EXHIBIT 2.4
STITEL SYSTEMS, INC./CIRILIUM HOLDINGS, INC.
INVESTMENT AGREEMENT
March 15, 2004
STITEL SYSTEMS, INC./CIRILIUM HOLDINGS, INC.
INVESTMENT AGREEMENT
THIS INVESTMENT AGREEMENT, (the "Agreement") is entered into as of March
15, 2004, by and among Stitel Systems, Inc., an Arizona corporation ("Stitel"),
and Cirilium Holdings, Inc., a Delaware corporation ("Cirilium Holdings"). Each
of Stitel and Cirilium Holdings may be from time to time herein collectively
referred to as "Parties" and individually as a "Party."
RECITALS
WHEREAS, Stitel, together with all of Stitel's shareholders as indicated on
Schedule 1 hereto (the "Stitel Shareholders"), wish to transfer 100% of the
shares of Common Stock of Stitel to Cirilium Holdings, subject to the terms and
conditions contained in this Agreement, and
WHEREAS, consideration payable to Stitel, in exchange for 100% of the
Common Stock of Stitel shall consist of one million (1,000,000) shares of common
stock of Cirilium Holdings, and up to an additional one million (1,000,000)
shares of Cirilium Holdings, payable over the next three years upon Stitel
reaching certain performance goals, as defined below, with all such
consideration subject to the terms and conditions set forth below, and
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
promises hereinafter set forth, the Parties hereto agree as follows.
1. [INTENTIONALLY DELETED]
2. AGREEMENT TO SELL AND PURCHASE.
2.1 Authorization of Shares. On or prior to the Closing (as defined in
Section 3 below), Stitel and the Stitel Shareholders shall have authorized the
sale to Cirilium Holdings of 100% of the Common Stock of Stitel (collectively,
the "Stitel Shares"). The Stitel Shares shall have the rights, preferences,
privileges and restrictions of shares of common stock set forth in the Articles
of Incorporation of Stitel, in the form attached hereto as Exhibit B (the
"Stitel Articles") and Bylaws of Stitel, in the form attached hereto as Exhibit
C (the "Stitel Bylaws").
2.2 Sale and Purchase of Shares. Subject to the terms and conditions
contained herein, hereby agrees to sell to Cirilium Holdings, and Cirilium
Holdings agrees to purchase the Stitel Shares from Stitel, subject to the
purchase price set forth in Sections 3.2 below.
3. CLOSING, DELIVERY AND PAYMENT.
3.1 Closing. The closing under this Agreement (the "Closing" or "Closing")
shall take place at 10 a.m. on March 15, 2004, at the offices of Cirilium
Holdings, or at such other time or place as Cirilium Holdings and Stitel may
mutually agree (the "Closing Date").
3.2 Deliveries. At the Closing, subject to the terms and conditions hereof,
Stitel will deliver to Cirilium Holdings one or more certificates representing
100% of the Stitel Shares ("Share Certificate"); and Stitel will deliver to
Cirilium Holdings such certificates of title, bills of sale, assignments, and
other instruments as may be requested by counsel to Cirilium Holdings, each in a
form reasonably acceptable to Cirilium Holdings.
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(a) In partial consideration of the receipt of the Share Certificate and
other deliveries to be made at the Closing, Cirilium Holdings will deliver to
Stitel share certificates in the aggregate of one million (1,000,000) shares of
Cirilium Holdings (the "Purchase Price"), to be delivered immediately by Stitel
to each Stitel Shareholder to reflect that Stitel Shareholder's proportional
ownership in Stitel immediately prior to the Closing. Such proportional
ownership interest in Stitel immediately prior to the Closing shall be reflected
in Schedule 1 attached hereto.
(b) In partial consideration of the receipt of the Share Certificate and
the other deliveries to be made at the Closing, Cirilium Holdings will enter
into an agreement (the "Supplementary Agreement") with the Stitel Shareholders,
which agreement shall provide for payments to the Stitel Shareholders of up to
an additional one million (1,000,000) shares of common stock of Cirilium
Holdings , over a period of up to three years from the Closing Date, in the
event that Stitel achieves certain performance goals, as set forth in the
Supplementary Agreement. The Supplementary Agreement shall be attached hereto as
Exhibit A.
4. REPRESENTATIONS AND WARRANTIES OF STITEL AND THE STITEL SHAREHOLDERS
Except as set forth on a Schedule of Exceptions delivered by Stitel to
Cirilium Holdings prior to the Closing, Stitel and the Stitel Shareholders
hereby represent and warrants to Cirilium Holdings as of the Closing as follows:
4.1 Organization, Good Standing and Qualification. Stitel is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Arizona. Stitel has all requisite corporate power and authority to own
and operate its properties and assets, to execute and deliver this Agreement,
and to carry out the provisions of this Agreement and to carry on its business
as presently conducted. Stitel is duly qualified and is authorized to do
business and is in good standing as a foreign corporation in all jurisdictions,
in which the nature of its activities and of its properties (both owned and
leased) makes such qualification necessary, except for those jurisdictions in
which failure to do so would not have a material adverse effect on Stitel or its
business.
4.2 Subsidiaries. Stitel does not own or control any equity security or
other interest in any other corporation, limited partnership, limited liability
Company, or other business entity, nor immediately prior to the Closing, does
any other business entity own or control any equity security or interest in
Stitel. Stitel is not a participant in any joint venture, partnership or similar
agreement.
