EXHIBIT 2
AGREEMENT AND PLAN OF REORGANIZATION
DATED AS OF
MARCH 25, 2002
BETWEEN
SCARAB SYSTEMS, INC.,
CERTAIN SHAREHOLDERS OF SCARAB SYSTEMS, INC.
AND
XXX, INC.
TABLE OF CONTENTS
SECTION 1: GENERAL DEFINITIONS........................................-1-
1.1 BEST KNOWLEDGE.............................................-1-
1.2 BUSINESS DAY...............................................-1-
1.3 CODE.......................................................-1-
1.4 ERISA......................................................-1-
1.5 EXCHANGE ACT...............................................-1-
1.6 FISCAL YEAR................................................-1-
1.7 GOVERNMENTAL AUTHORITY.....................................-2-
1.8 GOVERNMENTAL REQUIREMENT...................................-2-
1.9 IRS........................................................-2-
1.10 LEGAL REQUIREMENTS.........................................-2-
1.11 OWNERSHIP INTEREST.........................................-2-
1.12 PERSON.....................................................-2-
1.13 SECTION....................................................-2-
1.14 SECURITIES ACT.............................................-2-
1.15 TAXES......................................................-3-
SECTION 2: ACQUISITION ...............................................-3-
2.1 EXCHANGE OF SHARES.........................................-3-
2.2 HOLDBACK SHARES............................................-3-
2.3 COMPLIANCE WITH SECURITIES LAWS............................-3-
SECTION 3: APPROVALS .................................................-3-
3.1 XXX BOARD OF DIRECTORS APPROVAL............................-3-
3.2 SCARAB BOARD OF DIRECTOR APPROVAL..........................-3-
3.3 SCARAB SHAREHOLDER APPROVAL................................-4-
3.4 DISSENTER RIGHTS...........................................-4-
SECTION 4: ADDITIONAL AGREEEMENTS.....................................-4-
4.1 SCARAB AUDITS..............................................-4-
4.2 SPIN OFF...................................................-4-
4.3 SCARAB PRIVATE PLACEMENT...................................-5-
4.4 REVERSE SPLIT..............................................-5-
4.5 NOTIFICATION OF CERTAIN MATTERS............................-5-
4.6 FURTHER ACTION.............................................-5-
4.7 PUBLIC ANNOUNCEMENTS.......................................-5-
4.8 COOPERATION IN SECURITIES FILINGS..........................-6-
4.9 ADDITIONAL DOCUMENTS.......................................-6-
SECTION 5: CLOSING ...................................................-6-
5.1 GENERAL PROCEDURE..........................................-6-
5.2 TIME AND PLACE.............................................-6-
5.3 EFFECTIVE DATE OF CLOSING..................................-6-
5.4 COVENANTS REGARDING CLOSING................................-6-
5.5 CONDITIONS TO OBLIGATION OF XXX............................-7-
5.6 CONDITIONS TO OBLIGATION OF SCARAB AND SHAREHOLDERS........-9-
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5.7 SPECIFIC ITEMS TO BE DELIVERED AT THE CLOSING.............-11-
5.8 ELECTION OF DIRECTORS AND EXECUTIVE OFFICERS OF
XXX AND SCARAB ...........................................-13-
SECTION 6: REPRESENTATIONS AND WARRANTIES BY
SCARAB AND SHAREHOLDERS ..................................-13-
6.1 ORGANIZATION AND STANDING.................................-13-
6.2 SUBSIDIARIES, ETC.........................................-13-
6.3 QUALIFICATION.............................................-13-
6.4 CORPORATE AUTHORITY.......................................-13-
6.5 FINANCIAL STATEMENTS......................................-14-
6.6 FINANCIAL INFORMATION.....................................-14-
6.7 CAPITALIZATION OF THE CORPORATION.........................-14-
6.8 TAXES.....................................................-14-
6.9 NO ACTIONS, PROCEEDINGS, ETC..............................-15-
6.10 POST BALANCE SHEET CHANGES................................-15-
6.11 NO BREACHES...............................................-15-
6.12 CONDITION OF THE CORPORATION'S ASSETS.....................-16-
6.13 INVENTORY.................................................-16-
6.14 ACCOUNTS RECEIVABLE.......................................-16-
6.15 CORPORATE ACTS AND PROCEEDINGS............................-16-
6.16 REGISTERED RIGHTS AND PROPRIETARY INFORMATION.............-16-
6.17 CHANGES IN SUPPLIERS AND CUSTOMERS........................-17-
6.18 NO LIENS OR ENCUMBRANCES..................................-17-
6.19 EMPLOYEE MATTERS..........................................-18-
6.20 LEGAL PROCEEDINGS AND COMPLIANCE WITH LAW.................-18-
6.21 CONTRACT SCHEDULES........................................-18-
6.22 LABOR MATTERS.............................................-19-
6.23 INSURANCE.................................................-19-
6.24 ENVIRONMENTAL.............................................-19-
6.25 DISCLOSURE OF INFORMATION.................................-21-
6.26 REPRESENTATION AND WARRANTIES.............................-21-
SECTION 7: COVENANTS OF SCARAB .....................................-21-
7.1 PRESERVATION OF BUSINESS..................................-21-
7.2 ORDINARY COURSE...........................................-23-
7.3 NEGATIVE COVENANTS........................................-23-
7.4 ADDITIONAL COVENANTS......................................-23-
7.5 ACCESS TO BOOKS AND RECORDS, PREMISES, ETC................-23-
7.6 COMPENSATION..............................................-23-
7.7 NO SOLICITATION...........................................-23-
SECTION 8: REPRESENTATIONS AND WARRANTIES OF XXX.....................-24-
8.1 ORGANIZATION AND STANDING.................................-21-
8.2 SUBSIDIARIES, ETC.........................................-21-
8.3 QUALIFICATION.............................................-21-
8.4 CORPORATE AUTHORITY.......................................-21-
8.5 SEC DOCUMENTS.............................................-25-
8.6 CAPITALIZATION OF THE CORPORATION.........................-25-
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8.7 NO ACTIONS, PROCEEDINGS, ETC..............................-26-
8.8 POST BALANCE SHEET CHANGES................................-26-
8.9 NO BREACHES...............................................-26-
8.10 CORPORATE ACTS AND PROCEEDINGS............................-26-
8.11 LEGAL PROCEEDINGS AND COMPLIANCE WITH LAW.................-27-
8.12 INSURANCE.................................................-27-
8.14 DISCLOSURE OF INFORMATION.................................-28-
8.15 REPRESENTATIONS AND WARRANTIES............................-28-
SECTION 9: COVENANTS OF XXX..........................................-29-
9.1 PRESERVATION OF BUSINESS..................................-29-
9.2 ORDINARY COURSE...........................................-29-
9.3 NEGATIVE COVENANTS........................................-29-
9.4 ADDITIONAL COVENANTS......................................-30-
9.5 ACCESS TO BOOKS AND RECORDS, PREMISES, ETC................-30-
9.6 DELIVERY OF ADDITIONAL FILINGS............................-31-
SECTION 10: REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS............-31-
10.1 SHARE OWNERSHIP...........................................-31-
10.2 RIGHTS OWNERSHIP..........................................-31-
10.3 RESTRICTION ON FUTURE TRANSFER............................-31-
10.4 UNREGISTERED STOCK........................................-31-
10.5 STOCK ACQUIRED FOR INVESTMENT; LIMITATIONS ON DISPOSITIONS-31-
SECTION 11: TERMINATION.....................................................-31-
11.1 TERMINATION...............................................-31-
11.2 EFFECT OF TERMINATION.....................................-31-
SECTION 12: INDEMNIFICATION AND REMEDIES FOR BREACH.........................-32-
12.1 INDEMNIFICATION BY XXX....................................-32-
12.2 RESERVED..................................................-33-
12.3 INDEMNIFICATION BY SCARAB.................................-33-
12.4 ADDITIONAL NOTICE.........................................-34-
12.5 DETERMINATION OF DAMAGES AND RELATED MATTERS..............-34-
12.6 REMEDIES FOR BREACH.......................................-34-
SECTION 13: NONDISCLOSURE OF CONFIDENTIAL INFORMATION.......................-34-
13.1 NONDISCLOSURE OF CONFIDENTIAL INFORMATION.................-34-
13.2 NO PUBLICITY..............................................-35-
SECTION 14: EXPENSES........................................................-35-
SECTION 15: MISCELLANEOUS...................................................-36-
15.1 ATTORNEY'S FEES...........................................-36-
15.2 NO BROKERS................................................-36-
15.3 SURVIVAL AND INCORPORATION OF REPRESENTATIONS.............-36-
15.4 INCORPORATION BY REFERENCE................................-36-
15.5 PARTIES IN INTEREST.......................................-36-
15.6 AMENDMENTS AND WAIVERS....................................-36-
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15.7 WAIVER....................................................-36-
15.8 GOVERNING LAW - CONSTRUCTION..............................-37-
15.9 REPRESENTATIONS AND WARRANTIES............................-37-
15.10 NOTICES...................................................-37-
15.11 FAX/COUNTERPARTS..........................................-38-
15.12 CAPTIONS..................................................-38-
15.13 SEVERABILITY..............................................-38-
15.14 GOOD FAITH COOPERATION AND ADDITIONAL DOCUMENTS...........-38-
15.15 SPECIFIC PERFORMANCE......................................-38-
15.16 ASSIGNMENT................................................-39-
15.17 TIME......................................................-39-
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EXHIBITS
4.2- xXX and RAM Escrow Instructions Agreement
5.5(h)- Scarab Contracts as of Closing Date
5.5(o)- Scarab Shareholder Subscription Agreements
6.3- Scarab Qualification as a Foreign Corporation
6.4- Scarab Exception to Corporate Authority
6.5- Scarab Financial Statements as of Closing Date
6.7- Scarab Shareholder List
6.8- Scarab Unpaid Taxes
6.9- Scarab Legal Proceedings and Legal Liabilities
6.10- Scarab Balance Sheet Changes Since December 31, 2001
6.12- Scarab Exceptions to Assets in Good and Usable Condition
6.13- Scarab Exceptions to Inventory from December 31, 2001 Financials
6.14- Scarab Notice of Impairment of Accounts Receivable
6.16- Scarab List of Proprietary Information
6.17- Scarab Changes in Suppliers and Customers
6.18- Scarab Liens or Encumbrances on Property and Assets
6.19- Scarab Employee Issues
6.20- Scarab Regulatory Proceedings
6.21- Scarab List of Contracts
6.24- Scarab Environmental Compliance
8.2- xXX Ownership of Subsidiaries
8.3- xXX Qualification as a Foreign Corporation
8.4- xXX Exception to Corporate Authority
8.6- xXX Obligation to Issue Additional Derivative Securities
8.7- xXX Legal Actions or Proceedings
8.8- xXX Post Balance Sheet Changes
8.9- xXX Breaches of Transactions
8.11- xXX Regulatory Proceedings
8.12 xXX Insurance
8.13- XXX Environmental Issues
10.1- Scarab Share Ownership
10.2- Scarab Obligation to Issue Additional Derivative Securities
vi
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT ("Agreement") is made and entered into effective this
25th day of March, 2002, by and between and among XXX, INC., a Colorado
corporation, ("xXX") and SCARAB SYSTEMS, INC., a Nevada corporation, ("Scarab")
and each of the undersigned, and certain Shareholders of Scarab who constitute
at least eighty (80) percent of the issued and outstanding shares of Scarab
(hereafter collectively be referred to as "Shareholders").
WITNESSETH
WHEREAS, Shareholders are the record and beneficial owners of at least
eighty (80) percent of the issued and outstanding shares of Scarab (the
"Shares"); and
WHEREAS, xXX desires to acquire Scarab (the "Acquisition") through the
acquisition of the Shares in consideration of the issuance of shares of common
stock, $.001 par value, of xXX; and
WHEREAS, the parties intend this Agreement to be a Plan of
Reorganization within the meaning of Section 368(a)(1)(B) of the Internal
Revenue Code of 1986, as amended, (the "Code") and the regulations thereunder;
and
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained in this Agreement, and other good and
valuable consideration, the receipt and adequacy whereof is hereby acknowledged,
the parties agree as follows:
SECTION 1: GENERAL DEFINITIONS
For purposes of this Agreement, the following terms shall have the
respective meanings set forth below:
1.1 BEST KNOWLEDGE. "Best Knowledge" shall mean both what a Person knew
as well as what the Person should have known had the Person exercised reasonable
diligence. When used with respect to a Person other than a natural person, the
term "Best Knowledge" shall include matters that are known or should have known
as the result of the exercise of reasonable diligence to the current directors
and executive officers of the Person.
1.2 BUSINESS DAY. "Business Day" means any day which is not a Saturday,
Sunday or a permitted or required bank holiday in Denver, Colorado.
1.3 CODE. "Code" means the Internal Revenue Code of 1986, as amended.
1.4 ERISA. "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
1.5 EXCHANGE ACT. "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
1
1.6 FISCAL YEAR. "Fiscal Year" shall mean a twelve-month period
beginning April 1.
1.7 GOVERNMENTAL AUTHORITY. "Governmental Authority" shall mean any and
all foreign, federal, state or local governments, governmental institutions,
public authorities and governmental entities of any nature whatsoever, and any
subdivisions or instrumentalities thereof, including, but not limited to,
departments, boards, bureaus, commissions, agencies, courts, administrations and
panels, and any division or instrumentalities thereof, whether permanent or ad
hoc and whether now or hereafter constituted or existing.
1.8 GOVERNMENTAL REQUIREMENT. "Governmental Requirement" shall mean any
and all laws (including, but not limited to, applicable common law principles),
statutes, ordinances, codes, rules regulations, interpretations, guidelines,
directions, orders, judgments, writs, injunctions, decrees, decisions or similar
items or pronouncements, promulgated, issued, passed or set forth by any
Governmental Authority.
1.9 IRS. "IRS" means the Internal Revenue Service.
1.10 LEGAL REQUIREMENTS. "Legal Requirements" means applicable common
law and any statute, ordinance, code or other laws, rule, regulation, order,
technical or other standard, requirement, judgment, or procedure enacted,
adopted, promulgated, applied or followed by any governmental authority,
including, without limitation, any order, decree, award, verdict, findings of
fact, conclusions of law, decision or judgment, whether or not final or
appealable, of any court, arbitrator, arbitration board or administrative
agency.
1.11 OWNERSHIP INTEREST. "Ownership Interest" shall mean any form of
direct or indirect interest in the ownership, equity or profits of Scarab or
xXX, whether certificated or non-certificated, issued or unissued, contingent or
otherwise, including, without limitation, the following: shares, or the right
thereto, executory rights to receive shares, options, warrants, instruments or
obligations convertible into shares or profit interests.
1.12 PERSON. "Person" shall mean any natural person, any Governmental
Authority and any entity the separate existence of which is recognized by any
Governmental Authority or Governmental Requirement, including, but not limited
to, corporations, partnerships, joint ventures, joint stock companies, trusts,
estates, companies and associations, whether organized for profit or otherwise.
1.13 SECTION. Unless otherwise stated herein, the term "Section" when
used in this Agreement shall refer to the Sections of this Agreement.
1.14 SECURITIES ACT. "Securities Act" shall mean the Securities Act of
1933, as amended.
1.15 TAXES. "Tax" and "Taxes" shall mean any and all income, excise,
franchise or other taxes and all other charges or fees imposed or collected by
any Governmental Authority or pursuant to any Governmental Requirement, and
shall also include any and all penalties, interest, deficiencies, assessments
and other charges with respect thereto.
