SHARE EXCHANGE AGREEMENT
AGREEMENT dated February 23, 2006 by and among CRSI GROUP, INC., a
Florida corporation (hereinafter referred to as "CRSI") and the individual
signatories to this agreement, being all of the shareholders of SCIENTIFIC
INDUSTRIAL FIRM DANK LLC. , CENTRAL GEOPHYSICAL EXPEDITION LLC. and A-
FIDAN, LLC., each a limited liability company organized under the laws of the
Republic of Kazakhstan (all of said shareholders being hereinafter referred to
collectively as the " EXCHANGING SHAREHOLDERS").
WHEREAS, each of SCIENTIFIC INDUSTRIAL FIRM DANK LLC., CENTRAL
GEOPHYSICAL EXPEDITION LLC. and A-FIDAN, LLC. is a limited liability company
organized under the laws of the Republic of Kazakhstan (each being referred to
herein as an "Operating Company" and all being referred to herein collectively
as the "Operating Companies"); and
WHEREAS, the EXCHANGING SHAREHOLDERS, collectively, own all of the
equity in each of the Operating Companies that will be transferred hereunder;
and
WHEREAS, the EXCHANGING SHAREHOLDERS desire to transfer to CRSI and
CRSI desires to acquire a controlling equity interest in the Operating
Companies;
NOW, THEREFORE, it is agreed:
1. Definitions. As used herein, the following terms shall have the
meanings set forth below:
a. "Applicable Law" means any domestic or foreign law, statute,
regulation, rule, policy, guideline or ordinance applicable to the
businesses or corporate existence of CRSI or any of the OPERATING COMPANIES.
b. "BV-Corp" means a corporation to be formed by the EXCHANGING
SHAREHOLDERS under the laws of the Netherlands, which will at the Closing
own the Operating Company Equity (as defined below).
c. "GAAP" means generally accepted accounting principles in the
United States of America as promulgated by the American Institute of
Certified Public Accountants and the Financial Accounting Standards Board
or any successor institutes concerning the treatment of any accounting
matter.
d. "Lien" means, with respect to any property or asset, any
mortgage, lien, pledge, charge, security interest, claim, encumbrance,
royalty interest, any other adverse claim of any kind in respect of such
property or asset, or any other restrictions or limitations of any nature
whatsoever.
d. "Operating Company Equity" means ninety-five (95%) percent of
the equity in SCIENTIFIC INDUSTRIAL FIRM DANK LLC., CENTRAL GEOPHYSICAL
EXPEDITION LLC. and A-FIDAN, LLC.
e. "Tax" (and, with correlative meaning, "Taxes" and "Taxable")
means:
(i) any income, alternative or add-on minimum tax, gross
receipts tax, sales tax, use tax, ad valorem tax, transfer tax, franchise
tax, profits tax, license tax, withholding tax, payroll tax, employment
tax, excise tax, severance tax, stamp tax, occupation tax, property tax,
environmental or windfall profit tax, custom, duty or other tax, impost,
levy, governmental fee or other like assessment or charge of any kind
whatsoever together with any interest or any penalty, addition to tax or
additional amount imposed with respect thereto by any governmental or Tax
authority responsible for the imposition of any such tax (domestic or
foreign), and
(ii) any liability for the payment of any amounts of the type
described in clause (i) above as a result of being a member of an
affiliated, consolidated, combined or unitary group for any Taxable period,
and
(iii) any liability for the payment of any amounts of the type
described in clauses (i) or (ii) above as a result of any express or
implied obligation to indemnify any other person.
e. "Tax Return" means any return, declaration, form, claim for
refund or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
2. Share Exchange.
a. Prior to the Closing Date (defined herein), the EXCHANGING
SHAREHOLDERS shall organize the BV-Corp and shall transfer the Operating
Company Equity to the BV-Corp in exchange for shares of the BV-Corp. The
percentage ownership that each of the EXCHANGING SHAREHOLDERS will have in the
BV-Corp is set forth on Schedule 2(a) hereto.
b. On the Closing Date (defined herein), the EXCHANGING SHAREHOLDERS
shall transfer and assign to CRSI all of the outstanding capital stock of the
BV-Corp. The EXCHANGING SHAREHOLDERS represent and warrant that upon
delivery to CRSI of certificates for said Shares, all of the right, title and
interest in said shares will be transferred to CRSI free of Liens, claims and
encumbrances.
