EXHIBIT 10.2
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement, dated as of June 25, 2008, is made by and
between Xxxxx Xxxxxx (the "Seller") and Xxxxx Xxxxxxxxxx (the "Buyer").
BACKGROUND
WHEREAS, the Seller owns One Hundred Sixty Thousand (160,000) shares (the
"Shares") of common stock, par value $.001 of CH4 Energy, Inc. (the "Company") a
Nevada corporation; and
WHEREAS, the Seller desires to sell the Shares to the Buyer and the Buyer
desires to purchase the Shares from the Seller, all upon the terms and subject
to the conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements herein contained and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:
SECTION I
DEFINITIONS
Unless the context otherwise requires, the terms defined in this Section 1
will have the meanings herein specified for all purposes of this Agreement,
applicable to both the singular and plural forms of any of the terms herein
defined.
1.1 "Accredited Investor" has the meaning set forth in Regulation D under
the Securities Act and set forth on Exhibit A.
1.2 "Affiliate" means any Person that directly or indirectly controls, is
controlled by or is under common control with the indicated Person.
1.3 "Agreement" means this Stock Purchase Agreement, including all
Schedules and Exhibits hereto, as this Stock Purchase Agreement may be from time
to time amended, modified or supplemented.
1.4 "Approved Plans" means a stock option or similar plan for the benefit
of employees or others which has been approved by the stockholders of the
Company.
1.5 "Balance Sheet" means the Company's unaudited balance sheet dated March
31, 2008.
1.6 "Buyer" has the meaning set forth in the preamble.
1.7 "Closing" has the meaning set forth in Section 2.1.
1.8 "Code" means the Internal Revenue Code of 1986, as amended.
1.9 "Commission" means the Securities and Exchange Commission or any other
federal agency then administering the Securities Act.
1.10 "Common Stock" has the meaning set forth in the preamble.
1.11 "Company" means CH4 Energy, Inc., a Nevada corporation, and all of its
direct and indirect subsidiaries.
1.12 "Company Board" means the Board of Directors of the Company.
1.13 "Distributor" means any underwriter, dealer or other Person who
participates, pursuant to a contractual arrangement, in the distribution of the
securities offered or sold in reliance on Regulation S.
1.14 "Environmental Laws" means any Law or other requirement relating to
the environment, natural resources, or public or employee health and safety.
1.15 "Environmental Permit" means all licenses, permits, authorizations,
approvals, franchises and rights required under any applicable Environmental Law
or Order.
1.16 "Equity Security" means any stock or similar security, including,
without limitation, securities containing equity features and securities
containing profit participation features, or any security convertible into or
exchangeable for, with or without consideration, any stock or similar security,
or any security carrying any warrant, right or option to subscribe to or
purchase any shares of capital stock, or any such warrant or right.
1.17 "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
1.18 "Exchange Act" means the Securities Exchange Act of 1934 or any
similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same will then be in effect.
1.19 "Exhibits" means the several exhibits referred to and identified in
this Agreement.
1.20 "GAAP" means, with respect to any Person, United States generally
accepted accounting principles applied on a consistent basis with such Person's
past practices.
1.21 "Governmental Authority" means any federal or national, state or
provincial, municipal or local government, governmental authority, regulatory or
administrative agency, governmental commission, department, board, bureau,
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agency or instrumentality, political subdivision, commission, court, tribunal,
official, arbitrator or arbitral body, in each case whether U.S. or non-U.S.
1.22 "Indebtedness" means any obligation, contingent or otherwise. Any
obligation secured by a Lien on, or payable out of the proceeds of, or
production from, property of the relevant party will be deemed to be
Indebtedness.
1.23 "Indebtedness for Borrowed Money" means (a) all Indebtedness in
respect of money borrowed; (b) all Indebtedness evidenced by a promissory note,
bond or similar written obligation to pay money; or (c) all such Indebtedness
guaranteed by the relevant party or for which the relevant party is otherwise
contingently liable.
