SHARE EXCHANGE AGREEMENT
Exhibit
10.1 (Share Exchange Agreement)
Execution
Copy
This
SHARE EXCHANGE AGREEMENT (this “Agreement”), dated as
of June 15, 2009, is by and among Usunco Automotive Limited, a British Virgin
Islands company (the “Company”), a wholly
owned subsidiary of Equicap, Inc., a Nevada corporation (the “Parent”), IBC
Automotive Products, Inc., a California corporation (“IBC”), a wholly owned
subsidiary of Company and Xxxxxx Xxxxxxx (“Xxxxxxx”) and Xxxx
Xxxxxxxx (“Kirshner”) (together
the “Buyers”). Each
of the parties to this Agreement is individually referred to herein as a “Party” and
collectively, as the “Parties.”
BACKGROUND
The
Company currently owns all the outstanding equity of IBC, being only shares of
common stock (“IBC
Common Stock”). Xxxxxxx and Xxxxxxxx have been operating IBC
for the past three years while it has been a subsidiary of the
Company. Now, the Company and Parent want to divest IBC and
propose to sell the equity of IBC to Xxxxxxx and Kirshner. The reason
for the sale is to divest IBC to its current management because IBC is no longer
representing the business focus of the Parent and the Company, and IBC has
become a smaller portion of the overall business of the Parent. Each
of Xxxxxxx and Xxxxxxxx is a stockholder of record of the Parent, owing the
number of shares of Parent Company Stock set forth opposite such stockholder’s
name on Exhibit
A, and they are agreeing to contribute the Parent Company Stock to Parent
as a capital contribution to facilitate the transaction, and for the
consideration of Parent authorizing the Company to engage in this the overall
transaction.
The
balance of the consideration, being the cash paid by Xxxxxxx and Kirshner and
cancellation of debt of IBC to the Company, is for the transfer of the IBC
Common Stock from the Company to Xxxxxxx and Xxxxxxxx.
The Board
of Directors of each of IBC, the Parent and the Company have determined that it
is desirable to effect this share exchange.
By the
acquisition of the IBC Common Stock, Xxxxxxx and Kirshner will be assuming all
the assets, liabilities, contracts, obligations, working capital and benefits of
IBC as its sole stockholders.
AGREEMENT
NOW
THEREFORE, the parties agree as follows:
ARTICLE
I
Exchange of
Shares
SECTION
1.01. Exchange by
Stockholders. At the Closing (as defined in Section 1.02), the
following will take place (i) the Company will transfer the IBC Common Stock to
Xxxxxxx and Xxxxxxxx, which represents all the equity interests of IBC, (ii)
Xxxxxxx and Kirshner will transfer to Parent all the Parent Company Stock listed
on Exhibit A
hereto as a contribution to capital, which represents a portion of the Parent
Company Stock that they currently own, (iii) the Company will cancel the debt of
IBC to the Company in the amount of $428,261.49, including any accrued interest
thereon to the Closing, and (iv) Xxxxxxx and Xxxxxxxx will enter into a note for
the payment of $60,000 (“Promissory Note”), to
be paid in six monthly installments of $2,500 commencing the Closing and the
balance of $45,000 to be paid in 12 installments of $3,750 commencing the first
of the sixth month after the Closing.
SECTION
1.02. Closing. The
closing (the “Closing”) of the
transactions contemplated hereby (the “Transactions”) shall
take place at the offices of Golenbock Xxxxxxx Assor Xxxx & Xxxxxx LLP in
New York commencing at 9:00 a.m. local time on the later of June 11, 2009 or the
second business day following the satisfaction or waiver of all conditions to
the obligations of the parties to consummate the Transactions contemplated
hereby (other than conditions with respect to actions the respective parties
will take at the Closing itself), or such other date and time as the parties may
mutually determine (the “Closing
Date“).
ARTICLE
II
Representations and
Warranties of Xxxxxxx and Kirshner
Each of
Xxxxxxx and Xxxxxxxx hereby severally (and not jointly) represents and warrants
to the Parent with respect to itself, as follows:
SECTION
2.01. Good
Title. The Party is the record and beneficial owner, and has
good title to its respective Parent Company Stock, with the right and authority
to sell and deliver such Company Stock. Upon delivery of any
certificate or certificates duly assigned, representing the same as herein
contemplated and/or upon registering of the Parent as the new owner of such
Parent Company Stock in the share register of the Company for cancellation, the
Parent will receive good title to such Parent Company Stock, free and clear of
all liens, security interests, pledges, equities and claims of any kind, voting
trusts, stockholder agreements and other encumbrances (collectively, “Liens”).
SECTION
2.02. No
Conflicts. The execution and delivery of this Agreement and
the Promissory Note by the Party and the performance by the Party of its
obligations hereunder and thereunder in accordance with the terms hereof and
thereof: (i) will not require the consent of any third party or any federal,
state, local or foreign government or any court of competent jurisdiction,
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign (“Governmental Entity”)
under any statutes, laws, ordinances, rules, regulations, orders, writs,
injunctions, judgments, or decrees (collectively, “Laws”); (ii) will not
violate any Laws applicable to such Party or such Parent Company Stock, and
(iii) will not violate or breach any contractual obligation to which such Party
is a party.
SECTION
2.03. No Finder’s
Fee. The Party has not created any obligation for any
finder’s, investment banker’s or broker’s fee in connection with the
Transactions.
