AGREEMENT AND PLAN OF MERGER BY AND BETWEEN INTERNATIONAL DEVELOPMENT AND ENVIRONMENTAL HOLDINGS, a Nevada corporation AND PETROCOM ENERGY LIMITED, a Cayman Islands corporation Dated January 8, 2010
AGREEMENT
AND PLAN OF MERGER
BY
AND BETWEEN
INTERNATIONAL
DEVELOPMENT AND ENVIRONMENTAL HOLDINGS,
a
Nevada corporation
AND
PETROCOM
ENERGY LIMITED, a Cayman Islands corporation
Dated
January 8, 2010
Table
of Contents
|
ARTICLE 1 THE CONVERSION
|
1
|
|||
|
1.1
|
The
Conversion.
|
1
|
||
|
1.2
|
Directors
and Officers of IDEH Cayman.
|
2
|
||
|
1.3
|
Subsequent
Actions.
|
2
|
||
|
ARTICLE 2 THE MERGER
|
2
|
|||
|
2.1
|
The
Merger.
|
2
|
||
|
2.2
|
Cayman
Corporate Filings.
|
3
|
||
|
2.3
|
Directors
and Officers of the Surviving Corporation.
|
3
|
||
|
2.4
|
Subsequent
Actions.
|
3
|
||
|
ARTICLE 3 CONVERSION OF SECURITIES AND MERGER
CONSIDERATION
|
3
|
|||
|
3.1
|
Conversion
of Target Ordinary Shares.
|
3
|
||
|
3.2
|
Merger
Consideration.
|
4
|
||
|
3.3
|
Exchange
of Certificates.
|
4
|
||
|
3.4
|
Exchange
of Warrants.
|
5
|
||
|
ARTICLE 4 CLOSING AND
TERMINATION
|
5
|
|||
|
4.1
|
Closing
Date.
|
5
|
||
|
4.2
|
Extended
Closing Dates.
|
6
|
||
|
4.3
|
Termination
of Agreement.
|
6
|
||
|
4.4
|
Effect
of Termination.
|
7
|
||
|
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF
TARGET
|
7
|
|||
|
5.1
|
Organization
and Good Standing of Target.
|
7
|
||
|
5.2
|
Authority.
|
7
|
||
|
5.3
|
Capital
Stock.
|
8
|
||
|
5.4
|
Basic
Corporate Records.
|
8
|
||
|
5.5
|
Minute
Books.
|
8
|
||
|
5.6
|
Subsidiaries
and Affiliates.
|
9
|
||
|
5.7
|
Consents.
|
9
|
||
|
5.8
|
Financial
Statements.
|
10
|
||
|
5.9
|
Compliance
With the Law.
|
10
|
||
|
5.10
|
Broker.
|
10
|
||
|
5.11
|
Patriot
Act.
|
11
|
||
|
5.12
|
Disclosure.
|
11
|
||
|
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF
IDEH
|
11
|
|||
|
6.1
|
Organization
and Good Standing.
|
11
|
||
|
6.2
|
Authority.
|
11
|
||
|
6.3
|
Conflicts;
Consents of Third Parties.
|
12
|
||
|
6.4
|
SEC
Documents; Financial Statements.
|
12
|
||
|
6.5
|
Minute
Books.
|
13
|
||
|
6.6
|
Litigation.
|
13
|
||
|
6.7
|
Records
and Books of Account.
|
13
|
||
|
6.8
|
Broker.
|
13
|
||
|
6.9
|
Patriot
Act.
|
13
|
||
|
6.10
|
Due
Authorization of Ordinary Shares.
|
13
|
||
|
6.11
|
Absence
of Certain Changes.
|
14
|
||
|
6.12
|
Absence
of Undisclosed Liabilities.
|
14
|
||
|
6.13
|
Taxes.
|
14
|
||
|
6.14
|
Leases.
|
16
|
||
i
|
6.15
|
Customers
and Vendors.
|
16
|
||
|
6.16
|
Compliance
With the Law.
|
16
|
||
|
6.17
|
Litigation;
Pending Labor Disputes.
|
16
|
||
|
6.18
|
Assets.
|
17
|
||
|
6.19
|
Absence
of Certain Commercial Practices.
|
17
|
||
|
6.20
|
Licenses,
Permits, Consents and Approvals.
|
17
|
||
|
6.21
|
Intellectual
Property.
|
17
|
||
|
6.22
|
Environmental
Matters.
|
18
|
||
|
6.23
|
OTCBB
Quote.
|
18
|
||
|
6.24
|
Disclosure.
|
18
|
||
|
ARTICLE 7 COVENANTS
|
19
|
|||
|
7.1
|
Access
to Information.
|
19
|
||
|
7.2
|
Target
Financials.
|
19
|
||
|
7.3
|
IDEH
Liabilities and Resolution of Litigations.
|
19
|
||
|
7.4
|
IDEH
Contracts
|
20
|
||
|
7.5
|
IDEH
Assets.
|
21
|
||
|
7.6
|
IDEH
Licenses.
|
21
|
||
|
7.7
|
Operation
of the Business.
|
21
|
||
|
7.8
|
Consents.
|
21
|
||
|
7.9
|
Lock-up
Agreement.
|
22
|
||
|
7.10
|
Indemnification
Agreement.
|
22
|
||
|
7.11
|
Other
Actions.
|
22
|
||
|
7.12
|
Alternate
Transaction, Capital Raise Transaction, Target’s Failure to Close by
Closing Date or Extended Closing Date.
|
22
|
||
|
7.13
|
Restrictions
on Target Concerning Alternative Transaction.
|
23
|
||
|
7.14
|
Publicity.
|
24
|
||
|
7.15
|
Sale
of Assets of IDEH to New Co.; No Liabilities at Closing.
|
24
|
||
|
7.16
|
Reverse
Stock Split.
|
25
|
||
|
ARTICLE 8 CONDITIONS TO
CLOSING
|
25
|
|||
|
8.1
|
Conditions
Precedent to Obligations of IDEH.
|
25
|
||
|
8.2
|
Conditions
Precedent to Obligations of the Target.
|
26
|
||
|
8.3
|
Documents
To Be Delivered.
|
28
|
||
|
ARTICLE 9 INDEMNIFICATION
|
28
|
|||
|
9.1
|
Indemnification.
|
28
|
||
|
9.2
|
Limitations
on Indemnification for Breaches of Representations and
Warranties.
|
30
|
||
|
9.3
|
Indemnification
Procedures.
|
30
|
||
|
ARTICLE 10 MISCELLANEOUS
|
32
|
|||
|
10.1
|
Payment
of Sales, Use or Similar Taxes.
|
32
|
||
|
10.2
|
Expenses.
|
32
|
||
|
10.3
|
Further
Assurances.
|
32
|
||
|
10.4
|
Arbitration.
|
32
|
||
|
10.5
|
Entire
Agreement; Amendments and Waivers.
|
33
|
||
|
10.6
|
Governing
Law.
|
33
|
||
|
10.7
|
Headings.
|
33
|
||
|
10.8
|
Notices.
|
33
|
||
|
10.9
|
Severability.
|
33
|
||
|
10.10
|
|
Binding
Effect; Assignment.
|
|
34
|
ii
AGREEMENT
AND PLAN OF MERGER
AGREEMENT
AND PLAN OF MERGER (hereinafter referred to as the “Agreement”) is dated
as of January 8, 2010 by and between INTERNATIONAL DEVELOPMENT AND ENVIRONMENTAL
HOLDINGS, a corporation existing under the laws of Nevada (“IDEH”) and PETROCOM
ENERGY LIMITED, a Cayman Islands corporation (the “Target”).
WITNESSETH:
WHEREAS,
the respective board of directors of IDEH and Target have approved and declared
advisable the acquisition of Target by IDEH by means of redomiciling to the
Cayman Islands and the merger of Target with and into IDEH upon the terms and
subject to the conditions set forth herein and have approved and declared
advisable this Agreement;
WHEREAS,
for federal income tax purposes, it is intended that the merger shall qualify as
a tax-free reorganization under the provisions of the Internal Revenue Code of
1986, as amended, and any successor statute (the “Code”).
NOW,
THEREFORE, in consideration of the above premises, the mutual covenants and
agreements stated herein and other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties hereto agree as
follows, to be effective as of the date hereof:
ARTICLE
1
THE
CONVERSION
|
1.1
|
The
Conversion.
|
|
|
(a)
|
Upon
the written request of the Target, IDEH shall (i) register by way of
continuation as an exempted company under the Cayman Islands Companies Law
(2009 Revision) (the “Companies Law”)
and file the relevant documents with: (A) the Registrar of Companies in
the Cayman Islands and (B) the Nevada Corporate Commission in accordance
with the relevant sections of the Nevada Corporate Code and (ii) thereupon
continue its existence, without interruption, in the organizational form
of a Cayman Islands exempted company (“IDEH Cayman”)
rather than a Nevada company (the “Conversion”). The
Conversion shall become effective at the later of (1) the time of issuance
by the Cayman Islands of a certificate of registration by way of
continuation as an exempted company and (2) the time of issuance of a
certificate recognizing the Conversion by the Nevada Corporate Commission
in accordance with the Nevada Corporate Code (the “Conversion Effective
Time”). The Conversion shall have the effects set forth
under the Nevada Corporate Code and the Cayman Companies Law and subject
to the terms and conditions set forth in this
Agreement.
|
|
|
(b)
|
Each
common stock of IDEH issued and outstanding immediately prior to the
Conversion Effective Time shall be converted into one validly issued,
fully paid, non-assessable ordinary share of IDEH
Cayman.
|
|
1.2
|
Directors and Officers
of IDEH Cayman.
|
The
directors of IDEH immediately prior to the Conversion Effective Time shall, from
and after the Conversion Effective Time, be the directors of IDEH Cayman, and
the officers of IDEH immediately prior to the Conversion Effective Time shall,
from and after the Conversion Effective Time, be the officers of IDEH Cayman, in
each case until their respective successors shall have been duly elected,
designated or qualified at the Merger Effective Time, or until their earlier
death, resignation or removal in accordance with IDEH Cayman’s Memorandum and
Articles of Association.
|
1.3
|
Subsequent
Actions.
|
If at any
time after the Conversion Effective Time, IDEH Cayman shall determine, in its
reasonable discretion, that any actions are necessary or desirable to vest,
perfect or confirm of record or otherwise in IDEH Cayman its right, title or
interest in, to, or under any of the rights, properties or assets of either of
IDEH or Target acquired or to be acquired by IDEH Cayman as a result of, or in
connection with, the Conversion or otherwise to carry out this Agreement, then
the officers and directors of IDEH Cayman shall be authorized to take all such
actions as may be necessary or desirable to vest all right, title or interest
in, to and under such rights, properties or assets in IDEH Cayman or otherwise
to carry out this Agreement.