1.24 "Intellectual Property" means all industrial and intellectual
property, including, without limitation, all U.S. and non-U.S. patents, patent
applications, patent rights, trademarks, trademark applications, common law
trademarks, Internet domain names, trade names, service marks, service xxxx
applications, common law service marks, and the goodwill associated therewith,
copyrights, in both published and unpublished works, whether registered or
unregistered, copyright applications, franchises, licenses, know-how, trade
secrets, technical data, designs, customer lists, confidential and proprietary
information, processes and formulae, all computer software programs or
applications, layouts, inventions, development tools and all documentation and
media constituting, describing or relating to the above, including manuals,
memoranda, and records, whether such intellectual property has been created,
applied for or obtained anywhere throughout the world.
1.25 "Laws" means, with respect to any Person, any U.S. or non-U.S.
federal, national, state, provincial, local, municipal, international,
multinational or other law (including common law), constitution, statute, code,
ordinance, rule, regulation or treaty applicable to such Person.
1.26 "Lien" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind, including, without limitation, any conditional sale
or other title retention agreement, any lease in the nature thereof and the
filing of or agreement to give any financing statement under the Uniform
Commercial Code of any jurisdiction and including any lien or charge arising by
Law.
1.27 "Material Contract" means any and all agreements, contracts,
arrangements, leases, commitments or otherwise, of the Company, of the type and
nature that the Company is required to file with the Commission.
1.28 "Material Adverse Effect" means, when used with respect to the
Company, any change, effect or circumstance which, individually or in the
aggregate, would reasonably be expected to (a) have a material adverse effect on
the business, assets, financial condition or results of operations of the
Company, in each case taken as a whole or (b) materially impair the ability of
the Company to perform their obligations under this Agreement, excluding any
change, effect or circumstance resulting from (i) the announcement, pendency or
consummation of the transactions contemplated by this Agreement, (ii) changes in
the United States securities markets generally, or (iii) changes in general
economic, currency exchange rate, political or regulatory conditions in
industries in which the Company, as the case may be, operate.
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1.29 "Order" means any award, decision, injunction, judgment, order,
ruling, subpoena, or verdict entered, issued, made, or rendered by any
Governmental Authority.
1.30 "Organizational Documents" means the Company's articles of
incorporation and by-laws and any and all amendments to any of the foregoing.
1.31 "Permits" has the meaning set forth in Section 3.20.
1.32 "Permitted Liens" means (a) Liens for Taxes not yet payable or in
respect of which the validity thereof is being contested in good faith by
appropriate proceedings and for the payment of which the relevant party has made
adequate reserves; (b) Liens in respect of pledges or deposits under workmen's
compensation laws or similar legislation, carriers, warehousemen, mechanics,
laborers and materialmen and similar Liens, if the obligations secured by such
Liens are not then delinquent or are being contested in good faith by
appropriate proceedings conducted and for the payment of which the relevant
party has made adequate reserves; (c) statutory Liens incidental to the conduct
of the business of the relevant party which were not incurred in connection with
the borrowing of money or the obtaining of advances or credits and that do not
in the aggregate materially detract from the value of its property or materially
impair the use thereof in the operation of its business; and (d) Liens that
would not have a Material Adverse Effect.
1.33 "Person" means all natural persons, corporations, business trusts,
associations, companies, partnerships, limited liability companies, joint
ventures and other entities, governments, agencies and political subdivisions.
1.34 "Proceeding" means any action, arbitration, audit, hearing,
investigation, litigation, or suit (whether civil, criminal, administrative,
investigative, or informal) commenced, brought, conducted, or heard by or
before, or otherwise involving, any Governmental Authority.
1.35 "Purchase Price" has the meaning set forth in Section 2.2.
1.36 "Regulation S" means Regulation S under the Securities Act, as the
same may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission.
1.37 "Rule 144" means Rule 144 under the Securities Act, as the same may be
amended from time to time, or any successor statute.
1.38 "Schedules" means the several schedules referred to and identified
herein, setting forth certain disclosures, exceptions and other information,
data and documents referred to at various places throughout this Agreement.