2
SECTION 2: ACQUISITION
2.1 EXCHANGE OF SHARES. Subject to the terms and conditions hereinafter
set forth, on the Closing Date (as hereinafter defined), the Shareholders of
Scarab, shall deliver to xXX, and xXX shall accept from Shareholders,
certificates representing up to eight million five hundred forty
thousand(8,540,000 ) shares of the outstanding common stock of Scarab, which
shares shall represent at least eighty percent (80%) and up to one hundred
percent (100%) of the issued and outstanding common stock and equity securities
of Scarab (the "Scarab Common Stock"). In exchange for the Scarab Common Stock,
xXX shall issue and deliver to Shareholders, pro rata and proportionately, ten
shares of xXX Common Stock for each share of Scarab Common Stock, which shall be
between sixty-eight million three hundred twenty (68,320,000) shares of xXX
Common Stock, $.001 par value and an aggregate of eighty-five million four
hundred thousand (85,400,000) shares of xXX Common Stock, $.001 par value, (the
"xXX Common Stock" or the "Exchange Shares"). Hereafter the exchange of the
Scarab Common Stock for the Exchange Shares shall be referred to as the
"Exchange" or the "Acquisition").
2.2 INCOME TAX CONSIDERATIONS. It is the intention of the parties
hereto that the exchange of stock contemplated by this Agreement will qualify
for treatment as a tax-free reorganization under ss.368(a)(1)(B) of the Internal
Revenue Code of 1986, as amended, and the parties hereby agree to undertake all
reasonable actions necessary both before and after the consummation of the
Exchange to effect such treatment.
2.3 COMPLIANCE WITH SECURITIES LAWS. The Exchange provided for in
Sections 2 above shall be undertaken in reliance upon an exemption from the
registration requirements contained in Section 5 of the Securities Act contained
in Section 4(2), 4(6) Rule 506 of Regulation D and/or Regulation S thereunder,
as may be applicable. xXX shall take such actions as may be necessary or
advisable in order consummate the Exchange in conformity with applicable laws
including, without limitation, federal and state securities laws; and Scarab,
together with its directors and officers, agrees to take such actions as may be
necessary or advisable upon the reasonable request of xXX to consummate the
Exchange in conformity with such Legal Requirements.
SECTION 3: APPROVALS
3.1 xXX BOARD OF DIRECTORS APPROVAL. Subject to the provisions hereof,
the Board of Directors of xXX shall, by written unanimous consent, approve the
Exchange and the transactions provided for or contemplated by this Agreement;
provided, however, that such approval shall be subject to their satisfaction
that the issuance of the Exchange Shares to the Shareholders shall be and is
exempt from the registration requirements of the Securities Act, is undertaken
without violation of the anti-fraud provisions of the Securities Act and has
been consummated in conformity with all other applicable Legal Requirements.
3.2 SCARAB BOARD OF DIRECTORS APPROVAL. Subject to the provisions
hereof, the Board of Directors of Scarab shall, by written unanimous consent,
approve the Exchange and the transactions provided for or contemplated by this
Agreement; provided, however, that such approval shall be subject to their
satisfaction that the issuance of the Exchange Shares to the Shareholders shall
be and is exempt from the registration requirements of the Securities Act, is
undertaken without violation of the anti-fraud provisions of the Securities Act
and has been consummated in conformity with all other applicable Legal
Requirements.
3
3.3 SCARAB SHAREHOLDER APPROVAL. As promptly as practicable after the
date hereof, Scarab shall take all action necessary or appropriate under the
Nevada Corporations Law ("NCL"), and its Articles of Incorporation and By-Laws,
to obtain the approval of its Shareholders of the Exchange and the other
transactions provided for or contemplated by this Agreement. Such approval shall
be obtained in conformity with all applicable Legal Requirements.
3.4 DISSENTER RIGHTS. At all times, and as applicable, Scarab shall
comply with applicable Legal Requirements, including, without limitation, the
payment of cash for dissenting shares related to the Exchange.
SECTION 4: ADDITIONAL AGREEMENTS
4.1 SCARAB AUDITS. As promptly as practicable following the execution
of this Agreement, Scarab shall engage the services of an independent auditing
firm (the "Auditor"), to prepare audited financial statements of Scarab as well
as audited financial statements of any affiliates or subsidiaries of Scarab
(hereafter collectively the "Audited Financial Statements"). The Audited
Financial Statements shall conform in all respects to the requirements of
Regulation SB, Item 310 under the Securities Act and shall include, at a
minimum, audited balance sheets as of December 31, 2001, audited statements of
operation and statements of cash flow for the period from inception to December
31, 2001, and audited statements of stockholders' equity at December 31, 2001.
All costs and expenses incurred in connection with the preparation of the
Audited Financial Statements, including fees and disbursements of the Auditor,
shall be borne exclusively by Scarab.
4.2 SPIN-OFF. Prior to the effective date of the Exchange, xXX shall
transfer to a newly-formed wholly-owned subsidiary, Real Asset Management, Ltd.
("RAM") all of its assets subject to all of its liabilities in a reorganization
under Section 351 of the Code. RAM shall assume all liabilities of xXX and shall
agree to defend, indemnify and hold harmless xXX and its successors and assigns
from any obligation with respect to said reorganization, including, but not
limited to, attorneys fees.. In exchange for the xXX assets and liabilities, RAM
shall issue to xXX a total of approximately 15,000,000 shares of RAM common
stock (the "Spin-off Shares"). The Spin-off Shares shall be transferred to a
spin-off trust for the benefit of the pre-Exchange xXX shareholders. As soon as
practicable following the dropdown of the assets and liabilities into RAM, RAM
shall prepare and file with the Securities and Exchange Commission a
registration statement registering the distribution of the Spin-off Shares to
the pre-Exchange xXX shareholders, pro rata, pursuant to which the pre-Exchange
xXX shareholders shall receive, in the nature of a dividend, one share of RAM
common stock for each share of xXX common stock owned as of the record date of
the spin-off. All legal, audit and registration costs incurred in connection
with the spin-off of RAM shall be borne by RAM. In connection with the
organization of RAM, xXX shall grant to RAM an aggregate of Three Hundred
Fifteen Thousand (315,000) shares of xXX common stock. The said shares will be
deposited into and held in escrow under Escrow Instructions acceptable to xXX,
Scarab and RAM, substantially in the form of Exhibit 4.2 hereto. In
consideration of the issuance of the shares of xXX common stock, RAM shall agree
to assume all of iRV's rights and obligations under all of its issued and
outstanding derivative securities (including, but not limited to, all options
and warrants) exerciseaable to purchase, in the aggregate, Three Hundred Fifteen
Thousand (315,000) shares of xXX common stock; and shall indemnify and hold
harmless xXX from all liability with respect thereto. In the event of the future
exercise of such derivative securities, RAM shall be responsible for issuing to
the exercising security holder shares of xXX common stock owned by RAM and held
in escrow under the Escrow Instructions and shall be entitled to the exercise
price therefor.
4
4.3 SCARAB PRIVATE PLACEMENT. As soon as practicable following the
execution of this Agreement, and prior to the effective time of the Exchange,
Scarab agrees to undertake a private offering of shares of its common stock
exclusively to persons who qualify as "accredited investors" within the meaning
of Rule 501(a) of Regulation D or investors eligible under Regulation S under
the Securities Act (the "Scarab Private Placement"). The Scarab Private
Placement shall raise gross proceeds of up to $400,000 at a price of $.50 per
share of Scarab common stock. Investors in the Scarab Private Placement, and
their shares of common stock, shall be included in the Scarab Common Stock
outstanding at the effective time of the Exchange for purposes of exchanging for
shares of xXX. The Scarab Private Placement shall be undertaken without
registration under the Securities Act in reliance upon an exemption from such
registration requirements contained in Section 4(6) of the Act or Regulation S
of the Act, as may be applicable. Scarab agrees to undertake the Scarab Private
Placement in conformity with all applicable Legal Requirements including,
without limitation, applicable federal and state securities laws. The completion
of the Scarab Private Placement shall be a condition precedent to the
obligations of the parties to consummate the Exchange.
4.4 REVERSE SPLIT. Following consummation of the Exchange and the
reconstitution of the Board of Directors of xXX in accordance with Section 5.7
hereof, xXX may, at its discretion, with the approval of the xXX shareholders
and in conformity with all applicable Legal Requirements, implement a reverse
split of its outstanding securities which for a period of 12 months following
the effective date of the Exchange shall not exceed, in the aggregate, a total
reverse split of one-for-ten (1-for-10).
4.5 NOTIFICATION OF CERTAIN MATTERS. Scarab shall give prompt notice to
xXX and xXX shall give prompt notice to Scarab of (i) the occurrence or
non-occurrence of any event which would cause any representation or warranty
made by the respective parties in this Agreement to be materially untrue or
inaccurate and (ii) any failure of xXX or Scarab, as the case may be, to
materially comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder; provided, however, that the delivery
of any notice pursuant to this section shall not limit or otherwise affect the
remedies available hereunder to the party receiving such notice and, provided
further, that the failure to give such notice shall not be treated as a breach
of covenant for the purposes of this Agreement unless the failure to give such
notice results in material prejudice to the other party.
4.6 FURTHER ACTION. Upon the terms and subject to the conditions
hereof, each of the parties hereto shall use reasonable efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all other things
necessary, proper or advisable to consummate and make effective as promptly as
practicable the transactions contemplated by this Agreement, to obtain in a
timely manner all necessary waivers, consents and approvals and to effect all
necessary registrations and filings, and to otherwise satisfy or cause to be
satisfied all conditions precedent to its obligations under this Agreement.
4.7 PUBLIC ANNOUNCEMENTS. Scarab and xXX shall consult with each other
before issuing any press release or other public statement with respect to the
acquisition or this Agreement and shall not issue any such press release or make
any such public statement without the prior consent of the other party, which
consent shall not be unreasonably withheld; provided, however, that a party may,
without the prior consent of the other party, issue such press release or make
such public statement as may, upon the advice of counsel, be required by law if
it has used reasonable efforts to first consult with the other party.
4.8 COOPERATION IN SECURITIES FILINGS. Scarab shall provide such
information regarding Scarab, its business, its officers, directors and
5
affiliates, as is reasonably required by xXX for purposes of preparing any
notices, reports and other filings with the Commission.
4.9 ADDITIONAL DOCUMENTS. The parties shall deliver or cause to be
delivered such documents or certificates as may be necessary, in the reasonable
opinion of counsel for either of the parties, to effectuate the transactions
provided for in this Agreement. If at any time the parties or any of their
respective successors or assigns shall determine that any further conveyance,
assignment or other document or any further action is necessary desirable to
further effectuate the transactions set forth herein or contemplated hereby, the
parties and their officers, directors and agents shall execute and deliver, or
cause to be executed and delivered, all such documents as may be reasonably
required to effectuate such transactions.
SECTION 5: CLOSING
5.1 GENERAL PROCEDURE. Subject to the terms and conditions hereinafter
set forth, at the Closing each party shall deliver such documents, instruments
and materials as may be reasonably required in order to effectuate the intent
and provisions of this Agreement, and all such documents, instruments and
materials shall be satisfactory in form and substance to counsel for each party.
5.2 TIME AND PLACE. Upon the terms and subject to the conditions set
forth in this Agreement, the Exchange transactions contemplated by Section 2.1
shall be consummated and closed (the "Closing") at a time and place to be
determined by mutual agreement on the later of (i) April 2, 2002 and (ii) five
business days after the date on which the conditions set forth in Sections 5.4
and 5.5 shall have been satisfied or waived or such other time, date and place
as the parties shall agree upon (the date of the Closing being herein referred
to as the "Closing Date").
5.3 EFFECTIVE DATE OF CLOSING. Notwithstanding the actual time and
place of Closing, the parties stipulate and agree that the effective date of
Closing and the effective date of Exchange shall be April 1, 2002.
5.4 COVENANTS REGARDING CLOSING. Scarab and xXX each hereby covenant
and agree that they shall (i) use reasonable efforts to cause each of their
respective Exhibits to be prepared and exchanged with the other party, and its
legal counsel, within ten (10) business days following the execution of this
Agreement, except to the extent the express terms of this Agreement provide for
a different time period for such delivery to be accomplished, (ii) use
reasonable efforts to cause all of their respective representations and
warranties set forth in this Agreement, and Exhibits hereto, to be true on and
as of the Closing Date, (iii) use reasonable efforts to cause all of their
respective obligations that are to be fulfilled on or prior to the Closing Date
to be so fulfilled, (iv) use reasonable efforts to cause all conditions to the
Closing set forth in this Agreement to be satisfied on or prior to the Closing
Date, and (v) use reasonable efforts to deliver to each other at the Closing the
certificates, updated lists, notices, consents, authorizations, approvals,
agreements, transfer documents, receipts and amendments required hereby (with
such additions or exceptions to such items as are necessary to make the
statements set forth in such items true and correct, provided that if any such
additions or exceptions cause any of the conditions to its respective
obligations hereunder as set forth herein below not to be performed, satisfied
or fulfilled, such additions and exceptions shall in no way limit the rights of
the parties hereto to terminate this Agreement or refuse to consummate the
transactions contemplated hereby).
6
5.5 CONDITIONS TO OBLIGATION OF XXX. The obligation of xXX to complete
the Exchange on the Closing Date on the terms set forth in this Agreement is, at
the option of xXX, subject to the satisfaction or written waiver by xXX of each
of the following conditions:
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties made by Scarab in this Agreement shall be true
and correct in all material respects on and as of the Closing Date with the same
force and effect as though such representations and warranties had been made on
the Closing Date, except to the extent that such representations and warranties
expressly relate to an earlier date in which case they shall have been true and
correct as of such earlier date.
(b) COMPLIANCE WITH COVENANTS. All covenants which Scarab is
required to perform, satisfy or comply with on or before the Closing Date shall
have been fully complied with or performed in all material respects.
(c) CORPORATE APPROVALS. Any action required to be taken by
the Board of Directors of Scarab or its Shareholders to authorize the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby shall have been duly and validly taken.
(d) CONSENTS AND APPROVALS. To the extent that any material
lease, mortgage, deed of trust, contract or agreement to which Scarab is a party
shall require the consent of any person to the Exchange or any other transaction
provided for herein, such consent shall have been obtained and xXX shall have
received reasonably satisfactory evidence thereof; provided, however, that
Scarab shall not make, as a condition for the obtaining of any such consent, any
agreements or undertakings not approved in writing by xXX to the extent that
such condition otherwise has an effect on xXX. xXX shall have been furnished
with evidence satisfactory to it of the timely consent or approval of, filing
with or notice to, each Governmental Authority or Person which in the good faith
judgment of xXX is necessary or required with respect to the execution and
delivery by Scarab and the consummation by Scarab of the transactions
contemplated hereby.
(e) REVIEW AND DUE DILIGENCE. xXX, its investment bankers,
legal counsel and/or auditors shall have had the opportunity to complete, and
shall have completed, a satisfactory due diligence investigation of Scarab,
together with a satisfactory review of Scarab's corporate status and Scarab's
property, all of which shall be satisfactory in form and substance to xXX in its
sole discretion.
(f) NO LITIGATION, ETC. No action, investigation, litigation
or arbitration or proceeding by or before any Governmental Authority, or before
any arbitral, mediation panel or tribunal of any kind shall have been instituted
or threatened (i) to restrain or prohibit the transactions contemplated by this
Agreement, or (ii) to claim that the consummation of any such transaction is
illegal or (iii) which, if determined adversely, would effect adversely xXX or
Scarab following consummation of the transactions contemplated hereby and Scarab
shall have delivered to xXX a certificate dated as of the Closing Date and
executed by Scarab, stating that to its Best Knowledge, no such items exist. No
governmental authority or arbitral, mediation panel or tribunal of any kind
shall have taken any other action as a result of which the management of xXX, in
its sole discretion, reasonably deems it inadvisable to proceed with the
transactions contemplated by this Agreement.