4.3 Capitalization; Voting Rights. The authorized capital of Stitel
immediately prior to the Closing will consist solely of three million
shares_______ authorized shares of common stock, of which 100% shares are issued
and outstanding. All issued and outstanding Stitel Shares (a) have been duly
authorized and validly issued (b) are fully paid and no-assessable and (c) were
issued in compliance with all applicable state and federal laws and regulations
concerning the issuance of securities. The rights, preferences, privileges and
restrictions of the Stitel Shares are as stated in the Stitel Articles. In
addition to and supplementing any other warranty regarding the capitalization
and finances of Stitel, Stitel and the Stitel Shareholders specifically warrant
that other than the Stitel Shares, Stitel has not issued any securities of any
type or kind whatsoever, nor has Stitel incurred any material indebtedness not
disclosed in the financial statements provided to Cirilium Holdings or the
Balance Sheet (defined below), on its
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own behalf or on behalf of any other person or entity, prior to the Closing.
Except as set forth on the Schedule of Exceptions, there are no outstanding
options, warrants, rights (including conversion or preemptive rights and rights
of first refusal), proxy or shareholder agreements, or agreements of any kind
regulating the purchase or acquisition of any Stitel securities.
4.4 Authorization; Binding Obligations. All corporate action on the part of
Stitel, its officers, directors and shareholders, necessary for the
authorization of this Agreement, the performance of all obligations of Stitel
hereunder at the Closing and the authorization for the sale and delivery of the
Stitel Shares has been taken or will be taken prior to the Closing as
applicable. The terms of this Agreement, when executed and delivered, will be
valid and binding obligations of Stitel enforceable in accordance with its
terms, except (a) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application affecting
enforcement of creditors' rights, and (b) general principles of equity that
restrict the availability of equitable remedies. The sale of the Stitel Shares
are not and will not be subject to any preemptive rights or rights of first
refusal that have not been properly waived.
4.5 Liabilities. To the best of its knowledge, neither Stitel nor the
Stitel Shareholders know of any material contingent liabilities of Stitel not
disclosed in the financial statements provided to Cirilium Holdings or the
Balance Sheet, except (i) current liabilities incurred in the ordinary course of
business that individually or in the aggregate are not material to the financial
condition or operating results of Stitel and (ii) obligations not required to be
reflected under generally accepted accounting principles in the financial
statements provided to Cirilium Holdings or in the Balance Sheet.
4.6 Agreements; Aggregation.
(a) Stitel and the Stitel Shareholders warrant that there are no material
agreements, understandings, instruments, contracts, proposed transactions,
judgments, orders, writs or decrees to which Stitel is a party or by which
Stitel is bound which may involve obligations (contingent or otherwise) of, or
payments to, Stitel in excess of $5,000.00 (other than obligations of, or
payments to, Stitel arising from the ordinary course of business).
(b) For the purposes of subsection (a) above, all indebtedness,
liabilities, agreements, understandings, instruments, contracts and proposed
transactions involving the same person or entity shall be aggregated for the
purpose of meeting the individual minimum dollar amount set forth in such
subsection.
4.7 Related Party Transactions. Stitel warrants that there are no
obligations of Stitel to officers, directors, shareholders, or employees of
Stitel other than (a) for payment of salary for services rendered, (b)
reimbursement for reasonable expenses incurred on behalf of Stitel and (c) for
other standard employee benefits made generally available to all employees
(including stock option agreements outstanding under any stock option plan
approved by the Board of Directors of Stitel
4.8 Title to Properties and Assets; Liens, Etc. Stitel and the Stitel
Shareholders warrant that Stitel has good title to all its properties and
assets, including the properties and assets reflected in the most recent
financial statements provided to Cirilium Holdings and/or the Balance Sheet, and
good title to its leasehold estates, in each case subject to no mortgage,
pledge, lien, lease, encumbrance or charge, other than (a) those resulting from
taxes which have not yet become delinquent, (b) minor liens and encumbrances
which do not materially detract from the value of the property subject thereto
or materially impair the operations of Stitel, and (c) those that have otherwise
arisen in the ordinary course of business. All facilities, machinery, equipment,
fixtures, vehicles and other properties owned, leased or used by
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Stitel are in good operating condition and repair and are reasonably fit and
usable for the purposes for which they are being used. Stitel is in compliance
with all material terms of each lease to which it is a party or is otherwise
bound. A copy of Stitel's Balance Sheet, current as of the Closing Date and
prepared in accordance with generally accepted accounting principles, ("Balance
Sheet") is attached hereto as Exhibit D. A copy of each deed, title, lease,
permit, or other certificate or evidence of legal or beneficial ownership of
each real or personal property as used by Stitel has been provided to Cirilium
Holdings.
4.9 Title to Accounts. Stitel warrants that it has good title to all its
merchant accounts, bank accounts and in each case such accounts are subject to
no mortgage, pledge, lien, lease, encumbrance, charge, freeze, overdraft, or
hold. A current copy of an account statement and a current copy of an account
agreement (if available) for each such account has been provided to Cirilium
Holdings.
4.10 Insurance Policies. Stitel warrants that it has complied fully with
the terms of all insurance policies entered into by it, and that Stitel is not
in default, breach, or violation of any such policy, nor to Stitel's knowledge,
is there any fact that would give rise to such a default, breach or violation. A
copy of each insurance policy entered into by Stitel has been provided to
Cirilium Holdings.
