any lien or encumbrance, or paid any
liabilities, other than in the ordinary course of business
consistent with past practice, or failed to pay or discharge when
due any liabilities the failure to pay or discharge of which has
caused or may cause any material damage or risk of material loss
to it or its assets or properties;
d. Sold, assigned or transferred any of its assets or properties except
in the ordinary course of business consistent with past practice;
e. Created, incurred, assumed or guaranteed any indebtedness for
money borrowed, or mortgaged, pledged or subjected to any lien,
pledge, mortgage, security interest, conditional sales contract or
other encumbrance of any nature whatsoever any of its assets or
properties,
6
other than the liens, if any, of current taxes not yet due and
payable;
f. Changed any of the accounting principles followed by it or the methods
of applying such principles; or
g. Entered into any transaction other than in the course of ordinary
business consistent with past practice or any other material
transaction.
4.13 Taxes and Tax Returns COMPANY has duly made all deposits required by law to
be made with respect to employees withholding taxes. COMPANY has duly filed
with all appropriate governmental agencies and bodies, whether federal,
state or local, all income, sales, license, franchise, excise, gross
receipts, employment and payroll-related and real and personal property
returns to reflect the taxes owed by COMPANY for the periods covered
thereby, and COMPANY has paid, or established adequate liabilities or
reserves for the payment of, all taxes shown to be due on such returns.
4.14 Legal Proceedings, Etc. There are no disputes, claims, actions, suits,
proceedings, arbitration's or investigations, either administrative or
judicial, pending or threatened or contemplated, by or against or affecting
COMPANY or its business or any of its assets, properties or prospects, or
the transactions contemplated by this Reorganization Agreement, at law or
in equity or otherwise, before or by any court or governmental agency or
body, domestic or foreign, or before an arbitrator of any kind which, if
determined adversely to COMPANY, would materially adversely affect COMPANY;
nor do any facts exist which could give rise to any such dispute, claim,
action, suit, proceeding, arbitration or investigation affecting COMPANY or
its business or any of its assets, properties or prospects or the
transactions contemplated by this Agreement.
4.15 No Third Party Options. There are no existing contracts or other rights
with, to or in any person to acquire any of the assets or properties or any
interest therein of COMPANY, except for those contracts entered into in the
normal course of business consistent with business practices.
4.16 Delivery of Documents. COMPANY has delivered to NETSURF true, correct and
complete copies of its Certificate of Incorporation, and all amendments
thereto, and the Bylaws, as amended.
4.17 Authority and Compliance. COMPANY has full corporate power and lawful
authority to execute and deliver this Agreement. The consummation and
performance by COMPANY of the transactions contemplated by this Agreement
have been duly and validly authorized by all necessary corporate and other
proceedings. This Agreement has been duly and validly executed and
delivered on behalf of COMPANY and constitutes a valid obligation of
COMPANY, enforceable in accordance with its terms. No consent,
authorization or approval of, exemption by or filing with, any domestic
governmental or administrative authority, or any court, is required to be
obtained or made by COMPANY in connection with the execution, delivery and
performance of this Agreement by COMPANY. Such delivery and performance
will not conflict with or result in the breach or violation of any term or
provisions of, or constitute a default under, the Articles of Incorporation
or Bylaws of COMPANY, or conflict with or result in the breach or violation
of any term or provision of, or constitute a default under any statute,
indenture, mortgage, deed of trust, note agreement or other material
agreement or instrument to which COMPANY is a party or by which it is a
party or by which it is bound, or any law, order, writ, injunction, decree,
rule or regulation of any court or any governmental agency or body.
4.18 Indemnification. COMPANY agrees to indemnify, defend and hold NETSURF and
each of the Selling Shareholders harmless against and in respect of any and
all claims, demands, losses, costs, expenses, obligations, liabilities,
damages, recoveries and deficiencies, including interest, penalties, and
reasonable attorney's fees, that NETSURF or any of such Selling
Shareholders shall incur or suffer, which arise out of or result from or
relate to any breach of, or failure by COMPANY to perform any of its
representations or warranties, contained in this Agreement or in any
schedule, certificate, exhibit or other instrument furnished or to be
furnished by COMPANY under this Agreement.
7
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF NETSURF
NETSURF hereby, as of the Effective Date of the Reorganization hereof,
represents and warrants as follows:
5.1 Full Disclosure None of the representations and warranties made by NETSURF
herein, or in any exhibit, certificate of memorandum, furnished or to be
furnished by NETSURF, or on its behalf by officers and directors of
NETSURF, contains or will contain any untrue statement of material fact, or
omit any material fact the omission of which would be misleading.