ARTICLE
2
THE
MERGER
|
2.1
|
The
Merger.
|
|
|
(a)
|
The
merger effective time will take place as soon as reasonably practicable
after the Conversion Effective Time (the “Merger Effective
Time”). At the Merger Effective Time, the Target and
IDEH Cayman shall consummate a merger (the “Merger”)
pursuant to which (i) Target shall be merged with and into IDEH Cayman and
the separate corporate existence of Target shall thereupon cease,
(ii) IDEH Cayman shall be the successor or surviving corporation in the
Merger and shall continue to be governed by the Laws of the Cayman
Islands, and (iii) the separate corporate existence of IDEH Cayman with
all its rights, privileges, immunities, powers and franchises shall
continue unaffected by the Merger. The corporation surviving
the Merger is sometimes hereinafter referred to as the “Surviving
Corporation”. The Merger shall have the effects set
forth under the Laws of the Cayman Islands and subject to the terms and
conditions set forth in this Agreement. The Merger and the
Conversion are part of the same integrated transaction, such that neither
the Merger nor the Conversion shall occur without the
other.
|
|
|
(b)
|
The
Memorandum and Articles of Association of Target, as in effect immediately
prior to the Merger Effective Time, shall be the Memorandum and Articles
of Association of the Surviving Corporation, until thereafter amended as
provided by the Companies Law and such Memorandum and Articles of
Association.
|
2
|
2.2
|
Cayman Corporate
Filings.
|
Subject
to the provisions of this Agreement, the Merger will become effective on the
issuance of a Certificate of Merger issued by the Cayman Islands Registrar of
Companies, or at such subsequent date or time as Target and IDEH agree in
writing.
|
2.3
|
Directors and Officers
of the Surviving
Corporation.
|
The
directors of Target immediately prior to the Merger Effective Time shall, from
and after the Merger Effective Time, be the directors of the Surviving
Corporation, and the officers of Target immediately prior to the Merger
Effective Time shall, from and after the Merger Effective Time, be the officers
of the Surviving Corporation, in each case until their respective successors
shall have been duly elected, designated or qualified, or until their earlier
death, resignation or removal in accordance with the Surviving Corporation’s
Memorandum and Articles of Association.
|
2.4
|
Subsequent
Actions.
|
If at any
time after the Merger Effective Time the Surviving Corporation shall determine,
in its reasonable discretion, that any actions are necessary or desirable to
vest, perfect or confirm of record or otherwise in the Surviving Corporation its
right, title or interest in, to, or under any of the rights, properties or
assets of either of Target or IDEH acquired or to be acquired by the Surviving
Corporation as a result of, or in connection with, the Merger or otherwise to
carry out this Agreement, then the officers and directors of the Surviving
Corporation shall be authorized to take all such actions as may be necessary or
desirable to vest all right, title or interest in, to and under such rights,
properties or assets in the Surviving Corporation or otherwise to carry out this
Agreement.
ARTICLE
3
CONVERSION
OF SECURITIES AND MERGER CONSIDERATION
|
3.1
|
Conversion of Target
Ordinary Shares.
|
As of the
Merger Effective Time, by virtue of the Merger and without any action on the
part of the holders of any ordinary or preferred shares to acquire ordinary
shares of Target (collectively “Target Shares”), or
of IDEH:
|
|
(a)
|
Each
outstanding share of IDEH common stock shall remain outstanding and shall
constitute the issued and outstanding shares of ordinary shares of the
Surviving Corporation.
|
|
|
(b)
|
Each
outstanding Target Share, shall be converted into the right to receive,
and shall be exchangeable for the merger consideration identified in Section 3.2
hereafter. At the Merger Effective Time, all Target Shares
converted into the right to receive the Merger Consideration pursuant to
this Section
3.1(b) shall no longer be outstanding and shall automatically be
cancelled and shall cease to exist, and each holder of a certificate (or,
in the case of uncertificated Target Shares, evidence of such Target
Shares in book-entry form) which immediately prior to the Merger Effective
Time represented any such Target Shares (each, a “Certificate”)
shall cease to have any rights with respect thereto, except the right to
receive the Merger Consideration. Notwithstanding the
foregoing, if between the date of this Agreement and the Merger Effective
Time, the shares of outstanding ordinary shares of Target shall have been
changed into a different number of shares or a different class, by reason
of the occurrence or record date of any stock dividend, subdivision,
reclassification, recapitalization, split, combination, exchange of shares
or similar transaction, then the Merger Consideration shall be
appropriately adjusted to reflect such
action.
|
3
|
|
(c)
|
In
the event that there are dissenting shareholders among the shareholders of
IDEH Cayman or Target, IDEH Cayman and Target shall comply with Section
238 and 230 of the Companies Law with respect to repurchase of the shares
of such dissenting shareholders by cash or cash
equivalent.
|
|
3.2
|
Merger
Consideration.
|
|
|
(a)
|
Subject
to the provisions of Section 7.16,
the Merger Consideration, consisting of the total purchase price payable
to the shareholders of Target in connection with the acquisition by merger
of Target, shall be delivered and shall consist exclusively of 28,975,334
newly issued ordinary shares of the Surviving Corporation (the “Ordinary
Shares”).
|
|
|
(b)
|
The
Merger Consideration shall be allocated among Target’s stockholders in the
proportion of their share ownership of the Target Shares immediately prior
to the Closing Date on a fully converted basis, it being assumed that at
Closing any preferred shares of Target will be converted and exchanged
into Ordinary Shares and any warrants for the ordinary shares of the
Target will be converted and exchanged for warrants for the Ordinary
Shares. It is intended that the delivery of the Merger
Consideration shall qualify as a tax-free exchange under the
Code.
|
|
|
(c)
|
The
Ordinary Shares to be delivered at the Closing shall be fully paid and
non-assessable and shall be free and clear of all liens, levies and
encumbrances.
|
|
3.3
|
Exchange of
Certificates.
|
|
|
(a)
|
Merger
Consideration may be made to a person other than the person in whose name
the Certificate so surrendered is registered if such Certificate shall be
properly endorsed or otherwise be in proper form for transfer and the
person requesting such payment shall pay any transfer or other Taxes
required by reason of the transfer or establish to the reasonable
satisfaction of the Surviving Corporation that such Taxes have been paid
or are not applicable. Until surrendered, each Certificate shall be deemed
at any time after the Merger Effective Time to represent only the right to
receive upon such surrender the Merger
Consideration.
|
|
|
(b)
|
The
Merger Consideration in accordance with the terms of this Article 3 shall
be deemed to have been paid in full satisfaction of all rights pertaining
to the Target Shares formerly represented by such
Certificates. At the close of business on the day on which the
Merger Effective Time occurs, the share transfer books of Target shall be
closed, and there shall be no further registration of transfers on the
share transfer books of the Surviving Corporation of Target Shares that
were outstanding immediately prior to the Merger Effective
Time. If, after the Merger Effective Time, any Certificate is
presented to the Surviving Corporation for transfer, it shall be cancelled
against delivery of and exchanged as provided in this
Article.
|
4
|
|
(c)
|
No
fraction of an Ordinary Share will be issued by virtue of the Agreement,
but in lieu thereof each holder of Target Shares who would otherwise be
entitled to receive a fraction of an Ordinary Share (after aggregating all
fractional Ordinary Shares that otherwise would be received by such
holder) shall receive from the Surviving Corporation one additional
Ordinary Share.
|
|
3.4
|
Exchange of
Warrants.
|
|
|
(a)
|
Each
outstanding warrant for the ordinary shares of Target shall be converted
into a warrant for Ordinary Shares (the “Converted
Warrants”), substantially in form and substance as the warrants for
the ordinary shares of Target. Furthermore, for each such
Converted Warrant, the Surviving Corporation shall also issue additional
warrants for Ordinary Shares to those shareholders of IDEH immediately
prior to the Conversion and Merger in an amount equal to (i) the aggregate
amount of Ordinary Shares issuable upon exercise of the Converted Warrants
divided by 0.98, minus (ii) the
aggregate amount of Ordinary Shares issuable upon exercise of the
Converted Warrants. Such additional warrants shall be issued
pro rata to such shareholders according to their shareholding in IDEH
immediately prior to the Conversion and
Merger.
|
|
|
(b)
|
If,
at any time after the Closing Date, a final judgment or award is rendered
in connection with the existing action and claim under International
Centre for Dispute Resolution (ICDR) Case No. 50 148 T00420 08 or any
other action or claim derived therefrom, or a settlement shall have been
consummated in connection therewith, so that the Surviving Corporation
must issue additional Ordinary Shares or warrants for Ordinary Shares (the
“Settlement
Warrants”), then the Surviving Corporation shall also issue
additional Ordinary Shares or warrants for Ordinary Shares, as the case
may be, to those shareholders of IDEH immediately prior to the Conversion
and Merger in an amount equal to (i) the aggregate amount of Ordinary
Shares or Ordinary Shares issuable upon exercise of the Converted Warrants
divided by 0.98, minus (ii) the
aggregate amount of Ordinary Shares or Ordinary Shares issuable upon
exercise of such Settlement Warrants, as the case may be. Such
additional Ordinary Shares or warrants shall be issued pro rata to such
shareholders according to their shareholding in IDEH immediately prior to
the Conversion and Merger.
|
ARTICLE
4
CLOSING
AND TERMINATION
|
4.1
|
Closing
Date.
|
Subject
to the satisfaction of the conditions set forth in Sections 8.1 and 8.2
hereof, the closing of the Merger and the other transactions contemplated by
this Agreement shall take place on such date as Target and IDEH may designate
(the “Closing
Date”), which shall be not later than February 15, 2010 unless extended
pursuant to Section
4.2.
5
|
4.2
|
Extended Closing
Dates.
|
Target
may, at its sole discretion, extend the Closing Date to each of February 28,
2010 (the “First
Extended Closing Date”), March 31, 2010 (the “Second Extended Closing
Date”), and April 30, 2010 (the “Third Extended Closing
Date”), if:
|
|
(a)
|
written
notice of the extension is provided not less than ten days prior to the
Closing Date, the First Extended Closing Date, the Second Extended Closing
Date or the Third Extended Closing Date, as the case, or cases, may
be.
|
|
|
(b)
|
a
payment of US$20,000 is made to and received by IDEH, as directed by IDEH
after receipt of the Notice, no later than the close of business U.S.
Eastern Time, immediately after each of the Closing Date, the First
Extended Closing Date, the Second Extended Closing Date or the Third
Extended Closing Date, as the case, or cases, may be,. Any
payment made pursuant to this Section 4.2(b)
will not reduce any payments that Target may be obligated to pay under any
other part of this Agreement.
|
Notwithstanding
Section 4.2(b),
if Target has reason to believe, after due inquiry, that any condition precedent
to obligations of Target at the Closing set forth under Section 8.2 cannot be
met, then, upon written notification to IDEH of such deficiency or deficiencies
and giving reasonable consideration to IDEH’s explanation or cure, if any,
Target may defer payment of such US$20,000 until Closing.
|
4.3
|
Termination of
Agreement.
|
This
Agreement may be terminated prior to the Closing as follows:
|
|
(a)
|
by
mutual written consent of Target and
IDEH;
|
|
|
(b)
|
by
Target at any Closing Date if any conditions precedent to obligations of
the Target at the Closing set forth under Section 8.2 has
not been satisfied;
|
|
|
(c)
|
by
Target or IDEH if there shall be in effect a final non-appealable order of
a governmental body of competent jurisdiction restraining, enjoining or
otherwise prohibiting the consummation of the transactions contemplated
hereby; it being agreed that the parties hereto shall promptly appeal any
adverse determination which is not non-appealable (and pursue such appeal
with reasonable diligence); or
|
|
|
(d)
|
by
Target or IDEH, if any legal proceeding or administrative action (whether
civil, criminal, administrative, investigative, or informal) has been
commenced or threatened against either the Target or IDEH or any of their
officers or directors: (a) involving any challenge to, or seeking damages
or other relief in connection with, any of the transactions contemplated
by this Agreement, or (b) that could have the effect of preventing,
delaying, making illegal, or otherwise interfering with any of the
transactions contemplated by this
Agreement.
|
6
|
4.4
|
Effect of
Termination.
|
In the
event that this Agreement is validly terminated as provided herein, then each of
the parties shall be relieved of their duties and obligations arising under this
Agreement after the date of such termination and such termination shall be
without liability to IDEH or Target; provided, further, however, that nothing in
this Section
4.4 shall relieve IDEH or Target of any liability for a breach of this
Agreement.
