Exhibit 2.1
AGREEMENT AND PLAN
OF MERGER
BETWEEN
NORTHEAST (USA) CORP.
AND
BUT IT XXXXX.XXX, INC.
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS ........................................................1
ARTICLE II THE PLAN OF MERGER ................................................3
2.01 The Merger and the Surviving Corporation ......................3
2.02 Effectiveness of the Merger ...................................4
2.03 Exchange of Securities.........................................4
2.04 Adjustment Upon Recapitalization ..............................5
2.05 Securities Law Matters ........................................5
ARTICLE III REPRESENTATIONS AND WARRANTIES ...................................6
3.1 Representation and Warranties of BUYC .......................6
3.1.1 Organization of BUYC ........................................6
3.1.2 Capitalization ..............................................6
3.1.3 Subsidiaries ................................................7
3.1.4 Foreign Qualifications ......................................7
3.1.5 Other Business Names ........................................7
3.1.6 Owned Real Estate Interests .................................7
3.1.7 Leased Real Estate ..........................................7
3.1.8 Tangible Personal Property ..................................7
3.1.9 Intangible Personal Property; Computer Programs .............7
3.1.10 Stockholders; Title to BUYC Stock ...........................7
3.1.11 Title to Assets .............................................8
3.1.12 Material Contracts ..........................................8
3.1.13 Labor Matters ...............................................8
3.1.14 Loans to and from Stockholders ..............................8
3.1.15 Licenses and Permits ........................................8
3.1.16 Authority Relative to Agreement; Enforceability .............8
3.1.17 Compliance with Other Instruments; Consents .................8
3.1.18 Compliance with Applicable Laws .............................8
3.1.19 Environmental Compliance.....................................9
3.1.20 Financial Statements ........................................9
3.1.21 Taxes .......................................................9
3.1.22 Litigation ..................................................9
3.1.23 Brokerage ..................................................10
3.1.24 Full Disclosure ............................................10
3.2 Representations and Warranties of Northeast(USA) Corp....... 10
3.2.1 Organization ................................................10
3.2.2 Capitalization ..............................................10
3.2.3 Authorization ...............................................10
3.2.4 Title to Assets .............................................10
3.2.5 No Third Party Consent Required; No Violation of
Other Instruments ...........................................11
3.2.6 Litigation ..................................................11
3.2.7 Brokerage ...................................................11
3.2.8 Financial Statements ........................................11
3.2.9 Full Disclosure .............................................11
3.2.10 Subsidiaries................................................11
3.2.11 Joint venture and other agreements..........................11
ARTICLE IV ADDITIONAL COVENANTS AND AGREEMENTS OF THE PARTIES ...............11
4.01 Corporate Approval ...........................................11
4.02 Stockholders' Vote ...........................................12
4.03 Conduct of Business ..........................................12
4.04 Filing with Securities and Exchange Commission ...............12
4.05 Access .......................................................12
4.06 Best Efforts .................................................12
4.08 Brokers or Finders ...........................................12
4.09 Environmental Matters ........................................13
4.10 Exclusive Dealing ............................................13
ARTICLE V THE CLOSING ......................................................13
5.01 The Closing ..................................................13
5.02 Termination ..................................................13
5.03 Liability on Termination .....................................13
5.04 Termination Fees..............................................14
ARTICLE VI CONDITIONS TO OBLIGATION OF EACH PARTY ..........................14
6.01 No Prohibition of Transaction ................................14
6.02 Compliance with Law ..........................................14
6.03 Proceedings, Documentation and Consents ......................14
6.04 Tax Free Reorganization.......................................15
ARTICLE VII CONDITIONS TO THE OBLIGATION OF BUYC TO CLOSE ...................15
7.01 Representations and Warranties True at the Closing Date ......15
7.02 No Material Adverse Change: Officers' Certificates ...........15
7.03 Corporation's Performance ....................................15
7.04 Necessary Corporate Approvals ................................15
7.05 Resolutions Authorizing the Execution of this Agreement ......15
7.06 Investment Letters ...........................................15
7.07 Satisfactory Searches ........................................15
7.08 Environmental Review .........................................16
7.09 Consents to Transaction ......................................16
7.10 Dissenters' Rights ...........................................16
7.11 Title Insurance ..............................................16
7.12 Financial Statements .........................................16
7.13 Fairness Opinion .............................................16
7.14 Results of Investigation .....................................16
ARTICLE VIII CONDITIONS TO BUY IT XXXXX.XXX, INC. OBLIGATION TO CLOSE ......16
8.01 Representations and Warranties True at the Closing ...........16
8.02 Northeast's Performance ......................................16
8.03 No Material Adverse Change ...................................17
8.04 Authority ....................................................17
8.05 Results of Investigation .....................................17
ARTICLE IX SURVIVAL OF REPRESENTATIONS AND INDEMNIFICATION .................17
9.01 Representations to Survive Closing .........................17
9.02 Indemnification by BUYC ....................................17
9.03 Indemnification by Northeast ...............................18
9.04 Enforcement of Indemnification Rights.......................18
9.05 Remedies Cumulative ........................................19
ARTICLE X MISCELLANEOUS ....................................................19
10.01 Notices ....................................................19
10.02 Assignability and Parties in Interest ......................20
10.03 Expenses ...................................................20
10.04 Governing Law ..............................................20
10.05 Counterparts ...............................................20
10.06 Headings ...................................................20
10.07 Pronouns ...................................................20
10.08 Complete Agreement .........................................20
10.09 Modifications, Amendments and Waivers ......................20
10.10 Severability ...............................................20
APPENDICES
SECTION
DESCRIPTION REFERENCE
Appendix A Exchange Agreement 2.05(a), 7.06
EXHIBITS
EXHIBIT
DESCRIPTION REFERENCE
Intangible personal property 3.1.9
Shareholder List 3.1.10
Litigation 3.2.6
Subsidiaries 3.2.10
Joint venture and other agreements 3.2.11
THIS AGREEMENT AND PLAN OF MERGER ("Agreement") has been made and
entered into as of this 27th day of October, 1999, among NORTHEAST(USA) Corp., a
Delaware corporation ("Northeast"), and Buy It Xxxxx.xxx, Inc. ("BUYC"), a
Delaware corporation.
R E C I T A L S:
1. The respective Boards of Directors of Northeast and BUYC have
determined that it is in the best interests of each corporation and their
respective stockholders that BUYC be merged with and into Northeast (the
"Merger") in accordance with the laws of the State of Delaware in the manner and
on the terms and conditions set forth herein, and such Boards of Directors have
approved such Merger.
2. The Merger and this Agreement require the vote of a majority of the
issued and outstanding voting stock of BUYC and BUYC stockholders representing a
majority of the issued and outstanding voting stock of BUYC have voted their
shares in favor of the Merger contemplated hereby.
3. Pursuant to the Merger, the outstanding capital stock of BUYC will
be converted into the right to receive shares of Northeast common stock
("Northeast Stock") on the basis of 10,000 shares of Northeast Stock for each
outstanding share of BUYC common stock.
4. The respective Boards of Directors of Northeast and BUYC desire to
effectuate the Merger as a tax free reorganization for United States federal
income tax purposes.
NOW, THEREFORE, in consideration of the mutual agreements and
covenants contained herein, the parties hereby adopt this Agreement as and for a
Plan of Reorganization (the "Plan") under Section 368(a)(1)(A) of the Internal
Revenue Code of 1986, as amended, and agree that BUYC shall be merged with and
into Northeast and that the terms and conditions of such Merger and the mode of
carrying the same into effect shall be as follows:
ARTICLE I
DEFINITIONS
The terms defined in this Article (except as otherwise expressly
provided in this Agreement) for all purposes of this Agreement shall have the
respective meanings specified in this Article.
1.01 "Affiliate" shall mean any entity controlling or controlled by
another person, under common control with another person, or controlled by any
entity which controls such person.
1.02 "Agreement" shall mean this Agreement, and all the exhibits and
other documents attached to or referred to in the Agreement, and all amendments
and supplements, if any, to the Agreement.
1.03 "Closing" shall mean the meeting of the parties at which the
Closing Documents shall be exchanged by the parties, except for those documents,
or other items specifically required to be exchanged at a later time.
1.04 "Closing Date" shall mean October 27, 1999, or such other date as
agreed to by the parties on which the Closing occurs.
1.05 "Closing Documents" shall mean the papers, instruments and
documents required to be executed and delivered at the Closing pursuant to this
Agreement.
1.06 "Code" shall mean the Internal Revenue of 1986, or any successor
law, and regulations issued by the Internal Revenue Service pursuant to the
Internal Revenue Code or any successor law.
1.07 "Encumbrance" shall mean any charge, claim, community property
interest, condition, equitable interest, lien, option, pledge, security
interest, right of first refusal, or restriction of any kind, including any
restriction on use, voting (in the case of any security), transfer, receipt of
income, or exercise of any other attribute of ownership.