7
(g) NO MATERIAL ADVERSE CHANGE. No material adverse change in
the business, property or assets of Scarab shall have occurred, and no loss or
damage to any of the assets, whether or not covered by insurance, with respect
to Scarab hereto has occurred, and Scarab shall have delivered to xXX a
certificate dated as of the Closing Date to such effect.
(h) UPDATE OF CONTRACTS. Scarab shall have delivered to xXX an
accurate list, as of the Closing Date, showing (i) all agreements, contracts and
commitments of the type listed on Exhibit 5.5(h) entered into since the date of
this Agreement; and (ii) all other agreements, contracts and commitments related
to the businesses or the assets of Scarab entered into since the date of this
Agreement, together with true, complete and accurate copies of all such
documents (the "Scarab New Contracts"). xXX shall have had the opportunity to
review and approve the Scarab New Contracts of the other, and any of the
Companies shall have the right to delay the Closing for up to ten (10) days if
it in its sole discretion deems such delay necessary to enable it to adequately
review the Scarab New Contracts.
(i) NO ADVERSE INFORMATION. The investigations with respect to
Scarab, the assets and the respective businesses performed by iRV's respective
professional advisors and other representatives shall not have revealed any
information concerning Scarab, its assets, liabilities or its business that has
not been made known to xXX, in writing prior to the date of this Agreement and
that, in the opinion of such party and its advisors, materially and adversely
affects the business or assets of the other party or the viability of the
transaction contemplated by this Agreement.
(j) ORDINARY COURSE OF BUSINESS. During the period from the
date of this Agreement until the Closing Date, Scarab shall have carried on its
business in the ordinary and usual course, and shall have delivered to xXX a
certificate to that effect.
(k) LIENS. Scarab shall have delivered to xXX a reasonably
current lien and judgment search (both state and county levels in each
jurisdiction where the party is qualified to or is doing business or owns
material assets) confirming the absence of any judicial liens, security
interests, tax liens and similar such liens ("Liens") affecting any of its
business or assets, except for the lien of Xxxxx Fargo and other liens
acceptable to xXX.
(l) APPROVAL OF COUNSEL. All actions, proceedings, instruments
and documents required or incidental to carry out this Agreement, including all
schedules and exhibits thereto, and all other related legal matters shall have
been approved by XXXXXX & XXXXXXX, LLC, counsel to xXX.
(m) OTHER DOCUMENTS. Scarab shall have delivered or caused to
be delivered all other documents, agreements, resolutions, certificates or
declarations as xXX or its attorneys may have reasonably requested.
(n) COMPLIANCE WITH SECURITIES LAWS. xXX shall have undertaken
all actions necessary or advisable to consummate the Exchange in conformity with
all Governmental Requirements including, without limitation, applicable federal
and state securities laws.
(o) SHAREHOLDER SUBSCRIPTION AGREEMENTS AND ASSIGNMENTS. At
Closing, not less than eighty percent (80%) of the combined voting power of the
issued and outstanding shares of Scarab Common Stock shall have been delivered
for exchange pursuant to Section 2 of this Agreement. Surrendering Scarab
Shareholders shall have executed and delivered to xXX Assignments and
Subscription Agreements substantially in the form of Exhibit 5.5(o) hereto
assigning to xXX their Scarab Common Stock.
8
(p) APPRAISAL RIGHTS AND/OR DISSENTERS' RIGHTS. At or prior to
Closing, no beneficial or record owner of any outstanding shares of Scarab
Common Stock shall have exercised or shall have given notice to Scarab of their
intent to exercise any rights under applicable state law, if any, to dissent
from the Exchange or obtain the payment of the fair market value of such shares
of Scarab Common Stock in lieu of participating in the Exchange in accordance
with the terms and subject to the conditions set forth herein.
(q) FINANCIAL ADVISORY FEES. At or prior to Closing, all
obligations or commitments of xXX and Scarab to their respective financial
advisors and investment bankers shall have been paid or otherwise satisfied upon
terms satisfactory to the parties, and xXX and Scarab shall each have been
delivered and received such written consents, approvals, estoppel certificates
or other instruments or undertakings from its advisors or other third parties as
each may deem reasonable, necessary or advisable.
(r) Reserved.
(s) SCARAB AUDITED FINANCIAL STATEMENTS. The Scarab Audited
Financial Statements shall have been completed and shall be in a form and
substance satisfactory to xXX and in conformity with the requirements of
Regulation SB under the Securities Act.
(t) SCARAB PRIVATE PLACEMENT. Scarab shall have completed the
Scarab Private Placement and shall have received and collected gross proceeds
therefrom in an amount not less than $350,000.
5.6 CONDITIONS TO OBLIGATION OF SCARAB AND SHAREHOLDERS. The
obligations of Scarab and Shareholders on the Closing Date under the terms set
forth in this Agreement are, at the option of Scarab and Shareholders, subject
to the satisfaction or written waiver by Scarab and Shareholders of each of the
following conditions:
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties made by xXX in this Agreement shall be true and
correct in all material respects on and as of the Closing Date with the same
force and effect as though such representations and warranties had been made on
the Closing Date, except to the extent that such representations and warranties
expressly relate to an earlier date in which case they shall have been true and
correct as of such earlier date.
(b) COMPLIANCE WITH COVENANTS. All covenants which xXX are
required to perform, satisfy or comply with on or before the Closing Date shall
have been fully complied with or performed in all material respects.
(c) CORPORATE APPROVALS. Any action required to be taken by
the Board of Directors of xXX and shareholders to authorize the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby shall have been duly and validly taken.
(d) CONSENTS AND APPROVALS. To the extent that any material
lease, mortgage, deed of trust, contract or agreement to which xXX is a party
shall require the consent of any person to the exchange of iRV's shares of
Common Stock or any other transaction provided for herein, such consent shall
have been obtained and Scarab shall have received reasonably satisfactory
evidence thereof; provided, however, that xXX shall not make, as a condition for
the obtaining of any such consent, any agreements or undertakings not approved
in writing by Scarab to the extent that such condition otherwise has an effect
9
on Scarab or xXX. Scarab shall have been furnished with evidence satisfactory to
it of the timely consent or approval of, filing with or notice to, each
Governmental Authority or Person which in the good faith judgment of Scarab is
necessary or required with respect to the execution and delivery by xXX and the
consummation by xXX of the transactions contemplated hereby.
(e) REVIEW AND DUE DILIGENCE. Scarab, its investment bankers,
legal counsel and/or auditors shall have had the opportunity to complete, and
shall have completed, a satisfactory due diligence investigation of xXX, its
assets and liabilities, together with a satisfactory review of iRV's corporate
status and the marketability of title to iRV's property, all of which shall be
satisfactory in form and substance to Scarab in its sole discretion.
(f) NO LITIGATION, ETC. No action, investigation, litigation
or arbitration or proceeding by or before any Governmental Authority, or before
any arbitral, mediation panel or tribunal of any kind shall have been instituted
or threatened (i) to restrain or prohibit the transactions contemplated by this
Agreement or (ii) to claim that the consummation of any such transaction is
illegal or (iii) which, if determined adversely, would effect adversely xXX or
Scarab following consummation of the transactions contemplated hereby and the
Companies shall have delivered to each other certificates dated as of the
Closing Date and executed by such parties, stating that to their Best Knowledge,
no such items exist. No Governmental Authority or arbitral or mediation panel or
tribunal of any kind shall have taken any other action as a result of which the
management of Scarab, in its sole discretion, reasonably deems it inadvisable to
proceed with the transactions contemplated by this Agreement.
(g) NO MATERIAL ADVERSE CHANGE. No material adverse change in
the business, property, assets or liabilities of any Company shall have
occurred, and no loss or damage to any of the assets, whether or not covered by
insurance, with respect to xXX hereto has occurred, and xXX shall have delivered
to Scarab a certificate dated as of the Closing Date to such effect.
(h) NO ADVERSE INFORMATION. The investigations with respect to
xXX, the assets, liabilities and their respective businesses performed by
Scarab's respective professional advisors and other representatives shall not
have revealed any information concerning xXX, its assets, liabilities or
business that has not been made known to Scarab, in writing prior to the date of
this Agreement and that, in the opinion of Scarab and its advisors, materially
and adversely affects the business, liabilities or assets of xXX or the
viability of the transactions contemplated by this Agreement.
(i) ORDINARY COURSE OF BUSINESS. During the period from the
date of this Agreement until the Closing Date, xXX shall have undertaken no
material business operations and shall have delivered to Scarab a certificate to
that effect.
(j) APPROVAL OF COUNSEL. All actions, proceedings, instruments
and documents required or incidental to carry out this Agreement, including all
schedules and exhibits thereto, and all other related legal matters shall have
been approved as to substance and form by Xxxxx Xxxxxx & Associates, P.C.,
counsel to Scarab.
(k) OTHER DOCUMENTS. xXX shall have delivered or caused to be
delivered all other documents, agreements, resolutions, certificates or
declarations as Scarab or its attorneys may have reasonably requested.
(l) COMPLIANCE WITH SECURITIES LAWS. xXX shall otherwise have
undertaken all actions necessary or advisable to consummate the Private Offering
and Exchange in conformity with all Governmental Requirements, including,
without limitation, applicable federal and state securities laws.
10
(m) NO INJUNCTIONS OR RESTRAINTS. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Exchange shall be in effect.
5.7 SPECIFIC ITEMS TO BE DELIVERED AT THE CLOSING. The parties shall
deliver the following items to the appropriate party at the Closing of the
transactions contemplated by this Agreement.
(a) TO BE DELIVERED BY SCARAB:
(i) A certificate dated the Closing Date of
Scarab, signed by the President of Scarab
stating that the representations and
warranties of Scarab set forth in this
Agreement are true and correct in all
material respects. Said certificate shall
further verify and affirm that all consents
or waivers, if any, which may be necessary
to execute and deliver this Agreement have
been obtained and are in full force and
effect.
(ii) A certificate dated the Closing Date of
Scarab, signed by the President of Scarab,
in form and substance satisfactory to xXX
and its legal counsel, certifying that all
conditions precedent set forth in this
Agreement to the obligations of Scarab to
close, have been fulfilled or waived in
writing, and that no event of default
hereunder and no event which, with the
giving of notice or passage of time, or
both, would be an event of default, has
occurred as of such date.
(iii) Certificates dated the Closing Date of
Scarab, signed by the Secretary of Scarab,
(i) certifying attached copies of
resolutions duly adopted by the Board of
Directors of Scarab, authorizing the
execution of this Agreement and the other
transactions to be consummated pursuant
thereto; (i) certifying the names and
incumbency of the officers of Scarab who
executed the Agreement and any certificates
delivered pursuant to this Section 4.7(a)
for and on behalf of Scarab; (iii)
certifying the authenticity of copies of the
Articles of Incorporation and Bylaws of
Scarab; and (iv) certifying the authenticity
of a reasonably current Certificate of Good
Standing, from all jurisdictions in which
the company is qualified to conduct
business.
(iv) Audited financial statements of Scarab
containing balance sheets, together with
statements of operation, statements of cash
flows, and statements of stockholders'
equity as of and for the periods ended
December 31, 2001.
(b) TO BE DELIVERED BY SHAREHOLDERS:
(i) Certificate or certificates representing at
least eighty percent (80%) and up to one
hundred percent (100%) of the issued and
outstanding common shares of Scarab, which
stock certificates shall be endorsed in
favor of xXX.
11
(ii) Assignments, if any, with unconditional
warranties of title, duly executed by
Shareholders, assigning to xXX any and all
equity rights, including, but not limited
to, options, warrants, puts and so forth,
which Shareholders may own in Scarab at the
time of Closing.
(iii) Certificate of Shareholders in which they
state that they own the shares and other
rights of Scarab free and clear of all
liens, encumbrances, security interests and
limitations on transfer whatsoever.
(iv) Certificate of Shareholders confirming the
accuracy, as of the Closing Date, of the
representations and warranties of
Shareholders set forth in this Agreement.
(v) Subscription Agreements.
(c) TO BE DELIVERED BY xXX:
(i) Certificate or certificates representing the
Exchange Shares; and
(ii) A certificate dated the Closing Date of xXX,
signed by the President of xXX stating that
the representations and warranties of xXX
set forth in this Agreement are true and
correct in all material respects. Said
certificate shall further verify and affirm
that all consents or waivers, if any, which
may be necessary to execute and deliver this
Agreement have been obtained and are in full
force and effect.
(iii) A certificate dated the Closing Date of xXX,
signed by the Chief Executive Officer and
the Chief Financial Officer of xXX, in form
and substance satisfactory to Scarab and its
legal counsel, certifying that all
conditions precedent set forth in this
Agreement to the obligations of xXX to
close, have been fulfilled or waived in
writing, and that no event of default
hereunder and no event which, with the
giving of notice or passage of time, or
both, would be an event of default, has
occurred as of such date.
(iv) Certificates dated the Closing Date of xXX,
signed by the Secretary of xXX, (i)
certifying attached copies of resolutions
duly adopted by the Board of Directors of
xXX, authorizing the execution of this
Agreement and the other transactions to be
consummated pursuant thereto; (ii)
certifying the names and incumbency of the
officers of xXX who executed the Agreement
and any certificates delivered pursuant to
this Section for and on behalf of xXX; (iii)
certifying the authenticity of copies of the
Articles of Incorporation and Bylaws of xXX
and its Subsidiaries; and (iv) certifying
the authenticity of a reasonably current
Certificate of Good Standing, from all
jurisdictions in which xXX and its
Subsidiaries are qualified to conduct
business.
5.8 ELECTION OF DIRECTORS AND EXECUTIVE OFFICERS OF XXX AND SCARAB.
12
(a) At Closing, the Board of Directors of xXX shall resign and
be reconstituted to consist of directors designated by Scarab.
(b) At Closing, the executive officers of xXX shall resign and
the newly-constituted Board of Directors of xXX shall elect persons determined
by the newly constituted Board to serve as executive officers of xXX until the
next regular annual meeting of the Company's directors.
SECTION 6: REPRESENTATIONS AND WARRANTIES BY SCARAB
As a material inducement to xXX to enter into this Agreement and with
the understanding and expectations that xXX will be relying thereon in
consummating the Exchange contemplated hereunder, Scarab (hereinafter referred
to as the "Corporation" or "Scarab" for the purposes of this Section 5 only)
represents and warrants as follows:
6.1 ORGANIZATION AND STANDING. Scarab is a corporation duly organized,
validly existing and in good standing under the laws of the State of Nevada and
has all requisite corporate power and authority to own its assets and properties
and to carry on its business as it is now being conducted.
6.2 SUBSIDIARIES, ETC. The Corporation does not have any direct or
indirect Ownership Interest in any corporation, partnership, joint venture,
association or other business enterprise.
6.3 QUALIFICATION. Except as set forth on Exhibit 6.3 and for any
jurisdiction where the failure to be qualified to engage in business as a
foreign corporation would not have a material adverse affect on the Corporation,
the Corporation is not qualified to engage in business as a foreign corporation
in any state and there is no other jurisdiction wherein the character of the
properties presently owned by the Corporation or the nature of the activities
presently conducted by the Corporation makes necessary the qualification,
licensing or domestication of the Corporation as a foreign corporation.
