EXHIBIT 10.1
EXCHANGE AGREEMENT
BY AND AMONG
EZCOMM ENTERPRISES, INC.,
XXXXXX SCIENCE INC.,
AND CERTAIN SHAREHOLDERS OF XXXXXX SCIENCE INC.
DATED AS OF SEPTEMBER 1, 2005
EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT (the "AGREEMENT") is made and entered into as
of September 1, 2005, by and among Ezcomm Enterprises, Inc., a Delaware
corporation (the "COMPANY"); Xxxxxx Science Inc., a Korean corporation
("EUGENE"); and each of the shareholders of Eugene who may, from time to time,
execute a counterpart signature page to this Agreement (each, a "SHAREHOLDER"
and collectively, the "SHAREHOLDERS").
RECITALS
A. The Shareholders own outstanding shares of Eugene (the "XXXXXX
SHARES").
B. The parties desire to have the Company combine the respective
businesses of the Company and Eugene by means of the acquisition by the Company
of the Xxxxxx Shares and the acquisition by the Shareholders of equity
securities in the Company, in exchange for the consideration and on the terms
and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
ARTICLE I
EXCHANGE
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1.1 GENERAL. At the Closing and subject to and upon the terms and
conditions of this Agreement: (i) the Shareholders agree to contribute,
transfer, assign and deliver to the Company, and the Company agrees to acquire
from the Shareholders, all of the outstanding Eugene Shares owned by the
Shareholders as specifically set forth on SCHEDULE 1.1 hereto; and (ii) the
Company agrees to issue to the Shareholders, and the Shareholders agree to
acquire from the Company, that number of shares of Common Stock, par value
$0.0001 per share, of the Company (the "COMPANY SHARES") as is determined
pursuant to SECTION 1.3 below. The transactions set forth above and the other
transactions contemplated hereunder shall be referred to herein as the
"TRANSACTION" or the "TRANSACTIONS".
1.2 CLOSING. Unless this Agreement shall have been terminated pursuant
to ARTICLE IX hereof, the closing of the Transaction (the "CLOSING") shall take
place at the offices of Xxxxxx Xxxxxxxx & Markiles, LLP, 00000 Xxxxxxx
Xxxxxxxxx, Xxxxx 000, Xxxxxx, XX 00000 at a time and date to be specified by the
parties, which shall be no later than the third business day after the
satisfaction or waiver of the conditions set forth in ARTICLE VII, or at such
other time, date and location as the parties hereto agree in writing (the
"CLOSING DATE").
1.3 CONSIDERATION. In exchange for a U.S. Dollar amount equal to three
(3) Korean Won per Eugene Share and the additional agreements of the Company set
forth herein, the Shareholders shall transfer all of the Xxxxxx Shares to the
Company. In exchange for a U.S. Dollar amount equal to .325603 Korean Won per
Company Share and the additional agreements of the Shareholders set forth
herein, the Company shall issue to each Shareholder 9.213678 Company Shares (the
"COMPANY SHARE RATIO") multiplied by the number of Eugene Shares acquired by the
Company under this Agreement from such Shareholder. The Company covenants and
agrees that, assuming all the holders of Eugene's outstanding shares transfer
their Eugene Shares to the Company pursuant to this Agreement, there will be
353,688,000 shares of capital stock of the Company issued and outstanding, and
the Company Shares issued under this Agreement shall represent 90% of the issued
and outstanding shares of capital stock of the Company, immediately following
the Closing. The cash and shares to be transferred as set forth above shall be
delivered to Eugene as custodian and attorney-in-fact for the Shareholders,
pursuant to a Custody Agreement, Share Agreement and a Power-of-Attorney as
prepared by Korean counsel in accordance with Korean law and duly executed by
the Shareholders.
1.4 NO FRACTIONAL SHARES. No fractional Company Shares shall be issued
in the Transaction. If the number of shares a holder of Eugene Shares holds
immediately prior to the Closing multiplied by the Company Share Ratio would
result in the issuance of a fractional Company Share, that product will be
rounded down to the nearest whole number of Company Shares if it is less than
the fraction of one-half (.5) of one Company Share or rounded up to the nearest
whole number of shares of Common Stock if the said product is equal to or
greater than the fraction of one-half (.5) of one Company Share.
1.5 DELIVERY OF TRANSFER DOCUMENTS. At the Closing, the Company shall
deliver certificates representing the Company Shares to the Shareholders and
each Shareholder shall deliver an assignment or other acceptable instrument of
transfer of the Xxxxxx Shares owned by such Shareholder, duly executed by such
Shareholder, together with (i) all such other documents as may be reasonably
requested to vest in the Company good and marketable title to the Xxxxxx Shares
free and clear of any and all Liens (as defined in SECTION 2.3 hereof) and (ii)
all other reasonably necessary documentary stamps. Eugene shall record the
transfer of the Xxxxxx Shares described in this SECTION 1.5 on the Xxxxxx stock
transfer books.
1.6 ISSUANCE OF CERTIFICATES REPRESENTING COMPANY SHARES. At the
Closing, the Company will issue Company Shares to the Shareholders as provided
in SECTION 1.3 above (subject to SECTION 1.4). Company Shares, when issued
hereunder, shall be restricted shares and may not be sold, transferred or
otherwise disposed of by the Shareholders without registration under the
Securities Act, or an available exemption from registration under the United
Stated Securities Act of 1933, as amended (the "SECURITIES ACT"). The
certificates representing Company Shares will contain the appropriate
restrictive legends. At or prior to Closing, the Company may require the
Shareholders to execute and deliver an investment representation letter or
similar document containing such representations as may, in the Company's
reasonably opinion, be required to comply with applicable provisions of the
Securities Act.
1.7 REMAINING EUGENE SHARES.
(a) If less than all the outstanding Eugene Shares are
transferred to the Company at the Closing (any such Eugene Shares are referred
to as the "REMAINING EUGENE SHARES"), then promptly following the Closing the
Company will deposit in trust with Eugene as custodian for the Shareholders, the
cash consideration payable and the Company Shares issuable pursuant to SECTION
1.3 to the holders of the Remaining Eugene Shares (the "REMAINING SHARE FUND").
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(b) No dividends or other distributions declared or made after
the date of this Agreement with respect to Company Shares with a record date
after the Closing Date will be paid to the holders of any Remaining Eugene
Shares until the holders of record of such Remaining Eugene Shares shall
transfer such Remaining Eugene Shares to the Company and acquire such Company
Shares from the Company in accordance with the terms hereof. Subject to
applicable law, promptly following the transfer of any such Remaining Eugene
Shares and the acquisition of the Company Shares, Eugene, as custodian, shall
deliver to the record holders thereof, without interest, certificates
representing the Company Shares issuable to such holders against delivery of the
applicable consideration therefore.
(c) Any portion of the Remaining Share Fund which remains
undistributed for one (1) year after the Closing Date shall be delivered to the
Company, upon demand of the Company, and any Shareholders who have not
theretofore complied with the provisions of this SECTION 1.7 shall thereafter
look only to the Company for the Company Shares to which they are entitled
pursuant hereto.
1.8 TAX CONSEQUENCES. It is intended by the parties hereto that for
United States income tax purposes, the contribution and transfer of the Xxxxxx
Shares by the Shareholders to the Company in exchange for Company Shares
constitutes a tax-deferred exchange within the meaning of Section 351 of the
Code.
1.9 TAKING OF NECESSARY ACTION; FURTHER ACTION. If, at any time after
the Closing, any further action is necessary or desirable to carry out the
purposes of this Agreement, including qualifying the Transaction as a
tax-deferred exchange within the meaning of Section 351 of the Code, and to vest
the Company with full right, title and possession to Eugene Shares, the parties
shall take all such lawful and necessary action.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS
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Each Shareholder for himself, herself or itself only, and not with
respect to any other Shareholder, hereby severally represents and warrants to,
and covenants with, the Company with respect to such Shareholder as follows:
2.1 OWNERSHIP OF INTERESTS. Each Shareholder is both the record and
beneficial owner of the Xxxxxx Shares set forth beside such Shareholder's name
on SCHEDULE 1.1 hereto. Each Shareholder is not the record or beneficial owner
of any other Eugene Shares. The information set forth on SCHEDULE 1.1 with
respect to each Shareholder is accurate and complete.
2.2 AUTHORITY. Each Shareholder that is a natural person has full power
and authority and is competent to (i) execute, deliver and perform this
Agreement, and each ancillary document which each such Shareholder has executed
or delivered or is to execute or deliver pursuant to this Agreement, and (ii)
carry out each such Shareholder's obligations hereunder and thereunder, without
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the need for any Governmental Action/Filing. The execution, delivery and
performance by each Shareholder of this Agreement and each ancillary document
does not and will not conflict with, result in a breach of, or constitute a
default or require a consent or action under, any agreement or other instrument
to or by which such Shareholder is a party or is bound or to which any of the
Xxxxxx Shares of such Shareholder are subject, or, to such Shareholder's
knowledge, any Legal Requirement to which such Shareholder is subject, or result
in the creation of any Lien on the Xxxxxx Shares. This Agreement, and each
Shareholder's ancillary documents to be executed and delivered by such
Shareholder at the Closing, has been duly executed and delivered by such
Shareholder (and each ancillary document to be executed and delivered by such
Shareholder at or after the Closing will be duly executed and delivered by such
Shareholder), and this Agreement constitutes, and each ancillary document, when
executed and delivered by such Shareholder will constitute, and assuming the due
authorization, execution and delivery thereof by the other parties hereto and
thereto, as applicable, such Shareholder's legal, valid and binding obligation,
enforceable against such Shareholder in accordance with its terms, except as may
be limited by bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors' rights generally and by general
principles of equity and public policy. For purposes of this Agreement, (x) the
term "GOVERNMENTAL Action/Filing" shall mean any franchise, license, certificate
of compliance, authorization, consent, order, permit, approval, consent or other
action of, or any filing, registration or qualification with, any federal,
state, municipal, foreign or other governmental, administrative or judicial
body, agency or authority, and (y) the term "LEGAL REQUIREMENTS" means any
federal, state, local, municipal, foreign or other law, statute, constitution,
principle of common law, resolution, ordinance, code, edict, decree, rule,
regulation, ruling or requirement issued, enacted, adopted, promulgated,
implemented or otherwise put into effect by or under the authority of any
Governmental Entity (as defined in SECTION 3.4(b)), and all requirements set
forth in applicable Contracts (as defined in SECTION 3.16).