ARTICLE
5
REPRESENTATIONS
AND WARRANTIES OF TARGET
For purposes of this Agreement, Target
shall be deemed to have “knowledge” of a particular fact or other matter with
respect to any statement made to the knowledge of Target if any member of the
board of directors of the Target is actually aware of such fact or other matter,
or should, by reason of his or her position as an owner, director or executive
officer of Target, reasonably be expected to be aware of such fact or other
matter. Target hereby represents and warrants to IDEH
that:
|
5.1
|
Organization and Good
Standing of Target.
|
Target is
a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation as set forth
above. Except as otherwise provided herein, Target is not required to
be qualified to transact business in any other jurisdiction where the failure to
so qualify would have a material adverse effect on the business or operations of
Target (“Material
Adverse Affect”).
|
5.2
|
Authority.
|
|
|
(a)
|
Target
has full power and authority (corporate and otherwise) to carry on its
business and has all permits and licenses that are necessary to the
conduct of its business or to the ownership, lease or operation of its
properties and assets, except where the failure to have such permits and
licenses would not have a Material Adverse
Effect.
|
|
|
(b)
|
The
execution of this Agreement and the delivery hereof to IDEH and the sale
contemplated herein have been, or will be prior to Closing, duly
authorized by Target’s Board of Directors and by Target’s shareholders
having full power and authority to authorize such actions. In
that connection, all members of the Board of Directors of Target voting to
approve the merger shall enter into a Support Agreement in the form
attached hereto as Schedule 6.2
agreeing to vote their shares and any shares of their affiliates in favor
of the merger.
|
|
|
(c)
|
Subject
to any consents required under Section 5.7
below, Target has the full legal right, power and authority to execute,
deliver and carry out the terms and provisions of this Agreement; and this
Agreement has been duly and validly executed and delivered on behalf of
Target and constitutes a valid and binding obligation of Target
enforceable in accordance with its terms, except as limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or
affecting generally the enforcement of creditor’s
rights.
|
7
|
|
(d)
|
Neither
the execution and delivery of this Agreement, the consummation of the
transactions herein contemplated, nor compliance with the terms of this
Agreement will violate, conflict with, result in a breach of, or
constitute a default under any statute, regulation, indenture, mortgage,
loan agreement, or other agreement or instrument to which Target is a
party or by which it or any of them is bound, any charter, regulation, or
bylaw provision of Target, or any decree, order, or rule of any court or
governmental authority or arbitrator that is binding on Target in any way,
except where such would not have a Material Adverse
Effect.
|
|
5.3
|
Capital
Stock.
|
|
|
(a)
|
Target’s
authorized share capital consists of US$360,000 divided into 240,000,000
ordinary shares and 120,000,000 preferred shares of which 113,354,785
ordinary shares and 23,475,000 preferred shares are issued and all of the
shares are duly authorized, validly issued, fully paid and
non-assessable.
|
|
|
(b)
|
Target
has, or will have on the Closing Date, the absolute, unilateral right,
power, authority and capacity to enter into and perform this Agreement
without any other or further authorization, action or proceeding, except
as specified herein.
|
|
|
(c)
|
Target
is the lawful record and beneficial owner of all of the issued and
outstanding shares of each Subsidiary, as set forth in Section 5.6
below, free and clear of any liens, pledges, encumbrances, charges, claims
or restrictions of any kind, except as set forth in Schedule 5.3,
and has, or will have on the Closing Date, the absolute, unilateral right,
power, authority and capacity to enter into and perform this Agreement
without any other or further authorization, action or proceeding, except
as specified herein.
|
|
|
(d)
|
There
are no authorized or outstanding subscriptions, options, warrants, calls,
contracts, demands, commitments, convertible securities or other
agreements or arrangements of any character or nature whatever under which
Target is or may become obligated to issue, assign or transfer any shares
of Target except as set forth in Schedule
5.3. Those outstanding subscriptions, options, warrants,
calls, contracts, demands, commitments, convertible securities or other
agreements are being provided for disclosure purposes and will not be
acquired by IDEH and will be rendered null and
void.
|
|
5.4
|
Basic Corporate
Records.
|
The
copies of the Memorandum and Articles of Association of Target (certified as of
the date of this Agreement as true copy by Target’s secretary or assistant
secretary), all of which have been delivered to IDEH, are true, correct and
complete as of the date of this Agreement.
|
5.5
|
Minute
Books.
|
The
minute books of Target, which shall be exhibited to IDEH between the date hereof
and the Closing Date, each contain true, correct and complete minutes and
records of all meetings, proceedings and other actions of the shareholders,
Boards of Directors and committees of such Boards of Directors of Target, if
any, except where such would not have a Material Adverse Effect and, on the
Closing Date, will, to the best of Target’s knowledge, contain true, correct and
complete minutes and records of any meetings, proceedings and other actions of
the shareholders and the Board of Directors and committees of such Board of
Directors of Target, except where such would not have a Material Adverse
Effect.
8
|
5.6
|
Subsidiaries and
Affiliates.
|
Any and
all businesses, entities, enterprises and organizations in which Target has any
ownership, voting or profit and loss sharing percentage interest, except with
respect to any interest of less than 5% of the outstanding voting shares of any
corporation whose stock is publicly traded, (the “Subsidiaries”) as
well as any and all businesses, entities, enterprises and organizations which
has any direct ownership, voting or profit and loss sharing percentage interest
in Target, are identified in Schedule 5.6 hereto,
together with the interest therein. Unless the context requires
otherwise or specifically designated to the contrary on Schedule 5.6 hereto,
“Target” as used in this Agreement shall include all such
Subsidiaries. Except as set forth in Schedule 5.6, Target
has made no advances to, or investments in, nor owns beneficially or of record,
any securities of or other interest in, any business, entity, enterprise or
organization, except with respect to any interest of less than 5% of the
outstanding voting shares of any corporation whose stock is publicly
traded. Each Subsidiary shown on Schedule 5.6 is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, and has full corporate power to own all of
its property and to carry on its business as it is now being conducted, except
where such failure to qualify to own property or carry on its business would not
have a Material Adverse Effect. Also set forth on Schedule 5.6 is a
list of jurisdictions in which each Subsidiary is qualified as a foreign
corporation. Such jurisdictions are the only jurisdictions in which
the ownership or leasing of property by each Subsidiary or the conduct of its
business requires it to be so qualified, except where such failure to so qualify
as a foreign corporation would not have a Material Adverse
Effect. All of the outstanding shares of each Subsidiary have been
duly authorized and validly issued, are fully paid and nonassessable, and,
except as set forth on Schedule 5.6, are
owned, of record and beneficially, by Target, and on the Closing Date will be
owned by Target, free and clear of all liens, encumbrances, equities, options or
claims whatsoever. No Subsidiary has outstanding any other equity
securities or securities options, warrants or rights of any kind that are
convertible into equity securities of Target, except as set forth on Schedule
5.6. Notwithstanding the above, those equity securities or
securities options, warrants or rights of any kind that are convertible into
equity securities listed on Schedule 5.6, shall
not be acquired by IDEH in the Merger. After the Closing of the
Merger, all equity securities or securities options, warrants or rights of any
kind that are convertible into equity securities listed on Schedule 5.6 shall be
cancelled.
|
5.7
|
Consents.
|
No
consent, approval, order or authorization of, or registration, declaration or
filing with any court, administrative agency or commission or other governmental
authority or instrumentality (“Governmental Entity”)
is required by or with respect to Target in connection with the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby, except for (i) the approval by the Cayman Islands Registrar of Companies
in respect of the Merger (ii) such consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required under applicable
federal and state securities laws, and (iii) such other consents,
authorizations, filings, approvals and registrations which, if not obtained or
made, individually or in the aggregate, would not be reasonably likely to have a
Material Adverse Effect.
9
|
5.8
|
Financial
Statements.
|
Except as
disclosed in Target Financials, which will be furnished by Target prior to the
Closing, neither Target nor any of its Subsidiaries has any liabilities
(absolute, accrued, contingent or otherwise) of a nature required to be
disclosed on a balance sheet or in the related notes to the consolidated
financial statements prepared in accordance with GAAP which are, individually or
in the aggregate, material to the business, results of operations or financial
condition of Target and its Subsidiaries taken as a whole, except liabilities
(i) provided for in Target Balance Sheet, or (ii) incurred since the date of
Target Balance Sheet in the ordinary course of business consistent with past
practices and which would not reasonably be expected to have a Target Material
Adverse Effect.
|
5.9
|
Compliance With the
Law.
|
Target is
not in violation of any applicable federal, state, local or foreign law,
regulation or order or any other, decree or requirement of any governmental,
regulatory or administrative agency or authority or court or other tribunal
(including, but not limited to, any law, regulation order or requirement
relating to securities, properties, business, products, manufacturing processes,
advertising, sales or employment practices, terms and conditions of employment,
occupational safety, health and welfare, conditions of occupied premises,
product safety and liability, civil rights, or environmental protection,
including, but not limited to, those related to waste management, air pollution
control, waste water treatment or noise abatement), except where such would not
have a Material Adverse Effect. Target has not been and is not now
charged with, or to the best knowledge of Target under investigation with
respect to, any violation of any applicable law, regulation, order or
requirement relating to any of the foregoing, nor, to the best knowledge of
Target after due inquiry, are there any circumstances that would or might give
rise to any such violation. Target has filed all reports required to
be filed with any governmental, regulatory or administrative agency or
authority, except where the failure to file such would not have a Material
Adverse Effect.
|
5.10
|
Broker.
|
Except as
set forth in Schedule
5.10, Target has not retained any broker in connection with any
transaction contemplated by this Agreement. Except as set forth in
Schedule 5.10,
IDEH shall not be obligated to pay any fee or commission associated with the
retention or engagement by Target of any broker in connection with any
transaction contemplated by this Agreement.
10
|
5.11
|
Patriot
Act.
|
Target
certifies that it has not been designated, and is not owned or controlled, by a
“suspected terrorist” as defined in Executive Order 13224. Target
hereby acknowledges that it seeks to comply with all applicable laws concerning
money laundering and related activities. In furtherance of those
efforts, Target hereby represents, warrants and agrees that: (i) none
of the cash or property that Target has contributed or paid or will contribute
and pay to IDEH has been or shall be derived from, or related to, any activity
that is deemed criminal under United States law; and (ii) no contribution or
payment by Target shall cause Target to be in violation of the United States
Bank Secrecy Act, the United States International Money Laundering Control Act
of 1986 or the United States International Money Laundering Abatement and
Anti-Terrorist Financing Act of 2001. Target shall promptly notify
IDEH if any of these representations ceases to be true and accurate regarding
Target. Target agrees to provide IDEH any additional information
regarding Target that IDEH reasonably requests to ensure compliance with all
applicable laws concerning money laundering and similar activities.
|
5.12
|
Disclosure.
|
All
statements contained in any schedule, certificate, opinion, instrument, or other
document delivered by or on behalf of Target pursuant hereto shall be deemed
representations and warranties by Target herein. No statement,
representation or warranty by Target in this Agreement or in any schedule,
certificate, opinion, instrument, or other document furnished or to be furnished
to IDEH pursuant hereto contains or will contain any untrue statement of a
material fact.