5.2 No Governmental Consents. No consent, authorization or approval of,
exemption by, filing with, any domestic governmental or administrative
authority, or any court, is required to be obtained or made by NETSURF in
connection with the execution, delivery and performance of this
Reorganization Agreement or the consummation of the transactions
contemplated hereby.
5.3 Finder. There is no firm, corporation, agency or other person that is
entitled to a finder's fee or any type of brokerage commission in relation
to or in connection with the transactions contemplated by this
Reorganization Agreement as a result of any agreement or understanding with
NETSURF.
5.4 Organization and Good Standing. NETSURF is a corporation duly organized,
validly existing and in good standing under the laws of Ontario, Canada and
has full corporate power and authority to conduct its business as now
conducted and to own or lease and operate the assets and properties now
owned or leased and operated by it. NETSURF is duly qualified to do
business and is in good standing in each jurisdiction in which the nature
of its business or the character of its properties requires such
qualifications.
5.5 Capitalization of NETSURF. The total authorized capital stock of NETSURF
consists of unlimited shares of common stock, of which as of 1 July, 1999,
100 shares of common stock were issued and outstanding. No shares of any
other class of stock is issued and outstanding. All of such issued and
outstanding shares have been duly authorized and validly issued, and are
fully paid and non-assessable. There are no preemptive rights with respect
to any prior issuance of any shares of the capital stock of NETSURF.
5.6 Subsidiaries of NETSURF. NETSURF has no subsidiaries as of the effective
date of this Reorganization Agreement.
5.7 Options, Warrants and Other Conversion Rights. NETSURF has no options or
warrants outstanding.
5.8 No Restrictions on Securities. NETSURF is not a party to any written or
oral agreement:
a. creating rights in any person with respect to shares of the capital
stock of NETSURF or
b. relating to voting of shares of the capital stock of NETSURF on any
matter.
5.9 Directors and Officers. Immediately prior to the Effective Date of the
Reorganization, names, addresses, and title of all officers and directors of
NETSURF are as follows:
Xxxx/Xxxxx Xxxxxxx
0
Xxxxxxx Xxx 000 Xxxxxxx Xxxx Xxxxxxxx
Xxxxxxxxx Xxxxxxxxxxx, Xxxxxxx X0X 0X0
Xxxxxxx Xxxxxxxxxx 0000 Xxxxxxxxxx Xxxxxxxx
Xxxxxxxxx Xxxxxxxxxxx, Xxxxxxx X0X 0X0
5.10 Financial Statements. NETSURF will deliver their unaudited statement for
the period ending June 30, 1999.
5.11 Books and Records.
a. The books of account and other financial records of NETSURF are,
in all material respects, complete and correct and are maintained
in accordance with good business practices.
b. The minute books of NETSURF contain accurate records of all
meetings and accurately reflect all other corporate action of the
shareholders and directors and any committees of directors of
NETSURF.
5.12 Absence of Certain Events. As of the Effective Date of the Reorganization
Agreement, NETSURF has not:
a. Amended its Certificate of Incorporation or By-laws;
b. Changed its authorized capital stock or issued or sold, or
purchased, redeemed or otherwise acquired, or issued any rights to
subscribe for, or warrants to purchase, or entered into any
agreement, commitment or obligation (including, without
limitation, any convertible securities) to issue, sell, purchase,
redeem or otherwise acquire, any share of its capital stock, or
made any declaration or any payment or distribution of any
dividend or any other distribution with respect to its capital
stock;
c. Incurred any liabilities, other than liabilities incurred in the
ordinary course of business consistent with past practice, or
discharged or satisfied any lien or encumbrance, or paid any
liabilities, other than in the ordinary course of business
consistent with past practice, or failed to pay or discharge when
due any liabilities the failure to pay or discharge of which has
caused or may cause any material damage or risk of material loss
to it or its assets or properties;
d. Sold, assigned or transferred any of its assets or properties except
in the ordinary course of business consistent with past practice;
e. Created, incurred, assumed or guaranteed any indebtedness for
money borrowed, or mortgaged, pledged or subjected to any lien,
pledge, mortgage, security interest, conditional sales contract or
other encumbrance of any nature whatsoever any of its assets or
properties, other than the liens, if any, of current taxes not yet
due and payable;
f. Changed any of the accounting principles followed by it or the
methods of applying such principles; or
g. Entered into any transaction other than in the course of ordinary
business consistent with past practice or any other material
transaction.