2.3 TITLE TO SHARES. Each Shareholder has and shall transfer to the
Company at the Closing, good and marketable title to the Xxxxxx Shares shown as
owned of record by such Shareholder as set forth on SCHEDULE 1.1 to this
Agreement, free and clear of all Liens.
2.4 PRE-EMPTIVE AND CONVERSION RIGHTS. At Closing, no Shareholder has
any pre-emptive rights or rights to acquire any Eugene Shares that have not been
waived or exercised.
2.5 ACQUISITION OF COMPANY SHARES FOR INVESTMENT.
(a) Each Shareholder is acquiring Company Shares for
investment for such Shareholder's own account and not as a nominee or agent, and
not with a view to the resale or distribution of any part thereof, and each
Shareholder has no present intention of selling, granting any participation in,
or otherwise distributing the same, except as may be permitted under Regulation
S of the Securities Act. Each Shareholder further represents that he, she or it
does not have any contract, undertaking, agreement or arrangement with any
person to sell, transfer or grant participation to such person or to any third
person, with respect to any of the Company Shares, except as may be permitted
under Regulation S of the Securities Act.
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(b) Each Shareholder understands that the Company Shares are
not registered under the Securities Act, that the issuance of the Company Shares
to the Shareholders is intended to be exempt from registration under the
Securities Act pursuant to either Section 4(2) thereof or Regulation S
promulgated thereunder, and that the Company's reliance on such exemption is
predicated on the Shareholder's representations set forth herein and in the
investor representation letter to be executed and delivered to the Company by
each Shareholder pursuant hereto. Each Shareholder represents and warrants that:
(i) he, she or it is either an "accredited investor" as that term is defined in
Rule 501(a) of Regulation D under the Act or not a "U.S. person" as that term is
defined in Rule 902(k) of Regulation S under the Act, (ii) he, she or it can
bear the economic risk of his, her or its respective investments, and (iii) he,
she or it possesses such knowledge and experience in financial and business
matters that he is capable of evaluating the merits and risks of the investment
in the Company Shares.
(c) Each Shareholder acknowledges that neither the U.S.
Securities and Exchange Commission ("SEC"), nor the securities regulatory body
of any state or other jurisdiction, has received, considered or passed upon the
accuracy or adequacy of the information and representations made in this
Agreement.
(d) Each Shareholder acknowledges that he, she or it has
carefully reviewed such information as such Shareholder has deemed necessary to
evaluate an investment in the Company Shares. To the full satisfaction of each
Shareholder, he, she or it has been furnished all materials requested relating
to the Company and the issuance of the Company Shares hereunder, and each
Shareholder has been afforded the opportunity to ask questions of the Company's
representatives to obtain any information necessary to verify the accuracy of
any representations or information made or given to the Shareholder.
Notwithstanding the foregoing, nothing herein shall derogate from or otherwise
modify the representations and warranties of the Company set forth in this
Agreement, on which each of the Shareholder have relied in agree to enter into
the transactions set forth in this Agreement.
(e) Each Shareholder understands that the Company Shares
issued hereunder may not be sold, transferred, or otherwise disposed of without
registration under the Securities Act or an exemption therefrom, and that in the
absence of an effective registration statement covering such Company Shares or
any available exemption from registration under the Securities Act, the Company
Shares may have to be held indefinitely. Each Shareholder that is not a U.S.
person (as defined in Regulation S under the Securities Act), understands that
the Company Shares have not and will not be registered under the Securities Act
and, prior to the first anniversary date of the Closing may not be offered or
sold within the United States or to, or for the account or benefit of, U.S.
persons (as defined in Regulation S under the Securities Act) except in
accordance with the provisions of Rule 903 or Rule 904 of Regulation S under the
Securities Act or pursuant to an exemption from the registration requirements of
the Securities Act. Each Shareholder agrees not to engage in hedging
transactions involving the Company Shares except in compliance with the
Securities Act.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF XXXXXX
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Xxxxxx hereby represents and warrants to the Company as follows:
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3.1 ORGANIZATION AND QUALIFICATION. Eugene is a corporation duly
incorporated, validly existing and in good standing under the laws of
jurisdiction of its incorporation and has the requisite power and authority to
own, lease and operate its assets and properties and to carry on its business as
it is now being or currently planned by Eugene to be conducted. To its
knowledge, Eugene is in possession of all franchises, grants, authorizations,
licenses, permits, easements, consents, certificates, approvals and orders
("APPROVALS") necessary to own, lease and operate the properties it purports to
own, operate or lease and to carry on its business as it is now being conducted,
except where the failure to have such Approvals could not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect (as
defined in SECTION 10.2(b)) on Eugene. Complete and correct copies of the
articles of incorporation and bylaws, or similar charter documents (collectively
referred to herein as "CHARTER DOCUMENTS") of Eugene, as amended and currently
in effect, have been made available to the Company. Eugene is not in violation
of any of the provisions of the Xxxxxx Charter Documents.
3.2 CAPITALIZATION. At the close of business on the business day prior
to the date hereof, SCHEDULE 1.1 hereto sets forth all of the outstanding Eugene
Shares. All Eugene Shares on SCHEDULE 1.1 have been validly issued, fully paid
and are nonassessable. Except as set forth in SCHEDULE 1.1, at the Closing there
will be no outstanding securities, convertible securities, options, warrants or
derivative securities, and there are no agreements or commitments obligating
Eugene to issue or grant any of the foregoing, including any pre-emptive or
similar rights.
3.3 AUTHORITY RELATIVE TO THIS AGREEMENT. Eugene has all necessary
power and authority to execute and deliver this Agreement and to perform its
obligations hereunder and, to consummate the transactions contemplated hereby
(including the Transaction). The execution and delivery of this Agreement and
the consummation by Eugene of the transactions contemplated hereby (including
the Transaction) have been or will be prior to the Closing duly and validly
authorized by all necessary action on the part of Eugene (including the approval
by its board of directors and shareholders), and no other proceedings on the
part of Eugene are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Eugene and, assuming the due authorization, execution
and delivery thereof by the other parties hereto, constitutes the legal and
binding obligation of Eugene, enforceable against Eugene in accordance with its
terms, except as may be limited by bankruptcy, insolvency, reorganization or
other similar laws affecting the enforcement of creditors' rights generally and
by general principles of equity and public policy.
3.4 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by the Xxxxxx
does not, and the performance of this Agreement by Eugene shall not, (i)
conflict with or violate the Eugene's Charter Documents, (ii) to its knowledge,
conflict with or violate any Legal Requirements, or (iii) result in any breach
of or constitute a default (or an event that with notice or lapse of time or
both would become a default) under, or materially impair Eugene's rights or
alter the rights or obligations of any third party under, or give to others any
rights of termination, amendment, acceleration or cancellation of, or result in
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the creation of a lien or encumbrance on any of the properties or assets of
Eugene pursuant to, any Xxxxxx Material Contract (as defined below), except,
with respect to clauses (ii) or (iii), for any such conflicts, violations,
breaches, defaults or other occurrences that would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on Eugene.
(b) The execution and delivery of this Agreement by Eugene
does not, and the performance of its obligations hereunder will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any court, administrative agency, commission, governmental or regulatory
authority, domestic or foreign (a "GOVERNMENTAL ENTITY"), except (i) for
applicable requirements, if any, of applicable securities laws and the rules and
regulations thereunder, and appropriate documents with the relevant authorities
of other jurisdictions in which Eugene is qualified to do business, and (ii)
where the failure to obtain such consents, approvals, authorizations or permits,
or to make such filings or notifications, would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on Xxxxxx
or, after the Closing, the Company, or prevent consummation of the Transaction
or otherwise prevent the parties hereto from performing their obligations under
this Agreement.
3.5 COMPLIANCE. To the knowledge of Eugene, it has complied with and is
not in violation of any Legal Requirements with respect to the conduct of its
business, or the ownership or operation of its business, except for failures to
comply or violations which, individually or in the aggregate, have not had and
are not reasonably likely to have a Material Adverse Effect on Eugene. To
Eugene's knowledge, the businesses and activities of Eugene have not been and
are not being conducted in violation of any Legal Requirements. Eugene is not in
default or violation of any term, condition or provision of any applicable
Charter Documents of Xxxxxx or Xxxxxx Material Contracts to which Eugene is a
party. To Eugene's knowledge, no written notice of non-compliance with any Legal
Requirements relating or with respect to the business of Eugene has been
received by Eugene (and Eugene has no knowledge of any material such notice
delivered to any other Person).
3.6 FINANCIAL STATEMENTS. Eugene has provided to the Company a correct
and complete copy of the audited financial statements (including, in each case,
any related notes thereto) of Eugene for the fiscal year ended December 31,
2004, which statements were prepared in accordance with generally accepted
accounting principles of the United States ("U.S. GAAP") applied on a consistent
basis throughout the period involved (except as may be indicated in the notes
thereto), and such statements fairly present in all material respects the
financial position of Eugene at the date thereof and the results of its
operations and cash flows for the period indicated, and does not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading. To Eugene's
knowledge, the books of account and other financial records of Eugene have been
maintained in accordance with good business practice.
3.7 NO UNDISCLOSED LIABILITIES. Eugene has no liabilities individually
in excess of $50,000 and in the aggregate in excess of $100,000 (absolute,
accrued, contingent or otherwise) of a nature required to be disclosed on a
balance sheet or in the related notes to the financial statements prepared in
accordance with U.S. GAAP which are, individually or in the aggregate, material
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to the business, results of operations or financial condition of Eugene, except:
(i) liabilities provided for in or otherwise disclosed in the balance sheets of
Eugene as of June 30, 2005, (ii) such liabilities arising in the ordinary course
of Eugene's business since June 30, 2005, and (iii) liabilities that would not
have a Material Adverse Effect on Eugene.
3.8 LITIGATION. There are no claims, suits, actions or proceedings
pending, or to the knowledge of Eugene threatened against Eugene, before any
court, governmental department, commission, agency, instrumentality or
authority, or any arbitrator that seeks to restrain or enjoin the consummation
of the transactions contemplated by this Agreement or which could reasonably be
expected, either individually or in the aggregate with all such claims, actions
or proceedings, to have a Material Adverse Effect on Eugene or have a Material
Adverse Effect on the ability of the parties hereto to consummate the
Transaction.
3.9 LABOR MATTERS. Eugene is not a party to any collective bargaining
agreement or other labor union contract applicable to persons employed by Eugene
nor does Eugene know of any activities or proceedings of any labor union to
organize any such employees.
