AGREEMENT AND PLAN OF REORGANIZATION
between
BELCO SYSTEMS TECHNOLOGIES, INC., a Delaware corporation and
X. X. XXXXXXX, the Sole Shareholder
of
SJI WHOLESALE, INC., a Tennessee corporation
This AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement"), made the
27th day of February, 1998, between Belco Systems Technologies, Inc., a Delaware
corporation ("Belco") and X. X. Xxxxxxx ("Xxxxxxx"), the sole shareholder of SJI
Wholesale, Inc., a Tennessee corporation ("SJI").
WHEREAS, Belco has authorized capital stock consisting of 10,000,000
shares of common stock, par value $.0001 per share (the "Belco Common Stock") of
which 1,478,667 shares have been duly issued and outstanding and 10,000,000
shares of preferred stock, par value $.0001 per share, of which 4,900,000 shares
have been designated as Series A Preferred Stock, the designations, rights and
preferences of which are attached hereto as Exhibit A and incorporated herein by
such reference.
WHEREAS, SJI has authorized 2,000 shares of common stock, no par value
(the "SJI Stock"), of which 1,020 shares are issued and outstanding which are
owned beneficially and of record by Xxxxxxx.
WHEREAS, Belco desires to acquire 100% of the SJI Stock from Xxxxxxx in
exchange for 1,200,000 shares of Belco's Common Stock and 4,900,000 shares of
Series A Preferred Stock (collectively, the "Belco Stock") pursuant to the terms
and conditions set forth herein.
WHEREAS, Xxxxxxx desire to exchange his stock in SJI for the Belco
Stock pursuant to the terms and conditions set forth herein.
WHEREAS, the Board of Directors of Belco deem it advisable and
generally to the advantage and welfare of Belco's shareholders that the parties
enter into this Agreement pursuant to the terms set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and
obligations set forth herein, it is agreed as follows:
1. Recitals. The above recitals are true, correct and are herein
incorporated by reference.
2. Plan of Reorganization. Xxxxxxx is the owner of 100% of the issued
and outstanding shares of SJI Stock. It is the intention of the parties hereto
that 100% of the SJ1
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Stock shall be acquired by Belco in exchange solely for the Belco Stock which is
voting stock.
3. Exchange of Shares. Subject to the terms and conditions herein,
Xxxxxxx hereby agrees that the SJI Stock shall be exchanged with Belco for the
Belco Stock at the closing of the transactions contemplated herein in a private
transaction exempt from registration under the Securities Act of 1933, as
amended (the "Act") and applicable state securities laws and Belco agrees to
deliver to Xxxxxxx certificates representing the Belco Stock. The parties hereto
acknowledge that it is the intent that the transactions contemplated herein
shall be tax free, pursuant to Section 368 of the Internal Revenue Code of 1986,
as amended. The shares of the Belco Stock shall be issued in such name or names
as may be requested by Xxxxxxx.
4. Closing Date. The closing (the "Closing Date") shall be held on
March 5, 1998, 9a.m, or such other date and time as may be agreed upon by
Belco and Xxxxxxx, by telecopy.
5. Delivery of Shares. Upon execution of this Agreement, Xxxxxxx will
deliver certificates for the SJI Stock duly endorsed and with documentary stamps
affixed at the his expense so as to make Belco the sole owner thereof, free and
clear of all claims and encumbrances, and on the Closing Date delivery of the
certificates representing the 1,200,000 shares of Belco's Common Stock and
4,900,000 shares of Belco's Series A Preferred Stock, on which documentary stamp
taxes will have been paid by Belco, will be made to Xxxxxxx. Time is of the
essence.
6. Belco Subsidiary. Belco has formed a wholly-owned subsidiary, Belco
Systems Technologies Inc., a Florida corporation ("Belco Subsidiary"), of which
1,000 shares of common stock, par value $.001 are presently issued and
outstanding (the "Belco Subsidiary Stock"). Immediately preceding the closing of
the transactions contemplated herein, each of Belco and Xxxxxx Xxxxxxx and
Xxxxxxx Xxxxxxx (collectively, the "Beloyan Family"), shall concurrently take
the following actions:
(a) Belco shall capitalize the Belco Subsidiary with;
(i) all tights and interests in the Technology (as hereinafter
defined) it currently owns, or may at any time in the future own, in connection
with process and products that transmit certain credit card information and
verification safely via telephone lines (the "PRCTT"). For the purposes of this
Agreement, the term "Technology" shall mean all of the trade secrets, know-how,
show-how, inventions, patents pending, including U.S. Patent Applications No.