c. On the Closing Date, CRSI shall issue to the EXCHANGING
SHAREHOLDERS a total of fifty-six million (56,000,000) shares of CRSI common
stock. The shares will be allocated among the EXCHANGING SHAREHOLDERS in
proportion to the relative interests of the EXCHANGING SHAREHOLDERS in the BV-
Corp, as set forth on Schedule 2(a) hereto. No fractional shares will be
issued; in lieu thereof, the number of shares issued to each EXCHANGING
SHAREHOLDER will be rounded up to the next whole share. CRSI warrants that
the common stock, when so issued, will be duly authorized, fully paid and non-
assessable.
d. The parties intend that the exchange of shares described above
shall qualify as a tax-free exchange under Section 351 of the United States
Internal Revenue Code. The parties further intend that the issuance of the
common stock by CRSI to the EXCHANGING SHAREHOLDERS shall be exempt from the
provisions of Section 5 of the Securities Act of 1933 pursuant to Section 4(2)
of said Act.
3. Closing. The Closing of the transactions contemplated by this
Agreement ("Closing") shall take place at the offices of CRSI at 11:00 A.M. on
the first business day after the closing conditions set forth in Section 7
have been satisfied or such other date as the parties hereto shall agree upon,
but not later than May 31, 2006 unless extended by the written agreement of
all the parties. As used herein, "Closing Date" means the date on which the
Closing occurs.
4. Warranties and Representations of Exchanging Shareholders. In
order to induce CRSI to enter into this Agreement and to complete the
transaction contemplated hereby, each EXCHANGING SHAREHOLDER warrants and
represents to CRSI as follows with respect to himself, with respect to the
Operating Company Equity owned by such SHAREHOLDER, and also with respect to
the OPERATING COMPANY that issued such Equity. For further clarity, each
reference to the OPERATING COMPANY made by an EXCHANGING SHAREHOLDER in this
Section 4 refers to each OPERATING COMPANY that issued Operating Company
Equity to the Shareholder, as set forth in Schedule 2(a).
a. Organization and Standing. The OPERATING COMPANY is a limited
liability company duly organized, validly existing and in good standing under
the laws of the Republic of Kazakhstan. The OPERATING COMPANY is qualified to
do business in the Republic of Kazakhstan to the extent required by the laws
of Kazakhstan, and has full power and authority to carry on its business as
now conducted and to own and operate its assets, properties and business. The
copies of the Charter and Foundation Agreement of the OPERATING COMPANY
previously delivered to CRSI are true and complete as of the date hereof.
b. Capitalization. There are no voting or equity securities
authorized or issued, nor any authorized or issued securities convertible into
equity securities, and no outstanding subscriptions, warrants, calls, options,
rights, commitments or agreements by which the OPERATING COMPANY or the
EXCHANGING SHAREHOLDER is bound, calling for the issuance of any additional
equity securities of the OPERATING COMPANY. All of the outstanding equity
interests of the OPERATING COMPANY have been duly authorized and validly
issued and are fully paid and non-assessable and were not issued in violation
of any preemptive rights or any applicable securities laws.
c. Ownership of Operating Company Equity. The EXCHANGING SHAREHOLDER
is the sole owner of that portion of Operating Company Equity set forth
opposite his name in Schedule 2(a), free and clear of all liens, encumbrances,
and restrictions whatsoever. By the transfer of the Operating Company Equity
to the BV-Corp prior to the Closing, the BV-Corp will thereby acquire good and
marketable title to 95% of the equity interest in each of SCIENTIFIC
INDUSTRIAL FIRM DANK LLC., CENTRAL GEOPHYSICAL EXPEDITION LLC. and A-FIDAN,
LLC., free and clear of all Liens, encumbrances and restrictions of any nature
whatsoever. The transfer to the BV-Corp will have been properly registered
with the government of the Republic of Kazakhstan prior to the Closing.
d. Corporate Records and Management. All of the books and records
of the OPERATING COMPANY including, without limitation, its books of account,
corporate records, minute book, stock certificate books and other records are
up-to-date, complete and reflect accurately and fairly the conduct of its
business in all material respects since its date of incorporation. All
reports, returns and statements currently required to be filed by the
OPERATING COMPANY with any government agency with respect to the business and
operations of the OPERATING COMPANY have been filed or valid extensions have
been obtained in accordance with normal procedures and all governmental
reporting requirements have been complied with. Schedule 4(d) attached hereto
sets forth the name and address of each member of the Board of Directors of
each OPERATING COMPANY and each member of the Executive Body of each OPERATING
COMPANY.
e. Governmental Consent. No consent, waiver, approval, order or
authorization of, or registration, declaration or filing with, any court,
administrative agency or commission or other governmental authority is
required in connection with the execution and delivery of this Agreement by
the OPERATING COMPANY or the consummation of the transactions contemplated
hereby.