3.10 RESTRICTIONS ON BUSINESS ACTIVITIES. To Eugene's knowledge there
is no agreement, commitment, judgment, injunction, order or decree binding upon
Xxxxxx or to which Eugene is a party which has or could reasonably be expected
to have the effect of prohibiting or materially impairing any business practice
of Eugene, any acquisition of property by Eugene or the conduct of business by
Eugene as currently conducted other than such effects, individually or in the
aggregate, which have not had and could not reasonably be expected to have a
Material Adverse Effect on Eugene.
3.11 TITLE TO PROPERTY.
(a) To its knowledge, Eugene owns and has good and marketable
title to all its personal property and other property and assets of Eugene
(other than real property) ("PERSONAL PROPERTY") owned, used or held for use in
connection with the business of Eugene, and all such assets and properties are
in each case held free and clear of all Liens, except for Liens disclosed in the
financial statements of Eugene or which Liens would not have, individually or in
the aggregate, a Material Adverse Effect on such property or on the present or
contemplated use of such property in the businesses of Eugene.
(b) To Eugene's knowledge, all leases pursuant to which Eugene
leases from others material real or personal property are valid and effective in
accordance with their respective terms, and there is not, under any of such
leases, any existing material default or event of default of Xxxxxx or, to
Eugene's knowledge, any other party (or any event which with notice or lapse of
time, or both, would constitute a material default), except where the lack of
such validity and effectiveness or the existence of such default or event of
default could not reasonably be expected to have a Material Adverse Effect on
Eugene.
3.12 TAXES.
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(a) DEFINITION OF TAXES. For the purposes of this Agreement,
"TAX" or "TAXES" refers to any and all national, federal, state, local, foreign
or other taxes, including, without limitation, gross receipts, income, profits,
sales, use, occupation, value added, ad valorem, transfer, franchise,
withholding, payroll, recapture, employment, excise and property taxes,
assessments, governmental charges and duties together with all interest,
penalties and additions imposed with respect to any such amounts and any
obligations under any agreements or arrangements with any other person with
respect to any such amounts and including any liability of a predecessor entity
for any such amounts.
(b) TAX RETURNS AND AUDITS. To Eugene's knowledge:
(i) Eugene has timely filed all federal, state, local
and foreign returns, estimates, information statements and reports relating to
Taxes ("RETURNS") required to be filed by Eugene with any Tax authority prior to
the date hereof, except such Returns which are not material to Eugene. All such
Returns are true, correct and complete in all material respects. Eugene has paid
all Taxes shown to be due on such Returns.
(ii) All Taxes that Eugene is required by law to
withhold or collect have been duly withheld or collected, and have been timely
paid over to the proper governmental authorities to the extent due and payable.
(iii) No audit or other examination of any Return of
Eugene by any Tax authority is presently in progress, nor has Eugene been
notified of any request for such an audit or other examination.
3.13 ENVIRONMENTAL MATTERS. Except for such matters that, individually
or in the aggregate, are not reasonably likely to have a Material Adverse Effect
on Eugene, to Eugene's knowledge: (i) Eugene has complied with all applicable
Environmental Laws; (ii) the properties currently owned or operated by Eugene
(including soils, groundwater, surface water, buildings or other structures) are
not contaminated with any Hazardous Substances; (iii) the properties formerly
owned or operated by Eugene were not contaminated with Hazardous Substances
during the period of ownership or operation by Eugene; (iv) Eugene is not
subject to liability for any Hazardous Substance disposal or contamination on
any third party property; (v) Eugene has not been associated with any release or
threat of release of any Hazardous Substance; (vi) Eugene has not received any
notice, demand, letter, claim or request for information alleging that Eugene
may be in violation of or liable under any Environmental Law; and (vii) Eugene
is not subject to any orders, decrees, injunctions or other arrangements with
any Governmental Entity or subject to any indemnity or other agreement with any
third party relating to liability under any Environmental Law or relating to
Hazardous Substances.
As used in this Agreement, the term "ENVIRONMENTAL LAW" means
any federal, state, local or foreign law, regulation, order, decree, permit,
authorization, opinion, common law or agency requirement relating to: (A) the
protection, investigation or restoration of the environment, health and safety,
or natural resources; (B) the handling, use, presence, disposal, release or
threatened release of any Hazardous Substance or (C) noise, odor, wetlands,
pollution, contamination or any injury or threat of injury to persons or
property.
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As used in this Agreement, the term "HAZARDOUS SUBSTANCE"
means any substance that is: (i) listed, classified or regulated pursuant to any
Environmental Law; (ii) any petroleum product or by-product, asbestos-containing
material, lead-containing paint or plumbing, polychlorinated biphenyls,
radioactive materials or radon; or (iii) any other substance which is the
subject of regulatory action by any Governmental Entity pursuant to any
Environmental Law.
3.14 BROKERS; THIRD PARTY EXPENSES. Other than its obligations to
WestPark Capital, Inc., as set forth in that certain Agreement dated March 11,
2005 between Eugene and WestPark Capital, Inc.: (i) Eugene has not incurred, nor
will it incur, directly or indirectly, any liability for brokerage, finders'
fees, agent's commissions or any similar charges in connection with this
Agreement or any transactions contemplated hereby; and (ii) no shares of capital
stock, equity securities, convertible securities, warrants, options, or other
derivative securities of Xxxxxx or the Company are payable to any third party by
Eugene or any Eugene Shareholder as a result of this Transaction.
3.15 INTELLECTUAL PROPERTY. For the purposes of this Agreement, the
following terms have the following definitions:
"INTELLECTUAL PROPERTY" shall mean any or all of the
following: (i) patents and applications therefor and all reissues, divisions,
renewals, extensions, provisionals, continuations and continuations-in-part
thereof ("PATENTS") worldwide; (ii) inventions (whether patentable or not),
invention disclosures, improvements, trade secrets, proprietary information,
know how, technology, technical data and customer lists, and all documentation
relating to any of the foregoing; (iii) registered copyrights and applications
therefor, and all other rights corresponding thereto, worldwide; (iv) material
domain names, uniform resource locators (URLs) and other names and locators
associated with the Internet; (v) registered industrial designs and applications
therefor, worldwide; (vi) registered trade names, logos, trademarks and service
marks, and any applications therefor (collectively, "TRADEMARKS"), worldwide;
(vii) all databases and data collections and all rights therein; and (viii) all
moral and economic rights of authors and inventors, however denominated.
"EUGENE INTELLECTUAL PROPERTY" shall mean any Intellectual
Property that is owned by, or licensed to, Xxxxxx.
"XXXXXX PRODUCTS" means all current versions of products of
Eugene.
(a) To Eugene's knowledge, the Xxxxxx Intellectual Property
and Eugene Products are not subject to any material proceeding or outstanding
decree, order, judgment, contract, license, agreement or stipulation restricting
in any manner the use, transfer or licensing thereof by Eugene, or which may
affect the validity, use or enforceability of such Eugene Intellectual Property
or Xxxxxx Product, which in any such case could reasonably be expected to have a
Material Adverse Effect on Eugene.
(b) To Eugene's knowledge, Eugene either owns and has good and
marketable title to each material item of Eugene Intellectual Property owned by
it free and clear of any Liens (excluding licenses and related restrictions
granted in the ordinary course) or has one or more licenses sufficient for
Eugene's use of Eugene Intellectual Property; and Eugene is the owner or
licensee of all material Patents and Trademarks used in connection with the
operation or conduct of the business of Eugene including the sale of any
products by Eugene.
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(c) The operation of the business of Eugene as such business
currently is conducted, including (i) the design, development, manufacture,
distribution, reproduction, marketing or sale of the products of Eugene
(including Eugene Products) and (ii) Eugene's use of any product, device or
process, to Eugene's knowledge and except as could not reasonably be expected to
have a Material Adverse Effect, has not and does not infringe or misappropriate
the Intellectual Property of any third party or constitute unfair competition or
trade practices under the laws of any jurisdiction.
3.16 AGREEMENTS, CONTRACTS AND COMMITMENTS.
(a) For purposes of this Agreement, (i) the term "CONTRACTS"
shall mean all written contracts, agreements, leases, mortgages, indentures,
notes, bonds, liens, licenses, arbitration awards, judgments, decrees, orders,
documents, instruments, understandings and commitments to which Eugene is a
party or by or to which any of the properties or assets of Eugene may be bound,
subject or affected (including without limitation notes or other instruments
payable), and (ii) the term "XXXXXX MATERIAL CONTRACTS" shall mean (x) each
Contract (I) providing for payments (present or future) to Eugene in excess of
$50,000 in the aggregate, or (II) under which or in respect of which Eugene
presently has any liability or obligation of any nature whatsoever (absolute,
contingent or otherwise) in excess of $50,000, and (y) without limitation of
subclause (x), each of the following Contracts:
(i) any mortgage, indenture, note, installment
obligation or other instrument, agreement or arrangement for or relating to any
borrowing of money by or from Eugene;
(ii) any guaranty, direct or indirect, by Xxxxxx or
any officer, director or 5% or more shareholder ("INSIDER") of Eugene of any
obligation of Eugene for borrowings, or otherwise, excluding endorsements made
for collection in the ordinary course of business;
(iii) any Contract made other than in the ordinary
course of business or (x) providing for the grant of any preferential rights to
purchase or lease any asset of Xxxxxx or (y) providing for any right (exclusive
or non-exclusive) to sell or distribute, or otherwise relating to the sale or
distribution of, any product or service of Xxxxxx;
(iv) any obligation to register any shares of the
capital stock or other securities of Eugene with any Governmental Entity;
(v) any obligation to make payments, contingent or
otherwise, arising out of the prior acquisition of the business, assets or stock
of other Persons;
(vi) any lease or similar arrangement for the use by
Eugene of personal property;
11
(vii) any Contract granting or purporting to grant,
or otherwise in any way relating to, any mineral rights or any other interest
(including, without limitation, a leasehold interest) in real property; and
(viii) any Contract with Eugene to which any Insider
of Eugene is a party.
(b) Each Xxxxxx Material Contract was entered into at arms'
length and in the ordinary course, is in full force and effect and, to Eugene's
knowledge, is valid and binding upon and enforceable against each of the parties
thereto. True, correct and complete copies of all Xxxxxx Material Contracts have
been made available to the Company.
(c) Neither Eugene nor to Eugene's knowledge, any other party
thereto, is in breach of or in default under, and no event has occurred which
with notice or lapse of time or both would become a breach of or default under,
any Xxxxxx Material Contract, which breach, individually or in the aggregate,
could be reasonably likely to have a Material Adverse Effect on Eugene, and no
party to any Xxxxxx Material Contract has given any written notice of any claim
of any such breach, default or event, which, individually or in the aggregate,
are reasonably likely to have a Material Adverse Effect on Eugene. Each Material
Contract to which Eugene is a party or by which it is bound that has not expired
by its terms is in full force and effect, except where such failure to be in
full force and effect is not reasonably likely to have a Material Adverse Effect
on Eugene.