08/5 12,798 and International Patent Application No. PCTIUS96/12704, as each may
be modified from time to time, contracts, licenses, lab books, formulae,
processes, computer systems, methods, prototypes, discoveries, business methods,
confidential information, expertise, copyrights, trademarks, service marks,
plans, drawings, sketches, prototypes, tooling and information of any nature
whatsoever which relates to the design, manufacture, assembly and sale of the
PRCTT, developed, possessed, conceived or used by Belco relating to the PRCTT
including any modifications, derivations and translations thereof; and
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(ii) $155,000 in cash.
(b) The Beloyan Family shall purchase 490 shares of the Belco
Subsidiary Stock, all cash in the Belco Subsidiary in excess of $100,000 and the
40,000 shares of the common stock of Solucorp Industries Limited (the
"Marketable Securities") owned by Belco in exchange for an aggregate of 666,667
shares of Belco Common Stock currently owned beneficially and of record by the
Beloyan Family, as more fully set forth on Exhibit B attached hereto and
incorporated hereby by such reference. Upon the exchange thereof, the shares of
Belco Subsidiary Stock to be issued to the Beloyan Family shall be fully paid
and non-assessable and the shares of Belco Common Stock tendered in payment
therefor shall be canceled and returned to the treasury of Belco with the status
of authorized but unissued shares.
(c) Xxxxxx Xxxxxxx, Xxxxxxx Xxxxxxx and Xxxx Baradari, the nominee of
International Management Consulting, Inc. ("IMCI"), shall serve as the directors
of the Belco Subsidiary and the Beloyan Family shall manage the Belco
Subsidiary.
(d) Other than the transfer of the cash as set forth in sub-paragraph
(a)(ii) of the Xxxxxxxxx 0, Xxxxx shall have no further or continuing
obligations to provide the Belco Subsidiary with any operating funds, loans,
capital or similar monies, it being the specific representation of Belco and
Xxxxxx Xxxxxxx to Xxxxxxx that the $100,000 in cash remaining in the Belco
Subsidiary after the transaction contemplated in sub-paragraph 6(b) hereof is
sufficient to fund the operations of the Belco Subsidiary, including, but not
limited to, selling, general and administrative expenses.
(e) Notwithstanding the foregoing, Belco acknowledges its obligations
to issue shares of its Common Stock pursuant to that certain Agreement dated
January 16, 1998 by and between Belco and 1MCI, a copy of which is attached as
Exhibit C hereto and incorporated herein by such reference.
(f) Immediately upon the conclusion of the transactions between Belco,
the Belco Subsidiary and the Beloyan Family as contemplated in the Paragraph 6,
the Belco Subsidiary and the Beloyan Family shall enter into that certain Option
Agreement, a copy of which is attached hereto as Exhibit D and incorporated
herein by such reference.
7. Belco Board of Directors. Subsequent to such Closing Date, Xxxxxxx
shall have the right to appoint such additional members to the Board of
Directors at any time and from time to dine as he deems appropriate.
8. Anti-Dilution Provisions.
(a) Giving effect to the transactions contemplated in Paragraph 6
hereof, as well as the split of Belco's Common Stock as contemplated in
Paragraph 11(b)(ii) hereof, the Beloyan Family shall be the record and
beneficial owners of an aggregate of 350,000 shares of Belco's Common
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Stock. In addition, it is the understanding of the parties hereto that
subsequent to the Closing Date, Belco has reserved for future issuance an
aggregate of 266,668 shares of its Common Stock (the "Reserved Stock"). For the
period of 12 months following the Closing Date, should Belco issue more than
300,000 additional shares of its Common Stock in addition to the Reserved Stock
without the prior consent of the Beloyan Family, then Belco shall issue the
Beloyan Family for no charge such number of additional shares of its Common
Stock equal to 10% of any excess over the 300,000 share threshold. For example,
should Belco enter into a transaction with X entity whereby it agreed to issue X
entity 567,000 shares of Belco's Common Stock, and the Beloyan Family did not
consent to such transaction, then upon the issuance of the 567,000 shares to X
entity Belco would issue the Beloyan Family an additional 26,700 shares of Belco
Common Stock, representing 10% of the 267,000 share difference. Notwithstanding
the foregoing, no additional or special voting powers are conferred upon the
Beloyan Family by reason of this anti-dilution provision as to their holdings in
Belco following the Closing Date.