1.39 "SEC Documents" has the meaning set forth in Section 3.26.
1.40 "Section 4(2)" means Section 4(2) under the Securities Act, as the
same may be amended from time to time, or any successor statute.
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1.41 "Securities Act" means the Securities Act of 1933, as amended, or any
similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same will be in effect at the time.
1.42 "Seller" has the meaning set forth in the preamble.
1.43 "Shares" has the meaning set forth in the preamble.
1.44 "Subsidiary" means, with respect to the Company, any corporation,
limited liability company, joint venture or partnership of which the Company (a)
beneficially owns, either directly or indirectly, more than 50% of (i) the total
combined voting power of all classes of voting securities of such entity, (ii)
the total combined equity interests, or (iii) the capital or profit interests,
in the case of a partnership; or (b) otherwise has the power to vote or to
direct the voting of sufficient securities to elect a majority of the board of
directors or similar governing body.
1.45 "Taxes" means all foreign, federal, state or local taxes, charges,
fees, levies, imposts, duties and other assessments, as applicable, including,
but not limited to, any income, alternative minimum or add-on, estimated, gross
income, gross receipts, sales, use, transfer, transactions, intangibles, ad
valorem, value-added, franchise, registration, title, license, capital, paid-up
capital, profits, withholding, payroll, employment, unemployment, excise,
severance, stamp, occupation, premium, real property, recording, personal
property, federal highway use, commercial rent, environmental (including, but
not limited to, taxes under Section 59A of the Code) or windfall profit tax,
custom, duty or other tax, governmental fee or other like assessment or charge
of any kind whatsoever, together with any interest, penalties or additions to
tax with respect to any of the foregoing; and "Tax" means any of the foregoing
Taxes.
1.46 "Tax Group" means any federal, state, local or foreign consolidated,
affiliated, combined, unitary or other similar group of which the Acquiror is
now or was formerly a member.
1.47 "Tax Return" means any return, declaration, report, claim for refund
or credit, information return, statement or other similar document filed with
any Governmental Authority with respect to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
1.48 "Transaction Documents" means, collectively, all agreements,
instruments and other documents to be executed and delivered in connection with
the transactions contemplated by this Agreement.
1.49 "U.S." means the United States of America.
1.50 "U.S. person" has the meaning set forth in Regulation S under the
Securities Act and set forth on Exhibit D hereto.
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SECTION II
CLOSING
2.1 CLOSING. The closing ("Closing") of the transactions contemplated
hereby will occur at the offices of Batcher Xxxxxxx & Xxxxx, LLP in San Diego,
California, on the date hereof (the "Closing Date").
2.2 PURCHASE AND SALE; PAYMENT. On the terms and subject to the conditions
of this Agreement, at the Closing, the Seller shall sell, convey, assign,
transfer and deliver to the Buyer, free and clear of all Liens, and the Buyer
will buy from the Seller, the Shares. The purchase price for the Shares shall be
U.S. $4,000 ("Purchase Price"). At the Closing, the Seller will deliver to the
Buyer certificates representing all the Shares, duly endorsed and medallion
guaranteed, or accompanied by stock powers duly executed in the form acceptable
by the Company's transfer agent. At the Closing, the Buyer shall transfer to the
Seller by wire transfer or certified or official bank check in immediately
available funds an amount equal to the Purchase Price.
SECTION III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller hereby represents and warrants to the Buyer as follows:
3.1 ORGANIZATION AND QUALIFICATION. The Company is duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization, has all requisite authority and power (corporate and other),
governmental licenses, authorizations, consents and approvals to carry on its
business as presently conducted and to own, hold and operate its properties and
assets as now owned, held and operated by it, except where the failure to be so
organized, existing and in good standing, or to have such authority and power,
governmental licenses, authorizations, consents or approvals would not have a
Material Adverse Effect. The Company is duly qualified, licensed or domesticated
as a foreign corporation in good standing in each jurisdiction wherein the
nature of its activities or its properties owned, held or operated makes such
qualification, licensing or domestication necessary, except where the failure to
be so duly qualified, licensed or domesticated and in good standing would not
have a Material Adverse Effect. Schedule 3.1 sets forth a true, correct and
complete list of the Company's jurisdiction of organization and each other
jurisdiction in which the Company presently conducts its business or owns, holds
and operates its properties and assets.