3.17 GOVERNMENTAL ACTIONS/FILINGS. To the knowledge of Xxxxxx, Xxxxxx
holds, and has made, all Governmental Actions/Filings reasonably necessary to
the conduct by Eugene of its business (as presently conducted), except with
respect to any Governmental Actions/Filings the failure of which to hold or make
would not reasonably be likely to have a Material Adverse Effect on Eugene.
3.18 BOARD APPROVAL. The Board of Directors of Eugene has, as of the
date of this Agreement, unanimously approved this Agreement and the transactions
contemplated hereby.
3.19 REPRESENTATIONS AND WARRANTIES COMPLETE. The representations and
warranties of Eugene included in this Agreement and any Schedule provided by
Eugene pursuant to this Agreement, are true and complete in all material
respects and do not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements contained therein not misleading, under the circumstance under which
they were made.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
The Company represents and warrants as follows:
4.1 ORGANIZATION AND QUALIFICATION. The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware and has the requisite corporate power and authority to own, lease
and operate its assets and properties and to carry on its business as it is now
being or currently planned by the Company to be conducted. To its knowledge, the
Company is in possession of all Approvals necessary to own, lease and operate
the properties it purports to own, operate or lease and to carry on its business
as it is now being or currently planned by the Company to be conducted, except
where the failure to have such Approvals could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Company. Complete and correct copies of the Charter Documents of the Company, as
amended and currently in effect, have been heretofore delivered to Eugene. The
Company is not in violation of any of the provisions of the Company's Charter
Documents. As of the date of this Agreement, the Company has no subsidiaries and
does not own, directly or indirectly, any ownership, equity, profits or voting
interest in any Person and, other than this Agreement, has no agreement or
commitment to purchase any such interest, and the Company has not agreed and is
not obligated to make nor is bound by any written, oral or other agreement,
contract, subcontract, lease, binding understanding, instrument, note, option,
warranty, purchase order, license, sublicense, insurance policy, benefit plan,
commitment or undertaking of any nature, as of the date hereof or as may
hereafter be in effect under which it may become obligated to make, any future
investment in or capital contribution to any other entity.
4.2 CAPITALIZATION. The authorized capital stock of the Company
consists of 480,000,000 shares of Common Stock, par value $0.0001 per share, and
20,000,000 shares of Preferred Stock, par value $0.0001 per share. At the close
of business on the business day prior to the date hereof, (i) 35,368,800 shares
of the Company's Common Stock were issued and outstanding; (ii) no shares of the
Company's Preferred Stock were issued and outstanding; (iii) no shares of the
Company's Common Stock were reserved for issuance upon the exercise of
outstanding options or warrants to purchase Company Common Stock; (iv) no shares
of the Company's Common Stock or Preferred Stock were reserved for issuance to
any party (other than the Shareholders in accordance with this Agreement); and
(vi) no shares of the Company's Common Stock or Preferred Stock were reserved
for issuance upon the conversion of any outstanding convertible notes,
debentures or securities. Immediately prior to Closing, the Company shall take
all such action as is necessary so that there will be no more than 35,368,800
shares of the Company's Common Stock issued and outstanding and the shares
issuable to the Shareholders under this Agreement will, assuming all outstanding
Eugene Shares are transferred to the Company hereunder, represent 90% of the
issued and outstanding shares of capital stock of the Company immediately
following the Closing. The Company Shares to be issued under this Agreement,
when issued pursuant to the terms and conditions of this Agreement, will be
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validly issued, fully paid and nonassessable. There is no plan or arrangement to
issue the Company's Common Stock or Preferred Stock except as set forth in this
Agreement. Except as contemplated by this Agreement, there are no registration
rights, and there is no voting trust, proxy, rights plan, anti-takeover plan or
other agreement or understanding to which the Company is a party or by which it
is bound with respect to any equity security of any class of the Company.
4.3 AUTHORITY RELATIVE TO THIS AGREEMENT. The Company has full
corporate power and authority to: (i) execute, deliver and perform this
Agreement, and each ancillary document which the Company has executed or
delivered or is to execute or deliver pursuant to this Agreement, and (ii) carry
out the Company's obligations hereunder and thereunder and, to consummate the
transactions contemplated hereby (including the Transaction). The execution and
delivery of this Agreement and the consummation by the Company of the
transactions contemplated hereby (including the Transaction) have been duly and
validly authorized by all necessary corporate action on the part of the Company
(including the approval by its Board of Directors), and no other corporate
proceedings on the part of the Company are necessary to authorize this Agreement
or to consummate the transactions contemplated hereby other than the
reaffirmation. This Agreement has been duly and validly executed and delivered
by the Company and, assuming the due authorization, execution and delivery
thereof by the other parties hereto, constitutes the legal and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except as may be limited by bankruptcy, insolvency, reorganization or
other similar laws affecting the enforcement of creditors' rights generally and
by general principles of equity and public policy.
4.4 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by the
Company and the execution and delivery of each ancillary document to be
delivered by the Company hereunder do not, and the performance of this Agreement
and each such ancillary document by the Company will not: (i) conflict with or
violate the Company's Charter Documents, (ii) conflict with or violate any Legal
Requirements, or (iii) result in any breach of or constitute a default (or an
event that with notice or lapse of time or both would become a default) under,
or materially impair the Company's rights or alter the rights or obligations of
any third party under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or
encumbrance on any of the properties or assets of the Company pursuant to, any
Contracts to which the Company is a party, except, with respect to clauses (ii)
or (iii), for any such conflicts, violations, breaches, defaults or other
occurrences that would not, individually or in the aggregate, have a Material
Adverse Effect on the Company.
(b) The execution and delivery of this Agreement by the
Company does not, and the performance of its obligations hereunder will not,
require any consent, approval, authorization or permit of, or filing with or
notification to, any Governmental Entity, except (i) the filing of a Current
Report on Form 8-K with the SEC, (ii) the filing of a Form D with the SEC and
other applicable requirements, if any, of applicable securities laws and the
rules and regulations thereunder, and appropriate documents with the relevant
authorities of other jurisdictions in which the Company is qualified to do
business, and (iii) where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company, or prevent consummation of the Transaction or
otherwise prevent the parties hereto from performing their obligations under
this Agreement.
14
4.5 COMPLIANCE. To the Company's knowledge, the Company has complied
with, and is not in violation of, any Legal Requirements with respect to the
conduct of its business, or the ownership or operation of its business, except
for failures to comply or violations which, individually or in the aggregate,
have not had and are not reasonably likely to have a Material Adverse Effect on
the Company. To the Company's knowledge, the businesses and activities of the
Company have not been and are not being conducted in violation of any Legal
Requirements. The Company is not in default or violation of any material term,
condition or provision of its Charter Documents or any Contract to which it is a
party. To the Company's knowledge, no written notice of non-compliance with any
Legal Requirements has been received by the Company (and the Company has no
knowledge of any material such notice delivered to any other Person).
4.6 SEC DOCUMENTS; UNDISCLOSED LIABILITIES.
(a) For all periods since February 20, 2004, the Company has
filed all reports, schedules, forms, statements and other documents as required
by the SEC in a timely basis (or has received a valid extension of such time of
filing and has filed any such reports or other documents prior to the expiration
of any such extension), and the Company has delivered or made available to
Eugene all reports, schedules, forms, statements and other documents filed with
the SEC during such period (collectively, and in each case including all
exhibits and schedules thereto and documents incorporated by reference therein,
the "SEC DOCUMENTS"). As of their respective dates (or, if amended, supplemented
or superseded by a filing prior to the date hereof, then as of the date of such
amendment, supplement or superseding filing) the SEC Documents complied in all
material respects with the requirements of the Securities Act or the Exchange
Act, as the case may be, and the rules and regulations of the SEC promulgated
thereunder applicable to such SEC Documents, and none of the SEC Documents
(including any and all consolidated financial statements included therein) as of
such date 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 consolidated financial statements of the Company included in
such SEC Documents comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with U.S. GAAP (except, in the
case of unaudited consolidated quarterly statements, as permitted by Form 10-QSB
of the SEC) applied on a consistent basis during the periods involved (except as
may be indicated in the notes thereto) and fairly and accurately present the
consolidated financial position of the Company as of the dates thereof and the
consolidated results of operations and changes in cash flows for the periods
covered thereby (subject, in the case of unaudited quarterly statements, to
normal year-end audit adjustments as determined by the Company's independent
accountants). The Company does not have, and at the Closing will not have
incurred, any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) except for liabilities and obligations that
have been incurred since the date of the most recent balance sheet included in
the SEC Documents in the ordinary course of business and are not (singly or in
the aggregate) more than $10,000.
15
(b) The SEC Documents include all certifications and
statements required of it, if any, by (i) Rule 13a-14 or 15d-14 under the
Exchange Act, and (ii) 18 U.S.C. Section 1350 (Section 906 of the Xxxxxxxx-Xxxxx
Act of 2002), and each of such certifications and statements contain no
qualifications or exceptions to the matters certified therein other than a
knowledge qualification, permitted under such provision, and have not been
modified or withdrawn and neither the Company nor any of its officers has
received any notice from the SEC or any other Governmental Entity questioning or
challenging the accuracy, completeness, form or manner of filing or submission
of such certifications or statements.
(c) The Company is in compliance in all material respects with
all of the provisions of the Xxxxxxxx-Xxxxx Act of 2002, and the provisions of
the Exchange Act and the Securities Act relating thereto which under the terms
of such provisions (including the dates by which such compliance is required)
have become applicable to the Company.
4.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in the
SEC Documents, since the date of the most recent financial statements included
in the SEC Documents, the company has conducted its business only in the
ordinary course consistent with past practice in light of its current business
circumstances, and there is not and has not been: (i) any event which has had a
Material Adverse Effect with respect to the Company; (ii) any condition, event
or occurrence which, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect with respect to the Company; (iii)
any event which, if it had taken place following the execution of this
Agreement, would not have been permitted by SECTION 5.1 without the prior
consent of Xxxxxx; or (iv) any condition, event or occurrence which could
reasonably be expected to prevent, hinder or materially delay the ability of the
Company to consummate the transactions contemplated by this Agreement.
4.8 INDEBTEDNESS; COMPANY ASSETS. The Company has no indebtedness for
borrowed money. Immediately prior to the Closing, the Company will have no
material assets.