(b) The parties hereto acknowledge their agreement to enter into a
separate agreement subsequent to the Closing Date between Belco, the Belco
Subsidiary and the Beloyan Family regarding the sub-licensing of the Technology
by the Belco Subsidiary to other corporations and limitations involving Belco's
ownership interest in such other corporations.
(c) During the period commencing on the Closing Date and ending on the
first anniversary thereof, in the event the Company should issue additional
shares of its Common Stock, or securities which are convertible into Common
Stock, to an unaffiliated third party in connection with a business combination,
stock or asset purchase, then, upon the written request of Xxxxxxx, the Company
shall immediately issued to Xxxxxxx such number of additional shares of Common
Stock so as to maintain his 85% voting control of the Company, giving effect to
the transactions herein contemplated and assuming the issuance of the Reserved
Securities.
9. Representation of Xxxxxxx. Xxxxxxx hereby makes the following
representations and warranties to Belco, each of which is true as of the date
hereof and will be true as of the Closing Date with the same effect as though
such representations and warranties had been made on the closing date:
(a) Xxxxxxx is the sole shareholder of SJI and there are no warrants,
options or other rights outstanding to acquire any shares of the capital stock
of SJI. The shares of SJI to be transferred by Xxxxxxx to Belco hereunder are
free and clear of all voting trusts, agreements, arrangements, encumbrances,
liens, claims, equities and liabilities of every nature and Xxxxxxx is conveying
clear and unencumbered tide thereto to Belco. The shares of SJI are fully paid
and non-assessable.
(b) This Agreement constitutes the valid and binding obligation of
Xxxxxxx, enforceable against him in accordance with its terms, except that such
enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to creditors rights.
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(c) Xxxxxxx knows of no other person, corporation or firm that owns any
interest in any property, invention, patent, patent application, copyright,
trade secret, service xxxx or trademark used by SJI relating to any product or
process used by SJI or relating in any way to its business except as may be set
forth on Schedule 9(c) attached hereto and incorporated herein by such
reference. Except as set forth on Schedule 9(c), SJI owns or have the rights to
use all those rights presently necessary to the operation of its businesses.
(d) There are no agreements to which Xxxxxxx or SJI is a party that in
any way restrict or infringe upon the business of SJI or the benefit of which
SJI requires or presently has in its business, nor does Xxxxxxx know of any
other agreements that in any way restrict or infringe upon the business of SJI
or the benefit of which SJI requires or presently has in its business.
(e) To the best of his knowledge, the execution and delivery of this
Agreement by Xxxxxxx does not, and the consummation of the transactions
contemplated herein, will not violate or constitute an occurrence of default (or
an event which, with notice or lapse of time or both would constitute a default)
under any provision of, or conflict with, or result in acceleration of any
obligations under, or result in the creation or imposition of any security
interest, lien or other encumbrance, or give rise to a right by any party to
terminate its obligations under any mortgage, deed of trust, conveyance to
secured debt, note, loan, lien, lease, agreement, instrument, order, judgment,
decrees or other arrangement to which Xxxxxxx or SJI is a party or to which he
or it is bound, except as set forth on Schedule 9(e) attached hereto and
incorporated herein by such reference.
(1) Neither the execution nor the delivery of this Agreement, nor the
consummation of the transactions herein contemplated, nor compliance with the
terms hereof, will conflict with or result in a breach of any of the terms,
conditions or provisions of the Articles of Incorporation or Bylaws of SJI as
amended, or any agreement or instrument to which Xxxxxxx or SJI is now a party.