4.11 Stitel Intellectual Property. Stitel and the Stitel Shareholders
warrant that Stitel owns or possesses sufficient legal rights and titles to all
patents, trademarks, service marks, trade names, copyrights, trade secrets,
internet or world-wide web addresses and sites, services, computer software,
licenses, information and other proprietary rights and processes necessary for
its business as now conducted and as presently proposed to be conducted, without
any known infringement of the rights of others, that all such rights and titles
are currently in full force and effect and that no such right or title is
scheduled to expire according to its terms within thirty (30) days following the
Closing Date. A copy of each patent, copyright, trade- or service- xxxx
registration, internet domain registration, co-location agreement, and software
license as is or has been used by Stitel has been provided to Cirilium Holdings.
(a) Stitel has not received nor is Stitel aware of any communication
alleging that Stitel (or any person acting or purporting to act on behalf
of Stitel) has violated or, by conducting its business as presently
proposed, would violate any of the patents, trademarks, service marks,
trade names, copyrights or trade secrets, rights in internet or world-wide
web addresses and sites, services, computer software, or other proprietary
rights of any other person or entity.
(b) Stitel is not aware of any employee of Stitel that may be
obligated under any contract (including licenses, covenants or commitments
of any nature) or other agreement, or subject to any judgment, decree or
order of any court or administrative agency, that would interfere with that
employee's duties to Stitel or that would conflict with Stitel's business
as presently proposed to be conducted. Neither the execution nor delivery
of this Agreement, nor the carrying on of Stitel's business by Stitel, nor
the conduct of Stitel's business as presently proposed, will, to Stitel's
knowledge, conflict with or result in a breach of the terms, conditions or
provisions of, or constitute a default under, any contract, covenant or
instrument under which any employee is now obligated.
4.12 Compliance with Other Instruments. Stitel is not in violation or
default of any term of the Stitel Articles or Stitel Bylaws, or of any material
provision of any mortgage, indenture, contract, agreement, instrument or
contract to which it is party or which binds or may bind it. The execution,
delivery, and performance of this Agreement, and the sale of the Stitel Shares
pursuant hereto will not, with or without the passage of time or giving of
notice, result in any such material violation, or be in conflict with or
constitute a default under any such term, or result in the creation of any
mortgage, pledge,
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lien, encumbrance or charge upon any of the properties or assets of Stitel or
the suspension, revocation, impairment, forfeiture or nonrenewal of any permit,
license, authorization or approval applicable to Stitel, its business or
operations or any of its assets or properties.
4.13 Litigation. There is no action, suit, proceeding or investigation
pending or to Stitel's or to any Stitel Shareholder's knowledge currently
threatened against Stitel, including without limitation, any action, suit,
proceeding or investigation which questions the validity of this Agreement, any
provisions thereof, or the rights of Stitel or any Stitel Shareholder to enter
into any such agreements, or to consummate the transactions contemplated hereby
or thereby, or which might result, either individually or in the aggregate, in
any material adverse change in the assets, condition, affairs or prospects of
Stitel, financially or otherwise, or any change in the current equity ownership
of Stitel, nor is Stitel or any Stitel Shareholder aware that there is any basis
for any of the foregoing. The foregoing includes, without limitation, actions
pending or to threatened against Stitel by reason of the past or present
employment relationships of any of Stitel's employees.
4.14 Tax Returns and Payments. Stitel has disclosed to Cirilium Holdings
the status with respect to all Stitel's tax returns (federal, state and local),
that Stitel is required to file. To Stitel's knowledge, all other taxes due and
payable by Stitel on or before the Closing have been paid or will be paid prior
to the time they become delinquent with any exceptions permitted by any taxing
authority. Stitel has not been advised (a) that any of its returns, federal,
state or other, have been or are being audited as of the date hereof, or (b) of
any deficiency in assessment or proposed judgment to its federal, state or other
taxes. Stitel has no knowledge of any liability for any tax to be imposed upon
its properties or assets as of the date of this Agreement that is not adequately
provided for.
4.15 Employees. Stitel has no collective bargaining agreements with any of
its employees. There is no labor union organizing activity pending or, to
Stitel's knowledge, threatened with respect to Stitel. Stitel is not aware that
any officer or key employee, or that any group of key employees, intends to
terminate his, her or their employment with Stitel, nor does Stitel have a
present intention to terminate the employment of any officer, key employee or
group of key employees.
4.16 ERISA. Stitel does not have or otherwise contribute to or participate
in any employee benefit plan subject to the Employee Retirement Income Security
Act of 1974.
4.17 Obligations of Management. Each officer of Stitel is currently
devoting adequate business time to the conduct of the business of Stitel. To
Stitel's knowledge, no current or former officer or key employee is currently
working for a competitor enterprise.
4.18 Registration Rights . Stitel is presently not under any obligation,
and Stitel has not granted any rights to register any of Stitel's presently
outstanding securities or any of its securities that may hereafter be issued.
4.19 Compliance with Laws; Permits. To the knowledge Stitel, it has
complied in all material respects with all applicable statutes, rules,
regulations, orders or restrictions of any domestic or foreign government or any
instrumentality or agency thereof in respect of the conduct of its business or
the ownership of its properties. No governmental orders, permissions, consents,
approvals or authorizations are required to be obtained and no registrations or
declarations are required to be filed in connection with the execution and
delivery of this Agreement and performance thereunder, or, except such filings
as shall have been made prior to or concurrently with the Closing, and, if
required, any such filings that must be made subsequent to the Closing will be
effective within the time period required by law. Stitel has all franchises,
permits, licenses and any similar authority necessary for the conduct of its
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business as now being conducted by it, the lack of which could materially and
adversely affect the business, properties, prospects or financial condition of
Stitel.
4.20 Offering Valid. Assuming the accuracy of the representations and
warranties of Cirilium Holdings contained in Section 5.2 hereof, the offer and
sale of the Stitel Shares will be effected in compliance with applicable federal
and state securities laws.