1.08 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
1.09 "GAAP" shall mean generally accepted accounting principles
applied in a manner consistent with prior periods.
1.10 "Knowledge" Any limitation or qualification of a representation
or warranty made in this Agreement which is based on "knowledge" shall include
facts known, or which should be known, to the following person, in the case of a
representation or warranty by BUYC: Xxxxxx Xxxxxxx and the following person in
the case of a representation or warranty made by Northeast: Xxxxxxx X. Xxxxx,
Xx.
1.11 "Ordinary Course of Business" shall mean actions consistent with
the past practices of the designated party which are similar in nature and style
to actions customarily taken by the designated party and which do not require,
and in the past have not received, specific authorization by the board of
directors of the designated party.
1.12 "Regulated Substances" includes any pollutant, chemical
substance, hazardous wastes, hazardous substances or contaminant regulated
under, or defined in or pursuant to the Solid Waste Disposal Act, as amended (42
U.S.C. 6901 et seq.) ("SWDA"), the Comprehensive Environmental Response
Compensation and Liability Act (42 U.S.C. 9601 et seq.) ("CERCLA"), the Toxic
Substance Control Act, as amended (15 U.S.C. 2601, et seq.), the Clean Air Act,
as amended (42 U.S.C. 7401 et seq.) the Clean Water Act, as amended (33 U.S.C.
1251, et seq.), and any other federal, state or local law or regulation designed
to provide safe and healthful working conditions and to reduce occupational
safety and health hazards.
1.13 "SEC" shall mean the Securities and Exchange Commission.
1.14 "Taxes" shall include federal, state and local income taxes,
capital gains tax, value-added taxes, franchise, personal property and real
property taxes, levies, assessments, tariffs, duties (including any customs
duty), business license or other fees, sales, use and any other taxes relating
to the assets of BUYC or Northeast, as applicable, or the business of BUYC or
Northeast, as applicable, for all periods up to and including the Closing Date,
together with any related charge or amount, including interest, fines, penalties
and additions to tax, if any, arising out of tax assessments.
1.15 "Transaction" shall mean the transaction contemplated by this
Agreement.
1.16 Terms Defined in Other Sections,. The following terms are defined
elsewhere in this Agreement in the following Sections:
Act 2.0 5 (a)
Northeast Heading
Northeast Stock Recital 3.
Effective Date 2.01(a)
Loss or Losses 10.02
Merger Recital 1.
BUYC Heading
BUYC Stock 2.03(b)
Outside Date 5.01
Plan Recitals
Stockholders Heading
Surviving Corporation 2.01(a)
ARTICLE II
THE PLAN OF MERGER
2.01 The Merger and the Surviving Corporation.
(a) Merger. Upon the date on which the Merger is to be effective, as
determined pursuant to Section 2.02 ("Effective Date"), BUYC shall be merged
with and into Northeast. Northeast shall be the surviving corporation (the
"Surviving Corporation"), The separate existence of BUYC shall cease and the
existence of Northeast shall continue unaffected and unimpaired by the Merger,
with all of the rights, privileges, immunities and powers, and subject to all of
the duties and liabilities of a corporation organized under the general
corporation law of the State of Delaware. All rights, privileges, powers,
immunities and franchises of BUYC shall, on the Effective Date, be automatically
vested in Northeast. All assets of BUYC, tangible and intangible, of every kind
and description, shall become vested in Northeast and all liabilities, claims
and obligations of BUYC may be enforced against Northeast, all without further
action or deed by either party. In all other respects, the effect of the Merger
shall be as set forth in Delaware General Corporation Law ss.251 ("Delaware
General Corporation Law" or "DGCL").
(b) Certificate of Incorporation. The Certificate of Incorporation of
Northeast shall be and remain the Certificate of Incorporation of the Surviving
Corporation following the Effective Date, until the same shall be altered or
amended.
(c) By-Laws. The by-laws of Northeast shall be the by-laws of the
Surviving Corporation following the Effective Date, until the same shall be
altered or amended.
(d) Directors. From and after the Effective Date, the Board of
Directors of the Surviving Corporation shall consist of Xxxxxx Xxxxxxx, Xxxxxxx
X. Xxxxx, Xx., Xxxxxxxx Xx Wu, Xxx Xxxx, Xxxxx Xxxx and Xxxxxxx Xxx, until their
respective successors shall be duly elected and qualified.
(e) Officers. From and after the Effective Date, the officers of the
Surviving Corporation shall consist of the persons listed below, holding the
respective office listed opposite such person's name, until their respective
successors shall be duly elected or appointed and qualified:
Name Title
Xxxxxxx X. Xxxxx, Xx. President and Secretary
Xxxxxxxx Xx Vice President
2.02 Effectiveness of Merger.
(a) Certificate of Merger. Following the approval of the Merger by the
stockholders of BUYC and upon the fulfillment or waiver of the conditions
specified in Articles VI, VII and VIII hereof, and provided that this Agreement
has not been terminated and abandoned pursuant to Article V hereof, Northeast
shall cause a Certificate of Merger to be executed, acknowledged and filed with
the Secretary of State of Delaware as provided in Section 251(c) of the DGCL.
(b) Effective Date. The Merger shall become effective immediately upon
the filing of the Certificate of Merger referred to in Section 2.02(a) hereof
with the Secretary of State of the State of Delaware.
2.03 Exchange of Securities. The manner of converting the securities
of BUYC into securities of the Surviving Corporation at the Effective Date shall
be as follows:
(a) Northeast's Shares. Each share of Northeast Stock which shall be
outstanding at the Effective Date shall remain outstanding, as the outstanding
common stock of the Surviving Corporation.
(b) BUYC Common Stock. Each share of Common Stock, no par value, of
BUYC ("BUYC Stock") outstanding immediately prior to the Effective Date shall,
by virtue of the Merger and without any action on the part of the holder
thereof, be converted into the right to receive 10,000 shares of Northeast
Stock. (c) Treasury Stock. Any shares of BUYC Stock held by Northeast, any
subsidiary of Northeast, or in Northeast's treasury on the Effective Date shall
be canceled and given no effect in the Merger.
(d) Records. For the purposes of this Agreement, the stock transfer
books of BUYC shall be closed as of the Effective Date, and no transfer of
record of any shares of BUYC Stock shall take place after the Effective Date.
(e) Surrender of BUYC Stock Certificates. On or immediately after the
Closing Date, each holder of an outstanding certificate or certificates which
prior thereto represented shares of BUYC Stock shall surrender the same to
Northeast. Each Stockholder who shall have surrendered his certificate for
shares of BUYC Stock shall be entitled to receive in exchange therefor a
certificate or certificates representing the number of whole shares of Northeast
Stock into which BUYC Stock shall have been converted and exchanged. When the
Merger becomes effective, the former stockholders of BUYC shall thereupon cease
to have any rights in respect of BUYC Stock, other than to receive the
certificates for BUYC Stock described in Section 2.03(b) hereof. Unless and
until any certificates shall be so surrendered and exchanged, (i) the holder
shall not have any voting rights in respect of Northeast Stock into which the
shares of BUYC Stock shall have been so converted and exchanged, and (ii)
dividends or other distributions payable to holders of record of shares of
Northeast Stock following the Effective Date shall not be paid to the holder of
the certificate. Upon surrender of the certificate representing shares of BUYC
Stock, there shall be paid to the record holder of the certificate the amount of
the dividends or other distributions which shall have become payable following
the Effective Date with respect to the number of whole shares of Northeast Stock
represented by the certificate issued in exchange for the surrendered
certificate, but without interest.
2.04 Adjustment Upon Recapitalization. Subject to the limitations of
Section 4.03 hereof, the number of shares of Northeast Stock to be issued at the
Closing shall be appropriately adjusted in the event that, prior to the
Effective Date, the Northeast Stock should be split, combined, or otherwise
recapitalized, or if any stock dividend should be paid on the Northeast Stock,
or the record date for the payment of any such stock dividend should occur.
2.05 Securities Law Matters.
(a) Private Offering. BUYC understands that the Northeast Stock to be
issued and delivered to its stockholders pursuant to the Merger will not be
registered under the Securities Act of 1933, as amended (the "Act"), but will be
issued in reliance upon the exemption afforded by Section 4(2) of the Act and
Regulation D promulgated by the SEC thereunder, and that Northeast is relying
upon the truth and accuracy of the representations set forth in the Exchange
Agreement, attached in the Appendix hereto, delivered concurrently with the
execution of this Agreement. Each certificate of Northeast Stock issued pursuant
to this Agreement shall bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED,
OR APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE TRANSFERRED
UNLESS THEY ARE SO REGISTERED OR, IN THE OPINION OF COUNSEL
ACCEPTABLE TO THIS CORPORATION, SUCH TRANSFER IS EXEMPT FROM
REGISTRATION.
Northeast shall give instructions to its transfer agent consistent with the
foregoing legend.