(g) Neither the execution, delivery and performance of this Agreement
nor the consummation of the transactions contemplated hereby will violate any
statue or law or any judgment, decree, order, award, regulation or rule of any
court, governmental authority or arbitration panel applicable to Xxxxxxx or SJI;
or give rise to the right of any termination by any governmental authority of
any license, registration, certificate or right of authority to engage in
business in such places where SJI now does or has a right to engage in business.
(h) Xxxxxxx has heretofore delivered to Belco true and correct copies
of the SJI Financial Statements for the year ended October 31, 1997 and the
three months ended January 31, 1998, copies of which are attached hereto as
Exhibit 9(h) and incorporated herein by such reference. To the best of Xxxxxxx'
knowledge, such financial statements have been prepared in accordance with
generally accepted accounting principles consistently applied. Since January 31,
1998, SJI has (i) no short term or long term debt or other obligations other
than as set forth in the financial statements for which are attached hereto as
Exhibit 9(h), excluding trade payables
5
incurred in the ordinary course of business, (ii) no tax liens or encumbrances
of any nature on its assets, (iii) continued its operations and business as they
are presently conducted, (iv) entered into no employment, consulting or similar
agreements, and (v) not issued or agreed to issue any equity security or any
other securities or obligations of SJI which are convertible into or
exchangeable for such equity securities. Since January 31, 1998, to the best of
his knowledge Xxxxxxx is not aware of any events affecting SJI, including, but
not limited to, a loss of a material customer or contract, which would result in
a reduction in revenues or operating results in the aggregate of greater than
10% for the fiscal year ended October 31, 1998 from those reported for the
fiscal year ended October 31, 1997. Since January 31, 1998 there has not have
been (i) any material adverse change in the business, condition (financial or
otherwise), results of operation, prospects, properties, assets or liabilities
of SJI, (ii) any damage, destruction or loss (whether or not covered by
insurance) affecting SJI's properties, assets or business, (iii) any increase in
the rate of compensation or in bonus payments payable or to become payable to
any of SJI's salaried employees, or (iv) any other event or condition of any
character which may reasonably be expected to have an effect as described in
clauses (i) through (iii) of this Paragraph 9(h).
(i) Except for liability or obligations disclosed or provided for the
in the financial statements attached hereto as Exhibit 9(h), and except for
liability or obligations incurred in the ordinary course of business consistent
with past practices, to the best of Xxxxxxx knowledge, SJI does not have any
liabilities or obligations or any nature, whether absolute, accrued, contingent,
potential or unassented or otherwise, that would be required to be disclosed on
a balance sheet of SJI.
C) Xxxxxxx is acquiring the Belco Stock in a private transaction exempt
from registration under applicable federal and state securities laws, for his
own account and for investment and not with a view to the distribution or resale
of any thereof The certificates representing the Belco Stock shall bear the
following legend pursuant to Rule 144 as promulgated under the Act:
"These securities have not been registered under any state or Federal
securities laws and may not be sold or otherwise transferred or
disposed of except pursuant to an effective registration statement
under any applicable Federal or state securities laws, or an opinion of
counsel satisfactory to counsel to the Company that an exemption 1mm
registration under any applicable Federal or state securities laws is
available."
(k) Except as may be set forth on Schedule 9(k), to the best of
Xxxxxxx' knowledge, SJI has applied for and received all licenses and permits
from all governmental authorities (the "Licenses") used in the business of SJI
which are necessary to permit SJI to conduct its business
6
and operations as currently conducted. No License has been revoked, is subject
to revocation pursuant to a current regulatory review or, to the best of
Xxxxxxx' knowledge, has been challenged or otherwise contested by any person,
except for immaterial deficiencies or other issues noted by regulatory review,
challenge or contest which are being corrected in the ordinary course of
business without material disruption or cost to SJI in respect of such License
or business reasonable related thereto.
(l) To the best of his knowledge, Xxxxxxx and SJI have complied in all
material respects with all federal, state, county and local laws, ordinances,
regulations, inspections, orders, judgements, injunctions, awards or decrees
applicable to SJI.
(m) There is no outstanding order, judgment, injunction, award or
decree of any court, governmental or regulatory body or arbitration tribunal
against or involving Xxxxxxx or SJI in respect of, or in connection with, SJI.