4.21 Disclosures. Neither this Agreement, the Exhibits hereto, nor any
other document delivered by Stitel, the Stitel Shareholders, their attorneys or
agents to Cirilium Holdings or their attorneys or agents in connection with the
transactions contemplated hereby or thereby, taken as a whole, contain any
untrue statement of a material fact, nor omit to state a material fact necessary
in order to make the statements contained herein or therein not misleading.
4.22 Minute Books. The minute books of Stitel will be made available to
Cirilium Holdings upon request through the Closing, and will contain a true and
complete summary of all meetings of directors and shareholders since the time of
incorporation.
4.23 Real Property Holding Corporation. Stitel is not a real property
holding corporation within the meaning of Section 897(c)(2) of the Internal
Revenue Code of 1986, as amended (the "Code") and any regulations promulgated
thereunder.
4.24 Tax Elections. Stitel has not elected pursuant to the Code to be
treated as an "S" corporation or a collapsible corporation pursuant to Section
341(f) or Section 1362(a) of the Code, nor has it made any other elections
pursuant to the Code (other than elections which relate solely to matters of
accounting, depreciation or amortization) which would have a material adverse
effect on Stitel, its financial condition, its business as presently conducted
or its present properties or material assets.
5. REPRESENTATIONS AND WARRANTIES OF CIRILIUM HOLDINGS.
Cirilium Holdings hereby represents and warrant to Stitel and the Stitel
Shareholders as follows:
5.1 Requisite Power and Authority. Cirilium Holdings has all necessary
power and authority under all applicable provisions of law to execute and
deliver this Agreement and to carry out its provisions. All action on Cirilium
Holdings' part required for the lawful execution and delivery of this Agreement
have been taken prior to the Closing. Upon their execution and delivery, the
terms of this Agreement will be valid and binding obligations of Cirilium
Holdings, enforceable in accordance with its terms, except (a) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws of
general application affecting enforcement of creditors' rights, and (b) general
principles of equity that restrict the availability of equitable remedies.
Cirilium Holdings represents that the execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby and
thereby, have been duly authorized by all necessary corporate action. The
execution and performance of the transactions contemplated by this Agreement by
Cirilium Holdings (i) will not violate any provision of law applicable to either
such party; and (ii) will not conflict with or result in any breach of any of
the material terms, conditions or provisions of, or constitute a default under,
its articles or bylaws or any indenture, lease, agreement or other instrument to
which Cirilium Holdings is a party or by which either or any of their respective
properties is bound, or any decree, judgment, order, statute, rule or regulation
applicable to Cirilium Holdings.
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5.2 Experience. Cirilium Holdings has carefully reviewed the
representations and warranties of Stitel and the Stitel Shareholders contained
in this Agreement and has made a detailed inquiry concerning Stitel, its
business and its personnel, and offices. Stitel and its officers, directors, and
personnel have made available to Cirilium Holdings any and all written
information that Cirilium Holdings has requested and have answered all inquiries
made by Cirilium Holdings to Cirilium Holdings' satisfaction. Cirilium Holdings
has adequate net worth and means of providing for its current needs and
contingencies to sustain a complete loss of its investment in Stitel. Cirilium
Holdings' overall commitment to investments which are not readily marketable is
not disproportionate to its net worth, (taking into account the net worth of
investors in Cirilium Holdings) and Cirilium Holdings' investment in Stitel will
not cause such overall commitment to become excessive.
5.3 Investment Representations. Cirilium Holdings understands that the
Stitel Shares have never been registered under the Securities Act. Cirilium
Holdings also understands that the Stitel Shares are being offered and sold
pursuant to an exemption from registration contained in the Securities Act based
in part upon Cirilium Holdings' representations contained in this Agreement.
Cirilium Holdings hereby represents and warrants as follows:
(a) Cirilium Holdings Bears Economic Risk. Cirilium Holdings and its
management have substantial experience in evaluating and investing in
private placement transactions of securities in companies similar to Stitel
so that it is capable of evaluating the merits and risks of its investment
in Stitel and has the capacity to protect its own interests. Cirilium
Holdings must bear the economic risk of this investment indefinitely unless
the Stitel Shares are registered pursuant to the Securities Act, or an
exemption from registration is available. Cirilium Holdings understands
that neither Stitel has no present intention of registering the Stitel
Shares, or any other securities. Cirilium Holdings also understands that
there is no assurance that any exemption from registration under the
Securities Act will be available and that, even if available, such
exemption may not allow Cirilium Holdings to transfer all or any portion of
the Stitel Shares under the circumstances, in the amounts, at the prices or
at the times Cirilium Holdings might propose.
(b) Acquisition for Own Account. Cirilium Holdings is acquiring the
Stitel Shares for Cirilium Holdings' own account for investment only, and
not with a view towards their distribution, and would not have been an
"underwriter" (as that term is defined in Section 2(a)(11) of the
Securities Act) with respect to the original purchase of the Stitel Shares
from the Stitel Shareholders if it had then been a purchaser of such
shares.
(c) Cirilium Holdings Can Protect Its Interest. Cirilium Holdings
represents that by reason of its management's, business or financial
experience, Cirilium Holdings has the capacity to protect its own interests
in connection with the transactions contemplated in this Agreement.
Furthermore, Cirilium Holdings is aware of no publication or of any
advertisement in connection with the transactions contemplated in the
Agreement.
(d) Accredited Investor. Cirilium Holdings represents that it is an
"accredited investor" within the meaning of Rule 501(a) of Regulation D
under the Securities Act.