3.2 SUBSIDIARIES. The Company does not own, directly or indirectly, any
equity or other ownership interest in any corporation, partnership, joint
venture or other entity or enterprise.
3.3 ORGANIZATIONAL DOCUMENTS. True, correct and complete copies of the
Organizational Documents have been delivered to the Buyer prior to the execution
of this Agreement, and no action has been taken to amend or repeal such
Organizational Documents. The Company is not in violation or breach of any of
the provisions of its Organizational Documents, except for such violations or
breaches as would not have a Material Adverse Effect.
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3.4 AUTHORIZATION. The Seller has all requisite authority and power
(corporate and other), governmental licenses, authorizations, consents and
approvals to enter into this Agreement and each of the Transaction Documents to
which the Seller is a party, to consummate the transactions contemplated by this
Agreement and each of the Transaction Documents to which the Seller is a party
and to perform its obligations under this Agreement and each of the Transaction
Documents to which the Seller is a party. The execution, delivery and
performance by the Seller of this Agreement and each of the Transaction
Documents to which the Seller is a party requires no authorization, consent,
approval, license, exemption of or filing or registration with any Governmental
Authority or other Person.
3.5 NO VIOLATION. Neither the execution or delivery by the Seller of this
Agreement or any Transaction Document to which the Seller is a party, nor the
consummation or performance by the Seller of the transactions contemplated
hereby or thereby will, directly or indirectly, (a) contravene, conflict with,
or result in a violation of any provision of the Organizational Documents of the
Company; (b) contravene, conflict with, constitute a default (or an event or
condition which, with notice or lapse of time or both, would constitute a
default) under, or result in the termination or acceleration of, or result in
the imposition or creation of any Lien under, any agreement or instrument to
which the Company is a party or by which the properties or assets of the Company
are bound; (c) contravene, conflict with, or result in a violation of, any Law
or Order to which the Company, or any of the properties or assets owned or used
by the Company, may be subject; or (d) contravene, conflict with, or result in a
violation of, the terms or requirements of, or give any Governmental Authority
the right to revoke, withdraw, suspend, cancel, terminate or modify, any
licenses, permits, authorizations, approvals, franchises or other rights held by
the Company or that otherwise relate to the business of, or any of the
properties or assets owned or used by, the Company, except, in the case of
clause (b), (c), or (d), for any such contraventions, conflicts, violations, or
other occurrences as would not have a Material Adverse Effect.
3.6 BINDING OBLIGATIONS. Assuming this Agreement and the Transaction
Documents have been duly and validly authorized, executed and delivered by the
parties thereto other than the Seller, this Agreement has been, and as of the
Closing each of the Transaction Documents to which the Seller is a party will
be, duly authorized, executed and delivered by the Seller and constitutes or
will constitute, as the case may be, the legal, valid and binding obligations of
the Seller, enforceable against the Seller in accordance with their respective
terms, except as such enforcement is limited by general equitable principles, or
by bankruptcy, insolvency and other similar Laws affecting the enforcement of
creditors rights generally.
3.7 OWNERSHIP OF SHARES. The Seller is the sole lawful owner of record and
beneficially of, and has good and marketable title to, the Shares. The sale,
transfer, assignment and delivery of the Shares by the Seller pursuant to this
Agreement is, and will transfer to the Buyer good and marketable record and
beneficial title thereto, free and clear of all pledges, liens, security
interests, encumbrances, equities, claims and other charges of any kind
whatsoever.