5.13 Taxes and Tax Returns NETSURF has duly made all deposits required by law to
be made with respect to employees withholding taxes. NETSURF has duly filed
with all appropriate governmental agencies and bodies, whether federal,
provincial or local, all income, sales, license, franchise, excise, gross
receipts, employment and payroll-related and real and personal property
returns to reflect the taxes owed by NETSURF for the periods covered
thereby, and NETSURF has paid, or established adequate liabilities or
reserves for the payment of, all taxes shown to be due on such returns.
9
5.14 Legal Proceedings, Etc. There are no disputes, claims, actions, suits,
proceedings, arbitration's or investigations, either administrative or
judicial, pending or threatened or contemplated, by or against or affecting
NETSURF or its business or any of its assets, properties or prospects, or
the transactions contemplated by this Reorganization Agreement, at law or
in equity or otherwise, before or by any court or governmental agency or
body, domestic or foreign, or before an arbitrator of any kind which, if
determined adversely to NETSURF, would materially adversely affect NETSURF;
nor do any facts exist which could give rise to any dispute, claim, action,
suit, proceeding, arbitration or investigation affecting NETSURF or its
business or any of its assets, properties or prospects or the transactions
contemplated by this Agreement.
5.15 No Third Party Options. There are no existing contracts or other rights
with, to or in any person to acquire any of the assets or properties or any
interest therein of NETSURF, except for those contracts entered into in the
normal course of business consistent with business practices.
5.16 Delivery of Documents. NETSURF has delivered to COMPANY true, correct and
complete copies of its Articles of Incorporation, all amendments thereto,
its Bylaws, minutes of the board of directors approving the Reorganization
Agreement.
5.17 Authority and Compliance. NETSURF has full corporate power to execute and
deliver this Reorganization Agreement. The consummation and performance by
NETSURF of the transactions contemplated by this Reorganization Agreement
have been duly and validly authorized by all necessary corporate and other
proceedings. This Agreement has been duly and validly executed and
delivered on behalf of NETSURF and constitutes a valid obligation of
NETSURF, enforceable in accordance with its terms. No consent,
authorization or approval of , exemption by, or filing with, any domestic
governmental or administrative authority, or any court, is required to be
obtained or made by NETSURF in connection with the execution, delivery and
performance of this Agreement or the consummation of the transaction
contemplated hereby. The execution, delivery, consummation and performance
of this Agreement by NETSURF will not conflict with or result in the breach
or violation of any term or provision of, or constitute a default under,
the Articles of Incorporation or Bylaws of NETSURF, or conflict with or
result in the breach or violation of any term or provision of, or
constitute a default under, any statute, indenture, mortgage, deed of
trust, note agreement or other material agreement or instrument to which
NETSURF is a party or by which it is bound, or any law, order, writ,
injunction, decree, rule or regulation of any court or any governmental
agency or body.
5.18 Indemnification. NETSURF and the Selling Shareholders agree to indemnify,
defend and hold harmless COMPANY against and in respect of any and all claims,
demands, losses, costs and expenses, obligations, liabilities, damages,
recoveries and deficiencies, including interest, penalties, and reasonable
attorney's fees, that COMPANY shall incur or suffer, which arises out of, result
from or relate to any breach of, or failure by NETSURF to perform any of its
representations, warranties, covenants or agreements in this Agreement or in any
schedule, certificate, exhibit or other instrument furnished or to be furnished
by NETSURF under this Agreement provided, however, that any demand for
indemnification hereunder shall be made in writing to all indemnitors within one
year after the date hereof, or be forever barred.
ARTICLE VI
COVENANTS
6.1 Investigative Rights. Up to and including the date of closing of this
Agreement, each party shall
10
provide to the other, and such others party's counsel, accountants,
auditors, and other authorized representatives, full access during normal
business hours and upon reasonable advance written notice to all, of each
party's property, books, contracts, commitments, and records for the
purpose of examining the same. Each party shall furnish the other party
with all information concerning such party's affairs as may reasonable be
requested.
6.2 Conduct of Business. Prior to the Effective Date of the Agreement, NETSURF
shall conduct its business in the normal course and shall not sell, pledge,
or assign any assets, without the prior written approval of COMPANY, except
in the regular course of business. NETSURF shall not amend its Certificate
or Articles of Incorporation, or Bylaws, declare any dividends, redeem or
sell stock or other securities, acquire or dispose of fixed assets, change
employment terms, enter into any material or long-term contract, guarantee
obligations of any third party, settle or discharge any balance sheet
receivable for less that its stated amount, pay more on any liability than
its stated amount, or enter into any other transaction other than in the
regular course of business.