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ARTICLE
III
Representations and
Warranties of the Parent and Company
The
Parent and the Company jointly represent and warrant to Xxxxxxx and Kirshner,
except as set forth in the Company Disclosure Letter (as defined below, and
regardless of whether or not the Company Disclosure Letter is referenced below
with respect to any particular representation or warranty), which will be
delivered by the Parent and the Company to Xxxxxxx and Xxxxxxxx together with
this Agreement (the “Company Disclosure
Letter”). For the abundance of clarity, neither Parent nor the Company is
making any representations about the business, operations, prospects, assets,
liabilities or any other fact about IBC, unless otherwise specifically stated,
because IBC has been under the management and effective control of Xxxxxxx and
Kishner.
SECTION
3.01. Organization, Standing and
Power. Each of the Parent and Company is duly organized,
validly existing and in good standing under the laws of the jurisdiction in
which it is organized and has the corporate power and authority and possesses
all governmental franchises, licenses, permits, authorizations and approvals
necessary to enable it to own, lease or otherwise hold its properties and assets
and to conduct its businesses as presently conducted, other than such
franchises, licenses, permits, authorizations and approvals the lack of which,
individually or in the aggregate, has not had and would not reasonably be
expected to have a material adverse effect on the Parent and Company, have a
material adverse effect on the ability of the Parent and the Company to perform
its obligations under this Agreement or on the ability of the Parent and the
Company to consummate the Transactions (together a “Company Material Adverse
Effect”). The Parent and Company is duly qualified to do
business in each jurisdiction where the nature of its business or its ownership
or leasing of its properties make such qualification necessary except where the
failure to so qualify would not reasonably be expected to have a Company
Material Adverse Effect.
SECTION
3.02. Company Equity Interests of
IBC. The IBC Common Stock represents all the capital stock or equity
investment of IBC. The Company is the record and beneficial owner of, and has
good title to, the IBC Common Stock with the right and authority to sell
and deliver such IBC Common Stock. Upon delivery of any certificate
or certificates duly assigned, representing the same as herein contemplated
and/or upon registering of Xxxxxxx and Xxxxxxxx as the new owner of such IBC
Common Stock in the share register of IBC, Xxxxxxx and Kirshner will receive
good title to such IBC Common Stock, free and clear of all Liens.
SECTION
3.03. Authority; Execution and
Delivery; Enforceability. The Parent and the Company have all
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the Transactions. The execution and delivery by the
Parent and the Company of this Agreement and the consummation by the Parent and
the Company of the Transactions have been duly authorized and approved by the
Board of Directors of the Parent and the Company and no other corporate
proceedings on the part of the Parent and the Company are necessary to authorize
this Agreement and the Transactions. When executed and delivered,
this Agreement will be enforceable against the Parent and the Company in
accordance with its terms.
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SECTION
3.04. No Conflicts;
Consents.
(a) Except
as set forth in the Company Disclosure Letter, the execution and delivery by the
Parent and the Company of this Agreement does not, and the consummation of the
Transactions and compliance with the terms hereof and thereof will not, conflict
with, or result in any violation of or default (with or without notice or lapse
of time, or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a material benefit under, or result
in the creation of any Lien upon any of the properties or assets of the Parent
or the Company (other than those of IBC) under, any provision of (i) the
certificate of incorporation or bylaws of the Parent or the Memorandum and
Articles of Association of the Company (together the “Constituent
Instruments”), (ii) any material contract, lease, license, indenture,
note, bond, agreement, permit, concession, franchise or other instrument (a
“Contract”) to
which the Parent or the Company is a party or by which any of their respective
properties or assets is bound or (iii) any material judgment, order or decree
(“Judgment”) or
material Law applicable to the Parent or the Company or their respective
properties or assets (excluding those of IBC), other than, in the case of
clauses (ii) and (iii) above, any such items that, individually or in the
aggregate, have not had and would not reasonably be expected to have a Company
Material Adverse Effect.
(b) Except
as set forth in the Company Disclosure Letter and except for required filings
with the Securities and Exchange Commission (the “SEC”) and applicable
“Blue Sky” or state securities commissions, no material consent, approval,
license, permit, order or authorization (“Consent”) of, or
registration, declaration or filing with, or permit from, any Governmental
Entity is required to be obtained or made by or with respect to the Parent or
the Company in connection with the execution, delivery and performance of this
Agreement or the consummation of the Transactions.
SECTION
3.05. Taxes.
(a) Each
of the Parent and Company has timely filed, or has caused to be timely filed on
its behalf, all Tax Returns required to be filed by it, and all such Tax Returns
are true, complete and accurate, except to the extent any failure to file or any
inaccuracies in any filed Tax Returns, individually or in the aggregate, have
not had and would not reasonably be expected to have a Company Material Adverse
Effect. All Taxes of the Parent and Company shown to be due on such
Tax Returns, or otherwise owed, have been timely paid, except to the extent that
any failure to pay, individually or in the aggregate, has not had and would not
reasonably be expected to have a Company Material Adverse
Effect. There are no unpaid taxes in any material amount claimed to
be due by the taxing authority of any jurisdiction, and the officers of the
Company know of no basis for any such claim.
(b) The
Company Financial Statements (as defined below) reflect an adequate reserve for
all Taxes payable by the Parent and Company in accordance with US GAAP (in
addition to any reserve for deferred Taxes to reflect timing differences between
book and Tax items) for all Taxable periods and portions thereof through the
date of such financial statements. No deficiency with respect to any
Taxes has been proposed, asserted or assessed against the Parent or the Company
and no requests for waivers of the time to assess any such Taxes are pending,
except to the extent any such deficiency or request for waiver, individually or
in the aggregate, has not had and would not reasonably be expected to have a
Company Material Adverse Effect.