f. Taxes. The OPERATING COMPANY has filed all Tax Returns that it
is required to file with all governmental agencies, wherever situate, and has
paid or accrued for payment all Taxes as shown on such returns except for
Taxes being contested in good faith. There is no material claim for Taxes
that is a Lien against the property of the OPERATING COMPANY other than
Liens for Taxes not yet due and payable.
g. Pending Actions. There are no legal actions, lawsuits,
proceedings or investigations, either administrative or judicial, pending or
threatened, against or affecting the OPERATING COMPANY or against the members
of its Board of Directors or the members of its Executive Body or against the
EXCHANGING SHAREHOLDERS that arose out of their operation of the OPERATING
COMPANY. Neither the OPERATING COMPANY nor any of the EXCHANGING SHAREHOLDERS
is subject to any order, writ, judgment, injunction, decree, determination or
award of any court, arbitrator or administrative, governmental or regulatory
authority or body which would be likely to have a material adverse effect on
the business of the OPERATING COMPANY.
h. Operating Company Financial Statements. The EXCHANGING
SHAREHOLDERS have delivered to CRSI the financial statements of each OPERATING
COMPANY for the years ended December 31, 2005 and 2004 (the "OPERATING COMPANY
Financial Statements"). The OPERATING COMPANY Financial Statements present
fairly in all material respects the financial condition of each OPERATING
COMPANY as of the dates thereof and the results of its operations for the
periods identified therein.
i. Absence Of Certain Changes Or Events. Except as set forth on
Schedule 4(i), to the knowledge of the EXCHANGING SHAREHOLDER, since
December 31, 2005:
(A) There has not been (i) any material adverse change in the
business, operations, properties, assets, or condition of the OPERATING
COMPANY or (ii) any damage, destruction, or loss to the OPERATING COMPANY
(whether or not covered by insurance) materially and adversely affecting
the business, operations, properties, assets, or condition of the OPERATING
COMPANY; and
(B) The OPERATING COMPANY has not (i) amended its Charter or its
Foundation Agreement; (ii) declared or made, or agreed to declare or make,
any payment of dividends or distributions of any assets of any kind
whatsoever to stockholders or purchased or redeemed, or agreed to purchase
or redeem, any outstanding capital stock; or (iii) other than pursuant to
any existing employment agreement, made any accrual or arrangement for
payment of bonuses or special compensation of any kind or any severance or
termination pay to any present or former officer or employee.
j. Ownership of Assets. Except as specifically identified in the
OPERATING COMPANY Financial Statements, the OPERATING COMPANY has good,
marketable title, without any Liens or encumbrances of any nature whatever, to
its assets, properties and rights of every type and description that are
reflected on the OPERATING COMPANY Financial Statements. As of the date of
this Agreement and as of the Closing Date, the OPERATING COMPANIES hold and
will hold valid, enforceable undivided mineral leases to properties having
proven reserves of approximately 4,000,000 barrels of oil.
k. Exploration License. A-Fidan, LLC owns all of the equity
interest in Kor-Tazh LLP. Kor-Tazh LLP holds a valid and enforceable
exploration and production license granted by the Ministry of Energy and
Mineral Resources of the republic of Kazakhstan, as set forth in the "Deed of
the State Registration of the Contract for Subsurface Use Operations," which
is registered by the Ministry as Registration No. 1483 (the "License"). Kor-
Tazh LLP holds the License free of Liens, claims and encumbrances. None of
the transactions contemplated by this Agreement, including the organization of
the BV-Corp, will limit or interfere with the rights of Kor-Tazh LLP under the
License.
l. No Interest in Suppliers, Customers, Creditors or Competitors.
Except as specifically identified in the OPERATING COMPANY Financial
Statements, neither the EXCHANGING SHAREHOLDERS nor any member of their
respective families have any interest of any nature whatever in any supplier,
customer, creditor or competitor of any OPERATING COMPANY.
m. No Debt Owed to Exchanging Shareholders. Except as specifically
identified in the OPERATING COMPANY Financial Statements, the OPERATING
COMPANY does not owe any money, securities, or property to any of the
EXCHANGING SHAREHOLDERS or any member of their families or to any company
controlled by or under common control with such a person, directly or
indirectly.