ARTICLE VII
CLOSING
7.1 Closing. The closing under this Agreement shall be held at the offices of
Escrow Agent hereinafter appointed at 000 Xxxxx Xxxxxx, Xxxxxx, Xxx
Xxxxxxxxx or at such other place as the parties may agree and at such date
as shall be mutually agreed upon by the parties. Unless otherwise agreed,
the rights, liabilities, obligations and duties of performance of the
respective parties to this Agreement shall automatically terminate, without
liability to any of the respective parties hereto, if the closing does not
occur hereunder prior to July 31, 1999.
7.2 Delivery of Documentation. At the closing, the following documents, in form
reasonably acceptable to the parties and their respective counsel, shall be
delivered to the respective parties :
a. A COMPANY officer's certificate, dated the Closing Date that all
representations, warranties, covenants and conditions set forth in
this Agreement on behalf of COMPANY are true and correct as of, or
have been fully performed and complied with by, the Closing Date;
and
b. A NETSURF officer's certificate, dated the Closing Date that all
representations, warranties, covenants and conditions set forth in
this Agreement on behalf of NETSURF are true and correct as of, or
have been fully performed and complied with by, the Closing Date;
and
c. A signed consent and or minutes of the Directors of COMPANY
approving the Reorganization Agreement and each matter to be
approved by the Directors of COMPANY under this Agreement.
d. A signed consent and or minutes of the Directors of NETSURF and each
matter to be approved by the Directors of NETSURF under this
Agreement; and
e. An affidavit of COMPANY's president that the shares of COMPANY
common Stock to be issued to the Selling Shareholders, pursuant to
this Agreement will, upon issuance, be duly and validly authorized
and issued and will be fully paid and non-assessable; and
f. Original COMPANY certificates evidencing 100,000 shares of COMPANY
common stock in the name of the Selling Shareholders as set forth in
Exhibit B, which certificates shall bear the appropriate
"restrictive legend" under the Securities Act of 1933, as amended;
an
g. An original certificate(s) of NETSURF common stock in the name of
COMPANY, which certificate(s) shall be accompanied by a duly
executed stock power with the signature guaranty of Selling
Shareholder transferring all right, title and interest in and to 80%
of all the
11
issued and outstanding shares of NETSURF.
h. An original Opinion of COMPANY's counsel that the shares of COMPANY
stock to be issued to the Selling Shareholders pursuant hereto shall
be freely tradeable under Rule 144 as promulgated by the Securities
and Exchange Commission twelve months after the date of issuance of
such stock.
i. This Reorganization Agreement executed in triplicate by each of the
respective parties hereto.
7.3 Escrow . The parties to this Reorganization Agreement hereby nominate and
appoint W. Xxxxxx Xxxxxxx, Esq., Xxxxxxx and Xxxxxxx, 000 Xxxxx Xxxxxx,
Xxxxxx, Xxx Xxxxxxxxx, Telephone 000.000.0000/772.4219 as the Escrow Agent
under this Agreement. It is understood and acknowledged by the parties that
W. Xxxxxx Xxxxxxx and Xxxxxxx and Xxxxxxx are not acting as legal counsel
to the COMPANY or NETSURF. W. Xxxxxx Xxxxxxx has agreed to act in the
capacity as Escrow Agent at the request and with the express consent of all
parties hereto. The Escrow Agent is charged and instructed by the parties
to collect each and every document set forth under Section 7.2 hereof. Once
all such documents are received by the Escrow Agent, all conditions of
Closing hereunder shall have occurred and the Escrow Agent is instructed
and directed to deliver all documents received to the appropriate parties.
Each of the parties to this Agreement hereby undertake to use their best
efforts to cause all documentation referenced hereunder to be delivered to
effect a closing. It is also acknowledged that Xx. Xxxxxxx is part of the
Project Finance Associates Inc. consulting team under contract to the
Company.
On July 31, 1999, if the Escrow Agent has not received all the
documents set forth in Section 7.2, then unless otherwise notified in writing by
both parties the Escrow Agent is hereby authorized, directed and instructed to
return to each of the respective parties of this Agreement the documents
previously delivered by said parties to the Escrow Agent.