6.4 CORPORATE AUTHORITY. Except as set forth on Exhibit 6.4 hereto,
neither the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby nor compliance by the Corporation with any on
the provisions hereof will:
(a) Conflict with or result in a breach of any provision of
its Articles of Incorporation or By-Laws;
(b) Result in a default (or give rise to any right of
termination, cancellation, or acceleration) under any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, license, agreement or
other instrument or obligation to which the Corporation is a party, or by which
any of its properties or assets may be bound except for such default (or right
of termination, cancellation, or acceleration) as to which requisite waivers or
consents shall either have been obtained by the Corporation prior to the Closing
Date or the obtaining of which shall have been waived by xXX; or
(c) Violate any order, writ, injunction, decree or, to the
Corporation's Best Knowledge, any statute, rule or regulation applicable to the
Corporation or any of its properties or assets. No consent or approval by any
Governmental Authority is required in connection with the execution and delivery
by the Corporation of this Agreement or the consummation by the Corporation of
the transactions contemplated hereby.
13
6.5 FINANCIAL STATEMENTS. Except as otherwise provided, the following
statements will be attached to this Agreement as Exhibit 6.5 on or before the
Closing Date:
(a) Audited financial statements of Scarab containing balance
sheets, together with statements of operation, statements of cash flows, and
statements of stockholders' equity as of and for the periods ended December 31,
2001.
Such financial statements, together with and subject to the
disclosures and notes thereto: (i) are in accordance with the books and records
of the Corporation; (i) present fairly and accurately the financial condition of
the Corporation as of the dates of the balance sheets; (iii) present fairly and
accurately the results of operations for the periods covered by such statements;
(iv) have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis; and (v) include all adjustments
(consisting of only normal recurring accruals) which are necessary for a fair
presentation of the financial condition of the Corporation, and of the results
of operations of the Corporation for the periods covered by such statements.
As of the date hereof and as of the Closing Date, the
Corporation does not have any liabilities or payables (absolute or contingent,
known or unknown), except for liabilities or payables set forth in the Financial
Statements or otherwise disclosed in writing to xXX.
6.6 FINANCIAL INFORMATION. In connection with the investigations
performed by and audit to be undertaken by xXX of Scarab, Scarab furnished
certain financial information and data including, without limitation, tax and
accounting records, financial records, statements, worksheets and other
information requested by Buyer and its auditors necessary to undertake the
complete the audited financial examinations. Scarab represents and warrants that
any and all such information furnished in connection with the conduct of such
investigations and audits shall be true, accurate and complete in all material
respects and shall not contain any material misstatements nor any material
omissions of fact or information respecting the financial condition or results
of operation of the business for the respective periods covered by the audits.
6.7 CAPITALIZATION OF THE CORPORATION. The authorized capital stock of
Scarab consists of Fifty Million (50,000,000) shares of Common Stock, $0.001par
value, of which Eight Million Five Hundred Forty Thousand (8,540,000 ) shares
are issued and outstanding. The names of at least eighty (80) percent of the
record owners of the issued and outstanding Common Stock are set forth on
Exhibit 6.7 hereto. All issued and outstanding shares of Scarab Common Stock
have been duly authorized and validly issued and are fully paid and
non-assessable. There are no other outstanding rights, options, warrants,
subscriptions, calls, convertible securities or agreement of any character or
nature under which the Company is or may become obligated to issue any shares of
its capital stock of any kind, other than those shares indicated in this Section
as presently outstanding and shares issuable in accordance with the terms of
this Agreement.
6.8 TAXES. Except as set forth in Exhibit 6.8:
(a) The Corporation has filed (or has obtained extensions for
filing) all income, excise, sales, corporate franchise, property, payroll and
other tax returns or reports required to be filed by it, as of the date hereof
14
by the United States of America, any state or other political subdivision
thereof or any foreign country and has paid all Taxes or assessments relating to
the time periods covered by such returns or reports; and
(b) The Corporation has paid all tax liabilities imposed or
assessed by any governmental authority for all periods prior to the Closing Date
for which such taxes have become due and payable and has received no notice from
any such governmental authority of any deficiency or delinquency with respect to
such obligation. The Corporation is not currently undergoing any audit conducted
by any taxing authority and has received no notice of audit covering any prior
period for which taxes have been paid or are or will be due and payable prior to
the Closing Date. There are no present disputes as to taxes of any nature
payable by the Corporation.
6.9 NO ACTIONS, PROCEEDINGS, ETC. Except as listed on the attached
Exhibit 6.9, there is no action or proceeding (whether or not purportedly on
behalf of the Corporation) pending or to its knowledge threatened by or against
the Corporation which might result in any material adverse change in the
condition, financial or otherwise, of the Corporation's business or assets. No
order, writ or injunction or decree has been issued by, or requested of any
court or Governmental Agency which does nor may result in any material adverse
change in the Corporation's assets or properties or in the financial condition
or the business of the Corporation. Except for liabilities referred to in
attached Exhibit 6.9, the Corporation is not liable for damages to any employee
or former employee as a result of any violation of any state, federal or foreign
laws directly or indirectly relating to such employee or former employee.
6.10 POST BALANCE SHEET CHANGES. Except as set forth on the attached
Exhibit 6.10 and as contemplated by this Agreement, since December 31, 2001, the
Corporation has not (a) issued, bought, redeemed or entered into any agreements,
commitments or obligations to sell, buy or redeem any shares of its capital
stock; (b) incurred any obligation or liability (absolute or contingent), other
than current liabilities incurred, and obligations under contracts entered into,
in the ordinary course of business; (c) discharged or satisfied any lien or
encumbrance or paid any obligation or liability (absolute or contingent), other
than current liabilities incurred in the ordinary course of business; (d)
mortgaged, pledged or subjected to lien charges, or other encumbrance any of its
assets, other than the lien of current or real property taxes not yet due and
payable; (e) waived any rights of substantial value, whether or not in the
ordinary course of business; (f) suffered any damage, destruction or loss,
whether or not covered by insurance, materially and adversely affecting its
assets or its business; (g) made or suffered any amendment or termination of any
material contract or any agreement which adversely affects its business; (h)
received notice or had knowledge of any labor trouble other than routine
grievance matters, none of which is material; (i) increased the salaries or
other compensation of any of its directors, officers or employees or made any
increase in other benefits to which employees may be entitled, other than
employee salary increases made in the ordinary course of business and reflected
on an exhibit hereto; (j) sold, transferred or otherwise disposed of any of its
assets, other than in the ordinary course of business; (k) declared or made any
distribution or payments to any of its shareholders, officers or employees,
other than wages and salaries made to employees in the ordinary course of
business; (l) revalued any of its assets; or (m) entered into any transactions
not in the ordinary course of business.
6.11 NO BREACHES. The Corporation is not in violation of, and the
consummation of the transactions contemplated hereby do not and will not result
in any material breach of, any of the terms or conditions of any mortgage, bond,
indenture, agreement, contract, license or other instrument or obligation to
which the Corporation is a party or by which its assets are bound; nor will the
15
consummation of the transactions contemplated hereby cause Scarab to violate any
statute, regulation, judgment, writ, injunction or decree of any court,
threatened or entered in a proceeding or action in which the Corporation is, was
or may be bound or to which any of the Corporation's assets are subject.
6.12 CONDITION OF THE CORPORATION'S ASSETS. Except as set forth on
Exhibit 6.12, Scarab's assets are currently in good and usable condition and
there are no defects or other conditions which, in the aggregate, materially and
adversely affect the operation or values of such assets taken as a whole. Except
as disclosed on Exhibit 6.12, no person other than Scarab (including any officer
or employee of the Corporation) has any proprietary interest in any know-how or
other intangible assets used by the Corporation in the conduct of its business.
The Company does not currently market any products for sale.
6.13 INVENTORY. Except as otherwise set forth on Exhibit 6.13, all
inventories reflected in the Financial Statements in excess of the reserves for
excess or obsolete inventories are stated at the lowest of cost, replacement
cost or market and, as so stated, are in good condition and usable or salable in
the category in which they are inventoried, in the ordinary course of business
of the Corporation, without discounts other than normal trade discounts
regularly offered by the Corporation, for prompt payment or quantity purchase.
6.14 ACCOUNTS RECEIVABLE. The accounts receivable of the Corporation
represent valid and enforceable obligations due to the Corporation and, except
to the extent of the reserve reflected in the latest financial statements, shall
be collectible by the Corporation in the ordinary course of business. Except as
set forth on the attached Exhibit 6.14, the Corporation has not received any
notice of any material counterclaim or set-off with respect to such accounts
receivable.
6.15 CORPORATE ACTS AND PROCEEDINGS. This Agreement has been duly
authorized by all necessary corporate action on behalf of Scarab, has been duly
executed and delivered by an authorized officer of Scarab, and is a valid and
binding Agreement on the part of Scarab that is enforceable against Scarab in
accordance with its terms, except as the enforceability thereof may be limited
by bankruptcy, insolvency, moratorium, fraudulent transfers, reorganization or
other similar laws affecting the enforcement of creditors' rights generally and
to judicial limitations on the enforcement of the remedy of specific performance
and other equitable remedies.
6.16 REGISTERED RIGHTS AND PROPRIETARY INFORMATION.
(a) Exhibit 6.16 hereto contains a true and complete list of
all patents, letters patent and patent applications, service marks, trademark
and service xxxx registrations and applications, copyright, copyright
registrations and applications, grants of licenses and rights to the Corporation
with respect to the foregoing, both domestic and foreign, claimed by the
Corporation or used or proposed to be used by the Corporation in the conduct of
its business (collectively herein, "Scarab Registered Rights"). Exhibit 6.16
hereto also contains a true and complete list of all and every trade secret,
know-how, process, formula, discovery, development, research, design, technique,
customer and supplier list, contracts, product development plans, product
development concepts, author contracts, marketing and purchasing strategy,
invention, and any other matter required for, incident to, or related to the
conduct of its business (hereafter collectively the "Scarab Proprietary
Information"). Except as described in Exhibit 6.16 hereto, the Corporation is
not obligated or under any liability whatever to make any payments by way of
royalties, fees or otherwise to any owner or licensor of, or other claimant to,
any Scarab Registered Right or Scarab Proprietary Information with respect to
the use thereof in the conduct of its business or otherwise.
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(b) Except as described in Exhibit 6.16 hereto, to the
Corporation's Best Knowledge, the Corporation owns and has the unrestricted
right to use the Scarab Registered Rights and Scarab Proprietary Information
required for or incident to the design, development, manufacture, operation,
sale and use of all products and services sold or rendered or proposed to be
sold or rendered by the Corporation or relating to the conduct or proposed
conduct of its business free and clear of any right, title, interest, equity or
claim of others. As soon as practicable following the execution of this
Agreement, and except as described in Exhibit 6.16 hereto, the Corporation
agrees to take all necessary steps (including without limitation entering into
appropriate confidentiality, assignment of rights and non-competition agreements
with all officers, directors, employees and consultants of the Corporation and
others with access to or knowledge of the Scarab Proprietary Information) to
safeguard and maintain the secrecy and confidentiality of, and its proprietary
rights in, the Scarab Proprietary Information and all related documentation and
intellectual property rights therein necessary for the conduct or proposed
conduct of its business.
(c) Except as described in Exhibit 6.16 hereto, the
Corporation has not sold, transferred, assigned, licensed or subjected to any
right, lien, encumbrance or claim of others, any Scarab Proprietary Information,
including without limitation any Scarab Registered Right, or any interest
therein, related to or required for the design, development, manufacture,
operation, sale or use of any product or service currently under development or
manufactured, or proposed to be developed, sold or manufactured, by it. Exhibit
6.16 contains a true and complete list and description of all licenses of Scarab
Proprietary Information granted to the Corporation by others or to others by the
Corporation. Except as described in Exhibit 6.16 hereto, there are no claims or
demands of any person pertaining to, or any proceedings that are pending or
threatened, which challenge the rights of the Corporation in respect of any
Scarab Proprietary Information used in the conduct of its business.
(d) Except as described in Exhibit 6.16 hereto, the
Corporation owns and on the Closing Date shall own, has and shall have, holds
and shall hold, exclusively all right, title and interest in the Scarab
Registered Rights, free and clear of all liens, encumbrances, restrictions,
claims and equities of any kind whatsoever, has and shall have the exclusive
right to use, sell, license or dispose of, and has and shall have the exclusive
right to bring action for the infringement of the Scarab Registered Rights and
the Scarab Proprietary Information. To the Best Knowledge of Corporation, the
marketing, promotion, distribution or sale by the Corporation of any products or
interests subject to the Scarab Registered Rights or making use of Scarab
Proprietary Information shall not constitute an infringement of any patent,
copyright, trademark, service xxxx or misappropriation or violation of any other
party's proprietary rights or a violation of any license or agreement by the
Corporation. Except as described in Exhibit 6.16 hereto, to the knowledge of the
Corporation after due inquiry no facts or circumstances exist that could result
in the invalidation of any of the Scarab Registered Rights.
6.17 CHANGES IN SUPPLIERS AND CUSTOMERS. Except as disclosed on Exhibit
6.17, the Corporation is not aware of any fact which indicates that any of the
suppliers supplying products, components or materials to the Corporation intends
to cease selling such products to the Corporation nor is the Corporation aware
of any fact which indicates that any major customer of the Corporation intends
to terminate its business relations with the Corporation.
6.18 NO LIENS OR ENCUMBRANCES. The Corporation has good and marketable
title to all of the property and assets, tangible and intangible, employed in
the operations of its business, free of any material mortgages, security
interests, pledges, easements or encumbrances of any kind whatsoever except as
set forth on the attached Exhibit 6.18 and except for such property and assets
as may be leased by Scarab.
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6.19 EMPLOYEE MATTERS. Exhibit 6.19 attached hereto contains a true,
complete and accurate list of all employees of the Corporation and the
remuneration of each (including wages, salaries and fringe benefits). The
Corporation has no information or facts indicating that any employee listed on
Exhibit 6.19 intends to terminate his/her employment relationship with the
Corporation prior or subsequent to the Closing Date, except as may be required
by this Agreement. Except as specifically described on Exhibit 6.19, the
Corporation has no employee benefit plans (including, but not limited to,
pension plans and health or welfare plans), arrangements or understandings,
whether formal or informal. The Corporation does not now and has never
contributed to a "multi-employer plan" as defined in Section 400(a)(3) of the
ERISA. The Corporation has complied with all applicable provisions of ERISA and
all rules and regulations promulgated thereunder, and neither the Corporation
nor any trustee, administrator, fiduciary, agent or employee thereof has at any
time been involved in a transaction that would constitute a "prohibited
transaction" within the meaning of Section 406 of ERISA as to any covered plan
of the Corporation. The Corporation is not a party to any collective bargaining
or other union agreement. The Corporation has not, within the past five (5)
years had, or been threatened with, any union activities, work stoppages or
other labor trouble with respect to its employees which had a material adverse
effect on the Corporation, its business or assets. Except as set forth in
Exhibit 6.19, the Corporation has not made any commitment or agreements to
increase the wages or modify the conditions or terms of employment of any of the
employees of the Corporation used in connection with its business, and between
the date of this Agreement and the Closing Date, the Corporation will not make
any agreement to increase the wages or modify the conditions or terms of
employment of any of the employees of the Corporation used in the conduct of its
business, without the prior written consent of all parties hereto.