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(c) For
purposes of this Agreement:
“Taxes” includes all
forms of taxation, whenever created or imposed, and whether of the United States
or elsewhere, and whether imposed by a local, municipal, governmental, state,
foreign, federal or other Governmental Entity, or in connection with any
agreement with respect to Taxes, including all interest, penalties and additions
imposed with respect to such amounts.
“Tax Return” means all
federal, state, local, provincial and foreign Tax returns, declarations,
statements, reports, schedules, forms and information returns and any amended
Tax return relating to Taxes.
SECTION
3.06. Litigation. Except
as set forth on the Company Disclosure Letter or in the Company Financial
Statements, there is no action, suit, inquiry, notice of violation, proceeding
(including any partial proceeding such as a deposition) or investigation pending
or threatened in writing against or affecting the Parent or the Company, any
subsidiary or any of their respective properties (for the abundance of clarity,
excluding IBC) before or by any court, arbitrator, governmental or
administrative agency, regulatory authority (federal, state, county, local or
foreign), stock market, stock exchange or trading facility (“Action”) which (i)
adversely affects or challenges the legality, validity or enforceability of any
of this Agreement or the Transaction or (ii) could, if there were an unfavorable
decision, individually or in the aggregate, have or reasonably be expected to
result in a Company Material Adverse Effect.
SECTION
3.07. Compliance with Applicable
Laws. The Parent and the Company are in compliance
with all applicable Laws, except for instances of noncompliance that,
individually and in the aggregate, have not had and would not reasonably be
expected to have a Company Material Adverse Effect. Except as set
forth in the Company Disclosure Letter, the Parent or the Company has not
received any written communication during the past two years from a Governmental
Entity that alleges that the Parent or the Company is not in compliance in any
material respect with any applicable Law. This Section 3.07 does not
relate to matters with respect to Taxes, which are the subject of Section
3.05.
SECTION
3.08. Brokers; Schedule of Fees
and Expenses. No broker, investment banker, financial advisor
or other person is entitled to any broker’s, finder’s, financial advisor’s or
other similar fee or commission in connection with the Transactions based upon
arrangements made by or on behalf of the Parent or Company.
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SECTION
3.09. Financial
Statements. Prior to the Closing the Parent will deliver to
Xxxxxxx and Xxxxxxxx its audited consolidated financial statements for the
fiscal years ended June 30, 2007 and 2008 and unaudited consolidated financial
statements for the quarter ended March 31, 2009 (collectively, the “Company Financial
Statements”), provided such delivery will be deemed satisfied if the
Company Financial Statements are available on the SEC website. The
Company Financial Statements have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods indicated and in respect of interim periods subject to year end
adjustments. The Company Financial Statements fairly present in all
material respects the financial condition and operating results of the Parent on
a consolidated basis as of the dates, and for the periods, indicated
therein. The Parent on a consolidated basis, excluding IBC, will not
have any material liabilities or obligations, contingent or otherwise, other
than (i) liabilities incurred in the ordinary course of business subsequent
to March 31, 2009, and (ii) obligations under contracts and commitments
incurred in the ordinary course of business and not required under generally
accepted accounting principles to be reflected in the Company Financial
Statements, which, in both cases, individually and in the aggregate would not be
reasonably expected to result in a Company Material Adverse Effect.
SECTION
3.10. Internal Accounting
Controls. The Parent and the Company and its subsidiaries (for
the abundance of clarity, excluding IBC) maintain a system of internal
accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management's general or specific
authorization, and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences. The Parent and the Company (for the
abundance of clarity, excluding IBC) has established disclosure controls and
procedures and designed such disclosure controls and procedures to ensure that
material information relating to the Parent and the Company, including its
subsidiaries (for the abundance of clarity, excluding IBC), is made known to the
officers by others within those entities.
SECTION
3.11. No Additional
Agreements. The Parent and the Company do not have any
agreement or understanding with any of their respective stockholders with
respect to the transactions contemplated by this Agreement, other than as
specified in this Agreement.
SECTION
3.12. Absence of Certain Changes
or Events. Except as disclosed in the Company Financial
Statements, as contemplated by this Agreement or set forth in the Company
Disclosure Letter, since March 31, 2009, the Parent and the Company has
conducted its business only in the ordinary course, and during such period there
has not been:
(a) any
change in the assets, liabilities, financial condition or operating results of
the Parent or the Company or any subsidiary (other than IBC), except with
respect to the securities litigation against the Parent and changes in the
ordinary course of business that have not caused, in the aggregate, a Company
Material Adverse Effect;
(b) any
damage, destruction or loss, whether or not covered by insurance, that would
have a Company Material Adverse Effect;
(c) any
waiver or compromise by the Parent or the Company or any subsidiary (other than
IBC) of a valuable right or of a material debt owed to it;
6
(d) any
satisfaction or discharge of any lien, claim, or encumbrance or payment of any
obligation by the Parent or the Company or any subsidiary (other than IBC),
except in the ordinary course of business and the satisfaction or discharge of
which would not have a Company Material Adverse Effect;
(e) any
material change to a material contract by which the Parent or the Company or any
subsidiary (other than IBC) or any of its respective assets is bound or
subject;
(f) any
mortgage, pledge, transfer of a security interest in, or lien, created by the
Parent or the Company or any subsidiary (other than IBC), with respect to any of
its material properties or assets, except liens for taxes not yet due or payable
and liens that arise in the ordinary course of business and do not materially
impair the Parent’s or the Company’s or such subsidiary’s (other than IBC)
ownership or use of such property or assets;
(g) any
loans or guarantees made by the Parent or the Company or any subsidiary (other
than IBC) to or for the benefit of its employees, officers or directors, or any
members of their immediate families, other than travel advances and other
advances made in the ordinary course of its business;
(h) any
alteration of the Parent’s method of accounting with respect to the Company
Financial Statements or the identity of its auditors;
(i) any
declaration or payment of dividend or distribution of cash or other property to
stockholders of the Parent or any purchase, redemption or agreements to purchase
or redeem any shares of stock, other than as contemplated herein;
(j) any
issuance of equity securities to any officer, director or affiliate, except
pursuant to existing Parent stock option plans; or
(k) any
arrangement or commitment by the Parent or Company or any subsidiary (other than
IBC) to do any of the things described in this Section 3.11.