n. Validity of the Agreement. This Agreement has been duly executed
by the EXCHANGING SHAREHOLDER and constitutes the valid and binding obligation
of each of them, except to the extent limited by applicable bankruptcy,
reorganization, insolvency, moratorium or other laws relating to or effecting
generally the enforcement of creditors' rights. The execution and delivery of
this Agreement and the carrying out of its purposes will not result in the
breach of any of the terms or conditions of, or constitute a default under or
violate, the Charter or the Foundation Agreement of the OPERATING COMPANY, or
any material agreement, lease, mortgage, bond, indenture, license or other
material document or undertaking, oral or written, to which the OPERATING
COMPANY or the EXCHANGING SHAREHOLDER is a party or is bound or may be
affected, nor will such execution, delivery and carrying out violate any
order, writ, injunction, decree, law, rule or regulation of any court,
regulatory agency or other governmental body; and the business now conducted
by the OPERATING COMPANY can continue to be so conducted after completion of
the transaction contemplated hereby.
o. Compliance with Laws. The OPERATING COMPANY's operations have
been conducted in all material respects in accordance with all applicable
statutes, laws, rules and regulations. The OPERATING COMPANY is not in
violation of any law, ordinance or regulation of the Republic of Kazakhstan or
of any other jurisdiction. The OPERATING COMPANY holds all the environmental,
health and safety and other permits, licenses, authorizations, certificates
and approvals of governmental authorities (collectively, "Permits") necessary
or proper for the current use, occupancy or operation of its business, and all
of the Permits are now in full force and effect. The OPERATING COMPANY holds
all permits and licenses necessary in order to expatriate profits from the
Republic of Kazakhstan to shareholders outside Kazakhstan.
p. Finders. Other than Xxxxxx Xxxxx, the EXCHANGING SHAREHOLDERS
have not employed or utilized any finder in connection with this transaction,
and the execution of this Agreement and the carrying out of its purposes will
not give any individual other than Xxxxxx Xxxxx a valid legal claim to a
finder fee. The EXCHANGING SHAREHOLDERS will pay and deliver to Xxxxxx Xxxxx
the entirety of the agreed-upon finder's fee which is stipulated in the
Amended Finder's Agreement dated February 23 signed between Finder and the
Operating Company by reason of the execution of this Agreement and closing of
the transactions contemplated hereby.
5. Warranties and Representations of CRSI. In order to induce the
EXCHANGING SHAREHOLDERS to enter into this Agreement and to complete the
transaction contemplated hereby, CRSI warrants and represents to the
EXCHANGING SHAREHOLDERS that:
a. Organization and Standing. CRSI is a corporation duly organized,
validly existing and in good standing under the laws of the State of Florida.
CRSI is qualified to do business as a foreign corporation in every other
state in which it operates to the extent required by the laws of such state,
and has full power and authority to carry on its business as now conducted and
to own and operate its assets, properties and business. The copies of the
Certificate of Incorporation and Bylaws of CRSI previously delivered to the
EXCHANGING SHAREHOLDERS are true and complete as of the date hereof. CRSI has
not conducted any revenue-producing business operations within the past six
months.
b. Capitalization. CRSI's entire authorized capital stock consists
of 200,000,000 shares of common stock, no par value, and 5,000,000 shares of
preferred stock, no par value. On the Closing Date there will be 6,000,000
shares of CRSI Common Stock issued and outstanding. There are no other voting
or equity securities outstanding, and no outstanding subscriptions, warrants,
calls, options, rights, commitments or agreements by which CRSI is bound,
calling for the issuance of any additional shares of common stock or preferred
stock or any other voting or equity security.
c. Corporate Records. All of CRSI's books and records, including,
without limitation, its books of account, corporate records, minute book,
stock certificate books and other records are up-to-date, complete and reflect
accurately and fairly the conduct of its business in all material respects
since its date of incorporation; all of said books and records will be
delivered to CRSI's new management at the Closing.
d. CRSI Financial Condition. On the Closing Date, the aggregate of
all liabilities of CRSI and its subsidiaries of any kind or nature, whether
xxxxxx, inchoate or contingent, will not exceed Ten Thousand Dollars
($10,000).
e. Significant Agreements. On the Closing date, CRSI will not be
bound by any contract, agreement, lease, commitment, guarantee or arrangement
of any kind that will impose any material liability on CRSI.
f. Taxes. CRSI has filed all Tax Returns that it is required to
file with all governmental agencies, wherever situate, and has paid or accrued
for payment all Taxes as shown on such returns except for Taxes being
contested in good faith. There is no material claim for Taxes that is a
Lien against the property of CRSI other than Liens for Taxes not yet due
and payable.
g. Pending Actions. There are no legal actions, lawsuits,
proceedings or investigations, either administrative or judicial, pending or
threatened, against or affecting CRSI or against CRSI's Officers or Directors
that arose out of their operation of CRSI. CRSI is not subject to any order,
writ, judgment, injunction, decree, determination or award of any court,
arbitrator or administrative, governmental or regulatory authority or body.