6.20 LEGAL PROCEEDINGS AND COMPLIANCE WITH LAW. Except as set forth in
Exhibit 6.20, Scarab has not received notice of any legal, administrative,
arbitration or other proceeding or governmental investigation pending or
threatened (including those relating to the health, safety, employment of labor,
or protection of the environment) pertaining to Scarab which might result in the
aggregate in money damages payable by Scarab in excess of insurance coverage or
which might result in a permanent injunction against Scarab. Except as set forth
in such Exhibit 6.20, Scarab has substantially complied with, and is not in
default in any respect under any laws, ordinances, requirements, regulations, or
orders applicable to the business of Scarab, the violation of which might
materially and adversely affect it. Except as set forth in such Exhibit 6.20,
Scarab is not a party to any agreement or instrument, nor is it subject to any
charter or other corporate restriction or any judgment, order, writ, injunction,
decree, rule, regulation, code or ordinance which materially and adversely
affects, or might reasonably be expected materially and adversely to affect the
business, operations, prospects, property, assets or condition, financial or
otherwise, of Scarab.
6.21 CONTRACT SCHEDULES. Attached as Exhibit 6.21 hereto is an accurate
list of the following:
(a) All contracts, leases, agreements, covenants, licenses,
instruments or commitments of Scarab pertaining to the business of Scarab
calling for the payment of Five Thousand Dollars ($5,000) or more or which is
otherwise material to the business of Scarab, including, without limitation, the
following:
(i) Licenses and contracts held in the ordinary
course of business;
(ii) Executory contracts for the purchase, sale
or lease of any assets;
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(iii) Management or consulting contracts;
(iv) Patent, trademark and copyright
applications, registrations or licenses, and
know-how, intellectual property and trade
secret agreements or other licenses;
(v) Note agreements, loan agreements, indentures
and the like, other than those entered into
and executed in the ordinary course of
business;
(vi) All sales, agency, distributorship or
franchise agreements; and
(vii) Any other contracts not in the ordinary
course of business.
(b) All labor contracts, employment agreements and collective
bargaining agreements to which Scarab is a party.
(c) All instruments evidencing any liens or security interest
securing any indebtedness of Scarab covering any asset of Scarab.
(d) All profit sharing, pension, stock option, severance pay,
retirement, bonus, deferred compensation, group life and health insurance or
other employee benefit plans, agreements, arrangements or commitments of any
nature whatsoever, whether or not legally binding, and all agreements with any
present or former officer, director or shareholder of the Corporation.
(e) Any and all documents, instruments and other writings not
listed in any other schedule hereto which are material to the business
operations of Scarab.
Except as set forth in Exhibit 6.21, all of such contracts,
agreements, leases, licenses, plans, arrangements and commitments and all other
such items set forth above are valid, binding and in full force and effect in
accordance with their terms and conditions, except as the enforceability thereof
may be limited by bankruptcy, insolvency, moratorium, fraudulent transfer,
reorganization or other similar laws affecting the enforcement of contracts
generally, and there is no existing material default thereunder or breach
thereof by the Corporation, or to Scarab's knowledge by any party to such
contracts, or any conditions which, with the passage of time or the giving of
notice or both, might constitute such a default by the Corporation or by any
other party to the contracts.
6.22 LABOR MATTERS. There are no strikes, slowdowns, stoppages,
organizational efforts, discrimination charges or other labor disputes pending
or, to the knowledge of Scarab or any of its agent or employees, threatened
against Scarab.
6.23 INSURANCE. Scarab maintains no insurance coverage on its assets
and business.
6.24 ENVIRONMENTAL. Except as disclosed on Exhibit 6.24, Scarab has
never owned or operated any real property except for leased office space:
(a) To the Best Knowledge of Scarab, no real property (or the
subsurface soil and the ground water thereunder) now or previously leased by
Scarab (the "Leased Premises") either contains any Hazardous Substance (as
hereinafter defined) or has underneath it any underground fuel or liquid storage
tanks;
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(b) To the Best Knowledge of Scarab, there has been no
generation, transportation, storage, treatment or disposal of any Hazardous
Substance on or beneath the Leased Premises, now or in the past;
(c) Scarab is not aware of any pending or threatened
litigation or proceedings before any court or administrative agency in which any
person alleges, or threatens to allege, the presence, release, threat of
release, placement on or in the Leased Premises, or the generation,
transportation, storage, treatment or disposal at the Leased Premises, of any
Hazardous Substance;
(d) Scarab has not received any written notice and has no
knowledge that any Governmental Authority or any employee or agent thereof has
determined or alleged, or is investigating the possibility, that there is or has
been any presence, release, threat of release, placement on or in the Leased
Premises, or any generation, transportation, storage, treatment or disposal at
the Leased Premises, of any Hazardous Substance;
(e) To the Best Knowledge of Scarab, there have been no
communications or agreements with any Governmental Authority or agency (federal,
state, or local) or any private person or entity (including, without limitation,
any prior owner of the Leased Premises and any present or former occupant or
tenant of the Leased Premises) relating in any way to the presence, release,
threat of release, placement on or in the Leased Premises, or any generation,
transportation, storage, treatment or disposal at the Leased Premises, of any
Hazardous Substance. Scarab further agrees and covenants that Scarab will not
store or deposit on, otherwise release or bring onto or beneath, the Leased
Premises any Hazardous Substance prior to the Closing Date; and
(f) There is no litigation, proceeding, citizen's suit or
governmental or other investigation pending, or, to Scarab's Best Knowledge,
threatened, against Scarab, and Scarab knows of no facts or circumstances which
might give rise to any future litigation, proceeding, citizen's suit or
governmental or other investigation, which relate to Scarab's compliance with
environmental laws, regulations, rules, guidelines and ordinances.
For purposes of this Section 6.24, "Hazardous Substance" shall
mean and include (i) a hazardous substance as defined in 42 U.S.C. Section
9601(14), the Regulations at 40 C.F.R. Part 302, (2) any substance regulated
under the Emergency Planning and Community Right to Know Act (including without
limitation any extremely hazardous substances listed at 40 C.F.R. Part 355 and
any toxic chemical listed at 40 C.F.R. Part 372), (iii) hazardous wastes and
hazardous substances as specified under any California state or local
Governmental Requirement governing water pollution, groundwater protection, air
pollution, solid wastes, hazardous wastes, spills and other releases of toxic or
hazardous substances, transportation of hazardous substances, materials and
wastes and occupational or employee health and safety, and (iv) any other
material, gas or substance known or suspected to be toxic or hazardous
(including, without limitation, any radioactive substance, methane gas, volatile
hydrocarbon, industrial solvent, and asbestos) or which could cause a material
detriment to, or materially impair the beneficial use of, the Leased Premises,
or constitute a material health, safety or environmental risk to any person
exposed thereto or in contact therewith. For purposes of this Section 6.24,
"Hazardous Substance" shall not mean and shall not include the following, to the
extent used normally and required for everyday uses or normal housekeeping or
maintenance: (a) fuel oil and natural gas for heating, (b) lubricating,
cleaning, coolant and other compounds customarily used in building maintenance,
(c) materials routinely used in the day-to-day operations of an office, such as
copier toner, (d) consumer products, (e) material reasonably necessary and
customarily used in construction and repair of an office project, and (f)
fertilizers, pesticides and herbicides commonly used for routine office
landscaping.
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6.25 DISCLOSURE OF INFORMATION. The Corporation represents and warrants
that all statements, data and other written information provided by it to any
party hereto as well as their respective consultants and representatives have
been accurate copies or true originals. The Corporation represents and warrants
that, to its Best Knowledge, (i) there exists no material information concerning
the Corporation which has been requested but not been disclosed to or made
available to the other parties and their representatives or consultants and
which would be material to a decision to consummate the transactions provided
for in this Agreement and (i) in the aggregate, such information does not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made in them, in light of the
circumstances under which they are made, not misleading.
6.26 REPRESENTATION AND WARRANTIES. The representations and warranties
contained in this Agreement shall be true on and as of the Closing Date with the
same force and effect as though such representations and warranties had been
made on and as of the Closing Date. Such representations and warranties shall
survive the Closing Date and shall remain operative in full force and effect for
the period of time set forth in Section 12.3 hereof regardless of any
investigation at any time made by or on behalf of xXX and shall not be deemed
merged in any document or instruction so executed and/or delivered by Scarab or
Shareholders.
SECTION 7: COVENANTS OF SCARAB
7.1 PRESERVATION OF BUSINESS. Until Closing, Scarab shall use its best
efforts to cause Scarab to:
(a) Preserve intact the present business organization of
Scarab;
(b) Maintain its property and assets in its present state of
repair, order and condition, reasonable wear and tear excepted;
(c) Preserve and protect the goodwill and advantageous
relationships of Scarab with its customers and all other persons having business
dealings with Scarab;
(d) Preserve and maintain in force all licenses, permits,
registrations, franchises, patents, trademarks, tradenames, trade secrets,
service marks, copyrights, bonds and other similar rights of Scarab; and
(e) Comply with all laws applicable to the conduct of its
business
7.2 ORDINARY COURSE. Until Closing, Scarab shall conduct its business
only in the usual, regular and ordinary course, in substantially the same manner
as previously, and shall not make any substantial change to its methods of
management or operation in respect of such business or property. Without
limiting the foregoing, Scarab shall not, with respect to Scarab:
(a) Sell, mortgage, pledge or encumber or agree to sell,
mortgage, pledge or encumber, any of its property or assets, other than in the
ordinary course of business;
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(b) Incur any obligation (contingent or otherwise) or
purchase, acquire, transfer, or convey, any material assets or property or enter
into any contract or commitment, except in the ordinary course of business.
7.3 NEGATIVE COVENANTS. Until Closing, except as contemplated by this
Agreement or disclosed in exhibits to this Agreement, from the date hereof until
the Closing Date, unless and until xXX otherwise consents in writing, which
consent shall not be unreasonably withheld, Scarab will not (a) change or alter
the physical contents or character of the tangible and intangible assets so as
to materially affect the nature of Scarab's business; (b) incur any obligations
or liabilities (absolute or contingent) other than current liabilities incurred
and obligations under contracts entered into in the ordinary course of business;
(c) mortgage, pledge or voluntarily subject to lien, charge or other encumbrance
any assets, tangible or intangible, other than the lien of current property
taxes not due and payable; (d) sell, assign or transfer any of its assets or
cancel any debts or claims, other than in the ordinary course of business; (e)
waive any right of any substantial value; (f) declare or make any payment or
distribution to Shareholders or issue, purchase or redeem any shares of its
capital stock or other equity securities or issue or sell any rights to acquire
the same; (g) grant any increase in the salary or other compensation of any of
its directors, officers, or employees or make any increase in any benefits to
which such employees might be entitled; (h) institute any bonus, benefit, profit
sharing, stock option, pension, retirement plan or similar arrangement, or make
any changes in any such plans or arrangements presently existing; or (i) enter
into any material transactions or series of transactions other than in the
ordinary course of business.
7.4 ADDITIONAL COVENANTS.
(a) Scarab will promptly pay and discharge, or cause to be
paid and discharged, when due and payable, all lawful taxes, assessments, and
governmental charges or levies imposed upon the income, profits, property or
business of Scarab or any subsidiary; PROVIDED, HOWEVER, that any such tax,
assessment, charge or levy need not be paid if the validity thereof shall
currently be contested in good faith by appropriate proceedings and if Scarab
shall have set aside on its books adequate reserves therefor; and PROVIDED,
FURTHER, that Scarab will pay all such taxes, assessments, charges or levies
forthwith upon the commencement of proceedings to foreclose any lien that may
have attached as security therefor. Scarab will promptly pay or cause to be paid
when due, or in conformance with customary trade terms, all other indebtedness
incident to the operations of Scarab;
(b) Scarab will keep its properties and those of its
subsidiaries in good repair, working order and condition, reasonable wear and
tear excepted, and from time to time make all needful and proper repairs,
renewals, replacements, additions and improvements thereto; and Scarab will at
all times comply with the provisions of all material leases to which any of them
is a party or under which any of them occupies property so as to prevent any
loss or forfeiture thereof or thereunder;
(c) Scarab will keep its assets that are of an insurable
character insured by financially sound and reputable insurers against loss or
damage by fire, extended coverage and explosion insurance in amounts customary
for companies in similar businesses similarly situated; and Scarab will
maintain, with financially sound and reputable insurers, insurance against other
hazards, risks and liabilities to persons and property to the extent and in the
manner customary for companies in similar businesses similarly situated;
(d) Scarab will keep true records and books of account in
which full, true and correct entries will be made of all dealings or
transactions in relation to its business and affairs in accordance with its past
practices consistently applied;
22
(e) Scarab will comply with the requirements of all applicable
laws, rules, regulations and orders of any governmental authority, a breach of
which could have a material adverse effect on its business or credit;
(f) Scarab shall maintain in full force and effect its
corporate existence, rights and franchises and all licenses and other rights to
use patents, processes, licenses, trademarks, trade names or copyrights owned or
possessed by it or any subsidiary and deemed by Scarab to be necessary to the
conduct of its business;
(g) Scarab will, consistent with its practices in the ordinary
course of business, endeavor to retain its business relationships with its
customers and suppliers that it believes to be advantageous; and
(h) Scarab shall deliver to xXX copies of its statements of
operation and financial condition and similar statements as and when prepared
(if at all) in the ordinary course of its business.
7.5 ACCESS TO BOOKS AND RECORDS, PREMISES, ETC. From the date of this
Agreement through the Closing Date, Scarab will xxxxx xXX and its authorized
representatives reasonable access to its books and records, premises, products,
employees and customers and other parties with whom it has contractual relations
during reasonable business hours and in a manner not to disrupt or interfere
with Scarab's business relationships for purposes of enabling xXX to fully
investigate the business of Scarab. Scarab will also deliver copies of its
monthly statements of operations and financial condition for the period
subsequent to its financial statements referred to in Section 6.5 to xXX within
a reasonable time of such statements becoming available.
7.6 COMPENSATION. Except as contemplated by this Agreement, Scarab
shall not enter into or agree to enter into any employment contract or agreement
for consulting, professional, or other services which will adversely and
materially affect the operation of Scarab prior to the Closing Date, except for
any extensions of said contracts or agreements on substantially the same terms
and conditions as were previously in effect.
7.7 NO SOLICITATION.
(a) Except in connection with the transactions contemplated by
this Agreement, Scarab shall not, nor shall it permit any of its subsidiaries
to, nor shall it authorize or permit any officer, director or employee of or any
investment banker, attorney or other advisor or representative of, Scarab or any
of its subsidiaries to, (i) solicit, initiate or encourage the submission of,
any takeover proposal, (i) enter into any agreement with respect to any takeover
proposal or (iii) participate in any discussions or negotiations regarding, or
furnish to any person any information with respect to, or take any other action
to facilitate any inquiries or the making of any proposal that constitutes, or
may reasonably be expected to lead to, any takeover proposal. Without limiting
the foregoing, it is understood that any violation of the restrictions set forth
in the preceding sentence by any executive officer of Scarab or any of its
subsidiaries or any investment banker, attorney or other advisor or
representatives of Scarab or any of its subsidiaries or otherwise, shall be
deemed to be a breach of this Section by Scarab. For purposes of this Agreement,
"takeover proposal" means any proposal for a merger, consolidation or
reorganization or other business combination involving Scarab or any of its
subsidiaries or any proposal or offer to acquire in any manner, directly or
indirectly, an equity interest in, any voting securities of, or options, rights,
warrants or other interests convertible or exercisable for or into such voting
securities, or a substantial or material portion of the assets or business of
Scarab or any of its subsidiaries, other than the transactions contemplated by
this Agreement.
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(b) Except upon a material breach of this Agreement by xXX or
following termination hereof, except for action permitted or contemplated by
this Agreement, including a party's right to terminate this Agreement under
certain circumstances, neither the Board of Directors of Scarab nor any
committee thereof shall (i) withdraw or modify, or propose to withdraw or
modify, in a manner adverse to xXX, the approval or recommendation by such Board
of Directors of any such committee of this Agreement or the Exchange or (i)
approve or recommend, or propose to approve or recommend, any takeover proposal.