SECTION
3.13. No Undisclosed Events,
Liabilities, Developments or Circumstances. Except
as disclosed in the Company Financial Statements (excluding IBC), since March
31, 2009 no event, liability, development or circumstance has occurred or
exists, or is contemplated to occur with respect to the Parent or the Company or
any subsidiary (other than IBC), or their respective business, properties,
operations or financial condition, that would be required to be disclosed by the
Company under applicable securities laws on a registration statement on Form S-1
filed with the SEC relating to an issuance and sale by the Company of its Common
Stock and which has not been publicly announced.
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ARTICLE
IV
Representations and
Warranties of IBC
Xxxxxxx
and Kirshner, who have been in the control of the operations of IBC as a
subsidiary of the Company, jointly and severally represents and warrants to each
of the Parent and the Company that, except as set forth in the letter, which
will be delivered by Xxxxxxx and Xxxxxxxx to the Parent and the Company together
with this Agreement (the “IBC Disclosure
Letter”):
SECTION
4.01. Organization, Standing and
Power. IBC is duly organized, validly existing and in good
standing under the laws of the State of California and has full corporate power
and authority and possesses all governmental franchises, licenses, permits,
authorizations and approvals necessary to enable it to own, lease or otherwise
hold its properties and assets and to conduct its businesses as presently
conducted, other than such franchises, licenses, permits, authorizations and
approvals the lack of which, individually or in the aggregate, has not had and
would not reasonably be expected to have a material adverse effect on IBC, a
material adverse effect on the ability of IBC to perform its obligations under
this Agreement or on the ability of IBC to consummate the Transactions (a “IBC Material Adverse
Effect”). IBC is duly qualified to do business in each
jurisdiction where the nature of its business or their ownership or leasing of
its properties make such qualification necessary and where the failure to so
qualify would reasonably be expected to have a IBC Material Adverse
Effect.
SECTION
4.02. Equity
Interests. IBC does not own, directly or indirectly, any
capital stock, membership interest, partnership interest, joint venture interest
or other equity interest in any person.
SECTION
4.03. Authority; Execution and
Delivery; Enforceability. IBC has all requisite corporate
power and authority to execute and deliver this Agreement and to consummate the
Transactions. The execution and delivery by IBC of this Agreement and
the consummation by IBC of the Transactions have been duly authorized and
approved by the Board of Directors of IBC and no other corporate proceedings on
the part of IBC are necessary to authorize this Agreement and the
Transactions. When executed and delivered, this Agreement will be
enforceable against IBC in accordance with its terms.
SECTION
4.04. No Conflicts;
Consents.
(a) Except
as set forth in the IBC Disclosure Letter, the execution and delivery by IBC of
this Agreement, does not, and the consummation of Transactions and compliance
with the terms hereof and thereof will not, conflict with, or result in any
violation of or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any obligation or to loss of a material benefit under, or to increased,
additional, accelerated or guaranteed rights or entitlements of any person
under, or result in the creation of any Lien upon any of the properties or
assets of IBC under, any provision of (i) certificate of incorporation or bylaws
of IBC, (ii) any material Contract to which IBC is a party or by which any of
its properties or assets is bound or (iii) any material Judgment or material Law
applicable to IBC or its properties or assets, other than, in the case of
clauses (ii) and (iii) above, any such items that, individually or in the
aggregate, have not had and would not reasonably be expected to have a IBC
Material Adverse Effect.
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(b) Except
as set forth in the IBC Disclosure Letter, no Consent of, or registration,
declaration or filing with, or permit from, any Governmental Entity is required
to be obtained or made by or with respect to IBC in connection with the
execution, delivery and performance of this Agreement or the consummation of the
Transactions.
SECTION
4.05. Undisclosed
Liabilities.
(a) Since
the acquisition of IBC by the Company, each IBC document (“IBC Document”)
supplied to the Parent or the Company for use by the Parent or the Company for
any purpose, including public disclosure under the Federal and state securities
laws, complied in all material respects with the requirements of applicable Law,
including the Exchange Act and the rules and regulations of the SEC promulgated
thereunder, and did 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. Since the acquisition of IBC by the Company,
the financial statements of IBC provided to the Parent and the Company complied
as to form in all material respects with applicable accounting requirements and
the published rules and regulations of the SEC with respect thereto, were
prepared in accordance with the U.S. generally accepted accounting principals
(“GAAP”) (except, in the case of unaudited statements, as permitted by the rules
and regulations of the SEC) applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and fairly presented
the financial position of IBC as of the dates thereof and the consolidated
results of its operations and cash flows for the periods shown (subject, in the
case of unaudited statements, to normal year-end audit
adjustments).