3.8 CAPITALIZATION AND RELATED MATTERS.
3.8.1 CAPITALIZATION. The authorized capital stock of the Company
consists of 75,000,000 shares of Common Stock, of which 302,000 shares are
issued and outstanding. All issued and outstanding shares of the Common Stock
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are duly authorized, validly issued, fully paid and nonassessable, and have not
been issued in violation of any preemptive or similar rights. Except as
disclosed in Schedule 3.8.1 or the SEC Documents, there are no outstanding or
authorized options, warrants, purchase agreements, participation agreements,
subscription rights, conversion rights, exchange rights or other securities or
contracts that could require the Company to issue, sell or otherwise cause to
become outstanding any of its authorized but unissued shares of capital stock or
any securities convertible into, exchangeable for or carrying a right or option
to purchase shares of capital stock or to create, authorize, issue, sell or
otherwise cause to become outstanding any new class of capital stock. There are
no outstanding stockholders' agreements, voting trusts or arrangements,
registration rights agreements, rights of first refusal or other contracts
pertaining to the capital stock of the Company. The issuance of all of the
shares of Common Stock described in this Section 3.8.1 have been in compliance
with U.S. federal and state securities laws.
3.8.2 NO REDEMPTION REQUIREMENTS. Except as set forth in Schedule
3.8.2 or in the SEC Documents, there are no outstanding contractual obligations
(contingent or otherwise) of the Company to retire, repurchase, redeem or
otherwise acquire any outstanding shares of capital stock of, or other ownership
interests in, the Company or to provide funds to or make any investment (in the
form of a loan, capital contribution or otherwise) in any other Person.
3.8.3 DULY AUTHORIZED. The issuance of the Shares has been duly
authorized and, upon delivery to the Buyer of certificates therefor in
accordance with the terms of this Agreement, the Shares will have been validly
issued and fully paid, and will be nonassessable, have the rights, preferences
and privileges specified, will be free of preemptive rights and will be free and
clear of all Liens and restrictions, other than Liens created by the Buyer and
restrictions on transfer imposed by this Agreement and the Securities Act.
3.9 COMPLIANCE WITH LAWS. Except as would not have a Material Adverse
Effect, the business and operations of the Company has been and is being
conducted in accordance with all applicable Laws and Orders. Except as would not
have a Material Adverse Effect, the Company has not received notice of any
violation (or any Proceeding involving an allegation of any violation) of any
applicable Law or Order by or affecting the Company and, to the knowledge of the
Seller, no Proceeding involving an allegation of violation of any applicable Law
or Order is threatened or contemplated.
3.10 CERTAIN PROCEEDINGS. There is no pending Proceeding that has been
commenced against the Company and that challenges, or may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any of the
transactions contemplated by this Agreement. To the knowledge of the Seller, no
such Proceeding has been threatened.
3.11 NO BROKERS OR FINDERS. Except as disclosed in Schedule 3.11, no Person
has, or as a result of the transactions contemplated herein will have, any right
or valid claim against the Company for any commission, fee or other compensation
as a finder or broker, or in any similar capacity, and the Seller will indemnify
and hold the Buyer harmless against any liability or expense arising out of, or
in connection with, any such claim.
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3.12 ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth on Schedule
3.12 or in the SEC Documents, the Company has no debt, obligation or liability
(whether accrued, absolute, contingent, liquidated or otherwise, whether due or
to become due, whether or not known to the Company) arising out of any
transaction entered into at or prior to the Closing or any act or omission at or
prior to the Closing, except to the extent set forth on or reserved against on
the Balance Sheet. Except as set forth on Schedule 3.12, the Company has not
incurred any liabilities or obligations under agreements entered into, in the
usual and ordinary course of business since [date of last 10-Q].
3.13 CHANGES. Except as set forth on Schedule 3.13 or in the SEC Documents,
the Company has not, since December 21, 2007:
3.13.1 ORDINARY COURSE OF BUSINESS. Conducted its business or entered
into any transaction other than in the usual and ordinary course of business,
except for this Agreement and the Agreement to Purchase Oil and Gas Leases dated
June 25 2008.