ARTICLE
6
REPRESENTATIONS
AND WARRANTIES OF IDEH
IDEH hereby represents and warrants to
Target that:
|
6.1
|
Organization and Good
Standing.
|
IDEH is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Nevada.
|
6.2
|
Authority.
|
|
|
(a)
|
The
execution and delivery of this Agreement and the consummation of the
transactions contemplated herein have been, or will prior to Closing be,
duly and validly approved and acknowledged by all necessary corporate
action on the part of IDEH.
|
|
|
(b)
|
The
execution of this Agreement and the delivery hereof to Target and the
purchase contemplated herein have been, or will be prior to Closing, duly
authorized by IDEH’s Board of Directors having full power and authority to
authorize such actions. In that connection, all members of the
Board of Directors of IDEH voting to approve the merger shall enter into a
Support Agreement in the form attached hereto as Schedule 6.2
agreeing to vote their shares and any shares of their affiliates in favor
of the merger.
|
11
|
6.3
|
Conflicts; Consents of
Third Parties.
|
The
execution and delivery of this Agreement, the Merger and the consummation of the
transactions herein contemplated, and the compliance with the provisions and
terms of this Agreement, are not prohibited by the Articles of Incorporation or
Bylaws of IDEH and will not violate, conflict with or result in a breach of any
of the terms or provisions of, or constitute a default under, any court order,
indenture, mortgage, loan agreement, or other agreement or instrument to which
IDEH is a party or by which it is bound.
No
consent, approval, order or authorization of, or registration, declaration or
filing with any court, administrative agency or commission or other Governmental
Authority or instrumentality is required by or with respect to IDEH in
connection with the execution and delivery of this Agreement or the consummation
of the transactions contemplated hereby, except for (i) the approval by the
Cayman Islands Registrar of Companies in respect of the Conversion and Merger
(ii) such consents, authorizations, filings, approvals and registrations which,
if not obtained or made, individually or in the aggregate, would not be
reasonably likely to have a Material Adverse Effect.
|
6.4
|
SEC Documents;
Financial Statements.
|
IDEH has
filed all forms, reports and documents required to be filed with the SEC since
the initial filing date of the registration statement for IDEH’s initial public
offering. All such required forms, reports and documents (including
those that IDEH may file subsequent to the date hereof) are referred to herein
as the “IDEH SEC
Reports”. As of their respective dates, IDEH SEC Reports (i)
were prepared in accordance with the requirements of the Securities Act or the
Exchange Act, as the case may be, and the rules and regulations of the SEC
thereunder applicable to such IDEH SEC Reports, and (ii) did not at the time
they were filed (or if amended or superseded by a filing prior to the date of
this Agreement, then on the date of such filing) contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. (b) Each of
the financial statements (including, in each case, any related notes thereto)
contained in IDEH SEC Reports (the “IDEH Financials”),
including any IDEH SEC Reports filed after the date hereof until the Closing, as
of their respective dates, (i) complied as to form in all material respects with
the published rules and regulations of the SEC with respect thereto, (ii) was
prepared in accordance with GAAP applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes thereto or, in the
case of unaudited interim financial statements, as may be permitted by the SEC
on Form 10-Q under the Exchange Act) and (iii) fairly presented the consolidated
financial position of IDEH at the respective dates thereof and the consolidated
results of its operations and cash flows for the periods indicated, except that
the unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments which were not, or are not expected to be,
material in amount. The balance sheet of IDEH as of May 31, 2009 is
hereinafter referred to as the “IDEH Balance Sheet”
and the date as “IDEH
Balance Sheet Date”. Except as disclosed in IDEH Financials,
IDEH has no liabilities (absolute, accrued, contingent or otherwise) of a nature
required to be disclosed on a balance sheet or in the related notes to the
consolidated financial statements prepared in accordance with GAAP, except
liabilities (i) provided for in IDEH Balance Sheet, or (ii) provided in any IDEH
SEC Reports. IDEH has filed and will file all required forms, reports and
documents required to be filed by it to the SEC, including but not limited to
all forms, reports or documents required to be filed by it in connection with
the transactions contemplated by this Agreement.
12
|
6.5
|
Minute
Books.
|
The
minute books of IDEH, which shall be exhibited to Target between the date hereof
and the Closing Date, each contain true, correct and complete minutes and
records of all meetings, proceedings and other actions of the shareholders,
Boards of Directors and committees of such Boards of Directors of IDEH, if any,
except where such would not have a Material Adverse Effect and, on the Closing
Date, will, to the best of IDEH’s knowledge, contain true, correct and complete
minutes and records of any meetings, proceedings and other actions of the
shareholders and the Board of Directors and committees of such Board of
Directors of IDEH.
|
6.6
|
Litigation.
|
There are
no legal proceedings pending or, to the best knowledge of IDEH, threatened that
are reasonably likely to prohibit or restrain the ability of IDEH to enter into
this Agreement or consummate the transactions contemplated hereby.
|
6.7
|
Records and Books of
Account.
|
The
records and books of account of IDEH reflect all material items of income and
expense and all material assets, liabilities and accruals, have been, and to the
Closing Date will be, regularly kept and maintained in conformity with GAAP
applied on a consistent basis with preceding years.
|
6.8
|
Broker.
|
IDEH has
not retained any broker in connection with any transaction contemplated by this
Agreement. Target shall not be obligated to pay any fee or commission
associated with the retention or engagement by IDEH of any broker in connection
with any transaction contemplated by this Agreement
|
6.9
|
Patriot
Act.
|
IDEH
certifies that neither it has not been designated, and is not owned or
controlled, by a “suspected terrorist” as defined in Executive Order
13224. IDEH hereby acknowledges that Target seek to comply with all
applicable laws concerning money laundering and related
activities. IDEH agrees to provide Target any additional information
regarding IDEH or any of its subsidiaries that Target reasonably request to
ensure compliance with all applicable laws concerning money laundering and
similar activities.
|
6.10
|
Due Authorization of
Ordinary Shares.
|
The
Ordinary Shares, when delivered to the shareholders of Target, shall be validly
issued and outstanding as fully paid and non-assessable, free and clear of any
liens, pledges, encumbrances, charges, agreements, options, claims or other
arrangements or restrictions of any kind.
13
|
6.11
|
Absence of Certain
Changes.
|
IDEH has
conducted its business in accordance with its filings with the SEC from time to
time up to October 19, 2009, that being the date of the latest Form 10-Q filing
prior to the signing of this Agreement
|
6.12
|
Absence of Undisclosed
Liabilities.
|
As of the
Closing, there are no liabilities or obligations of IDEH of any kind whatsoever
exceeding US$5,000, individually or in the aggregate, whether accrued, fixed,
absolute, contingent, determined or determinable, and including without
limitation (i) liabilities to former, retired or active employees of IDEH under
any pension, health and welfare benefit plan, vacation plan or other plan of
IDEH, (ii) liabilities to a parent company or subsidiary, (iii) contingent
liabilities in the nature of an endorsement, guarantee, indemnity or warranty,
and there is no condition, situation or circumstance existing or which has
existed that could reasonably be expected to result in any liability of IDEH
which is of a nature that would be required to be disclosed on its Financial
Statements in accordance with GAAP, other than liabilities and contingent
liabilities incurred in the ordinary course of business, none of which is
materially adverse to IDEH (each an “IDEH
Liability”).
|
6.13
|
Taxes.
|
|
|
(a)
|
For
purposes of this Agreement, “Tax” or “Taxes” refers
to: (i) any and all federal, state, local and foreign taxes,
assessments and other governmental charges, duties, impositions and
liabilities relating to taxes, including taxes based upon or measured by
gross receipts, income, profits, sales, use and occupation, and value
added, ad valorem, transfer, franchise, withholding, payroll, recapture,
employment, excise and property taxes and escheatment payments, together
with all interest, penalties and additions imposed with respect to such
amounts and any obligations under any agreements or arrangements with any
other person with respect to such amounts and including any liability for
taxes of a predecessor entity in any jurisdiction; (ii) any liability for
the payment of any amounts of the type described in clause (i) as a result
of being or ceasing to be a member of an affiliated, consolidated,
combined or unitary group for any period (including, without limitation,
any liability under Treas. Reg. Section 1.1502-6 or any comparable
provision of foreign, state or local law); and (iii) any liability for the
payment of any amounts of the type described in clause (i) or (ii) as a
result of any express or implied obligation to indemnify any other person
or as a result of any obligations under any agreements or arrangements
with any other person with respect to such amounts and including any
liability for taxes of a predecessor
entity.
|
|
|
(b)
|
(i)
|
IDEH
has timely filed all federal, state, local and foreign returns, estimates,
information statements and reports (“Tax Returns”)
relating to Taxes required to be filed by IDEH with any Tax authority
effective through the Closing Date. All such Returns are true,
correct and complete in all respects, except for immaterial amounts where
such would not have a Material Adverse Effect. IDEH has paid
all Taxes shown to be due on such Returns. Except as listed on
Schedule
6.13 hereto, IDEH is not currently the beneficiary of any
extensions of time within which to file any Returns. IDEH have
furnished and made available to Target complete and accurate copies of all
income and other Tax Returns and any amendments thereto filed by IDEH in
the last three (3) years.
|
14
|
|
(ii)
|
IDEH,
as of the Closing Date, will have withheld and accrued or paid to the
proper authority all Taxes required to have been withheld and accrued or
paid, except for immaterial amounts where such would not have a Material
Adverse Effect.
|
IDEH has
not been delinquent in the payment of any Tax nor is there any Tax deficiency
outstanding or assessed against IDEH. IDEH has not executed any
unexpired waiver of any statute of limitations on or extending the period for
the assessment or collection of any Tax.
|
|
(iii)
|
There
is no dispute, claim, or proposed adjustment concerning any Tax liability
of IDEH either (A) claimed or raised by any Tax authority in writing or
(B) based upon personal contact with any agent of such Tax authority, and
there is no claim for assessment, deficiency, or collection of Taxes, or
proposed assessment, deficiency or collection from the Internal Revenue
Service or any other governmental authority against IDEH which has not
been satisfied. IDEH is not a party to nor has it been notified
in writing that it is the subject of any pending, proposed, or threatened
action, investigation, proceeding, audit, claim or assessment by or before
the Internal Revenue Service or any other U.S. or foreign governmental
authority, nor does IDEH have any reason to believe that any such notice
will be received in the future. Except as set forth on Schedule 6.13,
neither the Internal Revenue Service nor any state or local taxation
authority has ever audited any income tax return of IDEH. IDEH
has not filed any requests for rulings with the Internal Revenue Service
or any similar foreign taxing authority. Except as provided to
Target’s accountants, no power of attorney has been granted by IDEH or its
affiliates with respect to any matter relating to Taxes of
IDEH. There are no Tax liens of any kind upon any property or
assets of IDEH, except for inchoate liens for Taxes not yet due and
payable.
|
|
|
(iv)
|
Except
for immaterial amounts which would not have a Material Adverse Effect,
IDEH has no liability for any unpaid Taxes which has not been paid or
accrued for or reserved on the Financial Statements in accordance with
GAAP, whether asserted or unasserted, contingent or
otherwise.
|
|
|
(v)
|
There
is no contract, agreement, plan or arrangement to which IDEH is a party as
of the date of this Agreement, including but not limited to the provisions
of this Agreement, covering any employee or former employee of IDEH that,
individually or collectively, would reasonably be expected to give rise to
the payment of any amount that would not be deductible pursuant to
Sections 280G, 404 or 162(m) of the Code. There is no contract,
agreement, plan or arrangement to which IDEH is a party or by which it is
bound to compensate any individual for excise taxes paid pursuant to
Section 4999 of the Code.
|
15
|
|
(vi)
|
IDEH
has not filed any consent agreement under Section 341(f) of the Code
or agreed to have Section 341(f)(2) of the Code apply to any disposition
of a subsection (f) asset (as defined in Section 341(f)(4) of the Code)
owned by IDEH.