(b) Limited Transfer Rights. The stockholders of BUYC may not
transfer, sell or assign the Northeast Stock until such shares are registered
pursuant to the Act; provided that, in the absence of such registration, a
Stockholder may transfer shares of Northeast Stock to one or more members of a
group consisting of (i) the spouse or children of any stockholder, and (ii) one
or more trusts for their benefit; provided however, that the transferee in each
case will furnish Northeast with an investment letter in form and substance
satisfactory to counsel for Northeast who shall be satisfied with the competence
of such persons to give an investment letter.
(c) Blue Sky Filings. Northeast shall promptly institute and
diligently prosecute such proceedings before, and make such filings with, such
state regulatory agencies as may be necessary or appropriate in connection with
or preliminary to the issuance of Northeast Stock required to be issued to the
BUYC stockholders pursuant to the Merger and any solicitation of the BUYC
stockholders for their approval of the Plan and the matters related hereto.
(d) Removal of Legend. If any BUYC stockholder desires to sell his
Northeast Stock at any time after the Closing, he shall notify Northeast of that
desire and the number of shares he desires to sell, together with such other
information concerning the transferee or purchaser and the manner of sale as
counsel to Northeast shall request. If counsel for Northeast is of the opinion
that such Northeast Stock may be sold without registration under the Act, and
shall render that opinion in writing to the BUYC stockholder and the Transfer
Agent for Northeast Stock, the Transfer Agent shall deliver to that BUYC
stockholder, certificates which are free of any restrictive legend representing
shares of Northeast Stock equal in number to the number of shares submitted for
transfer by that BUYC stockholder.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of BUYC . BUYC represents and
warrant to Northeast as follows:
3.1.1 Organization of BUYC . BUYC is a corporation, duly
organized, validly existing, and in good standing under the laws of the
State of Delaware, and has all requisite corporate power, franchises, and
licenses to own its property and conduct the business in which it is
engaged. Complete copies of BUYC's certificate of incorporation, by-laws,
as amended, minutes, stock transfer records and agreements, if any, among
some or all of its stockholders have been delivered to Northeast.
3.1.2 Capitalization.
3.1.2.1 BUYC has an authorized capital stock consisting of 1,000
shares of common stock, no par value per share, of which 140 shares are
issued and outstanding. All of such shares of BUYC Stock have been validly
issued, fully paid, are nonassessable, and were issued in compliance with
applicable federal and state securities laws.
3.1.2.2 BUYC does not have outstanding any subscriptions,
options, rights, warrants, convertible securities or other agreements or
commitments to issue, or contracts or any other agreements obligating BUYC
to issue, or to transfer from treasury, any shares of its capital stock of
any class or kind, or securities convertible into such stock. No persons
who are now holders of BUYC Stock, and no persons who previously were
holders of BUYC Stock, are or ever were entitled to pre-emptive rights,
other than persons who exercised or waived those rights.
3.1.3 Subsidiaries. BUYC does not directly or indirectly have any
subsidiaries, nor hold any equity interest in any corporation, partnership or
joint venture.
3.1.4 Foreign Qualifications. BUYC is duly qualified to conduct
business as a foreign corporation in each state or other jurisdiction in which
it is required to be so qualified.
3.1.5 Other Business Names. BUYC does not transact business under any
trade name or fictitious name.
3.1.6 Owned Real Estate, Real Estate Interests.
Not applicable - BUYC owns no real estate.
3.1.7 Leased Real Estate. BUYC does not lease any real estate from any
person, nor has it leased any real estate to any person.
3.1.8 Tangible Personal Property.
Not applicable, BUYC owns no tangible personal property and does not lease any
equipment.
3.1.9 Intangible Personal Property - Computer Programs.
3.1.9.1 BUYC does not own any patents, patent applications,
inventions, trademarks, trademark applications, copyrights, trade names or
proprietary technology, except for certain software programs necessary for
operating a website on the Internet, described on Exhibit 3.1.9. Except as
listed on Exhibit 3.1.9 annexed hereto, BUYC is not a party to any
distributorship, franchise, joint venture or license agreements (whether as
grantor or grantee). Copies of all written instruments which evidence such
intangible personal property have been or will promptly be delivered to
Northeast.
3.1.9.2 There are no infringement or other claims or demands
against BUYC with respect to any items of intangible personal property, and
no proceedings have been instituted, are pending, or to the knowledge of
BUYC, have been threatened to terminate or cancel any agreement affording
to BUYC the right to use any intangible asset, or which challenge the
rights of BUYC with respect to any of its intangible assets; and there are
no facts known to BUYC which make it likely that any such license or
similar agreement will not be renewed at its next expiration date or which
might reasonably serve as the basis, in whole or in part, of any claim that
any part of the business carried on by BUYC infringes the patent,
trademark, trade name, copyright, or other rights of any other person. BUYC
is the sole and exclusive owner of each of said items of intangible
personal property.
3.1.9.3 BUYC does not use, is not licensed to use and has no need
to use any patent, patent application, trademark, trademark application,
trade name, formula or copyright which is owned by an unrelated third
party.
3.1.10 Stockholders; Title to BUYC Stock. Exhibit 3.1.10 annexed
hereto contains a complete list of the names and addresses of all the
stockholders of BUYC and the number of shares of BUYC Stock owned by each
of them. Each of the persons listed on such Exhibit is the record and
beneficial owner of the shares of BUYC Stock listed on that Exhibit, owns
those shares of BUYC Stock free and clear of any security interests, liens,
encumbrances or claims and has the unrestricted right to vote the BUYC
Stock owned by such person in favor of the Transaction and transfer such
shares to Northeast without the consent of any person.
3. 1.11 Title to Assets. BUYC has good and marketable title in
and to all of their property reflected in the most recent financial
statement plus all assets purchased by BUYC, if any, since the date of that
financial statement, less all assets which BUYC may have disposed of in the
ordinary course, which property is free and clear of any security
interests, consignments, liens, judgments, encumbrances, restrictions, or
claims of any kind.
3.1.12 Material Contracts. BUYC is not party to any material
contract.
3.1.13 Labor Matters.
3.1.13.1 BUYC has never had any employees. There are
presently no consulting contracts with or covenants against
competition by, any present or former person associated with BUYC.
3.1.14 Loans to or from stockholders. BUYC is not indebted to, nor a
creditor of, any Stockholder or of any relative of any of such
Stockholder.
3.1.15 Licenses and Permits. BUYC and its respective agents, if
any, have all material licenses, permits, orders, approvals and
authorizations required by BUYC for the conduct of businesses as presently
and anticipated to be conducted. BUYC is acting within the terms of such
licenses, permits, orders, and approvals. BUYC has not received any notice
of investigation, evaluation or suspension of any such licenses, permits,
orders, approvals or authorizations. To the best knowledge of BUYC, no
suspension or cancellation of any such licenses, permits, orders, approvals
and authorizations has been threatened or is contemplated.
3.1.16 Authority Relative to Agreement: Enforceability. The
execution, delivery and performance of this Agreement is within the legal
capacity and power of BUYC and have been duly authorized by all requisite
corporate action on the part of BUYC. This Agreement is a legal, valid and
binding obligation of BUYC enforceable against BUYC in accordance with its
terms, except insofar as its enforcement may be limited by (a) bankruptcy,
insolvency, moratorium or similar laws affecting the enforcement of
creditors' rights generally and (b) equitable principles limiting the
availability of equitable remedies. All persons who execute this Agreement
on behalf of BUYC have been duly authorized to do so.
3.1.17 Compliance with Other Instruments Consents. Neither the
execution of this Agreement, nor the consummation of the Transaction, will
conflict with, violate or result in a breach or constitute a default (or an
event which, with notice or lapse of time or both, would constitute a
default), or result in the termination of, or accelerate the performance
required by, or result in the creation of any lien or encumbrance upon any
of the assets of BUYC under any provision of any certificate of
incorporation, by-law, indenture, mortgage, lien, lease, agreement,
contract, instrument, or any other restriction of any kind or character to
which BUYC is subject or by which BUYC is bound, or require the consent of
any third party or governmental agency.
3.1.18 Compliance with Applicable Laws. BUYC is in compliance
with all U.S. federal, state, county, and municipal laws, ordinances,
regulations, judgments, orders or decrees applicable to the conduct of the
business of each, or to the assets owned, used, or occupied by each, and
BUYC has not received notice or advices to the contrary. All reports
required by any or all U.S. federal, state and local governments have been
timely filed and all information contained therein is true and correct.
Neither the execution of this Agreement, nor consummation of the
Transaction will (a) violate any order, writ, injunction, statute, rule or
regulation applicable to BUYC, or (b) require the consent, approval,
authorization or permission of, or the filing with or the notification of
any U.S. federal, state or local government agency.