(b) Except
as set forth in the financial statements of IBC, as of March 31, 2009, provided
to the Parent and the Company for use in connection with the Company Financial
Statements, IBC has no liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) required by GAAP to be set forth on
a balance sheet of IBC or in the notes thereto. The IBC Disclosure
Letter sets forth all financial and contractual obligations and liabilities
(including any obligations to issue capital stock or other securities of the
parent) due after the date hereof.
SECTION
4.06. Absence of Certain Changes
or Events. Except as disclosed in the in the IBC Disclosure
Letter, since Xxxxx 00, 0000, XXX has conducted its business only in the
ordinary course, and during such period there has not been:
(a) any
change in the assets, liabilities, financial condition or operating results of
the IBC;
(b) any
damage, destruction or loss, whether or not covered by insurance;
(c) any
waiver or compromise by IBC of a valuable right or of a material debt owed to
it;
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(d) any
satisfaction or discharge of any lien, claim, or encumbrance or payment of any
obligation by IBC;
(e) any
material change to a material Contract by which IBC or any of its assets is
bound or subject;
(f) any
material change in any compensation arrangement or agreement with any employee,
officer, director or stockholder;
(g) any
resignation or termination of employment of any officer of IBC;
(h) any
mortgage, pledge, transfer of a security interest in, or lien, created by IBC,
with respect to any of its material properties or assets, except liens for taxes
not yet due or payable and liens that arise in the ordinary course of business
and do not materially impair IBC’s ownership or use of such property or
assets;
(i) any
loans or guarantees made by IBC to or for the benefit of its employees, officers
or directors, or any members of their immediate families, other than travel
advances and other advances made in the ordinary course of its
business;
(j) any
declaration, setting aside or payment or other distribution in respect of any of
IBC’s capital stock, or any direct or indirect redemption, purchase, or other
acquisition of any of such stock by IBC;
(k) any
alteration of IBC’s method of accounting;
(l) any
issuance of equity securities to any officer, director or affiliate;
or
(m) any
arrangement or commitment by IBC to do any of the things described in this
Section 4.06.
SECTION
4.07. Taxes.
(a) Except
where the Parent or the Company had the clear obligation on behalf of IBC, then
IBC has timely filed, or has caused to be timely filed on its behalf, all Tax
Returns required to be filed by it, and all such Tax Returns are true, complete
and accurate, except to the extent any failure to file or any inaccuracies in
any filed Tax Returns, individually or in the aggregate, have not had and would
not reasonably be expected to have a IBC Material Adverse Effect. All
Taxes shown to be due on such Tax Returns of IBC, or otherwise owed, has been
timely paid, except to the extent that any failure to pay, individually or in
the aggregate, has not had and would not reasonably be expected to have a IBC
Material Adverse Effect.
(b) The
most recent financial statements contained in the IBC Documents reflect an
adequate reserve for all Taxes payable by IBC (in addition to any reserve for
deferred Taxes to reflect timing differences between book and Tax items) for all
Taxable periods and portions thereof through the date of such financial
statements. No deficiency with respect to any Taxes has been
proposed, asserted or assessed against IBC, and no requests for waivers of the
time to assess any such Taxes are pending, except to the extent any such
deficiency or request for waiver, individually or in the aggregate, has not had
and would not reasonably be expected to have a IBC Material Adverse
Effect.
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(c) There
are no Liens for Taxes (other than for current Taxes not yet due and payable) on
the assets of IBC. IBC is not bound by any agreement with respect to
Taxes.
SECTION
4.08. Litigation. Except
as disclosed in the IBC Disclosure Letter, there is no Action which (i)
adversely affects or challenges the legality, validity or enforceability of any
of this Agreement or the Transactions or (ii) could, if there were an
unfavorable decision, individually or in the aggregate, have or reasonably be
expected to result in a IBC Material Adverse Effect. There has not
been, and to the knowledge of IBC there is not pending, any investigation
involving the IBC or any current or former director or officer of the IBC (in
his or her capacity as such).
SECTION
4.09. Compliance with Applicable
Laws. IBC is in compliance with all applicable Laws, including
those relating to occupational health and safety and the environment, except for
instances of noncompliance that, individually and in the aggregate, have not had
and would not reasonably be expected to have a IBC Material Adverse
Effect. Except as set forth in the IBC Disclosure Letter, IBC has not
received any written communication during the past two years from a Governmental
Entity that alleges that IBC is not in compliance in any material respect with
any applicable Law. This Section 4.09 does not relate to matters with
respect to Taxes, which are the subject of Section 4.07.
SECTION
4.10.
Brokers; Schedule of
Fees and Expenses. No broker, investment banker, financial
advisor or other person is entitled to any broker’s, finder’s, financial
advisor’s or other similar fee or commission in connection with the Transactions
based upon arrangements made by or on behalf of the Company.
SECTION
4.11. Transactions With Affiliates
and Employees. Except as set forth in the IBC Disclosure
Letter, none of the officers or directors of the IBC and, to the knowledge of
IBC, none of the employees of the IBC is presently a party to any transaction
with the IBC (other than for services as employees, officers and directors),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of IBC, any entity in which any
officer, director, or any such employee has a substantial interest or is an
officer, director, trustee or partner.
SECTION
4.12. Internal Accounting
Controls. IBC maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific authorizations,
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset accountability, (iii) access to assets is permitted only in
accordance with management's general or specific authorization, and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences. IBC has established disclosure controls and procedures
for IBC that ensure that material information relating to the IBC is made known
to the officers by others and is provided to the officers of Parent and
Company.