|
|
|
(vii)
|
IDEH
is not a party to, nor has any obligation under, any tax-sharing, tax
indemnity or tax allocation agreement or
arrangement.
|
|
|
(viii)
|
None
of IDEH’s assets are tax exempt use property within the meaning of Section
168(h) of the Code.
|
|
6.14
|
Leases.
|
All
leases of real and personal property of IDEH are described in Schedule 6.14 and
will be transferred to an entity designated in writing by Xxxxxxx Xxxxxxxx or
X. X. Xxxxxxxxx III (“New Co.”) in
connection with the Merger.
|
6.15
|
Customers and
Vendors.
|
To the
best knowledge of IDEH, there has not been any event, happening, threat or fact
that would lead them to believe that any of said customers or vendors will
terminate or materially alter their business relationship with IDEH after
completion of the transactions contemplated by this Agreement.
|
6.16
|
Compliance With the
Law.
|
IDEH is
not in violation of any applicable federal, state, local or foreign law,
regulation or order or any other, decree or requirement of any governmental,
regulatory or administrative agency or authority or court or other tribunal
(including, but not limited to, any law, regulation order or requirement
relating to securities, properties, business, products, manufacturing processes,
advertising, sales or employment practices, terms and conditions of employment,
occupational safety, health and welfare, conditions of occupied premises,
product safety and liability, civil rights, or environmental protection,
including, but not limited to, those related to waste management, air pollution
control, waste water treatment or noise abatement), except where such would not
have a Material Adverse Effect. IDEH has not been and is not now
charged with, or to the best knowledge of IDEH under investigation with respect
to, any violation of any applicable law, regulation, order or requirement
relating to any of the foregoing, nor, to the best knowledge of IDEH after due
inquiry, are there any circumstances that would or might give rise to any such
violation. IDEH has filed all reports required to be filed with any
governmental, regulatory or administrative agency or authority, except where the
failure to file such would not have a Material Adverse Effect.
|
6.17
|
Litigation; Pending
Labor Disputes.
|
Except as
specifically set forth in Schedule
6.17:
|
|
(i)
|
There
are no legal, administrative, arbitration or other proceedings or
governmental investigations pending or, to the best knowledge of IDEH,
threatened, against IDEH, relating to its business or IDEH or its
properties (including leased property), or the transactions contemplated
by this Agreement, nor is there any basis known to IDEH for any such
action.
|
16
|
|
(ii)
|
There
are no judgments, decrees or orders of any court, or any governmental
department, commission, board, agency or instrumentality binding upon IDEH
relating to its business the effect of which is to prohibit any business
practice or the acquisition of any property or the conduct of any business
by IDEH or which limit or control or otherwise would have a Material
Adverse Affect on its method or manner of doing
business.
|
|
|
(iii)
|
No
work stoppage has occurred and is continuing or, to the knowledge of IDEH,
is threatened affecting its business, and to the best of IDEH’s knowledge,
no question involving recognition of a collective bargaining agent exists
in respect of any employees of
IDEH.
|
|
6.18
|
Assets.
|
The
assets of IDEH are, and together with the additional assets to be acquired or
otherwise received by IDEH prior to the Closing will at the Closing Date be,
sufficient in all material respects to carry on the operations of the business
as now conducted by IDEH. IDEH is the only business organization
through which its business is conducted. All assets used by IDEH to
conduct the business of IDEH are, and will on the Closing Date be, owned by
IDEH.
|
6.19
|
Absence of Certain
Commercial Practices.
|
IDEH has
not made any payment (directly or by secret commissions, discounts, compensation
or other payments) or given any gifts to another business concern, to an agent
or employee of another business concern or of any governmental entity (domestic
or foreign) or to a political party or candidate for political office (domestic
or foreign), to obtain or retain business for IDEH or to receive favorable or
preferential treatment, except for gifts and entertainment given to
representatives of customers or potential customers of sufficiently limited
value and in a form (other than cash) that would not be construed as a bribe or
payoff.
|
6.20
|
Licenses, Permits,
Consents and Approvals.
|
IDEH has
all licenses, registrations, permits and certificates from government or
government agencies necessary for the conduct of its current business (the
“Licenses”). IDEH
is not in default in any material respect under any such Licenses.
|
6.21
|
Intellectual
Property.
|
IDEH has
not received any notice of infringement of or conflict with asserted rights of
others with respect to any trademark, copyrights, invention, patents, know-how,
trade secrets, confidential information or other intellectual property rights
that, if determined adversely to IDEH, would individually or in the aggregate
have a Material Adverse Effect.
17
|
6.22
|
Environmental
Matters.
|
|
|
(i)
|
IDEH
is and has been in compliance with all federal, state and local laws,
regulations, rules, ordinances, common laws, policies and guidance
relating to public or workplace health or safety, protection of the
environment or releases of hazardous materials into the environment
(“Environmental
Laws”) applicable to its leased real property or
operations;
|
|
|
(ii)
|
IDEH
has obtained all permits, licenses or other authorizations required under
all applicable Environmental Laws necessary to operate its business and is
and has been in compliance with all such
permits;
|
|
|
(iii)
|
IDEH
is not subject to any outstanding consent decree, compliance order or
administrative order with respect to any Environmental Law or any
violation or potential violation thereof and has not (a) received notice
under the citizen suit provision of any Environmental Law, (b) received
any request for information, notice, demand letter, administrative inquiry
or formal or informal complaint or claim with respect to any Environmental
Law or any violation or potential violation thereof or with respect to any
release of hazardous material and (c) been subject to or threatened with
any governmental or citizen enforcement action with respect to any
Environmental Law;
|
|
|
(iv)
|
IDEH
has not generated, manufactured, refined, transported, treated, stored,
handled, disposed, transferred, produced, or processed any hazardous
materials except in compliance with all applicable Environmental Laws;
there has been no release or threat of release of any hazardous material
by IDEH at or in the vicinity of any property leased or
operated by IDEH or at which IDEH has provided services that requires or
may require reporting, investigation, assessment, cleanup, remediation or
any other type of response action by IDEH pursuant to any Environmental
Law; and IDEH has not transported or disposed of any hazardous material at
any site which requires or may require reporting, investigation,
assessment, cleanup, remediation or any other type of response action by
IDEH pursuant to any Environmental Law;
and
|
|
|
(v)
|
IDEH
has not assumed, undertaken or otherwise become subject to any material
liability of any other person relating to or arising from any
Environmental Law.
|
|
6.23
|
OTCBB
Quote.
|
IDEH has
maintained its status as a company whose common stock are quoted on the OTCBB
and, assuming the filing of Form 8-A with the SEC at Closing, no reason exist as
to why such status shall not continue immediately following the
Closing.
|
6.24
|
Disclosure.
|
All
statements contained in any schedule, certificate, opinion, instrument, or other
document delivered by or on behalf of IDEH pursuant hereto shall be deemed
representations and warranties by IDEH herein. No statement,
representation or warranty by IDEH in this Agreement or in any schedule,
certificate, opinion, instrument, or other document furnished or to be furnished
to IDEH pursuant hereto contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact required to be
stated therein or necessary to make the statements contained therein not
misleading or necessary in order to provide a prospective purchaser of the
business of IDEH with full and fair disclosure concerning IDEH, its business,
and its affairs.
18
ARTICLE
7
COVENANTS
|
7.1
|
Access to
Information.
|
IDEH
agrees that, prior to the Closing Date, Target shall be entitled, through its
officers, employees and representatives (including, without limitation, its
legal advisors and accountants), to make such investigation of the properties,
businesses and operations of IDEH and such examination of the books, records and
financial condition of IDEH as it reasonably requests and to make extracts and
copies of such books and records. Any such investigation and
examination shall be conducted during regular business hours and under
reasonable circumstances, and IDEH shall cooperate, and shall cause IDEH to
cooperate, fully therein. No investigation by Target prior to or
after the date of this Agreement shall diminish or obviate any of the
representations, warranties, covenants or agreements of IDEH contained in this
Agreement or any other agreement referenced herein. In order that
Target may have full opportunity to make such physical, business, accounting and
legal review, examination or investigation as it may reasonably request of the
affairs of IDEH, IDEH shall cause the officers, employees, consultants, agents,
accountants, attorneys and other representatives of IDEH to cooperate fully with
such representatives in connection with such review and
examination.
|
7.2
|
Target
Financials.
|
Prior to
the Closing, Target shall furnish IDEH with the audited consolidated financial
statements (including, in each case, any related notes thereto) of Target for
the three years ended December 31, 2008 (the “Target Financials”). The Target
Financials, once provided by Target to IDEH, shall be incorporated herein as
part of this Agreement as Schedule 7.2. The Target Financials shall,
(i) be in a format that complies as to form in all material respects with the
published rules and regulations of the U.S Securities and Exchange Commission
(“SEC”) with respect thereto, (ii) be prepared in accordance with generally
accepted accounting principles of the United States (“GAAP”) applied on a
consistent basis throughout the periods involved (except as may be indicated in
the notes thereto) and (iii) fairly present the consolidated financial position
of Target and its Subsidiaries at the respective dates thereof and the
consolidated results of its operations and cash flows for the periods
indicated. The balance sheet of Target as of December 31, 2008, is
herein referred to as the “Target Balance Sheet”.
|
7.3
|
IDEH Liabilities and
Resolution of Litigations.
|
Within
four weeks after the execution of this Agreement, IDEH shall furnish Target with
Schedule 7.3,
setting forth any and all IDEH Liabilities existing as of the date that such
Schedule 7.3 is
provided, and such Schedule 7.3 shall be
incorporated herein as a part of this Agreement once provided by
IDEH. IDEH undertakes to pay, or otherwise settle, to the reasonable
satisfaction of Target all IDEH Liabilities prior to the Closing.
19
Prior to
Closing, IDEH shall resolve any and all of its outstanding litigations or
pending disputes to the reasonable satisfaction of Target.
|
7.4
|
IDEH
Contracts.
|
Within
four weeks after the execution of this Agreement, IDEH shall furnish Target with
Schedule 7.4,
listing, identifying and fairly summarizing each Contract to which IDEH is a
party as of the date that such Schedule 7.4 is
provided, and such Schedule 7.4 shall be incorporated herein as a part of this
Agreement once provided by IDEH.