h. Validity of the Agreement. All corporate and other proceedings
required to be taken by CRSI in order to enter into and to carry out this
Agreement have been duly and properly taken. This Agreement has been duly
executed by CRSI, and constitutes a valid and binding obligation of CRSI
except to the extent limited by applicable bankruptcy reorganization,
insolvency, moratorium or other laws relating to or effecting generally the
enforcement of creditors rights. The execution and delivery of this Agreement
and the carrying out of its purposes will not result in the breach of any of
the terms or conditions of, or constitute a default under or violate, CRSI's
Certificate of Incorporation or Bylaws, or any agreement, lease, mortgage,
bond, indenture, license or other document or undertaking, oral or written, to
which CRSI is a party or is bound or may be affected, nor will such execution,
delivery and carrying out violate any order, writ, injunction, decree, law,
rule or regulation of any court, regulatory agency or other governmental body.
i. Trading Status. CRSI's common stock is quoted for trading on the
Pink Sheets, with the symbol "CRSX."
j. SEC Status. CRSI is a reporting company pursuant to Section
15(d) of the Securities Exchange Act of 1934. Prior to the Closing, CRSI will
have filed all reports required by the applicable regulations of the SEC. All
of the filings by CRSI under the Exchange Act within the past three years were
true, correct and complete in all material respects when filed, were not
misleading and did not omit to state any material fact which was necessary
to make the statements contained in such public filings not misleading in
any material respect.
k. Compliance with laws. CRSI's operations have been conducted in
all material respects in accordance with all applicable statutes, laws,
rules and regulations. CRSI is not in violation of any applicable law,
ordinance or regulation.
l. Finders. CRSI has not employed or utilized any finder in
connection with this transaction, and the execution of this Agreement and the
carrying out of its purposes will not give any individual a valid legal claim
to a finder fee.
6. Pre-Closing Covenants.
a. Tax-Free Exchange. The Parties intend that the transactions
contemplated by this Agreement qualify as a tax-free exchange under Section
351 of the United States Internal Revenue Code. The Parties will take the
position for all purposes that the said transactions qualify under said
Section 351.
b. Announcement. Prior to the Closing, no Party hereto nor any
OPERATING COMPANY shall issue any press release or otherwise make any
public statement with respect to this Agreement or the transactions
contemplated hereby without the prior consent of the other Party (which
consent shall not be unreasonably withheld), except as may be required by
applicable law or securities regulation. The Parties will, to the extent
practicable, consult with each other before issuing, and provide each other
the opportunity to review and comment upon, any such press release or other
public statements with respect to this Agreement and the transactions
contemplated hereby whether or not required by Applicable Law. Upon
execution of this Agreement, CRSI shall file a Current Report on Form 8-K
with the SEC and will issue a press release, which shall be delivered to
the EXCHANGING SHAREHOLDERS for review at least two days before issuance.
c. Access to Information
(A) Inspection by Operating Companies. CRSI will make
available for inspection by the OPERATING COMPANIES, during normal business
hours, all of CRSI's records (including tax records), books of account,
premises, contracts and all other documents in CRSI's possession or control
that are reasonably requested by the OPERATING COMPANIES to inspect and
examine the business and affairs of CRSI. CRSI will cause its managerial
employees and regular independent accountants to be available upon
reasonable advance notice to answer questions of the OPERATING COMPANIES
concerning the business and affairs of CRSI. The OPERATING COMPANIES will
treat and hold as confidential any information they receive from CRSI in
the course of the reviews contemplated by this Section 6c(A). No
examination by the OPERATING COMPANIES will, however, constitute a waiver
or relinquishment by the EXCHANGE SHAREHOLDERS of their rights to rely on
CRSI's covenants, representations and warranties made herein or pursuant
hereto.
(B) Inspection by CRSI. The EXCHANGING SHAREHOLDERS will
cause each of the OPERATING COMPANIES and the BV-Corp to make available for
inspection by CRSI, during normal business hours and in a manner so as not
to interfere with normal business operations, all of the OPERATING
COMPANIES' records (including tax records), books of account, premises,
contracts and all other documents in the OPERATING COMPANIES' possession or
control that are reasonably requested by CRSI to inspect and examine the
business and affairs of the OPERATING COMPANIES, as well as like records
and books of the BV-Corp. The EXCHANGING SHAREHOLDERS will cause the
managerial employees of the OPERATING COMPANIES and their regular
independent accountants to be available upon reasonable advance notice to
answer questions of CRSI concerning the business and affairs of the
OPERATING COMPANIES. CRSI will treat and hold as confidential any
information it receives from the OPERATING COMPANIES and the BV-Corp in the
course of the reviews contemplated by this Section 6c(B). No examination
by CRSI will, however, constitute a waiver or relinquishment by CRSI of its
rights to rely on the EXCHANGING SHAREHOLDERS' covenants, representations
and warranties made herein or pursuant hereto.