(e) Company Information. Cirilium Holdings has received and read the
financial statements and the Balance Sheet of Stitel and has had an
opportunity to discuss Stitel's business, management and financial affairs
with Stitel and its directors, officers and management and has had the
opportunity to review Stitel's operations and facilities.
(f) Rule 144. Stitel acknowledges and agrees that the Stitel Shares
must be held indefinitely unless they are subsequently registered under the
Securities Act or
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an exemption from such registration is available. Cirilium Holdings has
been advised or is aware of the provisions of Rule 144 promulgated under
the Securities Act as in effect from time to time, which permits limited
resale of Stitel Shares purchased in a private placement subject to the
satisfaction of certain conditions, including, among other things, the
availability of certain current public information about Stitel, the resale
occurring following the required holding period under Rule 144 and the
number of shares being sold during any three-month period not exceeding
specified limitations.
(g) Residence. As corporation, the office or offices of Cirilium
Holdings in which its investment decision was made is located at the
address or addresses of Cirilium Holdings set forth on Exhibit E.
5.4 Anti-Dilution. Notwithstanding anything to the contrary in this
Agreement, for a period of three years following the Closing Date of this
Agreement, Cirilium Holdings, its assigns and successors, shall issue no shares
of common stock without adjusting the number of shares of Cirilium Holdings
Common Stock payable to the Stitel Shareholders under the Supplementary
Agreement proportionally pro rata with the number of shares of Cirilium Holdings
common stock issued.
6. [INTENTIONALLY DELETED]
7. CONDITIONS TO CLOSING.
7.1 Conditions to Cirilium Holdings' Obligations at the Closing. Cirilium
Holdings' obligations to purchase the Stitel Shares at the Closing are subject
to the satisfaction, at or prior to the Closing Date, of each of the following
conditions:
(a) Accuracy of Representations and Warranties; Performance of
Obligations. The representations and warranties made by Stitel and the
Stitel Shareholders in Section 4 herein shall be true and correct as of the
Closing Date with the same force and effect as if they had been made as of
the Closing Date, and Stitel and the Stitel Shareholders shall have
performed all obligations and conditions herein required to be performed or
observed by Stitel and the Stitel Shareholders on or prior to the Closing
Date.
(b) Consents, Permits, and Waivers. Stitel shall have obtained any and
all consents, permits and waivers necessary or appropriate for consummation
of the transactions contemplated by the Agreement (except for such as may
be properly obtained subsequent to the Closing ).
(c) Stockholders Agreement. Stitel, the Stitel Shareholders set forth
on Schedule 1 hereto and Cirilium Holdings shall have executed a
Shareholders Agreement with respect to transfer restrictions and other
matters that is reasonably acceptable to Cirilium Holdings.
(d) Compliance Certificate. Cirilium Holdings shall have received a
certificate signed by an officer of Stitel and dated as of the date of the
Closing, stating that the conditions set forth in Sections 7.1 (a) above
have been satisfied.
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(e) Secretary Certificate. Cirilium Holdings shall have received
copies of the Certificate of Incorporation of Stitel (certified by the
Secretary of State of the State of **), Bylaws, and resolutions of the
Board of Directors of Stitel with respect to the transactions contemplated
herein, and a good standing certificate from the Secretary of State of the
State of ** with respect to Stitel dated not more than 7 days prior to the
Closing Date, certified in a form reasonably acceptable to Cirilium
Holdings by the Secretary of Stitel as true and correct copies thereof as
of the Closing Date.
7.2 Conditions to Obligations of Stitel. The Stitel Shareholders'
obligation to sell the Stitel Shares is subject to the satisfaction, on or prior
to Closing, of each of the following conditions:
(a) Representations and Warranties True. The representations and
warranties of Cirilium Holdings shall be true and correct at the date of
the Closing, with the same force and effect as if they had been made on and
as of said date.
(b) Payment of Purchase Price. Cirilium Holdings shall have delivered
the Purchase Price and the Supplementary Agreement in exchange for the
Stitel Shares purchased hereunder.
(c) Performance of Obligations. Cirilium Holdings shall have performed
and complied with all agreements and conditions herein required to be
performed or complied with by Cirilium Holdings on or before the Closing.
(d) Stockholders Agreement. Cirilium Holdings and the Stitel
Shareholders shall have executed a Shareholders Agreement with respect to
transfer restrictions and other matters that is reasonably acceptable to
the Stitel Shareholders.
(e) Compliance Certificate. Stitel shall have received a certificate
signed by an officer of Cirilium Holdings and dated as of the date of the
Closing, stating that the conditions set forth in Sections 7.2 (a) and (c)
above have been satisfied.
(f) Secretary Certificate. Stitel shall have received copies of the
Certificate of Incorporation (certified by the Secretary of State of the
State of Florida), Bylaws, and resolutions of the Board of Directors of
Cirilium Holdings with respect to the transactions contemplated herein, and
a good standing certificate from the Secretary of State of the State of
Florida with respect to Cirilium Holdings dated not more than 7 days prior
to the Closing Date, certified in a form reasonably acceptable to Stitel by
the Secretary of Cirilium Holdings as true and correct copies thereof as of
the Closing Date.
8. MISCELLANEOUS.
8.1 Indemnification.
(a) Stitel and the Stitel Shareholders hereby agree jointly and
severally to hold harmless and indemnify one another against any and all
losses, claims, liabilities, damages and expenses (and all costs including,
without limitation, reasonable attorneys' fees and expenses) resulting from
(i) any inaccuracy in or any breach by Stitel or the Stitel Shareholders of
any representation or warranty thereof set forth in Section 4 above, (ii)
any breach of any covenant or agreement contained in this Agreement prior
to or following the Closing.