3.1.19 Environmental Compliance. BUYC is in compliance with all
applicable U.S. federal, state and local laws and regulations relating to
pollution control and environmental contamination and all laws and
regulations with regard to record-keeping, notification and reporting
requirements respecting Regulated Substances. BUYC has not been alleged to
be in violation of, nor has it been subject to any administrative or
judicial proceeding pursuant to such laws or regulations, either now or any
time subsequent to its incorporation.
3.1.20 Financial Statements. BUYC has delivered to Northeast
balance sheets and related statements of operations and cash flows for the
period from its incorporation, July 19, 1999 to the most recent month end
preceding the Closing. Such financial statements have been prepared in
accordance with generally accepted accounting principles (GAAP) necessary
for a fair presentation of BUYC's financial position and results of
operations for that period.
3.1.21 Taxes.
3.1.21.1 All tax and information returns required to have
been filed by BUYC have either been filed with the appropriate taxing
authority or BUYC has filed for any required extension, and all taxes
of BUYC have been paid (or estimated taxes have been deposited) to the
extent such payments are required prior to the date hereof or accrued
on the books of BUYC. The returns were (or will be) correct as (or
when) filed. BUYC's financial statements include adequate provision
for Taxes incurred or accrued as of the date of the most recent
balance sheet. True and complete copies of the most recent federal,
state and local tax returns of BUYC, if any are required, will
promptly be delivered to Northeast when filed.
3.1.21.2 None of the federal taxes and state and local
franchise and sales tax returns of BUYC, if any, have been audited (or
examined by IRS in the case of federal tax returns). No assessments or
additional Taxes have been proposed or threatened against BUYC or any
of its assets, and BUYC has not executed any waiver of the statute of
limitations on the assessment or collection of any tax liabilities.
3.1.21.3 There are no pending investigations of BUYC or its
respective tax returns by any federal, state or local taxing
authority, and there are no federal, state, local or foreign tax liens
upon any of BUYC's assets.
3.1.21.4 BUYC has not made any elections with respect to the
income tax treatment of any items which cannot be revoked without the
consent of the Commissioner of Internal Revenue.
3.1.22 Litigation. There are no legal, administrative,
arbitration or other proceedings or claims pending or to the knowledge of
BUYC, threatened, against BUYC, nor is BUYC subject to any existing
judgment which might affect the financial condition, business, property or
prospects of BUYC; nor has BUYC received any inquiry from an agency of the
federal or of any state or local government about the Transaction, or about
any violation or possible violation of any law, regulation or ordinance
affecting its business or assets; nor has BUYC been subject to any products
liability claims during the three years ended on the date of this
Agreement.
3.1.23 Brokerage. No broker or finder has rendered services to
BUYC or to any Stockholder in connection with the Transaction.
3.1.24 Full Disclosure. No representation or warranty made by
BUYC in this Agreement, and no certification furnished or to be furnished
to Northeast pursuant to this Agreement contains or will contain any untrue
statement of a material fact or omits, or will omit, to state a material
fact necessary to make the statements contained herein or therein not
misleading.
3.2 Representations and Warranties of Northeast. Northeast hereby
represents and warrants to BUYC that:
3.2.1 Organization. Northeast is duly organized, validly
existing, and in good standing under the laws of the state of its
incorporation and has the corporate power to execute, deliver, and perform
this Agreement.
3.2.2 Capitalization.
3.2.2.1 Northeast has an authorized capital stock consisting
of 20,000,000 shares of common stock, par value $0.001 per share, of
which 7,008,187 shares are issued and outstanding and 2,000,000 shares
of preferred stock, par value $0.001 per share, of which 10,000 shares
are issued and outstanding. All of such shares of stock have been
validly issued, fully paid, are non-assessable, and were issued in
compliance with applicable federal and state securities laws.
3.2.2.2 Except for its outstanding convertible preferred
stock, Northeast does not have outstanding any subscriptions, options,
rights, warrants, convertible securities or other agreements or
commitments to issue, or contracts or any other agreements obligating
Northeast to issue, or to transfer from treasury, any shares of its
capital stock of any class or kind, or securities convertible into
such stock. No persons who are now holders of Northeast Stock, and no
persons who previously were holders of Northeast Stock, are or ever
were entitled to pre-emptive rights other than persons who exercised
or waived those rights.
3.2.3 Authorization. The execution and delivery of this Agreement
and the consummation of the Transaction have been duly authorized by the
Board of Directors of Northeast. This Agreement constitutes the legal,
valid and binding obligation of Northeast, enforceable against it in
accordance with its terms, except insofar as the enforcement thereof may be
limited by bankruptcy, insolvency, or similar laws affecting the
enforcement of creditors' rights generally and subject to equitable
principles limiting the availability of equitable remedies. All persons who
have executed this Agreement on behalf of Northeast have been duly
authorized to do so.
3.2.4 Title to Assets. Northeast has good and marketable title in
and to all of its assets as reflected in the most recent financial
statement, plus all assets purchased by Northeast since the date of that
financial statement, less all assets which Northeast has disposed of in the
ordinary course, which property is free and clear of any security
interests, consignments, liens, judgments, encumbrances, restrictions, or
claims of any kind. The only liens or security interests which exist and,
at the Closing will exist, on Northeast's assets are those which either (a)
secure liabilities disclosed in the financial statements annexed hereto, or
(b) are liens for current taxes or assessments not yet due.
3.2.5 No Third Party Consent Required; No Violation of Other
Instruments. Neither the execution nor the performance of this Agreement by
Northeast requires the consent of any third party, nor will it violate or
result in a breach or constitute a default under any provision of the
certificate of incorporation or by-laws of Northeast, or any indenture,
mortgage, lien, lease, agreement, contract, instrument, order, judgment,
decree, statute, ordinance, regulation or any other restriction of any kind
or character to which Northeast is subject or by which it is bound.
3.2.6 Litigation. Except as noted in Exhibit 3.2.6 attached
hereto, there are no legal, administrative, arbitration or other
proceedings or claims pending, or to the knowledge of Northeast,
threatened, against Northeast, nor is Northeast subject to any existing
judgment which might affect the financial condition, business, property or
prospects of Northeast; nor has Northeast received any inquiry from an
agency of the federal or of any state or local government about the
Transaction, or about any violation or possible violation of any law,
regulation or ordinance affecting its business or assets; nor has Northeast
been subject to any products liability claims during the three years ended
on the date of this Agreement.
3.2.7 Brokerage. No broker or finder has rendered services to
Northeast in connection with the Transaction.
3.2.8 Financial Statements. Northeast has delivered to BUYC,
Northeast's Annual Report to the SEC on Form 10-KSB for its year ended June
30, 1999, which includes its financial statements as of that date and for
year then ended. Those statements fairly present the financial position of
Northeast as at the dates and for the periods to which they apply and have
been prepared in conformity with GAAP.
3.2.9 Full Disclosure. No representation or warranty made by
Northeast in this Agreement, and no certification furnished or to be
furnished to BUYC pursuant to this Agreement contains or will contain any
untrue statement of a material fact or omits, or will omit, to state a
material fact necessary to make the statements contained herein or therein
not misleading.
3.2.10 Subsidiaries Except as disclosed on Exhibit 3.2.10,
Northeast has no subsidiaries.
3.2.11 Joint Venture and Other Agreements Except as disclosed on
Exhibit 3.2.11, Northeast is not a party to any agreement.
ARTICLE IV
ADDITIONAL COVENANTS AND AGREEMENTS OF
THE PARTIES
4.01 Corporate Approval. The number of shares of Northeast Stock to be
exchanged for all of the outstanding shares of BUYC in this Transaction is less
than 20% of the outstanding shares of Northeast. According to Delaware
Corporation Law, no stockholder approval of Northeast is necessary provided that
certain other criteria are met. Northeast represents that all such criteria will
be met.
4.02 Stockholders' Vote. BUYC has obtained written consent for the
Merger by a majority of its stockholders.
4.03 Conduct of Business. Prior to the Closing Date, each corporation
shall conduct its business only in the Ordinary Course of Business, except as
otherwise permitted by this Agreement or consented to by the other party in
writing. Each party shall promptly advise the other in writing of any material
adverse change in the business, assets or prospects of such corporation. Without
the prior consent of the other party, neither BUYC nor Northeast shall, prior to
the Effective Date, (a) issue, sell, purchase or redeem, or grant options or
warrants or rights to purchase, or otherwise agree to issue, sell, purchase or
redeem, any common stock or other securities; (b) incur any indebtedness or
other liability, or discharge any obligation or liability other than in the
Ordinary Course of Business; (c) make any distribution to its stockholders; (d)
amend its Certificate of Incorporation or by-laws; (e) enter into an employment
agreement or make any changes in compensation or other employment benefits for
its executive officers; (f) sell or otherwise dispose of any of its material
assets; (g) mortgage, pledge or subject to lien or other Encumbrance any of its
assets; or (h) acquire or enter into a contract to acquire any business or
material asset.