There is no action, suit, claim or legal, administrative or arbitration
proceeding, or, to the best knowledge of Xxxxxxx after due inquiry, any
investigation (whether or not the defense or liabilities in respect thereof are
covered by insurance) pending, or to the best knowledge of Xxxxxxx, after due
inquiry, threatened against or involving SJI or any of its assets. To the best
knowledge of Xxxxxxx, after due inquiry, there is no fact, event or
circumstances that are likely to give rise to any suit, action, claim,
investigation or proceeds that would be required to be disclosed if currently
pending or threatened, other than a termination of exclusive rights to certain
products which is pending between SJI and Swedish Match, AB.
(n) SJI has good and valid title to all the properties and assets of
the type required to be reflected on a balance sheets attached hereto as Exhibit
9(h) which it purports to own, subject to security interests filed by third
parties related to loans with First Tennessee Bank, and those related to the
purchase by SJI of its telephone systems and certain automobiles
(o) SJI has timely filed all tax returns and reports required to be
filed by it, including, where applicable, all federal, state, county and local
income, gross receipts, excise, import, property, franchise, ad valorem,
license, sales, use and withholding tax reports and returns. All returns are
true and correct. To the best of Xxxxxxx' and SJI's knowledge, there is no basis
for any additional claim or assessment.
(p) SJI currently maintain policies of property insurance that provide
coverage in kind and amount reasonably necessary to protect against the risks
inherent or associated with the operation of SJI. All insurance polices are in
full force and effect. There is not any state of facts and no event has occurred
forming the basis for any claim covered by a property, casualty, fidelity,
automobile, general liability, libel or slander, xxxxxxx'x compensation, health
insurance or reinsurance or excess polity that is not fully covered by insurance
or that may be expected to exceed the available limits of liability of the
applicable insurance policies, nor has any carried declined coverage or reserved
its rights to determine its liability to provide coverage to SJI with respect to
any claim or circumstance.
7
(q) SJI has complied in all material respect with all laws, including
applicable rules and regulations, or all applicable federal, state, local and
foreign governments and their respective agencies concerning the environment,
public health and safety and employee health and safety, and no complaint,
action, suit, proceeding, hearing, investigation, claim, demand or notice has
been filed or commenced against SJI alleging any failure to comply with any such
law or regulation, including, without limitation, any law of any government or
agency concerning release or threatened release of hazardous substances, public
health and safety or pollution or protection of the environment.
10. Representations of Belco. Belco hereby makes the following
representations and warranties to Xxxxxxx, each of which is true as of the date
hereof and will be true as of the closing date with the same effect as though
such representations and warranties had been made on the closing date:
(a) Belco is a corporation duly organized and existing under and by
virtue of the laws of the Stare of Delaware, and is in good standing under the
laws thereof, and is duly qualified to transact business as a foreign
corporation and is in good standing under the laws of each jurisdiction wherein
the location of its properties or the character of its operations make such
qualification necessary, except where the failure to be so qualified would not
have a material adverse effect on the Company. The shares of Belco Stock to be
issued to Xxxxxxx hereunder are free and clear of all voting trusts, agreements,
arrangements, encumbrances, liens, claims, equities and liabilities of every
nature and Belco is conveying clear and unencumbered title thereto to Xxxxxxx.
The shares of Belco Stock have been duly authorized and when delivered pursuant
to the terms of this Agreement, will be fully paid and non-assessable.
(b) This Agreement constitutes the valid and binding obligation of
Belco, enforceable against it in accordance with its terms, except that such
enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to creditors rights.
(c) Belco knows of no other person, corporation or firm that owns any
interest in any property, invention, patent, patent application, copyright,
trade secret, service xxxx or trademark used by Belco relaxing to any product or
process used by Belco or relating in any way to its business except as may be
set forth on Schedule 10(c) attached hereto and incorporated herein by such
reference. Belco owns or have the rights to use all those rights presently
necessary to the operation of its businesses.
(d) There are no agreements to which Belco is a party that in any way
restrict or infringe upon the business of Belco or the benefit of which Belco
requires or presently has in its business, nor does Belco know of any other
agreements that in any way restrict or infringe upon the business of Belco or
the benefit of which Belco requires or presently has in its business.