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(b) Stitel and the Stitel Shareholders hereby agree jointly and
severally to hold harmless and indemnify Cirilium Holdings against any and
all losses, claims, liabilities, damages and expenses (and all costs
including, without limitation, reasonable attorneys' fees and expenses)
resulting from (i) any inaccuracy in or any breach by Stitel or the Stitel
Shareholders of any representation or warranty thereof set forth in Section
4above, (ii) any breach of any covenant or agreement contained in this
Agreement required to be performed by Stitel or the Stitel Shareholders
prior to or following the Closing.
(c) If the Stitel Shareholders receive in transfer any Cirilium
Holdings Shares from Cirilium Holdings pursuant to the Supplementary
Agreement, the Stitel Shareholders agree to hold harmless and indemnify
Cirilium Holdings against any and all losses, claims, liabilities, damages
and expenses (and all costs, including, without limitation, reasonable
attorneys fees and expenses) by any Stitel Shareholder resulting from any
actions, claims, demands or legal proceedings arising from or related to
matters or events that shall occur with respect to Stitel or Cirilium
Holdings following the Closing.
8.2 Indemnification Procedures.
(a) Each party claiming indemnification ("Indemnified Party") shall
promptly give notice hereunder to the party from which such Indemnified
Party is claiming Indemnification ("Indemnifying Party") after becoming
aware of any claim as to which recovery may be sought against the
Indemnifying Party as a result of the terms of Section 8.1 above.
(b) If the Indemnifying Party shall not, within 30-calendar days after
its receipt of the notice required by Section 8.2(a) above, advise
Indemnified Party that the Indemnifying Party denies the right of the
Indemnified Party to indemnity in respect of the claim, then the amount of
such claim shall be deemed to be finally determined between the parties
hereto. If the Indemnifying Party shall notify the Indemnified Party that
it disputes any claim made by the Indemnified Party, then the parties
hereto shall endeavor to settle and compromise such claim, and if unable to
agree on any settlement or compromise, such claim for indemnification shall
be settled by appropriate litigation, and any liability established by
reason of such settlement, compromise or litigation shall be deemed to be
finally determined.
8.2 Injunctive Relief. The Parties acknowledge that the restrictions
contained in this Agreement are reasonable and necessary to protect the
legitimate interests of the Parties, and that any violation of such restrictions
may result in irreparable injury to the Parties for which money damages may not
provide an adequate remedy. Therefore, the Parties shall be entitled to seek
equitable relief, including, without limitation, preliminary and permanent
injunctive relief, in any court of competent jurisdiction and, to the extent
applicable, an equitable accounting of all earnings, profits and other benefits
arising from the violation of any such restrictions, which rights shall be
cumulative and in addition to any other rights or remedies to which the Parties
seeking such relief may be entitled.
8.3 Governing Law. This Agreement shall be governed in all respects by and
construed in accordance with the laws of the State of Delaware, without regard
to the choice of law or conflicts of law provisions thereof. All suits or other
actions regarding disputes arising under this Agreement shall be brought in the
courts, whether state or federal, of the State of Delaware.
8.4 Survival. The representations and warranties made herein shall survive
the Closing of
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the transactions contemplated hereby for a period of two (2) years from the
Closing Date.
8.5 Successors and Assigns. Except as otherwise expressly provided herein,
the provisions hereof shall inure to the benefit of, and be binding upon, the
permitted successors, assigns, heirs, executors and administrators of the
Parties hereto. This agreement may not be assigned by any of the Parties hereto
without the prior written consent of all other Parties, and any attempted
assignment in violation of this provision shall be null and void.
8.6 Entire Agreement. This Agreement, the Exhibits and Schedules hereto,
and the other documents delivered pursuant hereto constitute the full and entire
understanding and agreement between the Parties with regard to the subject
matter hereof and no Party shall be liable or bound to any other in any manner
by any representations, warranties, covenants and agreements except as
specifically set forth herein and therein.
8.7 Severability. In case any provision of the Agreement shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
8.8 Amendment and Waiver. This Agreement may be amended or modified only by
a written consent signed by each of the Parties.
8.9 Delays or Omissions. It is agreed that no delay or omission to exercise
any right, power or remedy accruing to any Party, upon any breach, default or
noncompliance by another Party under this Agreement shall impair any such right,
power or remedy, nor shall it be construed to be a waiver of any such breach,
default or noncompliance, or any acquiescence therein, or of or in any similar
breach, default or noncompliance thereafter occurring. It is further agreed that
any waiver, permit, consent or approval of any kind or character on Cirilium
Holdings' part with respect to any breach, default or noncompliance under this
Agreement or any waiver on such Party's part of any provisions or conditions of
the Agreement must be in writing and shall be effective only to the extent
specifically set forth in such writing.
8.10 Notices. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (a) upon personal delivery to the
Party to be notified, (b) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient, if not, then on the next business
day, (c) five (5) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid, or (d) one (1) day after deposit with
a nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. All communications shall be sent to Stitel at
the address as set forth on the signature page hereof, or to Stitel at the
address as set forth in Exhibit E attached hereto and to Cirilium Holdings at
the address set forth on Exhibit E attached hereto or at such other address as
Stitel or Cirilium Holdings may designate by ten (10) days advance written
notice to the other Parties hereto.
8.11 Expenses. Cirilium Holdings shall pay all costs and expenses that it
or Stitel incurs with respect to the negotiation, execution, delivery and
performance of the Agreement.