(c) Scarab promptly shall advise xXX orally and in writing of
any takeover proposal or any inquiry with respect to or which could lead to any
takeover proposal and the identity of the person making any such takeover
proposal or inquiry. Scarab will keep xXX fully informed of the status and
details of any such takeover proposal or inquiry.
(d) The provisions of this Section 7.7 shall not be construed
to prevent any investment banker, attorney or other advisor or representative of
Scarab to engage in discussions with third parties in the ordinary course of
business with respect to transactions not involving the parties to this
Agreement.
SECTION 8: REPRESENTATIONS AND WARRANTIES OF XXX
As a material inducement to Scarab to enter into this Agreement and
with the understanding and expectations that Scarab will be relying thereon in
consummating the Exchange contemplated hereunder, xXX (hereinafter xXX shall be
referred to as the "Corporation" unless the context otherwise requires for the
purposes of this Section 8 only) hereby represents and warrants as follows:
8.1 ORGANIZATION AND STANDING. xXX is a corporation duly organized,
validly existing and in good standing under the laws of the State of Colorado,
and has all requisite corporate power and authority to own its assets and
properties and to carry on its business as it is now being conducted.
8.2 SUBSIDIARIES, ETC. Except as set forth on Exhibit 8.2 hereto, the
Corporation does not have any direct or indirect Ownership Interest in any
corporation, partnership, joint venture, association or other business
enterprise.
8.3 QUALIFICATION. Except as set forth on Exhibit 8.3 and for any
jurisdiction where the failure to be qualified to engage in business as a
foreign corporation would not have a material adverse effect on the corporation,
the Corporation is not qualified to engage in business as a foreign corporation
in any state other than Colorado, and there is no other jurisdiction wherein the
character of the properties presently owned by the Corporation or the nature of
the activities presently conducted by the Corporation makes necessary the
qualification, licensing or domestication of the Corporation as a foreign
corporation.
8.4 CORPORATE AUTHORITY. Except as set forth on Exhibit 8.4 hereto,
neither the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby nor compliance by xXX with any on the
provisions hereof will:
24
(a) Conflict with or result in a breach of any provision of
its Articles of Incorporation or By-Laws or similar documents of any Subsidiary;
(b) Result in a default (or give rise to any right of
termination, cancellation, or acceleration) under any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, license, agreement or
other instrument or obligation to which the Corporation is a party, or by which
any of its properties or assets may be bound except for such default (or right
of termination, cancellation, or acceleration) as to which requisite waivers or
consents shall either have been obtained by the Corporation prior to the Closing
Date or the obtaining of which shall have been waived by Scarab; or
(c) Violate any order, writ, injunction, decree or, to the
Corporation's Best Knowledge, any statute, rule or regulation applicable to the
Corporation or any of its properties or assets. No consent or approval by any
Governmental Authority is required in connection with the execution and delivery
by the Corporation of this Agreement or the consummation by the Corporation of
the transactions contemplated hereby, except for possible notice under plant
closing laws.
8.5 SEC DOCUMENTS. The Common Stock of xXX is registered
pursuant to Section 12(g) of the Exchange Act. Scarab has had the opportunity to
obtain on Scarab's behalf true and complete copies of the SEC Documents (except
for exhibits and incorporated documents). xXX has not provided to Scarab any
information which, according to applicable law, rule or regulation, should have
been disclosed publicly by xXX but which has not been so disclosed, other than
with respect to the transactions contemplated by this Agreement.
As of their respective dates, all of iRV's reports, statements
and other filings with the Commission (the "SEC Documents") complied in all
material respects with the requirements of the Act or the Exchange Act as the
case may be and the rules and regulations of the Commission promulgated
thereunder and other federal, state and local laws, rules and regulations
applicable to such SEC Documents, and none of the SEC Documents contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
financial statements of xXX included in the SEC Documents comply as to form in
all material respects with applicable accounting requirements and the published
rules and regulations of the Commission or other applicable rules and
regulations with respect thereto. Such financial statements have been prepared
in accordance with generally accepted accounting principles applied on a
consistent basis during the periods involved (except (i) as may be otherwise
indicated in such financial statements or the notes thereto or (ii) in the case
of unaudited interim statements, to the extent they may not include footnotes or
may be condensed or summary statements) and fairly present in all material
respects the financial position of Company as of the dates thereof and the
results of operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal year-end audit adjustments).
8.6 CAPITALIZATION OF THE CORPORATION. The authorized capital stock of
xXX consists entirely of 100,000,000 shares of Common Stock having a par value
of $.001 per share, and 50,000,000 shares of Preferred Stock having a par value
of $.01 per share. As of March 22, 2002, there were a total of 14,147,903 shares
of Common Stock issued and outstanding and no shares of Preferred Stock issued
and outstanding. All outstanding shares of iRV's capital stock have been validly
issued, are fully paid and non-assessable, and are not subject to pre-emptive
rights. The shares of Common Stock to be issued to the Shareholders on the
Closing Date in accordance with Sections 2.1 hereof have been duly approved by
the Directors of xXX and will, upon their issuance, have been validly issued and
will be fully paid and non-assessable. Except as described in iRV's SEC
25
Documents or in Exhibit 8.6, which will show rights to acquire no more than a
maximum of 315,000 additional common shares of xXX. Otherwise, there are no
equity securities of xXX authorized, issued or outstanding, and there are no
authorized, issued or outstanding subscriptions, options, warrants, contracts,
calls, commitments or other purchase rights of any nature or character relating
to any of iRV's capital stock, equity securities, debt or other securities
convertible into stock or equity securities of xXX. As of the date of this
Agreement, there are no outstanding contractual obligations of xXX to
repurchase, redeem or otherwise acquire any shares of capital stock of xXX.
8.7 NO ACTIONS, PROCEEDINGS, ETC. Except as listed on the attached
Exhibit 8.7, there is no action or proceeding (whether or not purportedly on
behalf of the Corporation) pending or to its knowledge threatened by or against
the Corporation, which might result in any material adverse change in the
condition, financial or otherwise, of the Corporation's business or assets. No
order, writ or injunction or decree has been issued by, or requested of any
court or Governmental Agency which does nor may result in any material adverse
change in the Corporation's assets or properties or in the financial condition
or the business of the Corporation. The Corporation is not liable for damages to
any employee or former employee as a result of any violation of any state,
federal or foreign laws directly or indirectly relating to such employee or
former employee.
8.8 POST BALANCE SHEET CHANGES. Except as set forth on Exhibit 8.8 and
as contemplated by this Agreement, since the date of the latest financial
statements, the Corporation has not (a) issued, bought, redeemed or entered into
any agreements, commitments or obligations to sell, buy or redeem any shares of
its capital stock; (b) incurred any obligation or liability (absolute or
contingent), other than current liabilities incurred, and obligations under
contracts entered into, in the ordinary course of business; (c) discharged or
satisfied any lien or encumbrance or paid any obligation or liability (absolute
or contingent), other than current liabilities incurred in the ordinary course
of business; (d) mortgaged, pledged or subjected to lien charges, or other
encumbrance any of its assets, other than the lien of current or real property
taxes not yet due and payable; (e) waived any rights of substantial value,
whether or not in the ordinary course of business; (f) suffered any damage,
destruction or loss, whether or not covered by insurance, materially and
adversely affecting its assets or its business; (g) made or suffered any
amendment or termination of any material contract or any agreement which
adversely affects its business; (h) received notice or had knowledge of any
labor trouble other than routine grievance matters, none of which is material;
(i) increased the salaries or other compensation of any of its directors,
officers or employees or made any increase in other benefits to which employees
may be entitled, other than employee salary increases made in the ordinary
course of business and reflected on an exhibit hereto; (j) sold, transferred or
otherwise disposed of any of its assets, other than in the ordinary course of
business; (k) declared or made any distribution or payments to any of its
shareholders, officers or employees, other than wages and salaries made to
employees in the ordinary course of business; (l) revalued any of its assets; or
(m) entered into any transactions not in the ordinary course of business.
8.9 NO BREACHES. Except as set forth on Exhibit 8.9 , the Corporation
is not in violation of, and the consummation of the transactions contemplated
hereby do not and will not result in any material breach of, any of the terms or
conditions of any mortgage, bond, indenture, agreement, contract, license or
other instrument or obligation to which the Corporation is a party or by which
its assets are bound; nor will the consummation of the transactions contemplated
hereby cause xXX or any Subsidiary to violate any statute, regulation, judgment,
writ, injunction or decree of any court, threatened or entered in a proceeding
or action in which the Corporation is, was or may be bound or to which any of
the Corporation's assets are subject.
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8.10 CORPORATE ACTS AND PROCEEDINGS. This Agreement has been duly
authorized by all necessary corporate action on behalf of xXX, has been duly
executed and delivered by authorized officers of xXX, and is a valid and binding
Agreement on the part of xXX that is enforceable against xXX in accordance with
its terms, except as the enforceability thereof may be limited by bankruptcy,
insolvency, moratorium, fraudulent transfers, reorganization or other similar
laws affecting the enforcement of creditors' rights generally and to judicial
limitations on the enforcement of the remedy of specific performance and other
equitable remedies. All corporate action necessary to issue and deliver to the
Scarab Shareholders the Exchange Shares (each as described in Sections 2.1 and
2.3) has been taken by xXX.
8.11 LEGAL PROCEEDINGS AND COMPLIANCE WITH LAW. Except as set forth in
Exhibit 8.11, xXX has not received notice of any legal, administrative,
arbitration or other proceeding or governmental investigation pending or
threatened (including those relating to the health, safety, employment of labor,
or protection of the environment) pertaining to xXX which might result in the
aggregate in money damages payable by xXX in excess of insurance coverage or
which might result in a permanent injunction against xXX. Except as set forth in
such Exhibit 8.11, xXX has substantially complied with, and is not in default in
any respect under any laws, ordinances, requirements, regulations, or orders
applicable to the business of xXX, the violation of which might materially and
adversely affect it. Except as set forth in such Exhibit 8.11, xXX is not a
party to any agreement or instrument, nor is it subject to any charter or other
corporate restriction or any judgment, order, writ, injunction, decree, rule,
regulation, code or ordinance which materially and adversely affects, or might
reasonably be expected materially and adversely to affect the business,
operations, prospects, property, assets or condition, financial or otherwise, of
xXX.
8.12 INSURANCE. xXX maintains in full force and effect insurance
coverage on its assets and business in such amounts and against such risks and
losses as set forth in Exhibit 8.12.
8.13 ENVIRONMENTAL. Except as disclosed on Exhibit 8.13, xXX or its
subsidiaries have never owned or operated any real property except for leased
office space:
(a) To the Best Knowledge of xXX, no real property (or the
subsurface soil and the ground water thereunder) now or previously leased by
xXX(the "Leased Premises") either contains any Hazardous Substance (as
hereinafter defined) or has underneath it any underground fuel or liquid storage
tanks;
(b) To the Best Knowledge of xXX, there has been no
generation, transportation, storage, treatment or disposal of any Hazardous
Substance on or beneath the Leased Premises, now or in the past;
(c) xXX is not aware of any pending or threatened litigation
or proceedings before any court or administrative agency in which any person
alleges, or threatens to allege, the presence, release, threat of release,
placement on or in the Leased Premises, or the generation, transportation,
storage, treatment or disposal at the Leased Premises, of any Hazardous
Substance;
(d) xXX has not received any written notice and has no
knowledge that any Governmental Authority or any employee or agent thereof has
determined or alleged, or is investigating the possibility, that there is or has
been any presence, release, threat of release, placement on or in the Leased
Premises, or any generation, transportation, storage, treatment or disposal at
the Leased Premises, of any Hazardous Substance;
27
(e) To the Best Knowledge of xXX, there have been no
communications or agreements with any Governmental Authority or agency (federal,
state, or local) or any private person or entity (including, without limitation,
any prior owner of the Leased Premises and any present or former occupant or
tenant of the Leased Premises) relating in any way to the presence, release,
threat of release, placement on or in the Leased Premises, or any generation,
transportation, storage, treatment or disposal at the Leased Premises, of any
Hazardous Substance. Scarab further agrees and covenants that iRvwill not store
or deposit on, otherwise release or bring onto or beneath, the Leased Premises
any Hazardous Substance prior to the Closing Date; and
(f) There is no litigation, proceeding, citizen's suit or
governmental or other investigation pending, or, to irV's Best Knowledge,
threatened, against xXX, and xXX knows of no facts or circumstances which might
give rise to any future litigation, proceeding, citizen's suit or governmental
or other investigation, which relate to iRV's compliance with environmental
laws, regulations, rules, guidelines and ordinances.
For purposes of this Section 8.13, "Hazardous Substance" shall
mean and include (i) a hazardous substance as defined in 42 U.S.C. Section
9601(14), the Regulations at 40 C.F.R. Part 302, (2) any substance regulated
under the Emergency Planning and Community Right to Know Act (including without
limitation any extremely hazardous substances listed at 40 C.F.R. Part 355 and
any toxic chemical listed at 40 C.F.R. Part 372), (iii) hazardous wastes and
hazardous substances as specified under any state or local Governmental
Requirement governing water pollution, groundwater protection, air pollution,
solid wastes, hazardous wastes, spills and other releases of toxic or hazardous
substances, transportation of hazardous substances, materials and wastes and
occupational or employee health and safety, and (iv) any other material, gas or
substance known or suspected to be toxic or hazardous (including, without
limitation, any radioactive substance, methane gas, volatile hydrocarbon,
industrial solvent, and asbestos) or which could cause a material detriment to,
or materially impair the beneficial use of, the Leased Premises, or constitute a
material health, safety or environmental risk to any person exposed thereto or
in contact therewith. For purposes of this Section 8.13, "Hazardous Substance"
shall not mean and shall not include the following, to the extent used normally
and required for everyday uses or normal housekeeping or maintenance: (a) fuel
oil and natural gas for heating, (b) lubricating, cleaning, coolant and other
compounds customarily used in building maintenance, (c) materials routinely used
in the day-to-day operations of an office, such as copier toner, (d) consumer
products, (e) material reasonably necessary and customarily used in construction
and repair of an office project, and (f) fertilizers, pesticides and herbicides
commonly used for routine office landscaping.
8.14 DISCLOSURE OF INFORMATION. xXX represents and warrants that all
statements, data and other written information provided by it to any party
hereto as well as their respective consultants and representatives have been
accurate copies or true originals. xXX represents and warrants that, to its Best
Knowledge, (i) there exists no material information concerning xXX which has
been requested but not been disclosed to or made available to the other parties
and their representatives or consultants and which would be material to a
decision to consummate the transactions provided for in this Agreement and (i)
in the aggregate, such information does not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements made in them, in light of the circumstances under which they are
made, not misleading.
8.15 REPRESENTATION AND WARRANTIES. The representations and warranties
contained in this Agreement shall be true on and as of the Closing Date with the
same force and effect as though such representations and warranties had been
28
made on and as of the Closing Date. Such representations and warranties shall
survive the Closing Date and shall remain operative in full force and effect for
the period of time set forth in Section 12.1 hereof regardless of any
investigation at any time made by or on behalf of Scarab and shall not be deemed
merged in any document or instruction so executed and/or delivered by xXX.