(e) To the best of its knowledge, the execution and delivery of this
Agreement by Belco
8
does not, and the consummation of the transactions contemplated herein, will not
violate or constitute an occurrence of default (or an event which, with notice
or lapse of time or both would constitute a default) under any provision of, or
conflict with, or result in acceleration of any obligations under, or result in
the creation or imposition of any security interest, lien or other encumbrance,
or give rise to a right by any party to terminate its obligations under any
mortgage, deed of trust, conveyance to secured debt, note, loan, lien, lease,
agreement, instrument, order, judgment, decrees or other arrangement to which
Belco is a party or to which he or it is bound, except as set forth on Schedule
10(e) attached hereto and incorporated herein by such reference.
(t) Neither the execution nor the delivery of this Agreement, nor the
consummation of the transactions herein contemplated, nor compliance with the
terms hereof, will conflict with or result in a breach of any of the terms,
conditions or provisions of the Certificate of Incorporation or Bylaws of Belco
as amended, or any agreement or instrument to which Belco is now a party.
(g) Neither the execution, delivery and performance of this Agreement
nor the consummation of the transactions contemplated hereby will violate any
statue or law or any judgment, decree, order, award, regulation or rule of any
court, governmental authority or arbitration panel applicable to Belco; or give
rise to the right of any termination by any governmental authority of any
license, registration, certificate or right of authority to engage in business
in such places where Belco now does or has a right to engage in business.
(h) Belco has heretofore delivered to Xxxxxxx true and correct copies
of Belco's Audited Financial Statements for the period commencing on August 17,
1995 (date of inception) to December 31, 1997, copies of which are attached
hereto as Exhibit 10(h) and incorporated herein by such reference. Such
financial statements have been prepared in accordance with generally accepted
accounting principles consistently applied. Since December 31, 1997, Belco has
(i) no short term or long term debt or other obligations other than as set forth
in the financial statements which are attached hereto as Exhibit 10(h),
excluding trade payables incurred in the ordinary course of business, (ii) no
tax liens or encumbrances of any nature on its assets, (iii) continued its
operations and business as they are presently conducted, (iv) entered into no
employment, consulting or similar agreements, and (v) not issued or agreed to
issue any equity security or any other securities or obligations of Belco which
are convertible into or exchangeable for such equity securities, other than
pursuant to the IMCI agreement, a copy of which is attached hereto as Exhibit C.
Since December 31, 1997 Belco is not aware of any events affecting Belco,
including, but not limited to, a loss of a material customer or contract, which
would result in a reduction in revenues or operating results in the aggregate of
greater than 10% for the fiscal year ended December 31, 1998 from those reported
for the fiscal year ended December 31, 1997. Since December 31, 1997 there has
not have been (i) any material adverse change in the business, condition
(financial or otherwise), results of operation, prospects, properties, assets or
liabilities of Belco, (ii) any damage, destruction or loss (whether or not
covered by insurance) affecting Belco's properties, assets or business, (iii)
any increase in the rate of compensation or in bonus payments payable or to
become payable to any of Belco's salaried employees, or (iv) any other
9
event or condition of any character which may reasonably be expected to have an
effect as described in clauses (i) through (iii) of this Paragraph 10(h).
(i) Except for liability or obligations disclosed or provided for the
in the financial statements attached hereto as Exhibit 10(h), and except for
liability or obligations incurred in the ordinary course of business consistent
with past practices, Belco does not have any liabilities or obligations or any
nature, whether absolute, accrued, contingent, potential or unassented or
otherwise, that would be required to be disclosed on a balance sheet of Belco.
(j) Belco is acquiring the SJI Stock from Xxxxxxx in a private
transaction exempt from registration under applicable federal and state
securities laws, for his own account and for investment and not with a view to
the distribution or resale of any thereof. The certificates representing the SJI
Stock acquired by Belco shall bear the following legend pursuant to Rule 144 as
promulgated under the Act:
"These securities have not been registered under any state or Federal
securities laws and may not be sold or otherwise transferred or
disposed of except pursuant to an effective registration statement
under any applicable Federal or state securities laws, or an opinion of
counsel satisfactory to counsel to the Company that an exemption from
registration under any applicable Federal or state securities laws is
available."