(C) Delivery of Information. In order to facilitate the
inspection of information pursuant to this Section 6, each party will promptly
deliver to the other by email, by fax or by hand-delivered photocopy any
document reasonably requested by the other for purposes of such inspection.
7. Conditions Precedent to Closing.
a. Conditions Precedent to Obligations of the Exchanging
Shareholders. The obligations of the EXCHANGING SHAREHOLDERS under this
Agreement shall be and are subject to fulfillment, prior to or at the Closing,
of each of the following conditions:
(A) CRSI's representations and warranties contained herein shall
be true and correct on the Closing Date, as if such representations and
warranties had been made on and as of the Closing Date, and the President and
the Chief Financial Officer of CRSI shall each have delivered to the
EXCHANGING SHAREHOLDERS a certification to such effect.
(B) CRSI shall have performed or complied with all agreements,
terms and conditions required by this Agreement to be performed or complied
with by it prior to or at the time of the Closing.
(C) The total outstanding capital stock of CRSI shall consist of
6,000,000 shares of common stock, and there shall be outstanding no rights,
warrants, options or securities convertible into common stock of CRSI.
(D) CRSI's common stock will continue to be quoted for trading on
the Pink Sheets.
(E) The EXCHANGING SHAREHOLDERS shall have completed to their own
satisfaction due diligence with respect to CRSI.
(F) Since the date of this Agreement, CRSI shall have not
suffered any material adverse event.
(G) CRSI shall have prepared a Current Report on Form 8-K
concerning the Closing that complies with the applicable Rules of the SEC and
shall have delivered the Report to the EXCHANGING SHAREHOLDERS for review.
(H) All documents and instruments to be delivered pursuant to
this Agreement shall be reasonably satisfactory in substance and form to
the EXCHANGING SHAREHOLDERS and their counsel, and the EXCHANGING
SHAREHOLDERS and their counsel shall have received all such counterpart
originals (or certified or other copies) of such documents as they may
reasonably request.
b. Conditions Precedent to Obligations of CRSI. The obligations of
the CRSI under this Agreement shall be and are subject to fulfillment, prior
to or at the Closing, of each of the following conditions:
(A) Except to the extent that the transfer of the Operating
Company Shares to the BV-Corp necessitates certain changes, the
representations and warranties of the EXCHANGING SHAREHOLDERS contained
herein shall be true and correct on the Closing Date, as if such
representations and warranties had been made on and as of the Closing Date,
and the Chairman of the BV-Corp shall have delivered to CRSI a certification
to such effect.
(B) The EXCHANGING SHAREHOLDERS shall have performed or complied
with all agreements, terms and conditions required by this Agreement to be
performed or complied with by them prior to or at the time of the Closing.
(C) CRSI shall have completed to its own satisfaction due
diligence with respect to THE OPERATING COMPANIES and the BV-Corp.
(D) Since the date of this Agreement, none of the OPERATING
COMPANIES shall have suffered any material adverse event.
(E) No less than two weeks prior to the Closing, the EXCHANGING
SHAREHOLDERS shall have delivered to CRSI such information as it had requested
for including in the Current Report on Form 8-K that it will file to report
the Closing. Included in the information delivered will be the reserve
report for the Kor-Tazh LLP oil license prepared by an SEC qualified
engineering firm as well as the financial statements of each of the
OPERATING COMPANIES and of the BV-Corp, each with an unqualified audit
report of an independent public accountant registered with the PCAOB.
(F) All documents and instruments to be delivered pursuant to
this Agreement shall be reasonably satisfactory in substance and form to
CRSI and its counsel, and CRSI and its counsel shall have received all such
counterpart originals (or certified or other copies) of such documents as
they may reasonably request.
8. Deliveries at Closing
a. At the Closing the EXCHANGING SHAREHOLDERS shall deliver to CRSI the
following:
A. Certificates for the shares of the BV-Corp duly endorsed for
transfer to CRSI.
B. The Certification of the Chairman of the BV-Corp described in
Section 7b(A) hereof.