4.04 Filing With Securities And Exchange Commission. BUYC recognizes
that Northeast may be required to report the Transaction to the SEC on Form 8-K
and be accompanied by financial statements of BUYC. BUYC shall cause its regular
accountants to furnish such statements to Northeast and to consent to the use of
those statements and their related report in said Form 8-K.
4.05 Access. Between the date hereof and the Closing Date, each party
shall give to the other and their respective designees full access, during
normal business hours and upon reasonable notice, in such a manner as not to
disrupt normal business activities, to the premises, property, material
contracts and books of account and records of such party, Each party will hold,
and will cause all of its directors, officers, employees and representatives to
hold in complete confidence, all information so obtained and will use such
information only for the purpose of conducting its due diligence investigation.
If the Transaction is not consummated as contemplated herein, each party will
return to the other all returnable information and data and will not disclose
any such data or information to any other person. Such obligation of
confidentiality shall not extend to any information which is shown to have been
previously known to the party to whom the information was provided, or generally
known to others engaged in the same trade or business as the party who provided
the information, or that is part of public knowledge.
4.06 Best Efforts. BUYC and Northeast shall use their best efforts,
and shall cooperate with and assist each other in their efforts to obtain such
consents and approvals of third parties as may be necessary to consummate the
Transaction and to permit each party to enjoy the benefits of the Transaction
without any cost beyond that contemplated by this Agreement.
4.07 Brokers or Finders. Each party agrees to hold the other harmless
and to indemnify it against the claims of any persons or entities claiming to be
entitled to any brokerage commission, finder's fee, advisory fee or like payment
from such other party based upon actions of the indemnifying party in connection
with the Transaction.
4.08 Environmental Matters.
4.8.1 Not applicable, neither Northeast nor BUYC own or lease any real
property to which this section might apply.
4.09 Exclusive. Until this Agreement shall be consummated or
terminated in accordance with its terms, BUYC shall not take, or permit any
other person acting on its or his behalf, to take or refrain from taking any
action, directly or indirectly, to encourage, initiate or engage in discussions
or negotiations with, or provide information to, any person or group other than
Northeast with respect to any purchase of the stock of BUYC or any purchase of
any substantial portion of the assets of, or merger with BUYC, other than
disclosures consented to in writing by Northeast. BUYC and the Stockholders
shall promptly notify Northeast of any solicitation or inquiry which any of them
receive with respect to any such matter.
ARTICLE V
THE CLOSING
5.01 The Closing. The Closing shall take place at a mutually
acceptable time and location to BUYC and Northeast, on the Closing Date,
provided that all conditions precedent to the obligations of BUYC and Northeast
to close have then been met or waived. Either party may postpone the Closing for
a reasonable period of time if necessary to enable it to perform any obligations
hereunder. If the Closing shall not take place on or before the 90th day
following the date hereof (the "Outside Date"), this Agreement may be terminated
at the option of either party, other than a party whose act or failure to act
prevented the Closing from occurring on or before the Outside Date.
5.02 Termination. This Agreement may be terminated at any time until
completion of the Closing as follows: (a) by mutual consent of Northeast and
BUYC; (b) by Northeast or BUYC, respectively, if, at or before the completion of
the Closing, any material condition set forth herein upon the obligation of such
party to consummate the Transaction shall not have been duly satisfied or
waived; (c) by Northeast or BUYC if the Closing shall not have occurred on or
before the Outside Date, but no party shall be entitled to terminate pursuant to
this clause if its own acts or failures to act delay the Closing beyond the
Outside Date; or (d) by Northeast or BUYC, respectively, if it shall have
discovered that any representation or warranty made herein for its benefit, or
in any certificate, schedule or document furnished to it, pursuant to this
Agreement is untrue in any material respect, or if the other party shall have
defaulted in the performance of any obligation to be performed by such party
under this Agreement; provided, however, that in order to terminate this
Agreement under Section 5.02 (b) or (d), the party seeking to terminate this
Agreement shall, upon discovery of a breach or default, give written notice
thereof to the other party and the other party shall fail to cure the breach or
default within ten (10) days after receipt of such notice.
5.03 Liability on Termination. Upon any termination of this Agreement
pursuant to Section 5.02 (a), no party shall have any liability or obligation
hereunder (except to observe the confidentiality provisions hereof), and each
party shall bear the expenses incurred by it. If a party should terminate
pursuant to Section 5.02(b) or Section 5.02(d), the terminating party shall have
no liability, but the defaulting party shall not be excused from liability to
the other party unless it can clearly demonstrate that the failure to perform
was caused by persons or acts beyond its control. If the termination is the
result of an event described in Section 5.02(c) above, the terminating party
shall have no liability to the other party provided that the terminating party
did not delay the closing beyond the Outside Date, but the party causing that
delay shall not be excused from liability to the other party unless it can
clearly demonstrate that such delay was caused by persons or acts beyond its
control.
5.04 Termination Fees. In order to induce each party to enter into
this Agreement, and as a means of compensating the parties for the substantial
efforts and direct and indirect monetary costs incurred and to be incurred in
connection with the Transaction, (i) in the event that Northeast terminates this
Agreement as a result of BUYC's failure to satisfy any of the conditions set
forth in Article VII, BUYC shall reimburse Northeast for all reasonable
out-of-pocket expenses actually incurred by it or on its behalf in connection
with this Agreement and the Transaction in an amount not to exceed $25,000; and
(ii) in the event that BUYC terminates this Agreement as a result of Northeast's
failure to satisfy any of the conditions set forth in Article VIII, Northeast
shall reimburse BUYC for all reasonable out-of-pocket expenses actually incurred
by it or on its behalf in connection with this Agreement and the transaction in
an amount not to exceed $25,000; provided, however, that any claim that a
representation of a party, which is based on the knowledge of such party, is
false shall not give rise to a claim under this Section unless that
representation is false to the knowledge of such party on the date of this
Agreement.
ARTICLE VI
CONDITIONS TO OBLIGATION OF EACH PARTY
The obligation of each party to effect the Transaction shall be
subject to the fulfillment, at or prior to the Closing Date, of the following
conditions:
6.01 No Prohibition of Transaction.
(a) No third party shall have instituted any suit or proceeding to
restrain, enjoin or otherwise prevent the consummation of the Transaction, or to
seek damages from or impose obligations upon either party by reason of the
Transaction which, in such party's reasonable judgment, would involve expense or
lapse of time that would be materially adverse to that party's interest.
(b) No order shall have been issued by any court or administrative
body to inquire into, restrain, enjoin or otherwise prevent consummation of the
Transaction.
6.02 Compliance with Law. There shall have been obtained all permits,
approvals and consents of any governmental body or agency which counsel for
Northeast or BUYC may reasonably deem necessary or appropriate to consummate the
Transaction in compliance with laws applicable to the Transaction, assets or
business of either party.
6.03 Proceedings. Documentation and Consents. All proceedings and
Closing Documents contemplated by this Agreement, together with all consents to
and approvals of the Transaction (the form and substance of all of which shall
be reasonably satisfactory to the parties) as are necessary to effect the
Merger, shall have been obtained.
6.04 Tax Free Reorganization. The Merger and the receipt by the
shareholders of BUYC of shares of Northeast Stock in exchange for their shares
of BUYC Stock shall constitute a tax free reorganization pursuant to Section
368(a)(i)(A) of the Internal Revenue Code of 1986, as amended.
ARTICLE VII
CONDITIONS TO THE OBLIGATION OF NORTHEAST TO CLOSE
The obligations of Northeast hereunder are subject to the
satisfaction, on or prior to the Closing Date, of all the following conditions,
compliance with which or the occurrence of which may be waived in whole or in
part by Northeast in writing.
7.01 Representations and Warranties True at the Closing Date. Except
for changes contemplated by this Agreement and changes which do not individually
or in the aggregate have a material adverse effect upon the assets or business
acquired, the representations and warranties of BUYC contained in Article III
shall be deemed to have been made again at and as of the Closing Date and shall
then be true and correct, except for changes in the Ordinary Course of Business
of BUYC.
7.02 No Material- Adverse Change: Officers' Certificates. During the
period from the date of this Agreement to the Closing Date there shall not have
been any material adverse change in the financial condition, results of
operations or prospects of BUYC, nor any material loss or damage to its assets,
whether or not insured, which materially adversely affects its ability to
conduct its business.
7.03 Corporation's Performance. Each of the obligations of BUYC to be
performed on or before the Closing Date pursuant to the terms of this Agreement
shall have been duly performed.
7.04 Necessary Corporate Approvals. The Board of Directors and
stockholders shall have duly authorized and approved the execution and delivery
of this Agreement and all corporate action necessary or proper on the part of
BUYC to authorize the execution, delivery and performance of this Agreement and
the Plan, shall have been taken on or prior to the Closing Date.
7.05 Resolutions Authorizing-the Execution of this Agreement. At the
Closing, BUYC will furnish to Northeast copies of the resolutions or consents of
BUYC's Board of Directors and its stockholders, appropriately certified by
BUYC's secretary, authorizing the execution, delivery, and performance of this
Agreement and the Plan.