11
SECTION
4.13. No Additional
Agreements. The IBC does not have any agreement or
understanding with any party with respect to the transactions contemplated by
this Agreement other than as specified in this Agreement.
SECTION
4.14. No Undisclosed Events,
Liabilities, Developments or Circumstances. Except
as set forth in the IBC Disclosure Letter, since March 31, 2009, no event,
liability, development or circumstance has occurred or exists, or is
contemplated to occur with respect to IBC or its business, properties,
prospects, operations or financial condition, that would be required to be
disclosed by the IBC under applicable securities laws on a registration
statement on Form S-1 filed with the SEC relating to an issuance and sale by the
IBC of its common stock and which has not been publicly announced.
ARTICLE
V
Deliveries
SECTION
5.01. Deliveries of Xxxxxxx,
Xxxxxxxx and IBC.
(a) Concurrently
herewith each of Xxxxxxx, Kirshner and IBC is delivering to the Parent and the
Company this Agreement and the IBC Disclosure Letter executed by the
Stockholder.
(b) At
or prior to the Closing, Xxxxxxx, Xxxxxxxx and IBC shall deliver:
|
|
(i)
|
to
Parent, certificates representing Xxxxxxx’x and Kirshner’s respective
Parent Company Stock set forth on Exhibit
A;
|
|
|
(ii)
|
to
Parent, duly executed stock powers for transfer by the stockholder of its
respective Parent Company Stock;
|
|
|
(iii)
|
to
Company, duly executed Promissory Note by Xxxxxxx and
Xxxxxxxx;
|
|
|
(iv)
|
such
other certificates as required hereunder;
and
|
|
|
(v)
|
first
principal installment under the Promissory
Note.
|
SECTION
5.02. Deliveries of the
Parent.
(a) Concurrently
herewith, the Parent is delivering:
|
|
(i)
|
to
each of Xxxxxxx, Kirshner and IBC, a copy of this Agreement and the
Company Disclosure Letter executed by
Parent;
|
12
(b) At
or prior to the Closing, the Parent shall deliver:
|
|
(i)
|
to
IBC, a letter of resignation of Xxxxx Xxxx from all offices he holds with
IBC effective upon the Closing; and
|
|
|
(ii)
|
such
other certificates as required
hereunder.
|
SECTION
5.03. Deliveries of the
Company.
(a) Concurrently
herewith, the Company is delivering to Xxxxxxx, Kirshner and IBC:
|
|
(i)
|
this
Agreement and the Company Disclosure Letter executed by
Company.
|
(b) At
or prior to the Closing, the Company shall deliver:
|
|
(i)
|
To
Xxxxxxx and Xxxxxxxx, certificates representing the IBC Common
Stock;
|
|
|
(ii)
|
to
Xxxxxxx and Kirshner, duly executed stock powers for transfer by the
Company of its IBC Common Stock;
|
|
|
(iii)
|
to
IBC, evidence of discharge of the obligation of IBC to the Company in the
amount of $428,261.49 and interest through the date of Closing;
and
|
|
|
(iv)
|
such
other certificates as required
hereunder.
|
ARTICLE
VI
Conditions to
Closing
SECTION
6.01. Stockholder and Company
Conditions Precedent. The obligations of Xxxxxxx, Xxxxxxxx and
IBC to enter into and complete the Closing is subject, at the option of Xxxxxxx,
Kirshner and IBC, to the fulfillment on or prior to the Closing Date of the
following conditions.
(a) Representations and
Covenants. The representations and warranties of the Parent and the
Company contained in this Agreement shall be true in all material respects on
and as of the Closing Date with the same force and effect as though made on and
as of the Closing Date. The Parent or the Company shall have
performed and complied in all material respects with all covenants and
agreements required by this Agreement to be performed or complied with by the
Parent or the Company on or prior to the Closing Date. The Parent
shall have delivered to Xxxxxxx, Xxxxxxxx and IBC, a certificate, dated the
Closing Date, to the foregoing effect.
13
(b) Litigation. No
action, suit or proceeding shall have been instituted before any court or
governmental or regulatory body or instituted or threatened by any governmental
or regulatory body to restrain, modify or prevent the carrying out of the
Transactions or to seek damages or a discovery order in connection with such
Transactions, or which has or may have, in the reasonable opinion of the Xxxxxx,
Kirshner and IBC, a materially adverse effect on the assets, properties,
business, operations or condition (financial or otherwise) of the Parent or the
Company.
(c) No Material Adverse
Change. There shall not have been any occurrence, event,
incident, action, failure to act, or transaction since March 31, 2009 which has
had or is reasonably likely to cause a Company Material Adverse
Effect.
(d) Deliveries. The
deliveries specified in Sections 5.02 and 5.03 shall have been made by the
Parent and the Company.
SECTION
6.02. Parent and Company
Conditions Precedent. The obligations of the Parent and the
Company to enter into and complete the Closing is subject, at the option of the
Parent and the Company, to the fulfillment on or prior to the Closing Date of
the following conditions, any one or more of which may be waived by the Parent
and the Company in writing.
(a) Representations and
Covenants. The representations and warranties of Xxxxxxx, Xxxxxxxx and
IBC contained in this Agreement shall be true in all material respects on and as
of the Closing Date with the same force and effect as though made on and as of
the Closing Date. Xxxxxxx, Kirshner and IBC shall have performed and
complied in all material respects with all covenants and agreements required by
this Agreement to be performed or complied with by Xxxxxxx, Xxxxxxxx and IBC on
or prior to the Closing Date. Xxxxxxx, Kirshner and IBC shall have
delivered to the Parent a certificate, dated the Closing Date, to the foregoing
effect.