C. A bank check or wire transfer in U.S. Dollars in an amount
equal to fifty percent (50%) of the legal and audit fees and expenses incurred
by CRSI in connection with the negotiation and preparation of this agreement,
the preparation of filings with the SEC as a result of this agreement and the
Closing, and preparation of the closing documents., all as demonstrated by
detailed bills delivered to the EXCHANGING SHAREHOLDERS prior to the Closing,
but in any event not to exceed $18,000.
D. An opinion of legal counsel to the EXCHANGING SHAREHOLDERS to
the effect that (i) the OPERATING COMPANIES are duly incorporated and in good
standing under the laws of the Republic of Kazakhstan, (ii) that the BV-Corp
has acquired good and marketable title to (i) 95% of the equity interests in
each of SCIENTIFIC INDUSTRIAL FIRM DANK LLC., CENTRAL GEOPHYSICAL EXPEDITION
LLC., , and A-FIDAN LLC, and (iii) that after due inquiry counsel is not aware
of any legal actions, lawsuits, proceedings or investigations, either
administrative or judicial, pending or threatened, against or affecting any of
the OPERATING COMPANIES.
E. An opinion of legal counsel to the EXCHANGING SHAREHOLDERS to
the effect that (i) the BV-Corp is duly incorporated and in good standing
under the laws of the Netherlands, and (ii) that the delivery of the
certificates recited in 8aA above will vest in CRSI good and marketable title
to 100% of the outstanding capital stock of the BV-Corp.
b. At the Closing, CRSI shall deliver to the EXCHANGING SHAREHOLDERS
the following:
A. Certificates for fifty-six million (56,000,000) shares of
CRSI common stock in the names and individual quantities specified on Schedule
2a hereto.
B. The Certification of the President and Chief Financial
Officer of CRSI described in Section 7a(A) hereof.
C. A certificate of good standing issued by the Florida
Secretary of State with respect to CRSI within seven days prior to the Closing
Date.
D. A certification signed by the Secretary of CRSI attesting to
the adoption and continuing effectiveness of resolutions of the CRSI Board of
Directors (i) ratifying and approving this Agreement, and (ii) electing to
serve as the members of the CRSI Board of Directors effective on the
completion of the Closing such individuals as have been designated by the
EXCHANGING SHAREHOLDERS for that purpose.
E. The resignations of all of the officers and directors of CRSI
effective on the completion of the Closing.
F. All books and records of CRSI.
9. Termination. This Agreement may be terminated at any time before
or at Closing, by:
a. The mutual agreement of the parties;
b. Any party if the Closing has not occurred by July 31, 2006,
unless extended by written agreement of the parties;
c. Any party if any legal proceeding shall have been instituted or
shall be imminently threatening to delay, restrain or prevent the
consummation of this Agreement or any material component thereof;
d. Without any action on the part of the Parties if required by
Applicable Law.
Upon termination of this Agreement for any reason, in accordance with
the terms and conditions set forth in this paragraph, each said party shall
bear all costs and expenses as each party has incurred and no party shall be
liable to the other for such costs and expenses.
10. Restriction on Resale. The CRSI Common Shares to be issued by
CRSI to the EXCHANGING SHAREHOLDERS hereunder will not be registered under
the Securities Act of 1933, or the securities laws of any state, and cannot
be transferred, hypothecated, sold or otherwise disposed of within the
United States of America until: (i) a registration statement with respect
to such securities is declared effective under the Securities Act of 1933,
or (ii) CRSI receives an opinion of counsel for the stockholders,
reasonably satisfactory to counsel for CRSI, that an exemption from the
registration requirements of the Securities Act of 1933 is available.
The certificates representing the shares which are being issued to
the EXCHANGING SHAREHOLDERS pursuant to this Agreement and to Warner shall
contain a legend substantially as follows:
"THE SECURITIES WHICH ARE REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY
NOT BE SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNTIL
A REGISTRATION STATEMENT WITH RESPECT THERETO IS DECLARED EFFECTIVE
UNDER SUCH ACT, OR CRSI GROUP. INC. RECEIVES AN OPINION OF COUNSEL
FOR THE HOLDER REASONABLY SATISFACTORY TO COUNSEL FOR CRSI GROUP,
INC. THAT AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT
IS AVAILABLE."