7.06 Investment Letters. On or prior to the Closing Date, each
stockholder of BUYC will be required to deliverer to Northeast an Exchange
Agreement as per Appendix A hereto and any such other similar documents which
may be required by Northeast. It is understood that Northeast, in issuing the
Northeast Stock, will be relying on the representations of said persons therein
contained.
7.07 Satisfactory Searches. Northeast shall have received evidence,
satisfactory to it, that (a) BUYC is duly organized, validly existing and in
good standing in its state of incorporation, (b) BUYC is qualified to do
business as a foreign Corporation where it is required to be so qualified, and
(c) BUYC has good title to all assets listed in its financial statements free
and clear of all Encumbrances.
7.08 Environmental Review. Not required.
7.09 Consents to Transaction. On or prior to the Closing Date, BUYC
shall furnish Northeast with such consents to the Transaction as in the opinion
of Northeast or its counsel are required to permit BUYC to enjoy the benefits of
the Transaction without any cost beyond that contemplated by this Agreement.
7.10 Dissenters' Rights. BUYC shall not have received notices from any
holders of any class of BUYC Stock of their intent to dissent from the
Transaction.
7.11 Title Insurance. Not applicable.
7.12 Financial Statements. BUYC shall have delivered to Northeast, at
BUYC's expense, a balance sheet of BUYC as of the most recent month end
preceding the Closing, and a statement of income and cash flows from the period
July 19, 1999 (date of incorporation) as required by SEC Regulation S-X.
7.13 Fairness Opinion. By mutual consent no fairness opinion is
required in this Transaction.
7.14 Results of Investigation Northeast shall have determined in good
faith that the results of its investigation do not show any losses, liabilities,
commitments, contingencies or other conditions of or relating to BUYC which are
not set forth or reflected in the financial statements of BUYC previously
delivered to Northeast or have not been otherwise disclosed to Northeast and
which in the aggregate materially and adversely affect the business, financial
condition, properties, results of operations, forecasts or prospects of BUYC.
ARTICLE VIII
CONDITIONS TO BUYC'S OBLIGATION TO CLOSE
The obligations of BUYC hereunder are subject to the satisfaction, on
or prior to the Closing Date, of the following conditions, compliance with
which, or the occurrence of which may be waived in whole or in part in writing
by BUYC.
8.01 Representations and Warranties True at the Closing. The
representations and warranties of Northeast contained in Article III shall be
deemed to have been made again at and as of the Closing Date and shall then be
true and correct in all material respects except for changes in the Ordinary
Course of Business of Northeast.
8.02 Northeast's Performance. Each of the obligations of Northeast to
be performed on or before the Closing Date, pursuant to the terms of this
Agreement, shall have been duly performed at the Closing Date. There shall have
been no change in Northeast's financial or business condition, nor any
litigation or proceeding, actual or threatened, which is reasonably likely to
prevent Northeast from performing any obligation undertaken by it under this
Agreement which is to be performed after the Closing.
8.03 No Material Adverse Change. During the period from the date of
this Agreement to the Closing Date, there shall not have been any material
adverse change in the financial condition, results of operations or prospects of
Northeast, nor any material loss or damage to its assets, whether or not
insured, which materially affects Northeast's ability to conduct its business.
8.04 Authority. All actions required to be taken by or on the part of
Northeast to authorize the execution, delivery and performance of this Agreement
by Northeast and the consummation of the Transaction shall have been duly and
validly taken by the Board of Directors and stockholders of Northeast.
8.05 Results of Investigation. BUYC shall have determined in good
faith that the results of its investigation do not show any losses, liabilities,
commitments, contingencies or other conditions of or relating to Northeast which
are not set forth or reflected in the financial statements of Northeast
previously delivered to BUYC or have not been otherwise disclosed in writing to
BUYC and which in the aggregate materially and adversely affect the business,
financial condition, properties, results of operations, forecasts or prospects
of Northeast.
ARTICLE IX
SURVIVAL OF REPRESENTATIONS AND INDEMNIFICATION
9.01 Representations to Survive Closing, The representations and
warranties of Northeast and BUYC contained herein or in any document furnished
pursuant hereto shall survive the Closing of the Transaction, but the exclusive
remedy following the Closing for a breach of any representation or warranty
shall be to assert a claim in accordance with the provisions of this Article IX.
Except as provided in this Article IX, neither Northeast, BUYC, nor their
respective stockholders, directors or officers, shall have any liability to the
other after the Effective Date on account of any breach or failure or the
incorrectness of any of those representations and warranties.
9.02 Indemnification by BUYC.
(a) Obligation to Indemnify. BUYC agrees to and do hereby indemnify,
and agree to defend and hold Northeast and the Surviving Corporation and their
respective directors, officers, employees, fiduciaries, agents and affiliates,
and each other person, if any, who controls such persons, harmless against any
claims, actions, suits, proceedings, investigations, losses, expenses, damages,
obligations, liabilities, judgments, fines, fees, costs and expenses (including
costs and reasonable attorneys' fees) and amounts paid in settlement of any
pending, threatened or completed claim, action, suit, proceeding or
investigation (collectively "Loss" or "Losses") which arise or result from or
are related to (i) any breach or failure of BUYC to perform any of their
covenants or agreements set forth herein, (ii) the inaccuracy of any
representation or warranty made by BUYC herein, (iii) any fixed or contingent
obligation or liability of BUYC (including but not limited to liabilities
arising in tort, contract, guarantees and indemnities) which existed as of the
Closing Date and would be required by GAAP to be disclosed on BUYC's financial
statements, or in the notes thereto, and is not so disclosed prior to Closing,
and (iv) any liability for Taxes, other than those which are accrued as
liabilities of BUYC, together with interest and penalties and additions to tax,
if any, arising out of tax assessments. No liability shall attach under this
Section 9.02, however, until Northeast has incurred a Loss or Losses in the
aggregate totaling fifty thousand dollars ($50,000) and no claim shall be
asserted by Northeast after one year in the case of claims asserted on the basis
of clause (i), two years in the case of a claim asserted on the basis of clauses
(ii) or (iii), and no time limitation in the case of a claim asserted on the
basis of clause (iv).
(b) Reimbursement on Demand. BUYC will reimburse Northeast from time
to time on demand for any payment made by Northeast at any time in respect of
any Loss which Northeast may sustain or incur to which the foregoing indemnity
relates.
9.03 Indemnification by Northeast.
(a) Obligation to Indemnify. Northeast agrees to and does hereby
indemnify and hold BUYC harmless against any claims, losses, damages, expenses
or liabilities (including costs and reasonable attorney's fees) resulting to
BUYC from (i) any breach or failure of Northeast to perform any of its covenants
or agreements set forth herein, (ii) the inaccuracy of any representations or
warranties made by Northeast herein, (iii) any fixed or contingent obligation or
liability of Northeast (including but not limited to liabilities arising in
tort, contract, guarantees and indemnities) which existed as of the Closing Date
and would be required by GAAP to be disclosed on Northeast's financial
statements, or in the notes thereto, and is not so disclosed prior to closing,
and (iv) any liability for Taxes, other than those which are accrued as
liabilities of Northeast, together with interest and penalties and additions to
tax, if any, arising out of tax assessments. No liability shall attach under
this Section 9.03, however, until the stockholders have incurred a Loss or
Losses in the aggregate totaling fifty thousand dollars ($50,000) and no claim
shall be asserted by BUYC after one year in the case of claims asserted on the
basis of clause (i), two years in the case of a claim asserted on the basis of
clauses (ii) or (iii), and no time limitation in the case of a claim asserted on
the basis of clause (iv).
9.04 Enforcement of Indemnification Rights.
(a) Notification. Any person or entity seeking enforcement of
indemnification rights hereunder shall notify each potentially liable person or
entity of (i) any payment made in respect of any liability, obligation or claim
to which the foregoing indemnity applies, (ii) any Loss which such person or
entity may sustain or incur, to which the foregoing indemnity relates, and (iii)
any claim made or suit filed against such person or entity with respect to BUYC
or Northeast, as applicable, their respective assets or this Agreement. Such
notification shall include a specific demand for indemnification and defense if
such person or entity wishes to assert his or its indemnification rights
hereunder.
(b) Disputes. If there is any dispute as to the right to
indemnification and defense hereunder, the disputing party shall give the other
party written notice of such dispute, specifying in detail the basis of the
dispute, not later than 20 days after receipt of demand for indemnification. The
parties agree to resolve any such dispute pursuant to the New Jersey Alternate
Procedure for Dispute Resolution Act (N.J.S.A. 2A:23A). All parties hereto agree
to submit to the jurisdiction of such court for the purpose of such suit or
suits.
(c) Time Limit. If there is no dispute as to the right to
indemnification with respect to any such demand within such 20 day period, TIME
BEING OF THE ESSENCE, or upon resolution of any such dispute by the parties or
by a court, the person or entity entitled to indemnification shall be promptly
paid the amount of such demand, the amount agreed to by the parties or the
amount ordered by a court.