(b) Litigation. No
action, suit or proceeding shall have been instituted before any court or
governmental or regulatory body or instituted or threatened by any governmental
or regulatory body to restrain, modify or prevent the carrying out of the
Transactions or to seek damages or a discovery order in connection with such
Transactions, or which has or may have, in the reasonable opinion of the Parent
and the Company, a materially adverse effect on the assets, properties,
business, operations or condition (financial or otherwise) of IBC.
(c) No Material Adverse
Change. There shall not have been any occurrence, event,
incident, action, failure to act, or transaction since March 31, 2009 which has
had or is reasonably likely to cause an IBC Material Adverse
Effect.
(d) Deliveries. The
deliveries specified in Section 5.01 shall have been made by Xxxxxxx, Xxxxxxxx
and IBC, respectively.
(e) Satisfactory Completion of
Due Diligence Investigation. The Parent and the Company shall
have completed its legal, accounting and business due diligence of IBC, which
shall include an audit and/or appraisal related to the Transaction and the
results thereof shall be satisfactory to the Parent and the Company in their
sole and absolute discretions.
14
ARTICLE
VII
Covenants
SECTION
7.01. Public
Announcements. Widmann, Kirshner, IBC, the Parent and the
Company will consult with each other before issuing, and provide each other the
opportunity to review and comment upon, any press release or other public
statements with respect to the Agreement and the Transactions and shall not
issue any such press release or make any such public statement prior to such
consultation, except as may be required by applicable Law, court process or by
obligations pursuant to any listing agreement with any national securities
exchange.
SECTION
7.02. Fees and
Expenses. All fees and expenses incurred in connection with
this Agreement shall be paid by the Party incurring such fees or expenses,
whether or not this Agreement is consummated.
SECTION
7.03. Continued
Efforts. Each Party shall use commercially reasonable efforts
to (a) take all action reasonably necessary to consummate the Transactions,
and (b) take such steps and do such acts as may be necessary to keep all of
its representations and warranties true and correct as of the Closing Date with
the same effect as if the same had been made, and this Agreement had been dated,
as of the Closing Date.
SECTION
7.04. Conduct of
Business.
During the period from the date hereof through the Closing Date, each of IBC on
the one hand, and the Parent and the Company together on the other hand, shall
carry on their respective businesses in the ordinary and usual course consistent
with past practice.
SECTION
7.05. Filing of 8-K and Press
Release. Parent shall file, within four business days of the
Closing Date, a current report on Form 8-K and attach as exhibits all relevant
agreements with the SEC disclosing the terms of this Agreement and other
requisite disclosure regarding the Transactions and including the requisite
financial statements of the Company.
SECTION
7.06. Access. Each Party
shall permit representatives of each other Party to have full access to all
premises, properties, personnel, books, records (including Tax records),
contracts, and documents of or pertaining to such Party.
15
ARTICLE
VIII
Miscellaneous
SECTION
8.01. Notices. All
notices, requests, claims, demands and other communications under this Agreement
shall be in writing and shall be deemed given upon receipt by the Parties at the
following addresses (or at such other address for a Party as shall be specified
by like notice):
If to the
Parent, to:
Equicap,
Inc.
X.X. Xxx 00
Xxx Xxxxxxx, XX 00000-0000
Attn: Xxxxx Xxxx or Xxxxx
He
If to the
Company, to:
Usunco
Automotive Limited
00000
Xxxxxxxxx Xxxx
Xxxxx
Xxxx XX 00000
If to
Xxxxxxx, Xxxxxxxx or IBC, to:
00000
Xxxxxxxxx Xxxx
Xxxxx
Xxxx, XX 00000
SECTION
8.02. Amendments; Waivers; No
Additional Consideration. No provision of this Agreement may
be waived or amended except in a written instrument signed by the Parent, the
Company, IBC, Xxxxxxx and Xxxxxxxx. No waiver of any default with
respect to any provision, condition or requirement of this Agreement shall be
deemed to be a continuing waiver in the future or a waiver of any subsequent
default or a waiver of any other provision, condition or requirement hereof, nor
shall any delay or omission of either Party to exercise any right hereunder in
any manner impair the exercise of any such right.
SECTION
8.03. Termination.
(a) Termination of
Agreement. The Parties may terminate this Agreement as
provided below:
|
|
(i)
|
Widmann,
Kirshner, IBC, the Company and the Parent may terminate this Agreement by
mutual written consent at any time prior to the
Closing;
|
16
|
|
(ii)
|
The
Parent and the Company, acting together, may terminate this Agreement by
giving written notice to Xxxxxxx, Kirshner and IBC at any time prior to
the Closing (A) in the event any of Xxxxxx, Xxxxxxxx or IBC have breached
any material representation, warranty, or covenant contained in this
Agreement in any material respect, or (B) if the Closing shall not have
occurred on or before May 30, 2009 by
reason of the failure of any condition precedent under Section 6.02 hereof
(unless the failure results primarily from either the Parent or the
Company itself breaching any representation, warranty, or covenant
contained in this Agreement); and
|
|
|
(iii)
|
Xxxxxxx,
Kirshner and IBC, acting together, may terminate this Agreement by giving
written notice to the Parent and the Company at any time prior to the
Closing (A) in the event the Parent or the Company has breached any
material representation, warranty, or covenant contained in this Agreement
in any material respect or (B) if the Closing shall not have occurred on
or before May 30, 2009, by reason of the failure of any condition
precedent under Section 6.01 hereof (unless the failure results primarily
from any of Xxxxxxx, Xxxxxxxx or IBC themselves breaching any
representation, warranty, or covenant contained in this
Agreement).
|
(b) Effect of
Termination. If any Party terminates this Agreement pursuant
to Section 8.03(a) above, all rights and obligations of the Parties hereunder
shall terminate without any Liability of any Party to any other
Party.