11. Confidentiality. CRSI, on the one hand, and each of the
EXCHANGING SHAREHOLDERS, on the other hand, will keep confidential all
information and documents obtained from the other, including but not
limited to any information or documents provided pursuant to Section 6c
hereof (except for any information disclosed to the public pursuant to a
press release authorized by the Parties) and in the event the Closing does
not occur or this Agreement is terminated for any reason, will promptly
return such documents and all copies of such documents and all notes and
other evidence thereof, including material stored on a computer, and will
not use such information for its own advantage, except to the extent that
(i) the information must be disclosed by law, (ii) the information becomes
publicly available by reason other than disclosure by the Party subject to
the confidentiality obligation, (iii) the information is independently
developed without use of or reference to the other Party's confidential
information, (iv) the information is obtained from another source not
obligated to keep such information confidential, (v) the information is
already publicly known or known to the receiving Party when disclosed as
demonstrated by written documentation in the possession of such Party at
such time, or (vi) in connection with any arbitration proceeding hereunder
pursuant to Section 13.
12. Restriction on Recapitalizations. Each of CRSI and the
EXCHANGING SHAREHOLDERS covenants that at no time prior to the second
anniversary of the Closing will CRSI effect any reverse stock split or other
combination of its shares of common stock. This covenant is made for the
benefit of the shareholders of CRSI, each of whom shall be deemed a third
party beneficiary of this covenant alone.
13. Applicable Law; Arbitration.
a. Governing Law. This Agreement shall be governed by the laws
of the State of New York, without giving effect to the principles of
conflicts of laws thereof, as applied to agreements entered into and to be
performed in such state.
b. Arbitration. Any dispute arising out of or in connection
with this Agreement, including any question regarding its existence,
validity or termination, shall be referred to and finally resolved by
arbitration under the London Court of International Arbitration Rules,
which Rules are deemed to be incorporated by reference into this clause.
The number of arbitrators shall be one. The seat, or legal place, of
arbitration will be New York City, New York, U.S.A. The language to be
used in the arbitral proceeding shall be English.
14. Notices. All notices and other communications under this
Agreement shall be in writing and shall be deemed to have been given or
made as follows:
(a) If sent by facsimile transmission, when transmitted to the fax
numbers noted below and receipt is confirmed by the fax machine; or
(b) If personally delivered, when delivered.
All notices and other communications under this Agreement shall be
sent or delivered as follows:
If to the EXCHANGING SHAREHOLDERS, to:
Mr. Nurlan S. Janseitov
211, Mukanova St.
Almaty, 050026
Republic of Kazakhstan
Fax Number: 8(3272) 68-40-44
with a copy to (which shall not constitute notice):
Mr. Timur Bergaliyev
100 B, Furmanov Xx.
Xxxxxx 000000
Xxxxxxxx xx Xxxxxxxxxx
Fax Number: 7(3272) 581392
If to CRSI, to:
Xx. Xxxxxx Xxxxxxx
0000 Xxxx Xxxx Xxxxx Xxxx
Xxxxxxxxx, XX 00000
Xxxxxx Xxxxxx of America
Fax Number: 000-000-0000
with a copy to (which shall not constitute notice):
Xxxxxx Xxxxxx, Esq.
000 0xx Xxxxxx
Xxxxxxxx, XX 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Each Party may change its address by written notice in accordance
with this Section.
14. Covenant of Cooperation. Each Party shall do and perform, or
cause to be done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates, instruments
and documents, as the other Party may reasonably request in order to carry
out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.
15. Counterparts; Translations. This Agreement may be executed in
multiple facsimile counterparts. Each of the counterparts shall be deemed an
original, and together they shall constitute one and the same binding
Agreement, with one counterpart being delivered to each party hereto.
IN WITNESS WHEREOF, the parties hereto have set their hands as of the
date and year written on the first page.
CRSI GROUP, INC.
By: /s/Xxxxxx Xxxxxxx
-------------------------
Xxxxxx Xxxxxxx, President
SCIENTIFIC INDUSTRIAL FIRM DANK LLC. SHAREHOLDERS:
By: /s/ Nurlan S. Janseitov
---------------------------
Nurlan S. Janseitov
CENTRAL GEOPHYSICAL EXPEDITION LLC. SHAREHOLDERS:
By: /s/ Nurlan S. Janseitov
---------------------------
Nurlan S. Janseitov
A-FIDAN LLC. SHAREHOLDERS:
By: PR-Alpec LLC
By: /s/ Xxxx Xxxxx
---------------------------
Xxxx Xxxxx, Director
SHARE EXCHANGE AGREEMENT
Schedule 2(a)
EXCHANGING SHAREHOLDERS
Operating BV-Corp
Shareholder Company Equity Shares
-------------------------------------------------------------------
Nurlan S. Janseitov 100% of Operating To Be Determined
Company Equity,
except As below
PR-Alpec, LLC 100% of Operating Company
Equity in A-Fidan, LLC