4.9 TAXES. To the Company's knowledge:
(a) The Company has timely filed all Returns required to be
filed by the Company with any Tax authority prior to the date hereof. All such
Returns are true, correct and complete in all material respects. The Company has
paid all Taxes shown to be due on such Returns.
(b) All Taxes that the Company is required by law to withhold
or collect have been duly withheld or collected, and have been timely paid over
to the proper governmental authorities to the extent due and payable.
(c) No audit or other examination of any Return of the Company
by any Tax authority is presently in progress, nor has the Company been notified
of any request for such an audit or other examination.
16
4.10 AGREEMENTS, CONTRACTS AND COMMITMENTS. Each Contract to which the
Company is a party was entered into at arms' length and in the ordinary course,
is in full force and effect and, to the Company's knowledge, is valid and
binding upon and enforceable against each of the parties thereto. True, correct
and complete copies of all Contracts to which the Company is a party have been
heretofore made available to Eugene. Neither the Company nor to the Company's
knowledge, any other party thereto, is in breach of or in default under, and no
event has occurred which with notice or lapse of time or both would become a
breach of or default under, any Contract to which the Company is a party, and no
party to any Contract to which the Company is a party has given any written
notice of any claim of any such breach, default or event, which, individually or
in the aggregate, are reasonably likely to have a Material Adverse Effect on the
Company. Each Contract to which the Company is a party or by which it is bound
that has not expired by its terms is in full force and effect, except where such
failure to be in full force and effect is not reasonably likely to have a
Material Adverse Effect on Eugene.
4.11 RESTRICTIONS ON BUSINESS ACTIVITIES. To the Company's knowledge
there is no agreement, commitment, judgment, injunction, order or decree binding
upon the Company or to which the Company is a party which has or could
reasonably be expected to have the effect of prohibiting or materially impairing
any business practice of the Company, any acquisition of property by the Company
or the conduct of business by the Company, in each case either before or after
the Closing.
4.12 LITIGATION. There are no claims, suits, actions or proceedings
pending or to the Company's knowledge, threatened against the Company, before
any court, governmental department, commission, agency, instrumentality or
authority, or any arbitrator.
4.13 BROKERS. The Company has not incurred, nor will it incur, directly
or indirectly, any liability for brokerage or finders' fees or agent's
commissions or any similar charges in connection with this Agreement or any
transaction contemplated hereby.
4.14 GOVERNMENTAL ACTIONS/FILINGS. To its knowledge, the Company has
been granted and holds, and has made, all Governmental Actions/Filings necessary
to the conduct by the Company of its businesses (as presently conducted) or used
or held for use by the Company. Each such Governmental Action/Filing is in full
force and effect and the Company is in compliance with all of its obligations
with respect thereto. To the Company's knowledge, no event has occurred and is
continuing which requires or permits, or after notice or lapse of time or both
would require or permit, and consummation of the transactions contemplated by
this Agreement or the ancillary documents will not require or permit (with or
without notice or lapse of time, or both), any modification or termination of
any such Governmental Actions/Filings.
4.15 BOARD APPROVAL. The Board of Directors of the Company (including
any required committee or subgroup of the Board of Directors of the Company)
has, as of the date of this Agreement, unanimously approved this Agreement and
the transactions contemplated hereby.
4.16 EXCHANGE ACT COMPLIANCE. The Company is in compliance with, and
current in, all of the reporting, filing and other requirements under the
Exchange Act, the shares of the Company's common stock have been duly and
properly registered under Section 12(g) of the Exchange Act, and the Company is
in compliance with all of the requirements under, and imposed by, Section 12(g)
of the Exchange Act, except where a failure to so comply is not reasonably
likely to have a Material Adverse Effect on the Company.
17
4.17 INTERESTED PARTY TRANSACTIONS. Except as set forth in the SEC
Documents, no employee, officer, director or stockholder of the Company or a
member of his or her immediate family is indebted to the Company, nor is the
Company indebted (or committed to make loans or extend or guarantee credit) to
any of them, other than (i) for payment of salary for services rendered, (ii)
reimbursement for reasonable expenses incurred on behalf of the Company, and
(iii) for other employee benefits made generally available to all employees. To
the Company's knowledge, none of such individuals has any direct or indirect
ownership interest in any Person with whom the Company is affiliated or with
whom the Company has a material contractual relationship, or any Person that
competes with the Company, except that each employee, stockholder, officer or
director of the Company and members of their respective immediate families may
own less than 5% of the outstanding stock in publicly traded companies that may
compete with the Company. To the Company's knowledge, no officer, director or
stockholder or any member of their immediate families is, directly or
indirectly, interested in any material contract with the Company (other than
such contracts as relate to any such individual ownership of capital stock or
other securities of the Company).
4.18 RECORDS. The books of accounts, corporate records and minute books
of the Company are complete and correct in all material respects. Complete and
accurate copies of all such books of account, corporate records and minute books
of the Company have been provided to Eugene.
4.19 REPRESENTATIONS AND WARRANTIES COMPLETE. The representations and
warranties of the Company included in this Agreement and any Schedule provided
by the Company pursuant to this Agreement or delivered hereunder, are true and
complete in all material respects and do not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements contained therein not misleading, under the
circumstance under which they were made.
ARTICLE V
CONDUCT PRIOR TO THE EFFECTIVE TIME
-----------------------------------
5.1 CONDUCT OF BUSINESS BY EUGENE AND THE COMPANY. During the period
from the date of this Agreement and continuing until the earlier of the
termination of this Agreement pursuant to its terms or the Closing, Eugene and
the Company shall, except to the extent that the other party shall otherwise
consent in writing, carry on its business in the usual, regular and ordinary
course consistent with past practices, in substantially the same manner as
heretofore conducted and in compliance with all applicable laws and regulations
(except where noncompliance would not have a Material Adverse Effect), pay its
debts and taxes when due subject to good faith disputes over such debts or
taxes, pay or perform other material obligations when due, and use its
commercially reasonable efforts consistent with past practices and policies to
(i) preserve substantially intact its present business organization, (ii) keep
available the services of its present officers, managers and employees, and
(iii) preserve its relationships with customers, suppliers, distributors,
licensors, licensees, and others with which it has significant business
dealings. In addition, except as permitted or required by the terms of this
Agreement or set forth on the SCHEDULE 5.1 hereto, without the prior written
consent of the other party, during the period from the date of this Agreement
and continuing until the earlier of the termination of this Agreement pursuant
to its terms or the Closing, each of Eugene and the Company shall not do any of
the following:
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(a) Waive any stock repurchase rights, accelerate, amend or
(except as specifically provided for herein) change the period of exercisability
of options or restricted stock, or reprice options granted under any employee,
consultant, director or other stock plans or authorize cash payments in exchange
for any options granted under any of such plans, except for amendments by Eugene
to outstanding options in connection with or to permit exercise of those options
prior to the Closing.
(b) Grant any severance or termination pay to any officer,
manager or employee except pursuant to applicable law, written agreements
outstanding, or policies existing on the date hereof and as previously or
concurrently disclosed in writing or made available to the other party, or adopt
any new severance plan, or amend or modify or alter in any manner any severance
plan, agreement or arrangement existing on the date hereof.
(c) Transfer or license to any person or otherwise extend,
amend or modify any material rights to any Intellectual Property, except in the
ordinary course of business consistent with past practice.
(d) Except for employment agreements in the ordinary course or
otherwise scheduled or set forth in this Agreement, declare, set aside or pay
any dividends on or make any other distributions (whether in cash, stock, equity
securities or property) in respect of any capital stock, or split, combine or
reclassify any capital stock, or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for any capital stock.
(e) Amend its Charter Documents.
(f) Acquire or agree to acquire by merging or consolidating
with, or by purchasing any equity interest in or a portion of the assets of, or
by any other manner, any business or any corporation, partnership, association
or other business organization or division thereof, or otherwise acquire or
agree to acquire any assets which are material, individually or in the
aggregate, to the business of Xxxxxx or the Company, as applicable, or enter
into any joint ventures, strategic partnerships or alliances or other
arrangements that provide for exclusivity of territory or otherwise restrict
such party's ability to compete or to offer or sell any products or services.
(g) Sell, lease, license, encumber or otherwise dispose of any
properties or assets, except sales of inventory in the ordinary course of
business consistent with past practice and, except for the sale, lease or
disposition (other than through licensing) of property or assets which are not
material, individually or in the aggregate, to the business of such party.
(h) Adopt or amend any employee benefit plan, policy or
arrangement, any employee stock purchase or employee stock option plan, or enter
into any employment contract or collective bargaining agreement (other than
offer letters and agreements entered into in the ordinary course of business
consistent with past practice), pay any special bonus or special remuneration to
any director or employee, or increase the salaries or wage rates or fringe
benefits (including rights to severance or indemnification) of its directors,
officers, employees or consultants, except in the ordinary course of business
consistent with past practices and other than for new hires in the ordinary
course.
19
(i) Pay, discharge, settle or satisfy any claims, liabilities
or obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), or litigation (whether or not commenced prior to the date of this
Agreement) other than the payment, discharge, settlement or satisfaction, in the
ordinary course of business consistent with past practices or in accordance with
their terms, or liabilities recognized or disclosed in the most recent financial
statements (or the notes thereto) of Xxxxxx or the Company, as applicable, or
incurred since the date of such financial statements.
(j) Except in the ordinary course of business consistent with
past practices, modify, amend or terminate any Eugene Material Contract or
Company Contract, as applicable, or waive, delay the exercise of, release or
assign any material rights or claims thereunder.
(k) Except as required by U.S. GAAP or other applicable
accounting standards, revalue any of its assets or make any change in accounting
methods, principles or practices.
(l) Settle any litigation.
(m) Make or rescind any Tax elections that, individually or in
the aggregate, could be reasonably likely to adversely affect in any material
respect the Tax liability or Tax attributes of such party, settle or compromise
any material income tax liability or, except as required by applicable law,
materially change any method of accounting for Tax purposes or prepare or file
any Return in a manner inconsistent with past practice.
(n) Form, establish or acquire any subsidiary.
(o) Agree in writing or otherwise agree, commit or resolve to
take any of the actions described in SECTION 5.1(a) through (n) above.