SECTION 9: COVENANTS OF XXX
9.1 PRESERVATION OF BUSINESS. Until Closing, except as provided for in
this Agreement,xXX shall use its best efforts to :
(a) Preserve intact the present business organization of the
Corporation;
(b) Maintain its property and assets in its present state of
repair, order and condition, reasonable wear and tear excepted;
(c) Preserve and protect the goodwill and advantageous
relationships of the Corporation with its customers and all other persons having
business dealings with the Corporation;
(d) Preserve and maintain in force all licenses, permits,
registrations, franchises, patents, trademarks, tradenames, trade secrets,
service marks, copyrights, bonds and other similar rights of the Corporation;
and
(e) Comply with all laws applicable to the conduct of its
business.
9.2 ORDINARY COURSE. Until Closing, except as provided for in this
Agreement, xXX shall not, without the prior written consent of Scarab:
(a) Sell, mortgage, pledge or encumber or agree to sell,
mortgage, pledge or encumber, any of the property or assets of xXX or the
Subsidiaries; and
(b) Incur any obligation (contingent or otherwise) or
purchase, acquire, transfer, or convey, any material assets or property or enter
into any contract or commitment.
9.3 NEGATIVE COVENANTS. Until Closing, except as contemplated by this
Agreement or as disclosed in Exhibits to this Agreement, from the date hereof
until the Closing Date, unless and until Scarab otherwise consents in writing,
xXX and the Subsidiaries will not (a) change or alter the physical contents or
character of the inventories of its business, so as to materially affect the
nature of the Corporation's business or materially and adversely change the
total dollar valuation of such inventories from that reflected on the financial
statements referred to in Section 8.5 other than in the ordinary course of
business; (b) incur any obligations or liabilities (absolute or contingent)
other than current liabilities incurred and obligations under contracts entered
into in the ordinary course of business; (c) mortgage, pledge or voluntarily
subject to lien, charge or other encumbrance any assets, tangible or intangible,
other than the lien of current property taxes not due and payable; (d) sell,
assign or transfer any of its assets or cancel any debts or claims, other than
in the ordinary course of business; (e) waive any right of any substantial
value; (f) declare or make any payment or distribution to Shareholders or issue,
purchase or redeem any shares of its capital stock or other equity securities or
issue or sell any rights to acquire the same; (g) grant any increase in the
salary or other compensation of any of its directors, officers, or employees or
make any increase in any benefits to which such employees might be entitled; (h)
29
institute any bonus, benefit, profit sharing, stock option, pension, retirement
plan or similar arrangement, or make any changes in any such plans or
arrangements presently existing; or (i) enter into any transactions or series of
transactions other than in the ordinary course of business.
9.4 ADDITIONAL COVENANTS.
(a) xXX will promptly pay and discharge, or cause to be paid
and discharged, when due and payable, all lawful taxes, assessments, and
governmental charges or levies imposed upon the income, profits, property or
business of xXX or any subsidiary; PROVIDED, HOWEVER, that any such tax,
assessment, charge or levy need not be paid if the validity thereof shall
currently be contested in good faith by appropriate proceedings and if xXX shall
have set aside on its books adequate reserves therefor; and PROVIDED, FURTHER,
that xXX will pay all such taxes, assessments, charges or levies forthwith upon
the commencement of proceedings to foreclose any lien that may have attached as
security therefor. xXX will promptly pay or cause to be paid when due, or in
conformance with customary trade terms, all other indebtedness incident to the
operations of xXX;
(b) xXX will keep its properties and those of its subsidiaries
in good repair, working order and condition, reasonable wear and tear excepted,
and from time to time make all needful and proper repairs, renewals,
replacements, additions and improvements thereto; and xXX will at all times
comply with the provisions of all material leases to which any of them is a
party or under which any of them occupies property so as to prevent any loss or
forfeiture thereof or thereunder;
(c) xXX will keep its assets that are of an insurable
character insured by financially sound and reputable insurers against loss or
damage by fire, extended coverage and explosion insurance in amounts customary
for companies in similar businesses similarly situated; and xXX will maintain,
with financially sound and reputable insurers, insurance against other hazards,
risks and liabilities to persons and property to the extent and in the manner
customary for companies in similar businesses similarly situated;
(d) xXX will keep true records and books of account in which
full, true and correct entries will be made of all dealings or transactions in
relation to its business and affairs in accordance with its past practices
consistently applied;
(e) xXX will comply with the requirements of all applicable
laws, rules, regulations and orders of any governmental authority, a breach of
which could have a material adverse effect on its business or credit;
(f) xXX shall maintain in full force and effect its corporate
existence, rights and franchises and all licenses and other rights to use
patents, processes, licenses, trademarks, trade names or copyrights owned or
possessed by it or any subsidiary and deemed by xXX to be necessary to the
conduct of its business;
(g) xXX will, consistent with its practices in the ordinary
course of business, endeavor to retain its business relationships with its
customers and suppliers that it believes to be advantageous; and
(h) xXX shall deliver to Scarab copies of its statements of
operation and financial condition and similar statements as and when prepared
(if at all) in the ordinary course of its business.
30
9.5 ACCESS TO BOOKS AND RECORDS, PREMISES, ETC. From the date of this
Agreement through the Closing Date, xXX will grant Scarab and its authorized
representatives reasonable access to its and the Subsidiaries' books and
records, premises, products, employees and customers and other parties with whom
it has contractual relations during reasonable business hours for purposes of
enabling Scarab to fully investigate the business of xXX and the Subsidiaries.
xXX will also deliver copies of the monthly statements of operations and
financial condition for the period subsequent to the latest financial statements
to Scarab within a reasonable time of such statements becoming available.
9.6 DELIVERY OF ADDITIONAL FILINGS. Following the execution of this
Agreement and until the Closing Date, xXX shall provide Scarab with copies of
any and all reports, filings, notices or other information which xXX may prepare
and file with or receive from the Commission, Nasdaq or any other regulatory
authority, (and shall give Scarab an opportunity to review and comment on any
such filings) as well as copies of any pleadings, notices or other filings made
in connection with any pending litigation, arbitration, investigation or
proceeding in which xXX or any Subsidiary is party or otherwise involved.
SECTION 10: REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS
Shareholders severally represent and warrant to xXX that, as of the
date of this Agreement, and as of the date of Closing, the following are true
and accurate:
10.1 SHARE OWNERSHIP. Each Shareholder owns the number of shares of the
common stock of Scarab, a Nevada corporation, set forth in Exhibt 10.1 hereto
which shares are fully paid, non-assessable and will be transferred and assigned
to xXX free and clear of any claims, liens, and encumbrances or other
restrictions which would in any way impair their right to effectively sell or
transfer such shares.
10.2 RIGHTS OWNERSHIP. Each Shareholder is the beneficial owner of the
equity rights, including, but not limited to, options, warrants, puts and the
like, in Scarab, as are set forth on Exhibit 10.2 hereto. The rights set forth
on Exhibit 10.2 are owned by Shareholders and will be assigned to xXX free and
clear of any claims, liens, and encumbrances or other restrictions which would
in any way impair the entitlements represented thereby.
10.3 RESTRICTION ON FUTURE TRANSFER. There are no restrictions on the
transferability of the shares of Scarab common stock being transferred to xXX
imposed by or pursuant to the company's Articles of Incorporation, Bylaws or by
any other agreements to which Shareholders or Scarab are a party, except for
restrictions imposed by or on account of federal and state securities laws.
10.4 UNREGISTERED STOCK. Shareholders represent that they understand
that the xXX Common Stock has not been registered for sale under federal or
state securities laws and that said securities are being issued to Shareholders
pursuant to a claimed exemption from the registration requirements of such laws.
Shareholders understand that in order to maintain such exemption they must be
acquiring the stock with no view to making a public distribution of said
securities,; and that they understand that they must bear the economic risk of
their investment in the xXX Common Stock for a substantial period of time,
because the xXX Common Stock has not been registered under the federal or state
securities laws, and, cannot be sold unless subsequently registered under such
laws or unless an exemption from such registration is available.
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10.5 STOCK ACQUIRED FOR INVESTMENT; LIMITATIONS ON DISPOSITIONS. Each
Shareholder represents that he is acquiring the xXX Common Stock for its own
account and for investment and not with a view to, or for sale in connection
with, any distribution thereof in violation of the Securities Act of 1933, as
amended. Shareholders agree that the stock will not be offered for sale, sold or
otherwise transferred for value and that no transfer thereof will be made by it
unless (i) a registration statement with respect thereto has become effective
under the Securities Act of 1933, as amended, or (i) there is presented to xXX
an opinion of counsel for Shareholders reasonably satisfactory to xXX that such
registration is not required, or (iii) there is presented to xXX a letter from
the Securities and Exchange Commission (said Commission having been informed of
all relevant circumstances) to the effect that in the event the stock is
transferred by Shareholders without such registration, the Commission or the
staff will not recommend any action. Shareholders further agrees that the stock
will not be offered for sale, sold or otherwise transferred unless, in the
opinion of legal counsel for xXX, such sale or disposition does not, and will
not, violate any provisions of any other federal or state securities law or
regulation. Shareholders consents that any transfer agent of xXX may be
instructed not to transfer any of the stock unless it receives satisfactory
evidence of compliance with the foregoing provisions and that there may be
endorsed upon any certificates (or instruments issued in substitution therefor),
iRV's regular legend regarding the sale of restricted securities.
SECTION 11: TERMINATION
11.1 TERMINATION. This Agreement may be terminated and abandoned solely
as follows:
(a) At any time until the Closing Date by the mutual agreement
of xXX and Scarab.
(b) By any party hereto, if for any reason the parties have
failed to close this Agreement on or before June 1, 2002, provided that the
party requesting termination is not then in default thereunder.
(c) By any party hereof, if the other party shall have
breached any representation, warranty or covenant contained in this Agreement
and shall have failed to cure such breach within ten (10) days following written
notice thereof by the party seeking termination.
In the event of any termination pursuant to this Section
11.1(b) or (c), written notice setting forth the reasons therefor shall
forthwith be given by the terminating party to all of the other parties hereto.
11.2 EFFECT OF TERMINATION. If the Exchange is terminated and abandoned
as provided for in this Section 11, this Agreement shall forthwith become wholly
void and of no effect without liability to any party to this Agreement;
provided, however, that no such termination shall terminate or limit the rights
of any such terminating party to enforce any remedy otherwise available for any
breach hereof.
SECTION 12: INDEMNIFICATION AND REMEDIES FOR BREACH
12.1 INDEMNIFICATION BY XXX.
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(a) For a period of eighteen months from the date of this
Agreement, xXX shall defend, indemnify and hold Shareholders and Scarab harmless
against and in respect of any damage, loss, liability, cost or expense,
including expert witness fees and reasonable attorneys' fees, whether or not
recoverable under applicable state law, resulting or arising from or incurred in
connection with:
(viii) Any misrepresentation, breach of warranty,
or nonfulfillment or nonperformance of any
agreement on the part of xXX under this
Agreement, or any misrepresentation or
omission from any exhibit, schedule, list,
certificate or other instrument furnished or
to be furnished by it under this Agreement,
or any noncompliance on the part of xXX with
applicable law.
(ix) Any and all liabilities of xXX of any nature
whatsoever, whether accrued, absolute,
contingent or otherwise and whether known or
unknown, except to the extent that any such
liability arises from Shareholders' failure
to perform or discharge, when due,
Shareholders' and Scarab's future
obligations; and
(x) Any actions, suits, proceedings, damages,
assessments, judgments, costs or expenses
incident to any of the foregoing.
(b) Promptly after the receipt by Shareholders and/or Scarab
of notice of any claim asserted by a third party that may give rise to iRV's
liability to Shareholders and/or Scarab under this Section, Shareholders and/or
Scarab shall give to xXX written notice of such claim, and xXX shall be entitled
to participate at its own expense in the defense of any such claim. Shareholders
and/or Scarab shall not pay, acknowledge, compromise or settle any such claim
without the written consent of xXX, unless such payment, acknowledgment,
compromise or settlement results in a full and complete release and discharge of
xXX from any liability.
12.2 RESERVED.
12.3 INDEMNIFICATION BY SCARAB.
(a) For a period of eighteen months from the date of this
Agreement, Scarab shall defend, indemnify and hold xXX harmless against and in
respect of any damage, loss, liability, cost or expense, including expert
witness fees and reasonable attorneys' fees, whether or not recoverable under
applicable state law, resulting or arising from or incurred in connection with:
(i) Any misrepresentation, breach of warranty,
or nonfulfillment or nonperformance of any
agreement on the part of Scarab under this
Agreement, or any misrepresentation or
omission from any exhibit, schedule, list,
certificate or other instrument furnished or
to be furnished by it under this Agreement.
(ii) Any and all liabilities of Scarab of any
nature whatsoever, whether accrued,
absolute, contingent or otherwise and
whether known or unknown, except to the
extent that any such liability arises from
iRV's failure to perform or discharge, when
due, iRV's future obligations;
33
(iii) Any actions, suits, proceedings, damages,
assessments, judgments, costs or expenses
incident to any of the foregoing.
(b) Promptly after the receipt by xXX of notice of any claim
asserted by a third party that may give rise to Scarab's liability to xXX under
this Section, xXX shall give to Scarab written notice of such claim and Scarab
shall be entitled to participate at its own expense in the defense of any such
claim. xXX shall not pay, acknowledge, compromise or settle any such claim
without the written consent of Scarab, unless such payment, acknowledgment,
compromise or settlement results in a full and complete release and discharge of
Scarab from any liability.
12.4 ADDITIONAL NOTICE. Notwithstanding the provisions of Sections
12.1,or 12.3 above, promptly after the receipt by any party hereto of notice of
any claim asserted by a third party that may give rise to the liability of any
party for which the right to indemnification may be claimed under this Section,
such party shall give to each other party written notice of such claim as soon
as practicable. The provisions of this Section 12.4 in addition to and not in
lieu of the covenants of the parties contained in Sections 12.1or 12.3 above.
12.5 DETERMINATION OF DAMAGES AND RELATED MATTERS.
(a) Upon the occurrence of any event which would give rise to
a claim by any party against, or to a right of defense and indemnity against any
other party pursuant to this Agreement, or in the event that any suit, action,
investigation, claim or proceeding is begun, made or instituted as a result of
which any party may become obligated to any other party hereunder, such
aggrieved party shall give notice to the other parties of the occurrence of such
event.; provided that the failure of xXX to give notice shall not affect the
indemnification obligations of Shareholders hereunder. xXX shall have the
exclusive right to so defend, contest or protect against such matter utilizing
the counsel of iRV's choice (who shall be reasonably acceptable to a
representative of the other parties). Such other parties shall have the right,
but not the obligation, to participate, at its own expense, in the defense
thereof by counsel of their choice.
(b) As xXX incurs expenses for which indemnification hereunder
is provided and 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, xXX shall forward to such other parties notice of any
sums due and owing by them pursuant to this Agreement with respect to such
matter and they shall be required to pay all of the sums so due and owing to xXX
within ten (10) days of such notice.
(c) As Scarab and/or Shareholders incur expenses for which
indemnification hereunder is provided and 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, Scarab and/or
Shareholders shall forward to xXX notice of any sums due and owing by it
pursuant to this Agreement with respect to such matter and shall be required to
pay all of the sums so due and owing to Scarab and/or Shareholders by certified
or bank cashier's check within ten (10) days of such notice.
12.6 REMEDIES FOR BREACH. In the event of any breach of any of the
provisions of this Agreement, including but not limited to any breach of any
covenant, warranty or representation made by any party hereto, the breaching or
defaulting party shall be liable pursuant to the provisions of 12.1 or 12.3
above. In the event of any material breach by any party of any provision under
34
this Agreement, either party may file suit. Nothing contained in this Agreement
shall be deemed to preclude a party to xxx for or seek specific performance of
the provisions of this Agreement in the appropriate circumstance.