(d) Calculation of Loss. In determining the amount of any Loss, net
after tax proceeds of insurance received shall reduce the Loss. Tax benefits, if
any, derived from such Loss by the party seeking indemnification shall not
reduce the Loss, unless the amount paid to indemnify it for such Loss shall not
be treated by it as income subject to federal or state income tax, in which
event the amount of the Loss shall be reduced by the tax benefits derived
therefrom.
(e) Litigation Procedure. If a party entitled to be indemnified
pursuant to this Article IX notifies the other party of the commencement of an
action against it, the party obligated to provide indemnification will be
entitled, at his or its own expense, to (i) participate in, and (ii) except in
the case of a claim that relates to a tax liability, assume the defense of the
action. If the indemnifying party wishes to assume the defense of that action,
counsel selected by the indemnifying party shall be reasonably satisfactory to
the indemnified party, and the indemnified party shall cooperate in all
reasonable respects, at its cost and expense, with the indemnifying party and
such counsel in the investigation and defense of such action and any appeal
arising therefrom. After the indemnifying party shall notify the indemnified
party of its election to assume the defense of any such action, the indemnifying
party will not be liable to the indemnified party under this Article IX for any
legal fees or other expense subsequently incurred by the indemnified party in
connection with the defense thereof Even if the indemnifying party should assume
the defense of any such actions, the indemnified party shall have the right at
its expense to participate in the defense thereof. If the indemnifying party
assumes the defense of any such actions, it shall not settle or otherwise
compromise any such action without the prior written consent of the indemnified
party. If the indemnifying party should fail or refuse to assume the defense of
any such action, the indemnifying party shall jointly and severally reimburse
the indemnified party for the fees and expenses of counsel engaged by it to
defend that action.
9.05 Remedies Cumulative. Persons or entities entitled to
indemnification hereunder shall be entitled to such indemnification from time to
time and shall be entitled to rely upon one or more provisions of this Agreement
without waiving its right to rely upon any other provisions at the same time or
any other time.
ARTICLE X
MISCELLANEOUS
10.01 Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed delivered if delivered by
hand, by telecopier, by courier or mailed by certified or registered mail,
postage prepaid, addressed as follows:
If to Northeast:
Northeast, Inc. Attn: Xx. Xxxxxxx X. Xxxxx, Xx. 0000
Xxxxxxxxxx Xxxxxx, Xxxxx, XX 00000 Tel: (000) 000-0000
Fax No.: (000) 000-0000
with a copy to:
Xxxxxxxxxx Xxxxxxx PC Attn: Xxxxxx X. Xxxxx, Esq.
00 Xxxxxxxxxx Xxxxxx Xxxxxxxx, XX 00000
Tel. (000) 000-0000 Fax No. (000) 000-0000
If to BUYC:
Buy It Xxxxx.xxx, Inc. Attn: Xxxxxx Xxxxxxx,
000 X. Xxxxx Xxxx, Xxxxxx, X.X. 00000,
Fax No. 000-000-0000
10.02 Assignability and Parties in Interest. This Agreement shall not
be assignable by any of the parties hereto without the consent of all other
parties hereto. This Agreement shall inure to the benefit of and be binding upon
the parties hereto and their respective successors. Nothing in this Agreement is
intended to confer, expressly or by implication, upon any other person any
rights or remedies under or by reason of this Agreement. 10.03 Expenses.
Northeast shall bear all expenses and costs, including the fees of any attorney
retained by it or BUYC, incurred in connection with the preparation of this
Agreement and consummation of the Transaction.
10.04 Governing Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of New Jersey.
All parties consent to the personal jurisdiction of the federal and state courts
in the State of New Jersey in connection with any action arising under or
brought with respect to this Agreement.
10.05 Counterparts. This Agreement may be executed as of the same
effective date in one or more counterparts, each of which shall be deemed an
original.
10.06 Headings. The headings and subheadings contained in this
Agreement are included solely for ease of reference, and are not intended to
give a full description of the contents of any particular Section and shall not
be given any weight whatever in interpreting any provision of this Agreement.
10.07 Pronouns. etc. Use of male, female and neuter pronouns in the
singular or plural shall be understood to include each of the other pronouns as
the context requires. The word "and" includes the word "or". The word "or" is
disjunctive but not necessarily exclusive.
10.08 Complete Agreement. This Agreement, the Appendices hereto, and
the documents delivered pursuant hereto or referred to herein or therein contain
the entire agreement between the parties with respect to the Transaction and,
except as provided herein, supersede all previous negotiations, commitments and
writings.
10.09 Modifications. Amendments and Waivers. This Agreement shall not
be modified or amended except by a writing signed by BUYC and Northeast. Prior
to the Closing, either BUYC or Northeast may amend any of the exhibits to
Article III by giving the other party notice of such amendments. If such amended
disclosures reveal material adverse information about the party making the
change, the recipient of the information may terminate this Agreement without
liability to the other party.
10.10 Severability. If any term or other provision of this Agreement
is invalid, illegal, or incapable of being enforced by any rule of law or public
policy, all other terms and provisions of this Agreement will nevertheless
remain in full force and effect so long as the economic or legal substance of
the Transaction is not affected in any manner adverse to any party hereto. Upon
any such determination that any term or other provision is invalid, illegal, or
incapable of being enforced, the parties hereto will negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties as
closely as possible in any acceptable manner to the end that the Transaction is
consummated to the extent possible.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
ATTEST: NORTHEAST (USA) CORP.
By: /s/ Xxxxxxx X. Xxxxx, Xx.
Xxxxxxx X. Xxxxx, President
ATTEST: BUY IT XXXXX.xxx, INC.
By: /s/ Xxxxxx Xxxxxxx
Xxxxxx Xxxxxxx, President
EXCHANGE AGREEMENT
Northeast (USA) Corp.
0000 Xxxxxxxxxx Xxx.
Xxxxx, X.X. 00000
Re: Northeast (USA) Corp. a Delaware corporation (the "Company")
Gentlemen:
Section 1. Exchange.
Pursuant to the terms of an Agreement and Plan of Merger, dated October
27, 1999, between the Company and Buy It Xxxxx.xxx, Inc. ("BUYC"),the
undersigned, in its capacity as a shareholder of BUYC, agrees to
exchange shares of BUYC common stock ("BUYC Stock") for shares of the
Company's common stock (the "Common Stock") and in connection therewith
irrevocably tenders this Exchange Agreement, together with the BUYC
Stock and such stock powers and other documents as may be deemed
necessary, in the sole discretion of the Company, to effectuate such
exchange.
Section 2. Shareholder's Acknowledgments.
The Company has disclosed to the undersigned and the undersigned
shareholder understands that:
(a) There is a limited public market for the Common Stock of the
Company.
(b) The Common Stock to be received by the undersigned will not be
registered under the Securities Act of 1933 or State securities laws and,
therefore, the Common Stock cannot be resold or transferred unless it is
subsequently registered under the Securities Act of 1933 and applicable State
securities or "Blue Sky" laws or exemptions from such registration are
available.
(c) A legend summarizing the restrictions on the transfer of the
Common Stock will be placed on the certificates representing the shares of
Common Stock to be received by me and stop transfer instructions will be given
to the transfer agent for the Common Stock to prohibit any transfer or attempted
transfer in violation of such restrictions.
(d) No Federal or State agency has made any finding or determination
as to the fairness of the investment, nor have they made any recommendation or
endorsement concerning the Common Stock.
Section 3. Shareholder Representations.
The undersigned represents and warrants as follows:
(a) The undersigned Shareholder is acquiring the Common Stock for its
own account and not for or with a view to resale or distribution. The
undersigned has not entered into any contract, undertaking, agreement or
arrangement with any person to sell, transfer or pledge to such person or anyone
else the Common Stock which it will receive in exchange for its BUYC Common
Stock and the undersigned has no present plans or intentions to enter into any
such contract, undertaking, agreement or arrangement.
(b) The undersigned can bear the economic risk of losing its entire
investment in the Common Stock. The undersigned is prepared to bear the economic
risk of this investment for an indefinite time.
(c) The representatives of the undersigned have substantial experience
in making investment decisions of this type and, therefore, have such knowledge
and experience in financial and business matters that they are capable of
evaluating the merits and risks of an investment in the Company.
(d) The undersigned and its advisors (i) have had the opportunity to
ask questions of and receive answers from representatives of the Company or
persons acting on its behalf concerning the terms and conditions of a proposed
investment in the Company; (ii) have had the opportunity to obtain additional
information necessary to verify the accuracy of information previously furnished
about the Company; and (iii) are satisfied that they have received information
with respect to all matters that they consider material to their decision to
invest in the Company. A copy of the Company's 10-KSB report for its fiscal year
ended June 30, 1999 as filed with the Securities and Exchange Commission has
been made available to me upon my request.