20
ARTICLE VI
ADDITIONAL AGREEMENTS
---------------------
6.1 BOARD OF DIRECTORS OF THE COMPANY. At Closing, the current board of
directors of the Company shall deliver duly adopted resolutions to: (a) set the
size of the Company's board of directors to between four (4) and seven (7)
members effective as of the Closing, the actual number to be determined by
resolution of the Company's board of directors and to initially equal four (4)
members effective as of the Closing; and (b) elect the four (4) individuals to
be specified in writing by Eugene prior to Closing to the Company's board of
directors effective as of the Closing; and (c) accepting the resignations of the
current officers and directors of the Company effective as of the Closing
("RESOLUTIONS"). At Closing, the current officers and director of the Company
shall deliver their resignations, as appropriate, as officers and directors of
the Company to be effective upon the Closing (the "RESIGNATIONS").
6.2 UNDERTAKING BY COMPANY ACCOUNTANT. On or before the Closing, Eugene
shall have received an acknowledgement and understanding from SF Partnership,
LLP ("ACCOUNTANT"), satisfactory to Eugene, that: (i) the Accountant has agreed
to an engagement with the Company to serve as its certified public accountants
following the Closing for purposes of auditing and reviewing the financial
statements of Xxxxxx and Company to comply with the Company's ongoing reporting
requirements under the Exchange Act including, without limitation, the filing of
Forms 10-Q, 10-K, and 8-K, (ii) the transaction contemplated hereunder will not
disqualify or otherwise prohibit the Accountant from rendering the foregoing
engagement services or from undertaking such services in a timely manner, (iii)
the Accountant is duly registered with the U.S. Public Company Accounting
Oversight Board, (iv) the Accountant shall provide its consent to the use of
their audited financial statements and accompanying reports for Xxxxxx and
Company, as applicable, in any regulatory filing by the Company prior to or
following the Closing, and (v) the Accountant shall consent to the use of its
name and the disclosure of its engagement by the Company in the Change of
Accountant Form 8-K (as defined in SECTION 6.3).
6.3 CHANGE OF ACCOUNTANTS. At Closing, the Company shall prepare the
Form 8-K announcing the change in the Company's certifying accountants from
Xxxxxxx Xxxxxxx Xxxxxxxx Xxxxxxxxxxx LLP ("COMPANY'S ACCOUNTANT") to the
Accountant effective as of the Closing ("CHANGE OF ACCOUNTANT FORM 8-K"), in a
form acceptable to Company and Eugene and in a format acceptable for XXXXX
filing. The Change of Accountant Form 8-K shall be filed with the SEC at or
within four (4) business days following Closing, and prior to the filing
thereof, Company's Accountant shall have issued its resignation letter to the
Company resigning from the engagement and consenting to the use of its name and
the disclosure of its resignation in the Change of Accountant Form 8-K
("RESIGNATION LETTER").
6.4 OTHER ACTIONS.
(a) At least ten (10) days prior to Closing, the Company shall
prepare the information statement required by Rule 14f-1 promulgated under the
Exchange Act ("14f-1 INFORMATION STATEMENT"), and the Company shall file the
14f-1 Information Statement with the SEC and mail the same to each of the
Company's stockholders.
21
(b) Prior to Closing, the Company and Eugene shall prepare the
Form 8-K announcing the Closing, which shall include all information required by
such form, including the required business and financial information concerning
Eugene, as reasonably determined by counsel to Eugene ("TRANSACTION FORM 8-K"),
which shall be in a form reasonably acceptable to Eugene. Prior to the Closing,
Eugene shall deliver to the Company pro forma financial statements for the
Company and Eugene, on a consolidated basis, giving effect to the Transaction,
for such periods as required by the SEC through and including December 31, 2004
and the applicable interim period, to be included in the Transaction Form 8-K or
any other report or form required to be filed with the SEC at or after Closing
with respect to the Transaction, all prepared in all material respects with the
published rules and regulations of the SEC and in accordance with U.S. GAAP
applied on a consistent basis throughout the periods involved ("PRO FORMA
FINANCIAL STATEMENTS"). The Pro Forma Financial Statements shall have been
reviewed by, the Accountant and shall be in a format acceptable for inclusion on
the Transaction Form 8-K. Prior to Closing, Eugene shall prepare the press
release announcing the consummation of the Transaction hereunder ("PRESS
RELEASE"). At the Closing, the Company shall file the Transaction Form 8-K with
the SEC and issue the Press Release.
(c) Company and Eugene shall cooperate with each other and use
their respective commercially reasonable efforts to take or cause to be taken
all actions, and do or cause to be done all things, necessary, proper or
advisable on its part under this Agreement and applicable laws to consummate the
Transaction and the other transactions contemplated hereby as soon as
practicable, including preparing and filing as soon as practicable all necessary
notices, reports and other filings and to obtain as soon as practicable all
consents, registrations, approvals, permits and authorizations necessary or
advisable to be obtained from any third party and/or any Governmental Entity in
order to consummate the Transaction or any of the other transactions
contemplated hereby. Subject to applicable laws relating to the exchange of
information and the preservation of any applicable attorney-client privilege,
work-product doctrine, self-audit privilege or other similar privilege, each of
Company and Eugene shall have the right to review and comment on in advance, and
to the extent practicable each will consult the other on, all the information
relating to such party that appear in any filing made with, or written materials
submitted to, any third party and/or any Governmental Entity in connection with
the Transaction and the other transactions contemplated hereby. In exercising
the foregoing right, each of Company and Eugene shall act reasonably and as
promptly as practicable.
6.5 REQUIRED INFORMATION. In connection with the preparation of the
Transaction Form 8-K, 14f-1 Information Statement, and Press Release, and for
such other reasonable purposes, the Company and Eugene each shall, upon request
by the other, furnish the other with all information concerning themselves,
their respective subsidiaries, directors, officers and shareholders (including
the directors and officers of the Company to be elected effective as of the
Closing pursuant to SECTION 6.1 hereof) and such other matters as may be
reasonably necessary or advisable in connection with the Transaction, or any
other statement, filing, notice or application made by or on behalf of the
Company and Eugene or any of their respective subsidiaries to any third party
and/or any Governmental Entity in connection with the Transaction and the other
transactions contemplated hereby. Each party warrants and represents to the
other party that all such information shall be true and correct in all material
respects and will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading.
22
6.6 EXECUTION BY SHAREHOLDERS. As soon as practicable after execution
of this Agreement, Eugene shall: (a) present this Agreement and any ancillary
agreements to be executed by the Shareholders pursuant to this Agreement to the
remaining Shareholders which have not already executed and delivered a
counterpart signature page to this; (b) have the Xxxxxx Board of Directors
recommend that the Shareholders execute and deliver this Agreement and any
ancillary agreements to be executed by the Shareholders pursuant to this
Agreement and, subject to the terms and conditions hereof, consummate the
Transaction; and (c) use commercially reasonable efforts to cause each
Shareholder to execute and deliver this Agreement and any ancillary agreements
to be executed by the Shareholders pursuant to this Agreement.
6.7 CONFIDENTIALITY; ACCESS TO INFORMATION.
(a) Any confidentiality agreement or letter of intent
previously executed by the parties shall be superseded in its entirety by the
provisions of this Agreement. Each party agrees to maintain in confidence any
non-public information received from the other party, and to use such non-public
information only for purposes of consummating the transactions contemplated by
this Agreement. Such confidentiality obligations will not apply to (i)
information which was known to the one party or their respective agents prior to
receipt from the other party; (ii) information which is or becomes generally
known; (iii) information acquired by a party or their respective agents from a
third party who was not bound to an obligation of confidentiality; and (iv)
disclosure required by law. In the event this Agreement is terminated as
provided in ARTICLE IX hereof, each party will return or cause to be returned to
the other all documents and other material obtained from the other in connection
with the Transaction contemplated hereby.
(b) ACCESS TO INFORMATION.
(i) Eugene will afford the Company and its financial
advisors, accountants, counsel and other representatives reasonable access
during normal business hours, upon reasonable notice, to the properties, books,
records and personnel of Eugene during the period prior to the Closing to obtain
all information concerning the business, including the status of product
development efforts, properties, results of operations and personnel of Eugene,
as the Company may reasonably request. No information or knowledge obtained by
the Company in any investigation pursuant to this SECTION 6.7 will affect or be
deemed to modify any representation or warranty contained herein or the
conditions to the obligations of the parties to consummate the Transaction.
(ii) The Company will afford Eugene and its financial
advisors, underwriters, accountants, counsel and other representatives
reasonable access during normal business hours, upon reasonable notice, to the
properties, books, records and personnel of the Company during the period prior
to the Closing to obtain all information concerning the business, including the
status of product development efforts, properties, results of operations and
personnel of the Company, as Eugene may reasonably request. No information or
knowledge obtained by Company in any investigation pursuant to this SECTION 6.7
will affect or be deemed to modify any representation or warranty contained
herein or the conditions to the obligations of the parties to consummate the
Transaction.
23
6.8 NO SOLICITATION. Other than with respect to the Transaction, each
of Eugene and the Company agrees that neither it nor any of its officers,
directors, managers, shareholders or affiliates shall, and that it shall direct
and use its reasonable best efforts to cause its and its agents and other
representatives (including any investment banker, attorney or accountant
retained by it) not to, directly or indirectly, initiate, solicit, encourage or
otherwise facilitate any inquiries or the making of any proposal or offer with
respect to (i) a merger, reorganization, share exchange, consolidation or
similar transaction involving it, (ii) any sale, lease, exchange, mortgage,
pledge, transfer or purchase of all or substantially all of the assets or equity
securities of it, taken as a whole, in a single transaction or series of related
transactions or (iii) any tender offer or exchange offer for the outstanding
Eugene Shares or Company capital stock (any such proposal or offer being
hereinafter referred to as an "ACQUISITION PROPOSAL"). Each of Eugene and the
Company further agrees that neither it nor of its officers, directors, managers,
shareholders or affiliates shall, and that it shall direct and use its
reasonable best efforts to cause its agents and representatives not to, directly
or indirectly, engage in any negotiations concerning, or provide any
confidential information or data to, or have any discussions with, any person
relating to an Acquisition Proposal, or otherwise facilitate any effort or
attempt to make or implement an Acquisition Proposal; provided that the Board of
Directors of each of Xxxxxx and Company can take such action as is necessary for
them to satisfy their applicable fiduciary duties with respect to the
consideration of any unsolicited Acquisition Proposal received after the date
hereof. Each of Eugene and the Company agrees that it will immediately cease and
cause to be terminated any existing discussions or negotiations with any parties
conducted heretofore with respect to any Acquisition Proposal. Each of Eugene
and the Company agrees that it will take the necessary steps to promptly inform
the individuals or entities referred to in the first sentence hereof of the
obligations undertaken in this SECTION 6.8.