For the
purposes herein “Contracts” mean
(whether written or oral):
|
|
(i)
|
All
joint venture contracts of IDEH or affiliates relating to the business of
IDEH;
|
|
|
(ii)
|
All
contracts of IDEH relating to (a) obligations for borrowed money, (b)
obligations evidenced by bonds, debentures, notes or other similar
instruments, (c) obligations to pay the deferred purchase price of
property or services, except trade accounts payable arising in the
ordinary course of business, (d) obligations under capital leases, (e)
debt of others secured by a lien on any asset of IDEH, and (f) debts of
others guaranteed by IDEH;
|
|
|
(iii)
|
All
agreements of IDEH relating to the supply of raw materials for and the
distribution of the products of its business, including without limitation
all sales agreements, manufacturer’s representative agreements and
distribution agreements of whatever magnitude and nature, and any
commitments therefore;
|
|
|
(iv)
|
All
contracts that individually provide for aggregate future payments to or
from IDEH of US$5,000 or more, to the extent not included in (i) through
(iii) above;
|
|
|
(v)
|
All
contracts of IDEH that have a term exceeding one year and that may not be
cancelled without any liability, penalty or premium, to the extent not
included in (i) through (iv) above;
|
|
|
(vi)
|
A
complete list of all outstanding powers of attorney granted by
IDEH;
|
|
|
(vii)
|
All
other contracts of IDEH material to the business, assets, liabilities,
financial condition, results of operations or prospects of the business of
IDEH taken as a whole to the extent not included above. All of
such Contracts will be transferred to New Co. in connection with the
Merger; and
|
|
(viii)
|
All
pending disputes with customers or vendors of IDEH regarding quality or
return of goods involving amounts in dispute with any one customer or
vendor, whether for related or unrelated claims, in excess of
US$5,000.
|
20
As soon
as practicable after Schedule 7.4 is
provided by IDEH to Target, the parties shall discuss and reach agreement as to
the resolution of each Contract, such as whether a particular Contract shall be
assigned to New Co. or another third party, shall be terminated prior to the
Closing, or shall remain with the Surviving Corporation. For all
Contracts that will not remain with the Surviving Corporation, IDEH undertakes
that it shall cause such Contracts to be either terminated or assigned to a
third party, all to the reasonable satisfaction of Target.
|
7.5
|
IDEH
Assets.
|
Within
four weeks after the execution of this Agreement, IDEH shall furnish Target with
Schedule 7.5,
setting forth any and all assets owned by IDEH as of the date that such Schedule 7.5 is
provided to Target. Once provided, such Schedule 7.5 shall be
incorporated as a part of this Agreement. IDEH undertakes to transfer
all such assets to New Co. at or prior to the Closing of the Merger to the
reasonable satisfaction of Target.
|
7.6
|
IDEH
Licenses.
|
Within
four weeks after the execution of this Agreement, IDEH shall furnish Target with
Schedule 7.6,
setting forth any and all Licenses of IDEH. Once provided, such Schedule 7.6 shall be
incorporated as a part of this Agreement. At or prior to the Closing,
IDEH shall transfer all Licenses to New Co.
|
7.7
|
Operation of the
Business.
|
Between
the date of this Agreement and the applicable Closing Date, IDEH will continue
to conduct its business as set forth in its filings with the SEC as of October
19, 2009, being the date of its latest Form 10-Q filing prior to the signing of
this Agreement.
|
7.8
|
Consents.
|
|
|
(a)
|
The
Target shall use its best efforts, and IDEH shall cooperate with the
Target, to obtain at the earliest practicable date all consents and
approvals required to consummate the transactions contemplated by this
Agreement, provided, however, that neither the Target nor IDEH shall be
obligated to pay any consideration therefor to any third party from whom
consent or approval is requested.
|
|
|
(b)
|
IDEH
shall use its best efforts, and Target shall cooperate with IDEH, to
obtain at the earliest practicable date all consents and approvals
required to consummate the transactions contemplated by this Agreement,
provided, however, that neither the Target nor IDEH shall be obligated to
pay any consideration therefor to any third party from whom consent or
approval is requested. In that connection, all members of the
Board of Directors of IDEH voting to approve the merger shall enter into a
Support Agreement in the form attached hereto as Schedule 6.2
agreeing to vote their shares and any shares of their affiliates in favor
of the merger.
|
21
|
7.9
|
Lock-up
Agreement.
|
Prior to
Closing, IDEH shall procure each of Xxxxxxx X. Xxxxxxxx and Xxx Xxxxxxxxx to
execute a lock up agreement substantially in the form of Schedule 7.9 attached
hereto to be dated as of the Closing Date;
|
7.10
|
Indemnification
Agreement.
|
Prior to
Closing, IDEH shall procure Xxxxxxx X. Xxxxxxxx, and Xxxxxxx X. (Xxx) Xxxxxxxxx
to jointly execute an Indemnification Agreement substantially in the form of
Schedule 7.10
attached hereto to be dated as of the Closing Date;
|
7.11
|
Other
Actions.
|
Each of
the Target and IDEH shall use its best efforts to (i) take all actions necessary
or appropriate to consummate the transactions contemplated by this Agreement,
and (ii) cause the fulfillment at the earliest practicable date of all of the
conditions to their respective obligations to consummate the transactions
contemplated by this Agreement.
|
7.12
|
Alternate Transaction,
Capital Raise Transaction, Target’s Failure to Close by Closing Date or
Extended Closing Date.
|
|
|
(a)
|
Capital Raise
Transaction. As used in this Agreement, Capital Raise
Transaction shall mean (i) a transaction that is funded, (ii) more than
US$15,000,000 of equity and/or debt capital is raised by Target, and (iii)
a written condition of such Capital Raise Transaction is that Target may
not complete the merger with IDEH.
|
|
|
(b)
|
Alternative
Transaction. As used in this Agreement, Alternative
Transaction shall mean, any transaction involving a merger, consolidation,
change of control, business combination of Target, other than the
transactions contemplated by this Agreement or any transaction other than
a Capital Raise Transaction.
|
|
|
(c)
|
Share
Value. As used this Agreement, Share Value shall mean
US$1.10 per share. However, if the per share value of any
Qualified New Investment in Target’s common shares exceeds US$1.10, then
the Share Value of each share will be the greater of $1.10 per share or
80% of the per share value established in the Qualified New
Investment.
|
|
|
(d)
|
Qualified New
Investment. For purposes of this Agreement, Qualified
New Investment means any new cash investment in Target’s common equity or
convertible debt of greater than US$15,000,000 and where such transaction
is made by any individual or institution not currently affiliated with
Target, and where such transaction closes and is fully funded to Target
within 90 days of the time in which the payment in shares would be due to
IDEH.
|
|
|
(e)
|
Maximum Payment to
IDEH. The Maximum Payment to IDEH under this Section 7.12 shall be
US$100,000 in cash plus 2% of the Target’s issued and outstanding equity,
on a fully diluted basis.
|
22
|
7.13
|
Restrictions on Target
Concerning Alternative
Transaction.
|
Subject
to the provisions of Section 7.13(a)
below, the Target will not, and will not cause or permit Target or any of
Target’s directors, officers, employees, representatives or agents
(collectively, the “Representatives”) to,
directly or indirectly, (i) facilitate, encourage, solicit or initiate
discussions, negotiations or submissions of proposals or offers in respect of an
Alternate Transaction, (ii) furnish or cause to be furnished, to any party, any
information concerning the business, operations, properties or assets of Target
in connection with an Alternate Transaction, or (iii) otherwise cooperate in any
way with, or assist or participate in, facilitate or encourage, any effort or
attempt by any other party to do or seek any of the foregoing. The
Target will inform IDEH in writing immediately following the receipt by Target,
Target or any Representative of any proposal or inquiry in respect of any
Alternate Transaction. Nothing in this Section 7.13 will
prohibit the Target from discussing, negotiating or entering into a Capital
Raise Transaction.
|
|
(a)
|
Payment to IDEH if
Alternative Transaction Occurs. If the Target enters
into definitive documentation with respect to, or accepts in principal a
proposal or executes an agreement with respect to an Alternate Transaction
on or before the Closing Date or any of the Extended Closing Dates, if
such dates are effected pursuant to the terms of this Agreement, then on
the date the Target enters into definitive documentation with respect to,
or accepts in principal a proposal or executes an agreement with respect
to an Alternate Transaction, the Target shall pay to IDEH the equivalent
of US$300,000 in Share Value of Target’s common shares. If
Target makes such payment, then Target’s obligation to pay to IDEH the
Maximum Payment as described in Section 7.13(e)
below will be eliminated.
|
|
|
(b)
|
Payment to IDEH if
Capital Raise Transaction Occurs. If Target completes a
Capital Raise Transaction prior to April 30, 2010, then on the date Target
completes a Capital Raise Transaction, Target will pay to IDEH US$200,000
in value of Target’s common shares, the number of shares determined by the
Share Value. If Target makes such payment, then Target’s
obligation to pay to IDEH the Maximum Payment as described in Section 7.13(e)
below will be eliminated.
|
|
|
(c)
|
Payment to IDEH if
Merger does not Close Prior to the Closing Date or any of the Extended
Closing Dates. Subject to the provisions of Sections
7.13(d) and Section 7.13(e)
below, if the Merger contemplated in this Agreement does not close on or
before the Closing Date or any of the Extended Closing Dates, if such
dates are effected pursuant to the terms of this Agreement, and all
conditions precedent to obligations of Target set forth under Section 8.2
have been satisfied, then on the Closing Date or such Extended Closing
Date, Target shall pay to IDEH US$200,000 in value of Target’s common
shares, such share value to be determined by the Share
Value. If Target makes such payment, then Target’s obligation
to pay to IDEH the Maximum Payment as described in Section 7.13(e)
below will be eliminated. However, if Target makes a payment
pursuant to this Section 7.13(c)
and within six months thereafter enters into an Alternative Transaction,
then at the date of entering into an the Alternative Transaction, Target
shall pay IDEH an additional US$100,000 in value of Target’s common
shares, such share value to be determined by the Share
Value
|
23
|
|
(d)
|
Payment to IDEH if
Target Requests Reverse Split. If Target requests IDEH
to effect a reverse split of IDEH common stock as provided in Section 7.16,
then in the event that Target does not close the transaction contemplated
in this Agreement on or before the Closing Date or any of the Extended
Closing Dates as the case may be, and IDEH is not in default under this
Agreement, then on the Closing Date or such Extended Closing Date, Target
shall pay to IDEH US$300,000 in value of Target’s common shares, such
share value to be determined by the Share Value. If Target
makes such payment, then Target’s obligation to pay to IDEH the Maximum
Payment as described in Section 7.13(e)
below will be eliminated.
|
|
|
(e)
|
Payment of Maximum
Payment. If the transactions contemplated in this
Agreement are not closed on or before the Closing Date or any of the
Extended Closing Dates as the case may be, and all conditions precedent to
obligations of Target set forth under Section 8.2
have been satisfied, then on the Closing Date or such Extended Closing
Date, Target shall pay to IDEH the Maximum Payment. No further
Share Value payments would be due.
|
|
7.14
|
Publicity.
|
None of
the Target nor IDEH shall issue any press release or public announcement
concerning this Agreement or the transactions contemplated hereby without
obtaining the prior written approval of the other party hereto, which approval
will not be unreasonably withheld or delayed, unless, in the sole judgment of
IDEH or the Target, disclosure is otherwise required by applicable law, rule or
regulation or by the applicable rules of any stock exchange on which IDEH lists
securities, provided that, to the extent required by applicable law, the party
intending to make such release shall use its best efforts consistent with such
applicable law to consult with the other party with respect to the text
thereof.
|
7.15
|
Sale of Assets of IDEH
to New Co.; No Liabilities at
Closing.
|
|
|
(a)
|
Immediately
prior to the Closing, all Assets of IDEH, including but not limited to
cash, accounts receivable, and contract rights shall be transferred to New
Co. Within four weeks after the execution of this Agreement, IDEH shall
furnish the form of the Asset Purchase Agreement in connection with that
transfer of asset to New Co. for Target’s approval. Such Asset
Purchase Agreement, once provided by IDEH and approved by Target, shall be
attached to this Agreement, and be incorporated herein, as Schedule
7.15.
|
|
|
(b)
|
At
least one week prior to expected Closing Date, the First Extended Closing
Date, the Second Extended Closing Date or the Third Extended Closing Date,
as the case may be, IDEH shall furnish Target with Schedule
7.15(b), setting forth all indebtedness of IDEH as of the
Closing. Once provided, such Schedule
7.15(b) shall be incorporated as a part of this
Agreement.
|
|
|
(c)
|
Prior
to Closing, Target shall pay the sum of no more than US$100,000 to an
escrow account to be mutually agreed by Target and IDEH (the “Escrow
Account”), for the sole purpose of satisfying the indebtedness of
IDEH set forth on Schedule
7.15(b). Any indebtedness in excess of the escrowed
amount will be satisfied by IDEH from its own funds or released at or
prior to Closing.
|
24
|
7.16
|
Reverse Stock
Split.
|
|
|
(a)
|
If
requested by Target, prior to closing, IDEH will
effect a reverse split of its issued common stock. Such reverse
split may be within a range of 1:30 to 1:70. At the date of
execution of this Agreement, there are 35,480,000 shares of IDEH common
stock issued and outstanding. Therefore, by way of example, the
effect of a 1:60 reverse-split is that each 60 shares of IDEH common stock
outstanding immediately prior to the Effective Date (the “Old Shares”)
will be automatically converted into one (1) share of IDEH common stock
(the “New
Shares”), reducing the number of outstanding shares of its common
stock to approximately 591,334 shares, subject to rounding.