SECTION 13: NONDISCLOSURE OF CONFIDENTIAL INFORMATION
13.1 NONDISCLOSURE OF CONFIDENTIAL INFORMATION. Each of the parties
hereto recognizes and acknowledges that it has and will have access to certain
nonpublic information of the others which shall be deemed the confidential
information of the other Companies (including, but not limited to, business
plans, costs, trade secrets, licenses, research projects, profits, markets,
sales, customer lists, strategies, plans for future development, financial
information and any other information of a similar nature) that after the
consummation of the transactions contemplated hereby will be valuable, special
and unique property of the Companies. Information received by the other party or
its representatives shall not be deemed Confidential Information and afforded
the protections of this Section 13.1 if, on the Closing Date, such information
has been (i) developed by the receiving party independently of the disclosing
party, (i) rightfully obtained without restriction by the receiving party from a
third party, provided that the third party had full legal authority to possess
and disclose such information, (iii) publicly available other than through the
fault or negligence of the receiving party, (iv) released without restriction by
the disclosing party to anyone, including the United States government, or (v)
properly and lawfully known to the receiving party at the time of its
disclosure, as evidenced by written documentation conclusively established to
have been in the possession of the receiving party on the date of such
disclosure. Each of the parties hereto agrees that it shall not disclose, and
that it shall use its best efforts to prevent disclosure by any other Person of,
any such confidential information to any Person for any purpose or reason
whatsoever, except to authorized representatives of the Companies who agree to
be bound by this confidentiality agreement. Notwithstanding, a party may use and
disclose any such confidential information to the extent that a party may become
compelled by Legal Requirements to disclose any such information; provided,
however, that such party shall use all reasonable efforts and shall have
afforded the other Companies the opportunity to obtain an appropriate protective
order or other satisfactory assurance of confidential treatment for any such
information compelled to be disclosed. In the event of termination of this
Agreement, each party shall use all reasonable efforts to cause to be delivered
to the other parties, and to retain no copies of, any documents, work papers and
other materials obtained by such party or on such party's behalf during the
conduct of the matters provided for in this Agreement, whether so obtained
before or after the execution hereof. Each of the Companies recognizes and
agrees that violation of any of the agreements contained in this Section 13.1
will cause irreparable damage or injury to the Companies, the exact amount of
which may be impossible to ascertain, and that, for such reason, among others,
the Companies shall be entitled to an injunction, without the necessity of
posting bond therefor, restraining any further violation of such agreements.
Such rights to any injunction shall be in addition to, and not in limitation of,
any other rights and remedies the Companies may have against each other. The
provisions of this Section 13.1 shall survive any termination of this Agreement.
13.2 NO PUBLICITY. Until the Closing or the termination of this
Agreement in accordance with its terms, neither xXX nor Scarab shall, directly
or indirectly, issue any press release, or make any public statement, concerning
the transactions contemplated by this Agreement without the prior written
consent of xXX (in the case of such a release or statement by Scarab) or of
Scarab (in the case of such a release or statement by xXX). This Section 13.2
shall not, however, preclude any party from making any disclosure required by
applicable law, and in the event any party, or any officer, director, employee,
agent or representative of a party, believes that any press release, public
statement or other disclosure is so required, such party will notify and consult
with the other parties with respect thereto as promptly as is practicable under
the circumstances.
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SECTION 14: EXPENSES
Each of the parties will pay all costs and expenses of its performance
and compliance with this Agreement. Notwithstanding the foregoing, if the
Agreement is not consummated by reason of a default of one of the Companies,
then the expenses of each of the Companies in connection with the transaction
contemplated herein shall be paid by such defaulting Company. In no event will
any party to this Agreement be liable to any other party for incidental damages,
lost profits, income tax consequences, lost savings or any other consequential
damages, even if such party has been advised of the possibility of such damages,
or for punitive damages, resulting from the breach of any obligation under this
Agreement. The provisions of this Section 13 shall survive any termination
hereof.
SECTION 15: MISCELLANEOUS
15.1 ATTORNEY'S FEES. In any action at law or in equity or in any
arbitration proceeding, for declaratory relief or to enforce any of the
provisions or rights or obligations under this Agreement, the unsuccessful party
to such proceeding, shall pay the successful party or parties all statutorily
recoverable costs, expenses and reasonable attorneys' fees incurred by the
successful party or parties including without limitation costs, expenses, and
fees on any appeals and the enforcement of any award, judgment or settlement
obtained, such costs, expenses and attorneys' fees shall be included as part of
the judgment. The successful party shall be that party who obtained
substantially the relief or remedy sought, whether by judgment, compromise,
settlement or otherwise.
15.2 NO BROKERS. xXX represents and warrants to Scarab and Scarab
represents and warrants to xXX, that neither it nor any party acting on its
behalf has incurred any liability, either express or implied, to any "broker,"
"finder," financial advisor, employee or similar person in respect of any of the
transactions contemplated hereby. xXX agrees to indemnify Scarab against, and
hold it harmless from, and Scarab agrees to indemnify xXX against, and hold it
harmless from, any liability, cost or expense (including, but not limited to,
fees and disbursements of counsel) resulting from any agreement, arrangement or
understanding made by such party with any third party, including employees of
Scarab, for brokerage, finders' or financial advisory fees or other commissions
in connection with this Agreement or the transactions contemplated hereby. The
provisions of this Section 15.2 shall survive any termination of this Agreement.
15.3 SURVIVAL AND INCORPORATION OF REPRESENTATIONS. The
representations, warranties, covenants and agreements made herein or in any
certificates or documents executed in connection herewith shall survive the
execution and delivery thereof, and all statements contained in any certificate
or other document delivered by any party hereunder or in connection herewith
shall be deemed to constitute representations and warranties made by that party
to this Agreement.
15.4 INCORPORATION BY REFERENCE. All Exhibits to this Agreement and all
documents delivered pursuant to or referred to in this Agreement are herein
incorporated by reference and made a part hereof.
15.5 PARTIES IN INTEREST. Nothing in this Agreement, whether express or
implied, is intended to, or shall, confer any rights or remedies under, or by
reason of, this Agreement, on any person other than the parties hereto and their
36
respective and proper successors and assigns and indemnitees. Nothing in this
Agreement shall act to relieve or discharge the obligation or liability of any
third persons to any party to this Agreement.
15.6 AMENDMENTS AND WAIVERS. This Agreement may not be amended, nor may
compliance with any term, covenant, agreement, condition or provision set forth
herein be waived (either generally or in a particular instance and either
retroactively or prospectively) unless such amendment or waiver is agreed to in
writing by all parties hereto.
15.7 WAIVER. No waiver of any breach of any one of the agreements,
terms, conditions, or covenants of this Agreement by the parties shall be deemed
to imply or constitute a waiver of any other agreement, term, condition, or
covenant of this Agreement. The failure of any party to insist on strict
performance of any agreement, term, condition, or covenant, herein set forth,
shall not constitute or be construed as a waiver of the rights of either or the
other thereafter to enforce any other default of such agreement, term,
condition, or covenant; neither shall such failure to insist upon strict
performance be deemed sufficient grounds to enable either party hereto to forego
or subvert or otherwise disregard any other agreement, term, condition, or
covenants of this Agreement.
15.8 GOVERNING LAW - CONSTRUCTION. This Agreement, and the rights and
obligations of the respective parties, shall be governed by and construed in
accordance with the laws of the State of Colorado. Notwithstanding the preceding
sentence, it is acknowledged that each party hereto is being represented by, or
has waived the right to be represented by, independent counsel. Accordingly, the
parties expressly agree that no provision of this Agreement shall be construed
against any party on the ground that the party or its counsel drafted the
provision. Nor may any provision of this Agreement be construed against any
party on the grounds that party caused the provision to be present.
15.9 REPRESENTATIONS AND WARRANTIES. The representations and warranties
contained in Sections 6 and 8 of this Agreement shall survive the Closing Date
and shall remain operative in full force and effect for the period of time set
forth in Section 12.5(a) above regardless of any investigation at any time made
by or on behalf of either xXX or Scarab and shall not be deemed merged in any
document or instrument so executed or delivered by either xXX or Scarab.
15.10 NOTICES. Any notice, communication, offer, acceptance, request,
consent, reply, or advice (herein severally and collectively, for convenience,
called "Notice"), in this Agreement provided or permitted to be given, served,
made, or accepted by any party or person to any other party or parties, person
or persons, hereunder must be in writing, addressed to the party to be notified
at the address set forth below, or such other address as to which one party
notifies the other in writing pursuant to the terms of this Section 15.10, and
must be served by (i) telefax or other similar electronic method, or (i)
depositing the same in the United States mail, certified, return receipt
requested and postage paid to the party or parties, person or persons to be
notified or entitled to receive same, or (iii) delivering the same in person to
such party.
Notice shall be deemed to have been given immediately when sent by
telefax and confirmed received or other electronic method and seventy-two hours
after being deposited in the United States mail, or when personally delivered in
the manner herein above described. Notice provided in any manner not specified
above shall be effective only if and when received by the party or parties,
person or persons to be, or provided to be notified.
37
All notices, requests, demands and other communications required or
permitted under this Agreement shall be addressed as set forth below:
If xXX, to: xXX, INC.
0000 Xxxxx Xxxx, Xxxxx Xxxxxxxxx X
Xxxxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
With copy to: Xxxxxxxx X. Xxxxxx, Esq.
Xxxxxx & Xxxxxxx, LLC
0000 Xxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
If Scarab or Shareholders, to: SCARAB SYSTEMS, INC.
0000-000 XXXXX XXXXXX
XXXXXXXXX, XX V6B-2W6
Fax (000)000-0000
With copy to: Xxxxx Xxxxxx & Associates, P.C.
Penthouse Suite
0000 Xxxx Xxxxxxxx Xxx.
Xxxxxxxxx Xxxxxxx, XX 00000
Fax (000)000-0000
Any party receiving a facsimile transmission shall be entitled to rely
upon a facsimile transmission to the same extent as if it were an original. Any
party may alter the address to which communications or copies are to be sent by
giving notice of such change of address in conformity with the provisions of
this Section 15.10 for the giving of notice.
15.11 FAX/COUNTERPARTS. This Agreement may be executed by telex,
telecopy or other facsimile transmission, and such facsimile transmission shall
be valid and binding to the same extent as if it were an original. Further, this
Agreement may be signed in one or more counterparts, all of which when taken
together shall constitute the same documents. For all evidentiary purposes, any
one complete counter set of this Agreement shall be considered an original.
15.12 CAPTIONS. The caption and heading of various sections and
paragraphs of this Agreement are for convenience only and are not to be
construed as defining or limiting, in any way, the scope or intent of the
provisions hereof.
15.13 SEVERABILITY. Wherever there is any conflict between any
provision of this Agreement and any Governmental Requirement or judicial
precedent, the latter shall prevail, but in such event the provisions of this
Agreement thus affected shall be curtailed and limited only to the extent
necessary to bring it within the requirement of the law. In the event that any
part, section, paragraph or clause of this Agreement shall be held by a court of
proper jurisdiction to be invalid or unenforceable, the entire Agreement shall
not fail on account thereof, but the balance of the Agreement shall continue in
full force and effect unless such construction would clearly be contrary to the
intention of the parties or would result in unconscionable injustice.
38
15.14 GOOD FAITH COOPERATION AND ADDITIONAL DOCUMENTS. The parties
shall use their best good faith efforts to fulfill all of the conditions set
forth in this Agreement over which it has control or influence. Each party
covenants and agrees to cooperate in good faith and to enter into and deliver
such other documents and papers as the other party reasonably shall require in
order to consummate the transactions contemplated hereby, provided in each
instance, any such document is in form and substance approved by the parties and
their respective legal counsel.
15.15 SPECIFIC PERFORMANCE. The obligations of the parties under
Sections 2 and 3 are unique. If either party should default in its obligations
under said Section, the parties each acknowledge that it would be extremely
difficult and impracticable to measure the resulting damages; accordingly, the
non-defaulting party, in addition to any other available rights and remedies,
may xxx in equity for injunction (mandatory or prohibitive) or specific
performance (all without the need to post a bond or undertaking of any nature),
and the parties each expressly waive the defense that a remedy at law in damages
is adequate.
15.16 ASSIGNMENT. Neither party may directly or indirectly assign or
delegate, by operation of law or otherwise, all or any portion of its/their/his
rights, obligations or liabilities under this Agreement without the prior
written consent of all other parties, which consent may be withheld in their
respective sole and absolute discretion. Any purported assignment or delegation
without such consent shall be null and void.
For purposes of this Section, the term "Agreement" shall include this
Agreement and the Exhibits and other documents attached hereto or described in
this Section 15.16. This Agreement, and other documents delivered pursuant to
this Agreement, contain all of the terms and conditions agreed upon by the
parties relating to the subject matter of this Agreement and supersede all prior
and contemporaneous agreements, letters of intent, representations, warranties,
disclosures, negotiations, correspondence, undertakings and communications of
the parties, oral or written, respecting that subject matter.
15.17 TIME. Time is of the essence of this Agreement and each of its
provisions.
IN WITNESS WHEREOF, the parties have signed the Agreement the date and
year first above written.
xXX: xXX, INC.,
A COLORADO CORPORATION
By:__________________________________
__________________________________
SCARAB: SCARAB SYSTEMS, INC.,
A NEVADA CORPORATION
By:__________________________________
__________________________________
39
SHAREHOLDERS:
-------------------------------------
Xxxxx Xxxxxxx
-------------------------------------
Xxxxxx Xxxx
Asgaard Services Ltd.
By___________________________________
Authorized Officer
-------------------------------------
Xxxxx Xxxxxxxxxx
-------------------------------------
Xxxxxxxx Rechia
-------------------------------------
Xxxxxx Xxxx
-------------------------------------
Xxxxxxx Xxx
40
Corona Enterprises, Inc.
By___________________________________
Authorized Officer
-------------------------------------
Xxxxx Xxxxxxxxxxx
-------------------------------------
Xxxxx Xxxxxx
-------------------------------------
Xxxxx Xxxxxx
-------------------------------------
Xxxxx Xxxxxxxx-Xxxx
-------------------------------------
Xxxxx Xxxxxx
-------------------------------------
Xxx Xxxxxxxx
Fidelity Services, Ltd.
By___________________________________
Authorized Officer
-------------------------------------
Gian-Xxxxx Xxxxxxx
41
Guardian Finance, Ltd.
By___________________________________
Authorized Officer
Healthnet International, Inc.
By___________________________________
Authorized Officer
-------------------------------------
Xxxxxxxx Xxxxxxx
-------------------------------------
Xxxx Xxxxx
-------------------------------------
Xxxxxx X. Xxxxxx
-------------------------------------
Xxx Xxxxxxxx
-------------------------------------
Xxx Hillford
Marianette Partners
By___________________________________
Authorized Officer
42
485017 B.C. Ltd.
By __________________________________
Authorized Officer
-------------------------------------
Xxxxxxx Xxxxxx
-------------------------------------
Xxxxxxxx Xxxxxxxx
-------------------------------------
Xxxxxxx Xxxx
-------------------------------------
S. Xxxx Xxxxxxx
-------------------------------------
Xxxx Xxxx
Sunrise Capital
By___________________________________
Authorized Officer
-------------------------------------
Xxxxx Xxxxxx
-------------------------------------
Tamyrra N. Bidiuk
43
-------------------------------------
Xxxxxx X. Xxxxx
-------------------------------------
Xxxxxxx Xxx XxXxxx
VDT, LLC
By___________________________________
Authorized Officer
-------------------------------------
Xxxxxxx Xxxxxxx
44