8.12 Attorneys' Fees. In the event that any suit or action is instituted to
enforce any provision in this Agreement, the prevailing Party in such dispute
shall be entitled to recover from the losing Party all reasonable fees, costs
and expenses of enforcing any right of such prevailing Party under or with
respect to this Agreement, unless payment for such fees and costs is otherwise
provided for under this Agreement.
- 12 -
8.13 Titles and Subtitles. The titles of the sections and subsections of
the Agreement are for convenience of reference only and are not to be considered
in construing this Agreement.
8.14 Counterparts; Execution. This Agreement may be executed in any number
of counterparts, each of which shall be an original, but all of which together
shall constitute one instrument. All Parties are specifically authorized to
execute this Agreement and transmit the executed Agreement and/or any schedules
or Exhibits thereto or portions thereof by facsimile transmission to each other
Party, and such execution shall be effective as if executed in the offices of
Cirilium Holdings as described in Section 3.1 herein. For convenience, Cirilium
Holdings' fax number may be set forth as part of Exhibit E.
8.15 Broker's Fees. Other than has been set forth herein, each of the
Parties hereto represents and warrants that no agent, broker, investment banker,
person or firm acting on behalf of or under the authority of such Party hereto
is or will be entitled to any broker's or finder's fee or any other commission
directly or indirectly in connection with the transactions contemplated herein.
Each of the Parties hereto further agrees to indemnify each other Party for any
claims, losses or expenses incurred by such other Party as a result of the
representation in this Section 8.13 being untrue.
8.16 Confidentiality. Each Party hereto agrees that, except with the prior
written consent of other Parties, it shall at all times keep confidential and
not divulge, furnish or make accessible to anyone any confidential information,
knowledge or data concerning or relating to the business or financial affairs of
the other Parties to which such Party has been or shall become privy by reason
of this Agreement, discussions or negotiations relating to this Agreement, the
performance of its obligations hereunder or the ownership of the Cirilium Shares
purchased hereunder. The provisions of this Section 8.14 shall be in addition
to, and not in substitution for, the provisions of any separate nondisclosure
agreement executed by the Parties hereto.
8.17 Pronouns. All pronouns contained herein, and any nouns or variations
thereof, shall be deemed to refer to the masculine, feminine or neutral,
singular or plural, as the context may require.
8.18 Investment. Ffunding will be provided as needed upon implementation of
the Business Plan as included exhibit A..
8.19 Idependent Business Unit. The Stitel Systems, Inc. will be conducting
its business as an Independent Business Unit (IBU) under the Cirilium Holdings,
Inc.,
[COUNTERPART SIGNATURE PAGES FOLLOW]
- 13 -
SIGNATURE PAGE TO INVESTMENT AGREEMENT.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
Stitel Systems, Inc., AN ARIZONA CORPORATION
By: /s/Xxxx X. Xxxxxxxxx
--------------------------------------------
Xxxx X. Xxxxxxxxx, its President
CIRILIUM HOLDINGS CORPORATION., a Delaware Corporation
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------------------
Xxxxxx X. Xxxxxx, its Chairman
- 15 -
SCHEDULES
Schedule 1
Stitel Shareholders and corresponding apportionment of Cirilium
Holdings Shares to be received at Closing.
Number of shares
of Cirilium
Holdings Common Stock
Name of Shareholder Number of Stitel Shares owned to be issued at Closing
--------------------------------------------------------------------------------
Noor Xxxxxx Xxxxxxxxx 3,000,000 550,000
Xxxxx Xxxxx 100,000
Xxxx Xxxxxxx Xxxxx 100,000
Syed Xxxxxx Xxxxx 100,000
Noor Nawaz Xxxxxxxxx 100,000
Md. Xxxxx Xxxxx 35,000
Xxxxx Xxxxx 15,000
-------------------------------------------------------------------------------
Supplementary Agreement
Cirilium Holdings, Inc/Stitel Systems, Inc.
This Supplementary Agreement ("Agreement") is entered into by and between
Cirilium Holdings, Inc., a Delaware corporation ("Cirilium"), Stitel Systems,
Inc., an Arizona corporation ("Stitel"), and each of the following shareholders:
Xxxx Xxxxxxxxx and Xxxxx Xxxxx (collectively, the "Shareholders"). Each of
Cirilium, Stitel, and the Shareholders may be referred to herein as a "Party"
and collectively as "Parties".
WHEREAS: In consideration for the execution of that certain Investment
Agreement, dated March 15, 2004, entered into by and between Cirilium and Stitel
("Investment Agreement"), Cirilium covenanted to enter into a supplementary
agreement, under which the Shareholders would collectively receive up to one
million (1,000,000) shares of restricted common stock in Cirilium, the sum
payable in three (3) tranches over a period of three (3) years (the "Shares"),
receipt of shares in each year conditioned upon Cirilium reaching certain
performance goals as set forth in the Stitel Business Plan ("Business Plan");
and
WHEREAS: This Agreement is that supplementary agreement, referred to in the
Investment Agreement and as such satisfies all terms, conditions, and
requirements as set forth in the Investment Agreement.