Fractional shares will be rounded
up.
|
|
|
(b)
|
IDEH’s
obligation to effect a reverse split is subject to Target providing
written notice to all parties not less than 30 days prior to the Closing
Date, the Extended Closing Date, or the Second Extended Closing Date, or
the Third Extended Closing Date, as the case may
be.
|
|
|
(c)
|
Based
upon the foregoing, and by way of example, assuming the one-for-sixty
(1:60) reverse split of IDEH stock, Target shall be issued an aggregate of
28,975,334 shares of IDEH common stock. To the extent Target
has any securities other than ordinary shares outstanding at Closing
resulting in Target receiving a number of shares greater than 28,975,334,
then the reverse split number shall be adjusted such that IDEH
shareholders retain 2% of the issued and outstanding stock post merger on
a fully-diluted basis.
|
ARTICLE
8
CONDITIONS
TO CLOSING
|
8.1
|
Conditions Precedent
to Obligations of IDEH.
|
The
obligation of IDEH to consummate the transactions contemplated by this Agreement
is subject to the fulfillment, on or prior to the Closing Date, of each of the
following conditions (any or all of which may be waived by IDEH in whole or in
part to the extent permitted by applicable law):
|
|
(a)
|
all
representations and warranties of the Target contained herein qualified as
to materiality shall be true and correct, and the representations and
warranties of the Target contained herein not qualified as to materiality
shall be true and correct in all material respects, at and as of the
Closing Date with the same effect as though those representations and
warranties had been made again at and as of that
time;
|
|
|
(b)
|
the
Target shall have performed and complied in all material respects with all
obligations and covenants required by this Agreement to be performed or
complied with by them on or prior to the Closing
Date;
|
25
|
|
(c)
|
IDEH
shall have been furnished with certificates (dated the Closing Date and in
form and substance reasonably satisfactory to IDEH) executed by each
Target certifying as to the fulfillment of the conditions specified in
Sections 8.1(a)
and 8.1(b) hereof;
|
|
|
(d)
|
IDEH
shall have been furnished with duly authorized shareholder and Board of
Director resolutions of each of IDEH and Target authorizing the entry by
them into this Agreement; there shall not have been or occurred any
Material Adverse Change; the Target shall have obtained all approvals,
consents and waivers referred to in Section 5.7
hereof, in a form reasonably satisfactory to IDEH, with respect to the
transactions contemplated by this
Agreement;
|
|
|
(e)
|
no
legal proceedings shall have been instituted or threatened or claim or
demand made against the Target seeking to restrain or prohibit or to
obtain substantial damages with respect to the consummation of the
transactions contemplated hereby, and there shall not be in effect any
order by a governmental body of competent jurisdiction restraining,
enjoining or otherwise prohibiting the consummation of the transactions
contemplated hereby; and
|
|
|
(f)
|
Any
equity interest of Target that are not ordinary shares, including
preferred shares will be exchangeable into Ordinary Shares at
Closing.
|
|
8.2
|
Conditions Precedent
to Obligations of the
Target.
|
The
obligations of the Target to consummate the transactions contemplated by this
Agreement are subject to the fulfillment, prior to or on the Closing Date, of
each of the following conditions (any or all of which may be waived by the
Target in whole or in part to the extent permitted by applicable
law):
|
|
(a)
|
all
representations and warranties of IDEH contained herein shall be true and
correct as of the date hereof;
|
|
|
(b)
|
all
representations and warranties of IDEH contained herein qualified as to
materiality shall be true and correct, and all representations and
warranties of IDEH contained herein not qualified as to materiality shall
be true and correct in all material respects, at and as of the Closing
Date with the same effect as though those representations and warranties
had been made again at and as of that
date;
|
|
|
(c)
|
IDEH
shall have performed and complied in all material respects with all
obligations and covenants required by this Agreement to be performed or
complied with by IDEH on or prior to the Closing
Date;
|
|
|
(d)
|
the
Target shall have been furnished with certificates (dated the Closing Date
and in form and substance reasonably satisfactory to the Target) executed
by the Chief Executive Officer and Chief Financial Officer of IDEH
certifying as to the fulfillment of the conditions specified in Sections 8.2(a) and
8.2(b) ;
|
26
|
|
(e)
|
Target
shall have been furnished with duly authorized shareholder and Board of
Director resolutions or written consents of each of Target and IDEH
authorizing the entry by them into this Agreement; there shall not have
been or occurred any Material Adverse Change; each of IDEH and IDEH
Cayman, as applicable, shall have obtained all approvals, consents and
waivers referred to in Section 5.7
hereof, in a form reasonably satisfactory to Target, with respect to the
transactions contemplated by this
Agreement;
|
|
|
(f)
|
each
of Xxxxxxx X. Xxxxxxxx, and Xxx Xxxxxxxxx shall have executed a lock up
agreement substantially in the form of Schedule 7.4
attached hereto;
|
|
|
(g)
|
Xxxxxxx
X. Xxxxxxxx and Xxx Xxxxxxxxx have jointly executed a Warrantor’s
Agreement substantially in the form of Schedule 7.5
attached hereto;
|
|
|
(h)
|
IDEH
and Target shall have mutually agreed and completed the establishment of
the Escrow Account.
|
|
|
(i)
|
IDEH
shall have furnished an updated Schedule
7.9(b), setting forth the indebtedness of IDEH to be paid for from
the Escrow Account;
|
|
|
(j)
|
IDEH
shall have filed all reports and other documents required to be filed by
it under the U.S. federal securities laws through the closing
date;
|
|
|
(k)
|
Subject
to Section
6.23, each of IDEH, IDEH Cayman, and Surviving Corporation, as
appropriate, shall have maintained its status as a company whose common
stock or ordinary shares, as the case may be, are quoted on the OTCBB and
no reason shall exist as to why such status shall not continue immediately
following the Closing;
|
|
|
(l)
|
no
formal or informal SEC investigation or proceeding shall have been
initiated by the SEC against IDEH or any of its officers or
directors;
|
|
|
(m)
|
the
transactions contemplated herewith shall have been approved by the Board
of Directors of IDEH;
|
|
|
(n)
|
the
transactions contemplated herewith shall have been approved by the
stockholders of IDEH in accordance with the Nevada Corporate
Code;
|
|
|
(o)
|
Target
shall have received a certificate of good standing of IDEH dated no more
than two weeks prior to the Closing
Date;
|
|
|
(p)
|
no
legal proceedings shall have been instituted or threatened or claim or
demand made against Target or IDEH seeking to restrain or prohibit or to
obtain substantial damages with respect to the consummation of the
transactions contemplated hereby, and there shall not be in effect any
order by a governmental body of competent jurisdiction restraining,
enjoining or otherwise prohibiting the consummation of the transactions
contemplated hereby;
|
|
|
(q)
|
Target
shall have received the resignation of all officers and directors of IDEH
and IDEH Cayman and each such officers and directors of IDEH and IDEH
Cayman shall have release all claims of any form, including but not
limited to any claim for severance payment, against each of IDEH, IDEH
Cayman and the Surviving
Corporation;
|
27
|
|
(r)
|
The
Asset Purchase Agreement, in form and substance reasonably satisfactory to
Target, has been executed and the transactions contemplated thereby have
been completed; and
|
|
|
(s)
|
Target
shall have also received written evidence to its reasonable satisfaction
that the Surviving Corporation has been discharged and released from all
obligations and liabilities in each of the existing contracts of IDEH
relating to the business of IDEH immediately prior to the Closing have
been transferred to New Co. pursuant to the Asset Purchase
Agreement.
|
|
8.3
|
Documents To Be
Delivered.
|
|
|
(a)
|
Documents
to be delivered by the Target. At the Closing, the Target shall
deliver, or cause to be delivered, to IDEH the
following:
|
|
|
(i)
|
the
certificates referred to in Section 8.1(c)
hereof;
|
|
|
(ii)
|
certificate
of good standing with respect to Target issued by the competent authority
of its jurisdiction of incorporation, and for each state, if any, in which
Target is qualified to do business as a foreign corporation;
and
|
|
|
(iii)
|
such
other documents as IDEH shall reasonably
request.
|
|
|
(b)
|
Documents
to be delivered by IDEH. At the Closing, IDEH shall deliver to
the Target the following:
|
|
|
(i)
|
the
Ordinary Shares (provided that the Ordinary Shares may be delivered within
three (3) business days of the Closing Date; provided, however, if the
Ordinary Shares are not delivered at Closing, IDEH shall deliver
irrevocable instructions to IDEH’s Transfer Agent to deliver the Ordinary
Shares as required under this
Agreement);
|
|
|
(ii)
|
the
certificates referred to in Section 8.2(b)
hereof;
|
|
|
(iii)
|
Lockup
agreements substantially in the form of Schedule 3.6
attached hereto executed by each of Xxxxxxx X. Xxxxxxxx, Xxx
Xxxxxxxxx;
|
|
|
(iv)
|
The
Indemnification Agreement substantially in the form of Schedule 7.5
attached hereto executed by each of Xxxxxxx X. Xxxxxxxx and Xxx Xxxxxxxxx;
and
|
|
|
(v)
|
such
other documents as the Target shall reasonably
request.
|
ARTICLE
9
INDEMNIFICATION
|
9.1
|
Indemnification.
|
|
|
(a)
|
Subject
to Section
9.2 hereof, IDEH hereby agrees to indemnify and hold the Target and
its respective directors, officers, employees, affiliates, agents,
successors and assigns harmless from and
against:
|
28
|
|
(i)
|
any
and all liabilities of IDEH of every kind, nature and description,
absolute or contingent, existing as against IDEH prior to and including
the Closing Date or thereafter coming into being or arising by reason of
any state of facts existing, or any transaction entered into, on or prior
to the Closing Date, except to the extent that the same have been fully
provided for in the Schedules attached hereto or were incurred in the
ordinary course of business between IDEH Balance Sheet Date and the
Closing Date;
|
|
|
(ii)
|
any
and all losses, liabilities, obligations, damages, costs and expenses
based upon, attributable to or resulting from the failure of any
representation or warranty of IDEH set forth in Article 6
hereof, or any representation or warranty contained in any certificate
delivered by or on behalf of IDEH pursuant to this Agreement, to be true
and correct in all respects as of the date
made;
|
|
|
(iii)
|
any
and all losses, liabilities, obligations, damages, costs and expenses
based upon, attributable to or resulting from the breach of any covenant
or other agreement on the part of IDEH under this Agreement;
and
|
|
|
(iv)
|
any
and all notices, actions, suits, proceedings, claims, demands,
assessments, judgments, costs, penalties and expenses, including
reasonable attorneys’ and other professionals’ fees and disbursements
(collectively, “Expenses”)
incident to any and all losses, liabilities, obligations, damages, costs
and expenses with respect to which indemnification is provided hereunder
(collectively, “Losses”).