(k) Except as may be set forth on Schedule 10(k), to the best of its
knowledge, Belco has applied for and received all licenses and permits from all
governmental authorities (the "Licenses") used in the business of Belco which
are necessary to permit Belco to conduct its business and operations as
currently conducted. No License has been revoked, is subject to revocation
pursuant to a current regulatory review or, to the best of Belco's knowledge,
has been challenged or otherwise contested by any person, except for immaterial
deficiencies or other issues noted by regulatory review, challenge or contest
which are being corrected in the ordinary course of business without material
disruption or cost to Belco in respect of such License or business reasonable
related thereto.
(l) To the best of its knowledge, Belco has complied in all material
respects with all federal, state, county and local laws, ordinances,
regulations, inspections, orders, judgements, injunctions, awards or decrees
applicable to Belco.
(m) There is no outstanding order, judgment, injunction, award or
decree of any court, governmental or regulatory body or arbitration tribunal
against or involving Belco. There is no action, suit, claim or legal,
administrative or arbitration proceeding, or, to the best knowledge of Belco
after due inquiry, any investigation (whether or not the defense or liabilities
in respect thereof are covered by insurance) pending, or to the best knowledge
of Belco, after due inquiry, threatened against or involving Belco or any of its
assets. To the best knowledge of Belco, after due inquiry, there is no fact,
event or circumstances that are likely to give rise to any suit, action,
10
claim, investigation or proceeds that would be required to be disclosed if
currently pending or threatened.
(n) Belco has good and valid title to all the properties and assets of
the type required to be reflected on a balance sheets attached hereto as Exhibit
10(h) which it purports to own and all such properties and assets are free and
clear of all title defects or objections, liens, claims, charges, security
interests or other encumbrances of any nature whatsoever.
(o) Belco has timely filed all tax returns and reports required to be
filed by it, including, where applicable, all federal, state, county and local
income, gross receipts, excise, import, property, franchise, ad valorem,
license, sales, use and withholding tax reports and returns. All returns are
true and correct. To the best of Belco's knowledge, there is no basis for any
additional claim or assessment.
(p) Belco has complied in all material respect with all laws, including
applicable rules and regulations, or all applicable federal, state, local and
foreign governments and their respective agencies concerning the environment,
public health and safety and employee health and safety, and no complaint,
action, suit, proceeding, hearing, investigation, claim, demand or notice has
been filed or commenced against Belco alleging any failure to comply with any
such law or regulation, including, without limitation, any law of any government
or agency concerning release or threatened release of hazardous substances,
public health and safety or pollution or protection of the environment.
11. Conditions of Closing. All of the obligations of the parties under
this Agreement are subject to the fulfillment, prior to or on the closing date
set forth in Section 4 of this Agreement, of each of the following conditions:
(a) Delivery by Xxxxxxx of the following:
(i) Certificates for the SJI Stock described in Section 5
hereof, endorsed in blank; and
(ii) A certificate of Xxxxxxx that all representations and
warranties made by him contained in Section 9 of this Agreement shall be true on
and as of the closing date set forth in Section 4 of this Agreement as though
such representations and warranties were made at and as of such date, and shall
be true on and as of said closing date as though such representations and
warranties were made at and as of such date.
(b) Delivery by Belco of the following:
(i) Evidence of the filing of the Certificate of Amendment to
Belco's Certificate of Incorporation creating a series of 10,000,000 shares of
blank check preferred stock and designating a series consisting of 4,900,000
shares of Series A Preferred Stock, which such Series
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A Preferred Stock is a component of the Belco Stock;
(ii) Evidence of the subsequent filing of the Certificate of
Amendment to Belco's Certificate of Incorporation effecting a 3:1 stock split of
Belco's issued and outstanding common stock and notification of such action to
Belco's shareholders;
(iii) Evidence of the formation of the Belco Subsidiary and
the conclusion of the transactions related thereto, all as set forth in Section
6 hereof;
(iv) Delivery of the resignation of Xxxxxx Xxxxxxx as an
officer and director of Belco to be effective on the Closing Date;
(v) Delivery of the resignation of Xxxxxxx Xxxxxxx as an
officer and director of Belco to be effective on the Closing Date;
(vi) Written consent of the Belco Board of Directors electing
X. X. Xxxxxxx and Xxx Xxxxxxx to the Board of Belco effective on the Closing
Date and appointing X. X. Xxxxxxx President of Belco on the Closing Date;
(vii) Certificates for the 1,200,000 shares of Belco Common
Stock and 4,900,000 shares of Belco Series A Preferred Stock described in
Section 5 hereof; and
(viii) A certificate of Belco that all representations and
warranties made by it contained in Section 10 of this Agreement shall be true on
and as of the closing date set forth in Section 4 of this Agreement as though
such representations and warranties were made at and as of such date, and shall
be true on and as of said closing date as though such representations and
warranties were made at and as of such date.