ARTICLE VIII
REMEDIES.
8.1 Disputes. Any dispute that might arise over the enforcement, interpretation
or execution of this Agreement and which is not amicably settled will be
submitted to arbitration in Buffalo, New York, before a panel of
arbitrators selected as follows: within 10 days of demand by a party to
this Agreement for arbitration, COMPANY and NETSURF will each select one
(1) arbitrator and those two arbitrators will select a third arbitrator and
those three (3) persons shall constitute the panel of arbitrators. The
arbitrators will conduct the hearings on continuous business days, and
their decisions will be by majority vote. All costs of the arbitrators will
be shared equally, but the arbitrators are authorized to award costs and
counsel fees to the prevailing party, if necessary. All documents to be
brought into evidence will be produced within 10 days of notice of request
for arbitration.
8.2 Costs. If any legal action or any arbitration or other proceeding is
brought for the enforcement of this Agreement, or because of an alleged
dispute, breach, default or misrepresentation in connection with any of the
provisions of this Agreement, the successful or prevailing party or parties
shall be entitled to recover reasonable attorney's fees and other costs
incurred in that action or proceeding, in addition to any other relief to
which it or they may be entitled.
8.3 Termination. In addition to the other remedies, any of the parties hereto
may on the Closing Date terminate this Agreement, without liability:
a. If the respective Boards of Directors of the parties shall consent
to the termination.
b. If any bona fide action or proceeding shall be pending against any
of the parties hereto on the Closing Date that could result in a
judgment, decree or order rendering
12
this Agreement null, void, unenforceable or against public policy or
if any agency of the federal or of any state government shall have
objected in writing at or before the Closing Date to this
Reorganization or to any other action required by or in connection
with the Agreement.
ARTICLE IX
GENERAL PROVISIONS
9.1 Survival of Representations, Warranties, Covenants, and Agreements. The
representations, warranties, covenants and agreements contained in this
Agreement shall survive the Effective Date of the Reorganization.
9.2 Amendments. This Agreement cannot be altered or otherwise amended except
pursuant to an instrument in writing signed by each party hereto. This
Agreement shall be binding upon, and subject to the terms of the foregoing
sentence, inure to the benefit of the parties, their successors , legal
representatives and assigns.
9.3 Notices. Any notice, request, instruction or other document to be given
hereunder by any party to any of the other parties shall be in writing and
shall be deemed to have been duly given when delivered personally or 5 days
after dispatch by registered or certified mail, postage prepaid, return
receipt requested, to the party to whom the same is so given or made:
If to COMPANY addressed to: J. Xxxxxx Xxx
President/CEO
0000 X. Xxxxxxxx Xx, Xxxxx 000
Xxxxxxxxxx, XX 00000
If to NETSURF to:
Xxxxxxx Rok
00 Xxx Xxxx Xxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0
or at such other address as the one party shall specify to the other party
in writing.
9.4 Expenses. Whether or not the transactions contemplated by this Agreement
are consummated, each party hereto shall bear the expenses incurred by it
in connection with the transactions contemplated hereby.
9.5 Entire Agreement. This Agreement and the Exhibits and Schedules which are a
part hereof and the other writings and agreements specifically identified
herein contain the entire agreement between the parties with respect to the
transactions contemplated herein and supersede all previous written or oral
negotiations, commitments and understandings.
9.6 Waivers, Remedies. Any waiver must be in writing. A waiver of any breach or
failure to enforce any of the terms or conditions of this Agreement shall
not in any way affect, limit or waive a party's rights at any time to
enforce strict compliance thereafter with every other term or condition of
this Agreement. All remedies under this Agreement shall be cumulative and
not alternative.
9.7 Counterparts and Headings. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same document. All headings, the
cover page, and the index of this Agreement are inserted for convenience of
reference only and shall not affect its meaning or interpretation.
9.8 Severability. If and to the extent that any court of competent jurisdiction
holds any provision of this
13
Agreement to be invalid or unenforceable, such holding shall in no way
affect the validity of the remainder of this Agreement.
9.9 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Nevada.
IN WITNESS WHEREOF, the Parties hereto have duly executed this Reorganization
Agreement as of the day and year first above written.
COMPANY
XxxXxxxxx00.xxx, Inc.
By: /s/ J. Xxxxxx Xxx
---------------------------------
J. Xxxxxx Xxx, President
NETSURF
By: /s/ Xxxxxxx Rok
---------------------------------
Xxxxxxx Rok, President