3.13.2 ADVERSE CHANGES. Suffered or experienced any change in, or
affecting, its condition (financial or otherwise), properties, assets,
liabilities, business, operations, results of operations or prospects other than
changes, events or conditions in the usual and ordinary course of its business,
none of which would have a Material Adverse Effect;
3.13.3 LOANS. Made any loans or advances to any Person other than
travel advances and reimbursement of expenses made to employees, officers and
directors in the ordinary course of business;
3.13.4 LIENS. Created or permitted to exist any Lien on any material
property or asset of the Acquiror Companies, other than Permitted Liens;
3.13.5 CAPITAL STOCK. Except for 2,538,000 issued to Xx. Xxxxx
Xxxxxxxxxx on June 25, 2008, the Company has not issued, sold, disposed of or
encumbered, or authorized the issuance, sale, disposition or encumbrance of, or
granted or issued any option to acquire any shares of its capital stock or any
other of its securities or any Equity Security, or altered the term of any of
its outstanding securities or made any change in its outstanding shares of
capital stock or its capitalization, whether by reason of reclassification,
recapitalization, stock split, combination, exchange or readjustment of shares,
stock dividend or otherwise;
3.13.6 DIVIDENDS. Declared, set aside, made or paid any dividend or
other distribution to any of its stockholders;
3.13.7 MATERIAL CONTRACTS. Terminated or modified any Material
Contract, except for termination upon expiration in accordance with the terms
thereof;
3.13.8 CLAIMS. Released, waived or cancelled any claims or rights
relating to or affecting the Company in excess of $10,000 in the aggregate or
instituted or settled any Proceeding involving in excess of $10,000 in the
aggregate;
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3.13.9 DISCHARGED LIABILITIES. Paid, discharged or satisfied any
claim, obligation or liability in excess of $10,000 in the aggregate, except for
liabilities incurred prior to the date of this Agreement in the ordinary course
of business;
3.13.10 INDEBTEDNESS. Except for the indebtedness to Xx. Xxxxx
Xxxxxxxxxx in the amount of $521,500 on June 25, 2008, the Company has not
created, incurred, assumed or otherwise become liable for any Indebtedness in
excess of $10,000 in the aggregate;
3.13.11 GUARANTEES. Guaranteed or endorsed in a material amount any
obligation or net worth of any Person;
3.13.12 ACQUISITIONS. Acquired the capital stock or other securities
or any ownership interest in, or substantially all of the assets of, any other
Person;
3.13.13 ACCOUNTING. Changed its method of accounting or the accounting
principles or practices utilized in the preparation of its financial statements,
other than as required by GAAP;
3.13.14 AGREEMENTS. Except as set forth on Schedule 4.13.14 or in the
SEC Documents, entered into any agreement, or otherwise obligated itself, to do
any of the foregoing.
3.14 MATERIAL CONTRACTS. Except to the extent filed with the SEC Documents,
the Seller has made available to the Buyer, prior to the date of this Agreement,
true, correct and complete copies of each written Material Contract, including
each amendment, supplement and modification thereto.
3.14.1 NO DEFAULTS. Each Material Contract is a valid and binding
agreement of the Company, and is in full force and effect. Except as would not
have a Material Adverse Effect, the Company is not in breach or default of any
Material Contract to which it is a party and, to the knowledge of the Seller, no
other party to any Material Contract is in breach or default thereof. Except as
would not have a Material Adverse Effect, no event has occurred or circumstance
exists that (with or without notice or lapse of time) would (a) contravene,
conflict with or result in a violation or breach of, or become a default or
event of default under, any provision of any Material Contract or (b) permit the
Company or any other Person the right to declare a default or exercise any
remedy under, or to accelerate the maturity or performance of, or to cancel,
terminate or modify any Material Contract. The Company has not received notice
of the pending or threatened cancellation, revocation or termination of any
Material Contract to which it is a party. There are no renegotiations of, or
attempts to renegotiate, or outstanding rights to renegotiate any material terms
of any Material Contract.