|
|
|
(b)
|
Subject
to Section
9.2 hereof, Target hereby agrees to indemnify and hold IDEH and its
affiliates, agents, successors and assigns, including but not limited to
the lending parties under the outstanding Xxxxxxxx/Xxxxxxxxx Loan in the
principal amount of US$75,000 and without interest, harmless from and
against:
|
|
|
(i)
|
any
and all Losses based upon, attributable to or resulting from the failure
of any representation or warranty of the Target set forth in Article 5
hereof, or any representation or warranty contained in any certificate
delivered by or on behalf of the Target pursuant to this Agreement, to be
true and correct as of the date
made;
|
|
|
(ii)
|
any
and all Losses based upon, attributable to or resulting from the breach of
any covenant or other agreement on the part of the Target under this
Agreement or arising from the ownership or operation of IDEH from and
after the Closing Date, unless such claim is for a pre-Closing matter;
and
|
|
|
(iii)
|
any
and all Expenses incident to the
foregoing.
|
29
|
9.2
|
Limitations on
Indemnification for Breaches of Representations and
Warranties.
|
An
indemnifying party shall not have any liability under Section 9.1(a) or
9.1(b) hereof unless the aggregate amount of Losses and Expenses to the
indemnified parties exceeds US$10,000 (the “Basket”) (except for
Losses and Expenses based upon, attributable to or resulting from the failure of
any representation or warranty to be true and correct under Article 5, for which
the Basket shall not apply) and, in such event, the indemnifying party shall be
required to pay the amount of such Losses and Expenses in excess of the
Basket. Notwithstanding anything else contained herein, the maximum
liability IDEH shall be required to pay hereunder, in the aggregate, shall be
the aggregate value of Ordinary Shares of Surviving Company (valued as of the
Closing of the proposed Merger) retainable by IDEH shareholders immediately
following the Closing of the proposed Merger (the “Cap”). In
addition, if any Loss or Expense of IDEH is covered by insurance, IDEH shall not
be required to indemnify Target for the amount of such Losses or Expenses to the
extent of such insurance proceeds and IDEH shall only pay Target the excess of
the Losses and Expenses, if any, over such insurance proceeds, subject to the
Cap. Following the Closing, other than in cases of fraud, this Article 8 shall be
the sole and exclusive remedy of the parties hereto and their successors and
assigns with respect to any and all claims for Losses and Expenses against each
other sustained or incurred arising out of this Agreement.
|
9.3
|
Indemnification
Procedures.
|
|
|
(a)
|
In
the event that any legal proceedings shall be instituted or that any claim
or demand (“Claim”) shall
be asserted by any person or entity in respect of which payment may be
sought under Section 9.1
hereof (regardless of the Basket referred to above), the indemnified party
shall reasonably and promptly cause written notice of the assertion of any
Claim of which it has knowledge which is covered by this indemnity to be
forwarded to the indemnifying party. The indemnifying party
shall have the right, at its sole option and expense, to be represented by
counsel of its choice, which must be reasonably satisfactory to the
indemnified party, and to defend against, negotiate, settle or otherwise
deal with any Claim which relates to any Losses indemnified against
hereunder. If the indemnifying party elects to defend against,
negotiate, settle or otherwise deal with any Claim which relates to any
Losses indemnified against hereunder, it shall within five (5) days (or
sooner, if the nature of the Claim so requires) notify the indemnified
party of its intent to do so. If the indemnifying party elects
not to defend against, negotiate, settle or otherwise deal with any Claim
which relates to any Losses indemnified against hereunder, fails to notify
the indemnified party of its election as herein provided or contests its
obligation to indemnify the indemnified party for such Losses under this
Agreement, the indemnified party may defend against, negotiate, settle or
otherwise deal with such Claim. If the indemnified party
defends any Claim, then the indemnifying party shall reimburse the
indemnified party for the Expenses of defending such Claim upon submission
of periodic bills. If the indemnifying party shall assume the
defense of any Claim, the indemnified party may participate, at his or its
own expense, in the defense of such Claim; provided, however, that such
indemnified party shall be entitled to participate in any such defense
with separate counsel at the expense of the indemnifying party if, (i) so
requested by the indemnifying party to participate or (ii) in the
reasonable opinion of counsel to the indemnified party, a conflict or
potential conflict exists between the indemnified party and the
indemnifying party that would make such separate representation advisable;
and provided, further, that the indemnifying party shall not be required
to pay for more than one such counsel for all indemnified parties in
connection with any Claim. The parties hereto agree to
cooperate fully with each other in connection with the defense,
negotiation or settlement of any such
Claim.
|
30
|
|
(b)
|
After
any final judgment or award shall have been rendered by a court,
arbitration board or administrative agency of competent jurisdiction and
the expiration of the time in which to appeal therefrom, or a settlement
shall have been consummated, or the indemnified party and the indemnifying
party shall have arrived at a mutually binding agreement with respect to a
Claim hereunder, the indemnified party shall forward to the indemnifying
party notice of any sums due and owing by the indemnifying party pursuant
to this Agreement with respect to such matter and the indemnifying party
shall be required to pay all of the sums so due and owing to the
indemnified party by wire transfer of immediately available funds within
10 business days after the date of such
notice.
|
|
|
(c)
|
The
failure of the indemnified party to give reasonably prompt notice of any
Claim shall not release, waive or otherwise affect the indemnifying
party’s obligations with respect thereto except to the extent that the
indemnifying party can demonstrate actual loss and prejudice as a result
of such failure.
|
|
|
(d)
|
With
respect to amounts payable by IDEH hereunder to the Target hereunder, it
is agreed that IDEH shall first be obligated to pay all amounts in cash,
up to the cash value of the Ordinary Shares actually received by the
Target pursuant to Article 3 of this Agreement. IDEH may then
deliver shares of IDEH Common Stock to the Target to pay any additional
amounts due hereunder. Any shares of IDEH common stock so used
to make payments hereunder shall be valued at the closing price of such
shares on the day prior to the date of delivery to IDEH, endorsed for
transfer. Any amounts which Target shall be required to pay
hereunder shall be made in
cash.
|
31
ARTICLE
10
MISCELLANEOUS
|
10.1
|
Payment of Sales, Use
or Similar Taxes.
|
All
sales, use, transfer, intangible, recordation, documentary stamp or similar
taxes or charges, applicable to, or resulting from, the Conversion and Merger
contemplated by this Agreement shall be borne by the Target. All
United States federal, state and local income tax, capital gain tax, or similar
Taxes or charges, applicable to IDEH or its shareholders, resulting from the
transactions contemplated by this Agreement, including any income tax applicable
to IDEH through and including Closing and capital gains tax taxable in
connection with sales of IDEH assets to New Co. pursuant to the Asset Purchase
Agreement, shall be borne by IDEH or each of its shareholders, as
applicable.
Survival of Representations
and Warranties.
The
parties hereto hereby agree that the representations and warranties contained in
this Agreement or in any certificate, document or instrument delivered in
connection herewith, shall survive the execution and delivery of this Agreement,
and the Closing hereunder, regardless of any investigation made by the parties
hereto.
|
10.2
|
Expenses.
|
Except as
otherwise provided in this Agreement, the Target and IDEH shall each bear its
own expenses incurred in connection with the negotiation and execution of this
Agreement and each other agreement, document and instrument contemplated by this
Agreement and the consummation of the transactions contemplated hereby and
thereby, it being understood that in no event shall IDEH bear any costs and
expenses related to Cayman redomestication or business combination, including
fees and expenses of the Cayman counsel and competent authority in the Cayman
Islands in connection with the Conversion and Merger, although IDEH will be
responsible for any fees and expenses incurred in Nevada in connection
therewith.
|
10.3
|
Further
Assurances.
|
The
Target and IDEH each agrees to execute and deliver such other documents or
agreements and to take such other action as may be reasonably necessary or
desirable for the implementation of this Agreement and the consummation of the
transactions contemplated hereby.
|
10.4
|
Arbitration.
|
Any
controversy or claim arising out of or relating to this Agreement, or the breach
thereof, shall be settled by arbitration administered by the American
Arbitration Association in accordance with its Commercial Arbitration Rules
before a panel of three arbitrators selected in accordance with those
rules. The arbitration is to be conducted in New York
City. Each party shall submit to any court of competent jurisdiction
for purposes of enforcement of any award, order or judgment. Any
award, order or judgment pursuant to the arbitration is final and may be entered
and enforced in any court of competent jurisdiction.
32
|
10.5
|
Entire Agreement;
Amendments and Waivers.
|
This
Agreement (including the schedules and exhibits hereto) represents the entire
understanding and agreement between the parties hereto with respect to the
subject matter hereof and can be amended, supplemented or changed, and any
provision hereof can be waived, only by written instrument making specific
reference to this Agreement signed by the party against whom enforcement of any
such amendment, supplement, modification or waiver is sought. No
action taken pursuant to this Agreement, including without limitation, any
investigation by or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action of compliance with any representation,
warranty, covenant or agreement contained herein. The waiver by any
party hereto of a breach of any provision of this Agreement shall not operate or
be construed as a further or continuing waiver of such breach or as a waiver of
any other or subsequent breach. No failure on the part of any party
to exercise, and no delay in exercising, any right, power or remedy hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
such right, power or remedy by such party preclude any other or further exercise
thereof or the exercise of any other right, power or remedy. All
remedies hereunder are cumulative and are not exclusive of any other remedies
provided by law.
|
10.6
|
Governing
Law.
|
This
Agreement shall be governed by and construed in accordance with the laws of the
State of New York without giving effect to principles regarding conflict of
laws.
|
10.7
|
Headings.
|
The
section headings of this Agreement are for reference purposes only and are to be
given no effect in the construction or interpretation of this
Agreement.
|
10.8
|
Notices.
|
All
notices and other communications under this Agreement shall be in writing and
shall be deemed given when delivered via e-mail at the following addresses (or
to such other address as a party may have specified by notice given to the other
party pursuant to this provision):
|
IDEH:
|
xxxxxx@xxxxxxxx.xx.xxx
|
|
xxxxxxxxxx@xxxxxxxxx.xxx
|
|
|
Target:
|
xxxxxxxx@xxxxxxxx-xxxxxx.xxx
|
|
Copies
to:
|
xxxxxx@xxxxxxxxxxx.xxx
|
|
xxxxx@xxxxxxxx.xxx
|
|
|
xxxx@xxxxxxxx.xxx
|
|
10.9
|
Severability.
|
If any
provision of this Agreement is invalid or unenforceable, the balance of this
Agreement shall remain in effect.
33
|
10.10
|
Binding Effect;
Assignment.
|
This
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and permitted assigns. Nothing in this
Agreement shall create or be deemed to create any third party beneficiary rights
in any person or entity not a party to this Agreement except as provided
below. No assignment of this Agreement or of any rights or
obligations hereunder may be made by either the Target or IDEH (by operation of
law or otherwise) without the prior written consent of the other parties hereto
and any attempted assignment without the required consents shall be
void.
[Intentionally
Left Blank]
34
IN WITNESS WHEREOF, the parties hereto
have executed or caused to be duly executed this Agreement and Plan of Merger as
of the date first set forth above.
|
INTERNATIONAL
DEVELOPMENT
AND
ENVIRONMENTAL HOLDINGS
|
|
|
By:
|
/s/ Xxxxxxx
X. Xxxxxxxxx III
|
|
Name:
|
Xxxxxxx
X. Xxxxxxxxx III
|
|
Title:
|
President
|
|
PETROCOM
ENERGY LIMITED
|
|
|
By:
|
/s/ Xxxxxx
Au
|
|
Name:
|
Xxxxxx
Au
|
|
Title:
|
Chief
Executive Officer
|