12. Investment Purpose. Xxxxxxx represents and warrants that he is
acquiring the Belco Stock to be delivered upon the execution of this Agreement
solely for investment purposes and not for distribution or resale.
Sales of such stock may be made only as permitted by Rule 145(d)
of the Act. Xxxxxxx further acknowledges that he has been advised by Belco that
the Belco Stock has not been registered under the Act and that Belco has no
obligation to so register.
13. Representations to Survive Closing. All the terms, conditions,
warranties, representations and guarantees contained in this Agreement shall
survive delivery of the shares of SJI Stock and the Belco Stock transferred as
the closing hereunder and any investigations made by or on behalf of Belco or
Xxxxxxx at any time.
14. Miscellaneous.
(a) Each of the parties hereto will bear its own legal fees
and other expenses in connection with the transactions contemplated by this
Agreement.
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(b) If any term or provision of this Agreement or any exhibits
thereto or the application thereof to any person, property or circumstances
shall to any extent be invalid or unenforceable, the remainder of this Agreement
or the exhibits thereto or the application or such term or provision to person,
property or circumstances other than those as to which it is invalid and
unenforceable shall not be affected thereby, and each term and provision of this
Agreement or the exhibits thereto shalt be valid and enforced to the fullest
extent permitted by law.
(c) Any notices, requests or consents hereunder shall be deemed given,
and any instruments delivered, two days after they have been mailed by first
class mail, postage prepaid, or upon receipt if delivered personally or by
facsimile transmission, as follows:
If to Belco: 000 Xxxx Xxxxxx
Xxxx Xxxxxx Xxx X-00x
Xxxxxxxxx, XX 00000
If to Xxxxxxx: 63l2 Xxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
except that any of the foregoing may from time to time by written notice to the
other designate another address which shall thereupon become its effective
address for the purposes of this paragraph.
(d) This Agreement, including the exhibits and documents
referred to herein which are a part hereof, contain the entire understanding of
the parties hereto with respect to the subject matter and may be amended only by
a written instrument executed by the parties hereto or their successors or
assigns. Any paragraph headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
(e) This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
(f) This Agreement shall inure to the benefit of and be binding in upon
the parties hereto and their respective successors but shall not inure to the
benefit of anyone other than the parties signing this Agreement and their
respective successors.
(g) This Agreement is governed by, interpreted under and construed in
all respects in accordance with the substantive laws of the State of Florida,
without regard to the conflicts of law provision thereof, and irrespective of
the place of domicile or resident of the party. In the event of a controversy
arising out of the interpretation, construction, performance or breach of this
agreement, the parties hereby agree and consent to the jurisdiction and venue
of the Courts of the State of Florida, or the United States District Court for
the Southern District of Florida; and
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further agree and consent that personal service of process in any such action or
preceding outside the State of Florida shall be tantamount to service in person
in Florida.
(h) The parties have either (1) been represented by independent legal
counsel in connection with the negotiations and execution of this Agreement, or
(ii) each has had the opportunity to obtain independent legal counsel, has been
advised that it is in their best interests to do so and by execution of this
Agreement has waive the right.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
Belco Systems Technologies, Inc., a
Delaware corporation
By: /s/ Xxxxxx Xxxxxxx
-------------------------------
Xxxxxx Xxxxxxx,
President
/s/ X. X. Xxxxxxx
-------------------------------
X. X. Xxxxxxx
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