(e) The undersigned and its advisors have relied solely upon (i) the
Offering Memorandum of Buy It Xxxxx.xxx, Inc., dated July 21, 1999 and (ii)
independent investigations made by the undersigned in making its decision to
accept the Common Stock. No other representations, warranties or favorable
descriptive statements about the business of the Company or the Common Stock
have been made to the undersigned.
(f) The undersigned has accurately completed the Questionnaire annexed
hereto as Exhibit A and hereby incorporates by reference into this Exchange
Agreement the information and representations contained therein.
(g) The undersigned acknowledges and understands that the terms of the
Merger have not been negotiated on any arm's length basis. Certain directors of
Buy It Xxxxx.xxx, Inc. are also directors of the Company. The exchange ratio is
arbitrary and has not been negotiated on an arm's length basis. No fairness
opinion or independent valuation opinion has been obtained with respect to the
value of either company.
Section 4. Representations Relating to Authority (not applicable to
individuals).
The undersigned represents and warrants that:
(a) It is duly incorporated or organized, validly existing and in good
standing in its state and/or country of incorporation or organization and in all
other jurisdictions in which the character of its business makes such
qualification necessary.
(b) It has full power and authority to enter into, deliver and perform
this Exchange Agreement and the Merger Agreement and it has taken all action
required to authorize the execution and delivery of this Agreement and the
Merger Agreement and to consummate the transactions contemplated hereby and
thereby. This Agreement and the Merger Agreement are the valid and binding
obligations of the undersigned shareholder, enforceable against it in accordance
with its terms and the person signing such documents on behalf of the
undersigned has been duly authorized to act on behalf of and to bind the
undersigned.
(c) The execution and delivery of this Agreement and the Merger
Agreement and the consummation of the transactions contemplated hereby and
thereby will not violate any provision of the certificate of incorporation and
by-laws, or any other organizational document or any agreement or contract to
which the undersigned is a party or by which it is bound, or any applicable law,
ordinance, rule or regulation of any governmental body having jurisdiction over
the undersigned or its business or any order, judgment or decree applicable to
the undersigned.
Section 5. Miscellaneous.
(a) Notices. All notices or other communications given or made
hereunder shall be in writing and shall be delivered or mailed by registered or
certified mail, return receipt requested, postage prepaid to the undersigned at
the address set forth below and to the Company at the following address: 0000
Xxxxxxxxxx Xxxxxx, Xxxxx, Xxx Xxxxxx 00000.
(b) Governing Law. Notwithstanding the place where this Agreement may
be executed by any of the parties hereto, the parties expressly agree that all
the terms and provisions hereof shall be governed by, and construed in
accordance with, the laws of the State of New Jersey without regard to the
choice of law principles thereof.
(c) Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto, their personal representatives,
successors and assigns; provided that neither party shall be entitled to make
any assignment of its rights hereunder without the prior written consent of the
other party.
(d) Further Assurances. The parties agree that they shall execute and
deliver any and all additional writings, instruments, and other documents
contemplated hereby or referred to herein and shall take such further action as
shall be reasonably required in order to effectuate the terms and conditions of
this Agreement.
(e) Interpretation. Whenever required by the context hereof, the
singular shall include the plural, and vice-versa; the masculine shall include
the feminine and neuter genders, and vice-versa; and the word "person" shall
include an individual, corporation, partnership, trust, estate or other entity.
Section headings contained in this Agreement are for reference purposes and
shall not affect the meaning or interpretation of this Agreement.
Section 6. Foreign Person. (check one)
_____The undersigned hereby certifies that it is not a "foreign
person" within the meaning of Section 7701(a)(30) of the Internal Revenue Code
and agrees to notify the Company prior to becoming a foreign person as so
defined. A "foreign person" is a person who is not a citizen or resident of the
United States.
_____The undersigned hereby certifies that it is a "foreign person"
within the meaning of Section 7701(a)(30) of the Internal Revenue Code.
IN WITNESS WHEREOF, the undersigned has executed this Exchange
Agreement, this day of 1999.
ATTEST _____________________________________
Stockholder signature
______________________________________
Name (print)
______________________________________
Exact name(s) as to appear on stock
certificate
Address _______________________________________________________________
Telephone Number _______________________
Stockholder Taxpayer I.D. No.____________________________
EXHIBIT 3.1.9
Intangible personal property and computer programs owned by Buy It
Xxxxx.xxx, Inc.
1. Software necessary to construct a website for retailing on the Internet.
2. The domain name "Buy It Xxxxx.xxx" for the Internet.
3. Any licenses, registrations, certifications, agreements or approvals which
are specifically required to operate an Internet retailing business (a/k/a
E-commerce).
Exhibit 3.1.10
Names and addresses of all stockholders of Buy It Xxxxx.xxx, Inc.
Name Number of shares Name Number of shares
Xxxxxx Xxxxxxx 40 Russia Wireless Holdings LLC 15
c/o 000 X. Xxxxx Xxxx 0000 Xxxxxxx Xx. XX Xxxxx 000
Xxxxxx, X.X. 00000 Xxxxxxxxxx, XX 00000
Xxxxxxx X. Xxxxx, Xx. 00 Xxxxxx X. Xxxxxx, Xx. 0
c/o 0000 Xxxxxxxxxx Xxx. 00 Xxxxxx Xxx.
Ocean, N.J. 00000 X. Xxxx Xxxxxx, X.X. 00000
Xxxxx X. Xxxxx 10 Xxxxxxxx Xxxxx 1
0 Xxxxxx Xx. 000 Xxxxxxxxx Xx.
Xxx Xxxx, X.X. 00000 Ocean, N.J. 07712
Xxxx and Xxxxx Xxxxx 10 Xxxxxxx Xxxxxxxx 6
000 00xx Xxxxxx 0000 Xxxxx Xxxxx
Xxxx Xxxxx, X.X. 00000 S. Plainfield, N.J. 07080
Xxxxx Xxxxxx 2 Xxxx X. Xxxx 3
00 Xxxxxxxxx Xxx. Xxx 0X 00 Xxxxxx Xxx.
Xxx Xxxx, X.X. 00000 Bloomfield, N.J. 07003
Xxxxxx Xxxxxx 10 Xxxx X. Xxxxx 5
X.X. Xxx 00 1721 Xxxxxx Road
Bloomingburg, N.Y. 12721 Scotch Plains, N.J. 07076
Xxxx X. Xxxxxx 1 Xxxxxxxxx Xxxxx 1
0 Xxxxxxx Xx. 000 Xxxxxx Xxxxx
Xx. Xxx, X.X. 00000 Ramsey, N.J. 07446
Xxxxxxx X. Xxxxx 10 Xxxxx Xxxxxxx 1
00 Xxxxxx Xxxxx 000 Xxxxx Xxx. Xxx. 0X
Xxxxxxx, X.X. 00000 Xxxxxxxxx Xxxx, X.X. 00000
Xxxxxxxx Xxxx 5 Xxxxxxx X. Xxxxxxx 1
000 Xxxxxxxxxx Xxxxx Xx. 0000 Xxx Xxxx.
Xxxxxx Xxxxxx, X.X. 00000 Pt. Pleasant, N.J. 08742
Xxxxx Xxxx 3 Xxxxx and Xxxxxxxxx Xxxxxxxxx 1
00 Xxxx Xxxx 29 Heidl Ave.
East Rockaway, N.Y. 00000 X. Xxxx Xxxxxx, X.X. 00000
Xxxxxx XxXxxxxxx 2 Xxxxxxx Xxxxxx 1
00 X. Xxxxxxxxx Xxxx. 0 Xxxxxxx Xxxxxx
Xxxxxxxxx Xx., X.X. 00000 Xxxxxx Xxxxx, X.X. 00000
Exhibit 3.2.6
Litigation - Northeast (USA) Corp.
Creditors with claims in the aggregate of $121,615 against Northeast for goods
and services have filed actions against Northeast. Except for disputed amounts
totaling $17,609, these liabilities are reflected in the Northeast Financial
Statements attached hereto. Northeast has no valid defense against the
non-disputed portion of these amounts.
3.2.10
Subsidiaries of Northeast (USA) Corp.
1. Northeast Consulting Ltd., Shenyang China. Owned 100%. Northeast has
abandoned this subsidiary and written off its investment therein. There has been
no formal dissolution as of this date.
2. United Vitatech Pharmaceuticals Ltd., Shenyang, China. 56% owned. Northeast
has advised the 44% stockholder that it no longer has interest in pursuing this
venture.
Exhibit 3.2.11
Joint Venture and Other Agreements of Northeast (USA) Corp.
Northeast is party to joint venture agreement with the Northeast
General Pharmaceutical Factory in Shenyang China. A joint venture company United
Vitatech Pharmaceuticals Ltd. was formed in China. Northeast (USA) Corp. has not
fulfilled its obligations under the joint venture agreement. See the Notes to
the Financial Statements attached hereto for disclosure relative thereto.