6.9 PUBLIC DISCLOSURE. Except to the extent previously disclosed or to
the extent the parties believe that they are required by applicable law or
regulation to make disclosure, prior to Closing, no party shall issue any
statement or communication to the public regarding the Transaction without the
consent of the other party, which consent shall not be unreasonably withheld. To
the extent a party hereto believes it is required by law or regulation to make
disclosure regarding the Transaction, it shall immediately notify the other
party prior to such disclosure.
6.10 NOTIFICATION.
(a) Eugene shall give prompt notice to the Company upon
becoming aware that any representation or warranty made by them contained in
this Agreement was untrue or inaccurate as of the signing of this Agreement or
later has become untrue or inaccurate, or of any failure of Eugene to comply
with or satisfy in any material respect any covenant, condition or agreement to
be complied with or satisfied by them under this Agreement, in each case, such
that the conditions set forth in ARTICLE VII would not be satisfied; provided,
however, that no such notification shall affect the representations, warranties,
covenants or agreements of the parties or the conditions to the obligations of
the parties under this Agreement.
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(b) The Company shall give prompt notice to Eugene upon
becoming aware that any representation or warranty made by it contained in this
Agreement was untrue or inaccurate as of the signing of this Agreement or later
has become untrue or inaccurate, or of any failure of the Company to comply with
or satisfy in any material respect any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement, in each case, such that
the conditions set forth in ARTICLE VII would not be satisfied; provided,
however, that no such notification shall affect the representations, warranties,
covenants or agreements of the parties or the conditions to the obligations of
the parties under this Agreement.
6.11 ABSENCE OF MATERIAL LIABILITIES. Immediately prior to Closing, the
Company shall have no liabilities or obligations requiring the payment of
monies, other than obligations under or with respect to: (i) any agreement with
the Company's stock transfer agent, and (ii) this Agreement.
6.12 BUSINESS RECORDS. At Closing, the Company shall cause to be
delivered to Eugene all records and documents relating to the Company which the
Company possesses, including, without limitation, books, records, government
filings, Returns, Charter Documents, Corporate Records, stock record books,
consent decrees, orders, and correspondence, director and stockholder minutes
and resolutions, stock ownership records, financial information and records,
electronic files containing any financial information and records, and other
documents used in or associated with the Company.
6.13 KOREAN FILINGS. The parties will execute such further documents as
may be required to provide notice to The Bank of Korea, under the Korean Foreign
Exchange Transactions Act, the Korea Investment Service Center, under the Korean
Foreign Investment Promotion Act and any other Korean agency where filings are
required under Korean law.
6.14 REGISTRATION OF COMPANY SHARES. The Company shall not register any
of the Company Shares issued hereunder for resale by the Shareholders under the
Securities Act unless and until the Company's shares are then listed on the New
York Stock Exchange or American Stock Exchange or quoted on the Nasdaq National
Market System or Nasdaq SmallCap Market; provided, however, that notwithstanding
the foregoing the Company shall be permitted, in its sole discretion, to
register for resale up to 1,000,000 Company Shares issued under this Agreement.
6.15 FORM S-8 REGISTRATIONS. For period of eighteen (18) months
following the Closing Date, the Company shall not register any securities on
Form S-8 other than registrations of employee stock incentive plans for the
benefit of the Company's or Eugene's employees generally. No options to purchase
shares of capital stock of the Company issued on or after the Closing Date shall
be exercisable by the optionee until at least one (1) year after the Closing
Date.
6.16 CERTAIN ACQUISITIONS. For a period of eighteen (18) months
following the Closing Date, the Company shall not effect the acquisition of any
other business or entity in a transaction in which the valuation attributed to
the business or entity to be acquired is greater than one hundred fifty percent
(150%) of the net asset value of such business or entity to be acquired, as
determined in good faith by the Board of Directors of the Company.
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ARTICLE VII
CONDITIONS TO THE TRANSACTION
-----------------------------
7.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE TRANSACTION.
The respective obligations of each party to this Agreement to effect the
Transaction shall be subject to the satisfaction at or prior to the Closing Date
of the following conditions:
(a) NO ORDER. No Governmental Entity shall have enacted,
issued, promulgated, enforced or entered any statute, rule, regulation,
executive order, decree, injunction or other order (whether temporary,
preliminary or permanent) which is in effect and which has the effect of making
the Transaction illegal or otherwise prohibiting consummation of the
Transaction, substantially on the terms contemplated by this Agreement. All
waiting periods, if any, under any law in any jurisdiction in which the Company
or Eugene has material operations relating to the transactions contemplated
hereby has expired or terminated early and all material approvals required to be
obtained prior to the Transaction in connection with the transactions
contemplated hereby shall have been obtained.
(b) REQUIRED APPROVALS. This Agreement and the Transaction
have been duly approved and adopted, by the requisite actions of the Board of
Directors of Eugene under the laws of Korea and the Xxxxxx Charter Documents,
and by the requisite actions of the Board of Directors of the Company under the
laws of the State of Delaware and Company Charter Documents.
(c) 14F-1 INFORMATION STATEMENT. At least ten (10) days prior
to Closing, the Company shall have filed the 14f-1 Information Statement with
the SEC, and the Company shall have mailed the 14f-1 Information Statement to
each of the stockholders of the Company, and the Company shall have otherwise
complied with all of the provisions under Rule 14f-1 under the Exchange Act.
(d) EXECUTION BY SHAREHOLDERS. Persons holding at least eighty
percent (80%) of the total outstanding Eugene Shares immediately prior to or at
Closing shall have executed a counterpart signature page to this Agreement to
transfer their Eugene Shares to the Company on the same terms and conditions as
each other Shareholder.
(e) SECURITIES LAWS. The Company Shares to be issued under
this Agreement are exempt from, or have been registered or qualified under, the
applicable securities laws of each appropriate jurisdiction to the satisfaction
of the Company and Eugene and their respective counsels.
(f) KOREAN LEGAL OPINION. The parties shall have received an
opinion, in a form reasonably acceptable to the parties, that the transactions
contemplated by this Agreement were conducted in compliance with Korean law.
7.2 CONDITIONS TO OBLIGATIONS OF EUGENE AND THE SHAREHOLDERS. The
obligations of Eugene and the Shareholders to consummate and effect the
Transaction shall be subject to the satisfaction at or prior to the Closing Date
of each of the following conditions, any of which may be waived, in writing,
exclusively and only by Eugene (for itself and as the attorney-in-fact for the
Shareholders):
26
(a) REPRESENTATIONS AND WARRANTIES. Each representation and
warranty of the Company contained in this Agreement (i) shall have been true and
correct as of the date of this Agreement and (ii) shall be true and correct in
all material respects on and as of the Closing Date with the same force and
effect as if made on the Closing Date. Eugene shall have received a certificate
with respect to the foregoing signed on behalf of the Company by an authorized
officer of the Company.
(b) AGREEMENTS AND COVENANTS. The Company shall have performed
or complied in all material respects with all agreements and covenants required
by this Agreement to be performed or complied with by it on or prior to the
Closing Date.
(c) DIRECTOR AND OFFICER RESIGNATIONS AND APPOINTMENTS. The
Company shall have delivered to Eugene the Resignations and Resolutions in a
form satisfactory to Eugene, effective as of the Closing. The Company shall also
have delivered to Eugene evidence satisfactory to Eugene of the appointment of
new directors of the Company in accordance with SECTION 6.1 hereof.
(d) CONSENTS. The Company shall have obtained all consents,
waivers and approvals required in connection with the consummation of the
transactions contemplated hereby, other than consents, waivers and approvals the
absence of which, either alone or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect on the Company taken as a whole.
(e) MATERIAL ADVERSE EFFECT. No Material Adverse Effect with
respect to the Company shall have occurred since the date of this Agreement.
(f) NO FINANCIAL OBLIGATIONS. Immediately prior to the
Closing, the Company shall have no liabilities or obligations, other than as set
forth in SECTION 6.11 hereof.
(g) SEC COMPLIANCE. Immediately prior to Closing, the Company
shall be in compliance with the reporting requirements under the Exchange Act.
(h) BUSINESS RECORDS; RESIGNATION LETTER. The Company shall
have delivered to Eugene the Business Records and the Resignation Letter from
Company's Accountants.
(i) OTHER DELIVERIES. At Closing, the Company shall have
delivered to Eugene and/or the Shareholders: (i) certificates representing
Company Shares to the Shareholders as set forth in SCHEDULE 1.1 hereof, (ii)
copies of resolutions and actions taken by the Company's board of directors in
connection with the approval of this Agreement and the transactions contemplated
hereunder, and (iii) such other documents or certificates as shall reasonably be
required by Company and its counsel in order to consummate the transactions
contemplated hereunder.
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7.3 CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The obligations of
the Company to consummate and effect the Transaction shall be subject to the
satisfaction at or prior to the Closing Date of each of the following
conditions, any of which may be waived, in writing, exclusively by the Company:
(a) REPRESENTATIONS AND WARRANTIES. Each representation and
warranty of Eugene and the Shareholders contained in this Agreement (i) shall
have been true and correct as of the date of this Agreement and (ii) shall be
true and correct in all material respects on and as of the Closing Date with the
same force and effect as if made on and as of the Closing. The Company shall
have received a certificate with respect to the foregoing signed on behalf of
Eugene by an authorized officer of Eugene with respect to the foregoing as its
relates to Eugene.
(b) AGREEMENTS AND COVENANTS. Eugene and the Shareholders
shall have performed or complied in all material respects with all agreements
and covenants required by this Agreement to be performed or complied with by
them at or prior to the Closing Date.
(c) CONSENTS. Eugene shall have obtained all consents, waivers
and approvals required in connection with the consummation of the transactions
contemplated hereby, other than consents, waivers and approvals the absence of
which, either alone or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect on Eugene.
(d) MATERIAL ADVERSE EFFECT. No Material Adverse Effect with
respect to Eugene shall have occurred since the date of this Agreement.
(e) CHANGE OF ACCOUNTANT FORM 8-K; PRESS RELEASE. Eugene shall
have delivered the Change of Accountant Form 8-K and Press Release to the
Company, each in a form reasonably acceptable to the Company.
(f) OTHER DELIVERIES. At Closing, Eugene and/or the
Shareholders shall have delivered to the Company: (i) documents evidencing the
transfer of the Xxxxxx Shares owned by the Shareholders, in accordance with
Section 1.5, (ii) copies of resolutions and actions taken Eugene's board of
directors or comparable governing body in connection with the approval of this
Agreement and the transactions contemplated hereunder, and (iii) such other
documents or certificates as shall reasonably be required by the Company and its
counsel in order to consummate the transactions contemplated hereunder.