SECTION
8.04. Replacement of
Securities. If any certificate or instrument evidencing any
shares is mutilated, lost, stolen or destroyed, the issuer shall issue or cause
to be issued in exchange and substitution for and upon cancellation thereof, or
in lieu of and substitution therefor, a new certificate or instrument, but only
upon receipt of evidence reasonably satisfactory to the issuer of such loss,
theft or destruction and customary and reasonable indemnity, if
requested. The applicants for a new certificate or instrument under
such circumstances shall also pay any reasonable third-party costs associated
with the issuance of such replacement shares. If a replacement
certificate or instrument evidencing any shares is requested due to a mutilation
thereof, the issuer may require delivery of such mutilated certificate or
instrument as a condition precedent to any issuance of a
replacement.
SECTION
8.05. Remedies. In
addition to being entitled to exercise all rights provided herein or granted by
law, including recovery of damages, each of the Parties will be entitled to
specific performance under this Agreement. The Parties agree that
monetary damages may not be adequate compensation for any loss incurred by
reason of any breach of obligations described in the foregoing sentence and
hereby agrees to waive in any action for specific performance of any such
obligation the defense that a remedy at law would be adequate.
SECTION
8.06. Interpretation. When
a reference is made in this Agreement to a Section, such reference shall be to a
Section of this Agreement unless otherwise indicated. Whenever the
words “include”, “includes” or “including” are used in this Agreement, they
shall be deemed to be followed by the words “without limitation”.
17
SECTION
8.07. Severability. If
any term or other provision of this Agreement is invalid, illegal or incapable
of being enforced by any rule or Law, or public policy, all other conditions and
provisions of this Agreement shall nevertheless remain in full force and effect
so long as the economic or legal substance of the Transactions contemplated
hereby is not affected in any manner materially adverse to any
Party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the Parties shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
Parties as closely as possible in an acceptable manner to the end that
Transactions contemplated hereby are fulfilled to the extent
possible.
SECTION
8.08. Counterparts; Facsimile
Execution. 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 Parties. Facsimile execution
and delivery of this Agreement is legal, valid and binding for all
purposes.
SECTION
8.09. Entire Agreement; Third
Party Beneficiaries. This Agreement, taken together with the Company
Disclosure Letter and IBC Disclosure Letter, (a) constitute the entire
agreement, and supersede all prior agreements and understandings, both written
and oral, among the Parties with respect to the Transactions and (b) are not
intended to confer upon any person other than the Parties any rights or
remedies.
SECTION
8.10. Governing
Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof,
except to the extent the laws of a jurisdiction of incorporation of a corporate
party are mandatorily applicable to the Transactions.
SECTION
8.11. Assignment. Neither
this Agreement nor any of the rights, interests or obligations under this
Agreement shall be assigned, in whole or in part, by operation of law or
otherwise by any of the Parties without the prior written consent of the other
Parties. Any purported assignment without such consent shall be
void. Subject to the preceding sentences, this Agreement will be
binding upon, inure to the benefit of, and be enforceable by, the Parties and
their respective successors and assigns.
[Signature Page
Follows]
18
The Parties hereto have executed and
delivered this Share Exchange Agreement as of the date first above
written.
The
Parent:
|
EQUICAP,
INC.
|
|
|
By:
|
/Xxxxx
Xxxx/
|
|
Name:
Xxxxx Xxxx
|
|
|
Title:
President
|
|
The
Company:
|
USUNCO
AUTOMOTIVE LIMITED
|
|
|
By:
|
/Xxxxx
Xxxx/
|
|
Name: Xxxxx
Xxxx
|
|
|
Title: President
|
|
|
IBC
AUTOMOTIVE PRODUCTS, INC.
|
||
|
By:
|
/Xxxxxxx
Xxxxxxx/
|
|
|
Name: Xxxxxxx
Xxxxxxx
|
||
|
Title: President
|
||
|
/s/
Xxxxxxx Xxxxxxx
|
||
|
Sign
Name Above
|
||
|
/s/
Xxxx Xxxxxxxxx
|
||
|
Sign
Name
Above
|
||
EXHIBIT
A
Shareholders of Usunco
Automotive Limited
As of the date of this Agreement, this
Exhibit A shall only contain the name and address of each Stockholder and the
number of shares of Company Stock held by each stockholder. Prior to
the Closing, this Exhibit A shall be amended in a manner that is satisfactory to
all of the Parties so that the missing information is provided.
|
Name and Address of Stockholder
|
Tax ID Number
of Stockholder
(if Applicable)
|
Number of
Shares of Parent
Stock to be Delivered
|
||||
|
Xxxxxxx Xxxxxxx
00000
Xxxxxxxxx Xxxxxx,
Xxxxx
Xxxx, XX 00000
|
508,062 | |||||
|
Xxxx
Xxxxxxxxx
00000
Xxxxx Xxxxx,
Xxxxxxx
Xxxxx, XX 00000
|
47,932 | |||||
|
TOTAL:
|
555,994 | |||||