NOW THEREFORE: Each of the Parties hereto agrees as follows:
1. As set forth in the Business Plan, in the event that Stitel achieves
Net Revenue (as defined in the Business Plan) of not less than
$825,600 for the fiscal year ending December 31, 2004, the
Shareholders shall collectively receive 333,333 shares of restricted
common stock in Cirilium, fully-paid and non-assessable (the "2004
Revenue Shares"). The 2004 Revenue Shares shall be apportioned between
the Shareholders as follows:
Noor Xxxxxx Xxxxxxxxx: 300,000 shares
Xxxxx Xxxxx: 33,333 shares
2. As set forth in the Business Plan, in the event that Stitel achieves
Net Revenue (as defined in the Business Plan) of not less than
$3,000,000 for the fiscal year ending December 31, 2005, the
Shareholders shall collectively receive 333,333 shares of restricted
common stock in Cirilium, fully-paid and non-assessable (the "2005
Revenue Shares"). The 2005 Revenue Shares shall be apportioned between
the Shareholders as follows:
Noor Xxxxxx Xxxxxxxxx: 300,000 shares
Xxxxx Xxxxx: 33,333 shares
3. As set forth in the Business Plan, in the event that Stitel achieves
Net Revenue (as defined in the Business Plan) of not less than
$7,000,000 for the fiscal year ending December 31, 2006, the
Shareholders shall collectively receive 333,334 shares of restricted
common stock in Cirilium, fully-paid and non-assessable (the "2006
Revenue Shares"). The 2006 Revenue Shares shall be apportioned between
the Shareholders as follows:
Noor Xxxxxx Xxxxxxxxx: 300,000 shares
Xxxxx Xxxxx: 33,334 shares
4. Neither Cirilium nor Stitel grants to any Shareholder anti-dilution
rights nor registration rights, of any kind or character, whether
express or implied, nor have Cirilium or Stitel made any
representation or promise of any kind regarding the present, future,
or potential value of the Shares.
5. In executing this Agreement, each of the Shareholders represents and
warrants to Cirilium and Stitel as follows:
(a) In accepting any or all of the Shares, such Shareholder is
acquiring such Shares for his or her own account, for investment
purposes, and not with a view towards their distribution.
(b) That each Shareholder understands that Cirilium has no present
intention of registering the Shares under the Securities Act of
1933, as amended ("Securities Act"), or relevant state "Blue Sky"
law and therefore each Shareholder must bear the economic risk of
an investment in the Shares, unless and until an exemption from
registration under the Securities Act and Blue Sky law becomes
available. Even if available, such exemption(s) may not allow any
Shareholder to transfer the Shares under the circumstances, at
the prices or at the times such Shareholder may propose.
(c) That each of the Shareholders, by representation of their
business and financial experience, as well as their specific
experience as officers of Stitel, represents that he or she has
sufficient experience and expertise to protect his or her own
interests in connection with the transfers contemplated in this
Agreement. Additionally, each of the Shareholders is an
"accredited investor" within the meaning of Rule 501(a) of the
Securities Act.
6. Each of Stitel and Cirilium represent and warrant to the Shareholders that
each of Stitel and Cirilium are corporations in good standing of the states
of Arizona and Delaware, respectively, and that, in entering into this
Agreement, they have made not misrepresented any material fact, nor have
they failed to supply information necessary to render any representations
not misleading, within the context such representations were made.
7. Each Party to this Agreement has full power and authority to enter into
this Agreement, and that this Agreement shall be binding upon each Party's
successors.
Stitel Systems, Inc.
By: /s/ Xxxx X. Xxxxxxxxx
---------------------------
Name: Xxxx X. Xxxxxxxxx
Title: President
Cirilium Holdings, Inc.
By: /s/ Xxxxxx X. Xxxxxx
---------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chairman
Stitel Systems, Inc./Cirilium Holdings, Inc.
Investment Agreement
Addendum
Ladies and Gentlemen:
Reference is made to that certain Stitel Systems, Inc./Cirilium Holdings,
Inc. Investment Agreement, dated March 15, 2004, Cirilium Holdings, Inc., a
Delaware corporation and Stitel Systems, Inc., a Arizona corporation ("Stitel")
(together with the agreements, documents and schedules referenced therein, the
"Agreement"). Capitalized terms used but not defined herein shall have the
meanings ascribed to them in the Agreement.
WHEREAS, pursuant to the Agreement, Stitel's shareholders agreed to and did
transfer to Cirilium Holdings all shares of Stitel held thereby, causing Stitel
to be a wholly-owned subsidiary of Cirilium Holdings as of the Closing on March
15, 2004, in exchange for which, among other consideration, Cirilium Holdings
agreed to deliver one million common shares of Cirilium Holdings in proportion
to ownership reflected in Schedule 1 attached to the Agreement
For good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereby agree to amend the Agreement as
follows:
1. The Schedule 1 on page 16 thereof is amended and restated in its entirety
with the following:
Name of Shareholder Number of Stitel Number of Shares of Cirilium Holdings
Shares Owned Common Stock to be Issued
Xxxx X. Xxxxxxxxx 3,000,000 600,000
Xxxxx Xxxxx 50,000
Xxxx Xxxxxx Ahmed 100,000
Syed Xxxxxx Xxxxx 100,000
Noor Nawaz 100,000
Chowdhury
Md. Xxxxx Xxxxx 40,000
Xxxxx Xxxxx 10,000
--------------------- ----------------- -------------------------------------
The parties agree that all of the terms and conditions set forth in the
Agreement shall remain in full force and effect, except to the extent expressly
provided herein.
Please indicate your agreement to the foregoing by signing in the space
below.
Sincerely,
Stitel Systems, Inc.
By: /s/ Xxxx X. Xxxxxxxxx
---------------------------
Name: Xxxx X. Xxxxxxxxx
Title: President
Cirilium Holdings, Inc.
By: /s/ Xxxxxx X. Xxxxxx
---------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chairman