ARTICLE VIII
SURVIVAL
--------
Except as specifically set forth in ARTICLE IX, all representations,
warranties, agreements and covenants contained in or made pursuant to this
Agreement by any party hereto or contained in any Schedule hereto shall not
survive the Closing, and no claims made by virtue of such representations,
warranties, agreements and covenants shall be made or commenced by any party
hereto from and after the Closing.
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ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
---------------------------------
9.1 TERMINATION. This Agreement may be terminated at any time prior to
the Closing:
(a) by mutual written agreement of Xxxxxx and the Company;
(b) by either Eugene or the Company if the Transaction shall
not have been consummated by October 1, 2005 for any reason; provided, however,
that the right to terminate this Agreement under this SECTION 9.1(b) shall not
be available to any party whose action or failure to act has been a principal
cause of or resulted in the failure of the Transaction to occur on or before
such date and such action or failure to act constitutes a breach of this
Agreement;
(c) by either Eugene of the Company if a Governmental Entity
shall have issued an order, decree or ruling or taken any other action, in any
case having the effect of permanently restraining, enjoining or otherwise
prohibiting the Transaction, which order, decree, ruling or other action is
final and nonappealable;
(d) by Company, upon a material breach of any representation,
warranty, covenant or agreement on the part of Xxxxxx or the Shareholders set
forth in this Agreement, or if any representation or warranty of Xxxxxx or the
Shareholders shall have become materially untrue, in either case such that the
conditions set forth in SECTION 7.1 or SECTION 7.3 would not be satisfied as of
the time of such breach or as of the time such representation or warranty shall
have become untrue, provided, that if such inaccuracy in Eugene's or the
Shareholders' representations and warranties or breach by Eugene or the
Shareholders is curable by Eugene or the Shareholders prior to the Closing Date,
then the Company may not terminate this Agreement under this SECTION 9.1(d) for
thirty (30) days after delivery of written notice from Company to Eugene and the
applicable Shareholders of such breach, provided Eugene or the applicable
Shareholders continues to exercise commercially reasonable efforts to cure such
breach (it being understood that Company may not terminate this Agreement
pursuant to this SECTION 9.1(d) if it shall have materially breached this
Agreement or if such breach by Eugene or the Shareholders is cured during such
thirty (30)-day period);
(e) by Eugene, upon a material breach of any or
representation, warranty, covenant or agreement on the part of the Company set
forth in this Agreement, or if any representation or warranty of the Company
shall have become materially untrue, in either case such that the conditions set
forth in SECTION 7.1 or SECTION 7.2 would not be satisfied as of the time of
such breach or as of the time such representation or warranty shall have become
untrue, provided, that if such inaccuracy in the Company's representations and
warranties or breach by the Company is curable by the Company prior to the
Closing Date, then Eugene may not terminate this Agreement under this SECTION
9.1(e) for thirty (30) days after delivery of written notice from Eugene to the
Company of such breach, provided the Company continues to exercise commercially
reasonable efforts to cure such breach (it being understood that Eugene may not
terminate this Agreement pursuant to this SECTION 9.1(e) if it shall have
materially breached this Agreement or if such breach by the Company is cured
during such thirty (30)-day period).
29
9.2 NOTICE OF TERMINATION; EFFECT OF TERMINATION. Any termination of
this Agreement under SECTION 9.1 above will be effective immediately upon (or,
if the termination is pursuant to SECTION 9.1(d) or SECTION 9.1(e) and the
proviso therein is applicable, thirty (30) days after) the delivery of written
notice of the terminating party to the other parties hereto. In the event of the
termination of this Agreement as provided in SECTION 9.1, this Agreement shall
be of no further force or effect and the Transaction shall be abandoned, except
as set forth in this SECTION 6.7(a), SECTION 9.2, SECTION 9.3 and ARTICLE X
(General Provisions), each of which shall survive the termination of this
Agreement.
9.3 FEES AND EXPENSES. All fees and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall be paid by
the party incurring such expenses whether or not the Transaction is consummated.
9.4 AMENDMENT. This Agreement may be amended by the parties hereto at
any time by execution of an instrument in writing signed on behalf of each of
the Company, Eugene and the Shareholders holding a majority of the Xxxxxx Shares
held by all Shareholders a party hereto.
9.5 EXTENSION; WAIVER. At any time prior to the Closing, any party
hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto and (iii)
waive compliance with any of the agreements or conditions for the benefit of
such party contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party. Delay in exercising any right under this
Agreement shall not constitute a waiver of such right.
ARTICLE X
GENERAL PROVISIONS
------------------
10.1 NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally or by commercial
delivery service, or sent via telecopy (receipt confirmed) to the parties at the
following addresses or telecopy numbers (or at such other address or telecopy
numbers for a party as shall be specified by like notice):
(a) if to the Company, to:
Ezcomm Enterprises, Inc.
Xxxxx Xxxxx, President
00000, 00X Xxxxxx
Xxxxx, XX, X0X 0X0
(000) 000-0000 telephone
(000) 000-0000 telecopy
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(b) if to Eugene or the Xxxxxx Shareholders, to:
Xxxxxx Science Inc.
00-0 Xxxxxxx-xxxx, Xxxxx-xx,
Xxxxxxx, Xxxxxxx-xx,
Xxxxx 421-150
Attn: CEO
(00-00) 000-0000 telephone
(00-00) 000-0000 telecopy
with a copy to:
Xxxxxx Xxxxxxxx & Markiles, LLP
00000 Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxx, Esq.
(000) 000-0000 telephone
(000) 000-0000 telecopy
10.2 INTERPRETATION.
(a) When a reference is made in this Agreement to Exhibits,
such reference shall be to an Exhibit to this Agreement unless otherwise
indicated. When a reference is made in this Agreement to Sections, such
reference shall be to a Section of this Agreement. Unless otherwise indicated
the words "include," "includes" and "including" when used herein shall be deemed
in each case to be followed by the words "without limitation." The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. When reference is made herein to "the business of" an entity, such
reference shall be deemed to include the business of all direct and indirect
subsidiaries of such entity. References to the Company shall be deemed to
include the Company and all of its direct or indirect subsidiaries.
(b) For purposes of this Agreement, the term "MATERIAL ADVERSE
EFFECT" when used in connection with an entity means any change, event,
violation, inaccuracy, circumstance or effect, individually or when aggregated
with other changes, events, violations, inaccuracies, circumstances or effects,
that is materially adverse to the business, assets (including intangible
assets), revenues, financial condition or results of operations of such entity
and its subsidiaries, if any, taken as a whole (it being understood that neither
of the following alone or in combination shall be deemed, in and of itself, to
constitute a Material Adverse Effect: (a) changes attributable to the public
announcement or pendency of the transactions contemplated hereby, (b) changes in
general national or regional economic conditions, or (c) changes affecting the
industry generally in which Eugene or the Company operates.
(c) For purposes of this Agreement, the term "PERSON" shall
mean any individual, corporation (including any non-profit corporation), general
partnership, limited partnership, limited liability partnership, joint venture,
estate, trust, company (including any limited liability company or joint stock
company), firm or other enterprise, association, organization, entity or
Governmental Entity.
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(d) For purposes of this Agreement, all monetary amounts set
forth herein are referenced in United States dollars, unless otherwise noted.
10.3 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
10.4 ENTIRE AGREEMENT; THIRD PARTY BENEFICIARIES. This Agreement and
the documents and instruments and other agreements among the parties hereto as
contemplated by or referred to herein, including the Schedules hereto (a)
constitute the entire agreement among the parties with respect to the subject
matter hereof and supersede all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof;
and (b) are not intended to confer upon any other person any rights or remedies
hereunder (except as specifically provided in this Agreement).
10.5 SEVERABILITY. In the event that any provision of this Agreement,
or the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto. The parties further agree to replace
such void or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the economic,
business and other purposes of such void or unenforceable provision.
10.6 OTHER REMEDIES; SPECIFIC PERFORMANCE. Except as otherwise provided
herein, any and all remedies herein expressly conferred upon a party will be
deemed cumulative with and not exclusive of any other remedy conferred hereby,
or by law or equity upon such party, and the exercise by a party of any one
remedy will not preclude the exercise of any other remedy. The parties hereto
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to seek an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having jurisdiction, this
being in addition to any other remedy to which they are entitled at law or in
equity.
10.7 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, regardless of the laws
that might otherwise govern under applicable principles of conflicts of law
thereof.
10.8 RULES OF CONSTRUCTION. The parties hereto agree that they have
been represented by counsel during the negotiation and execution of this
Agreement and, therefore, waive the application of any law, regulation, holding
or rule of construction providing that ambiguities in an agreement or other
document will be construed against the party drafting such agreement or
document.
32
10.9 ASSIGNMENT. No party may assign either this Agreement or any of
its rights, interests, or obligations hereunder without the prior written
approval of the other parties. Subject to the first sentence of this SECTION
10.9, this Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and permitted assigns.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
33
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first written above.
EZCOMM ENTERPRISES, INC.
By: /s/ Xxxxx Xxxxx
---------------------------------------
Xxxxx Xxxxx, President
XXXXXX SCIENCE INC.
By: /s/ Xxxx Xxx
---------------------------------------
Xxxx Xxx, Director and Attorney-in-Fact
34
XXXXXX SCIENCE INC.
SHAREHOLDERS' SIGNATURE PAGE TO
EXCHANGE AGREEMENT
Dated September 1, 2005
Among Ezcomm Enterprises, Inc.,
Xxxxxx Science Inc., and
The Shareholders of Xxxxxx Science Inc.
The undersigned Shareholder hereby executes and delivers the Exchange
Agreement (the "AGREEMENT") to which this Signature Page is attached, which,
together with all counterparts of the Agreement and Signature Pages of the other
parties named in said Agreement, shall constitute one and the same document in
accordance with the terms of the Agreement. The undersigned Shareholders shall
be bound by all provisions of the Agreement applicable to Shareholders and
confirms the accuracy of the representations and warranties of such Shareholder
set forth in ARTICLE II of the Agreement.
IF AN INDIVIDUAL:
--------------------------------------------------------------
(Signature)
--------------------------------------------------------------
(Type or print name as it should appear on certificate)
--------------------------------------------------------------
IF AN ENTITY:
--------------------------------------------------------------
(Type or print name as it should appear on certificate)
By:
----------------------------------------------------------
Name:
--------------------------------------------------
(Type or print name)
Title:
-------------------------------------------------
Address:
-----------------------------------------------------
-----------------------------------------------------
Telephone: ( )
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Facsimile: ( )
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NUMBER OF EUGENE SHARES HELD:
--------------------