3.15 EMPLOYEES.
3.15.1 Except as set forth on Schedule 3.15.1, the Company has no
employees, independent contractors or other Persons providing research or other
services to them. Except as would not have a Material Adverse Effect, the
Company is in full compliance with all Laws regarding employment, wages, hours,
benefits, equal opportunity, collective bargaining, the payment of Social
Security and other taxes, occupational safety and health and plant closing. The
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Company is not liable for the payment of any compensation, damages, taxes,
fines, penalties or other amounts, however designated, for failure to comply
with any of the foregoing Laws.
3.15.2 No director, officer or employee of the Company is a party to,
or is otherwise bound by, any contract (including any confidentiality,
noncompetition or proprietary rights agreement) with any other Person that in
any way adversely affects or will materially affect (a) the performance of his
or her duties as a director, officer or employee of the Company or (b) the
ability of the Company to conduct its business. Except as set forth on Schedule
3.15.2, each employee of the Company is employed on an at-will basis and the
Company has no contracts with any of its employees which would interfere with
the Company's ability to discharge its employees.
3.16 TAX RETURNS AND AUDITS.
3.16.1 TAX RETURNS. Except as set forth on Schedule 3.16.1, (a) all
material Tax Returns required to be filed by or on behalf of the Company have
been timely filed and all such Tax Returns were (at the time they were filed)
and are true, correct and complete in all material respects; (b) all material
Taxes of the Company required to have been paid (whether or not reflected on any
Tax Return) have been fully and timely paid, except those Taxes which are
presently being contested in good faith or for which an adequate reserve for the
payment of such Taxes has been established on the Balance Sheet; (c) no waivers
of statutes of limitation have been given or requested with respect to the
Company in connection with any Tax Returns covering the Company or with respect
to any Taxes payable by it; (d) no Governmental Authority in a jurisdiction
where the Company does not file Tax Returns has made a claim, assertion or
threat to the Company that the Company is or may be subject to taxation by such
jurisdiction; (e) the Company has duly and timely collected or withheld, paid
over and reported to the appropriate Governmental Authority all amounts required
to be so collected or withheld for all periods under all applicable laws; (f)
there are no Liens with respect to Taxes on the Company's property or assets
other than Permitted Liens; (g) there are no Tax rulings, requests for rulings,
or closing agreements relating to the Company for any period (or portion of a
period) that would affect any period after the date hereof; and (h) any
adjustment of Taxes of the Company made by a Governmental Authority in any
examination that the Company is required to report to the appropriate state,
local or foreign taxing authorities has been reported, and any additional Taxes
due with respect thereto have been paid.
3.16.2 NO ADJUSTMENTS, CHANGES. The Company has not, nor has any other
Person on behalf of the Company (a) executed or entered into a closing agreement
pursuant to Section 7121 of the Code or any predecessor provision thereof or any
similar provision of state, local or foreign law; or (b) agreed to or is
required to make any adjustments pursuant to Section 481(a) of the Code or any
similar provision of state, local or foreign law.
3.16.3 NO DISPUTES. There is no pending audit, examination,
investigation, dispute, proceeding or claim with respect to any Taxes of the
Company, nor is any such claim or dispute pending or contemplated. The Company
has delivered to the Buyer true, correct and complete copies of all Tax Returns,
examination reports and statements of deficiencies assessed or asserted against
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or agreed to by the Company since their inception and any and all correspondence
with respect to the foregoing.
3.16.4 NOT A U.S. REAL PROPERTY HOLDING CORPORATION. The Company is
not and has not been a United States real property holding corporation within
the meaning of Section 897(c)(2) of the Code at any time during the applicable
period specified in Section 897(c)(1)(A)(ii) of the Code.
3.16.5 NO TAX ALLOCATION, SHARING. The Company is not a party to any
Tax allocation or sharing agreement. Other than with respect to the Tax Group of
which the Company is the common parent, the Company has not (a) been a member of
a Tax Group filing a consolidated income Tax Return under Section 1501 of the
Code (or any similar provision of state, local or foreign law), and has no (b)
liability for Taxes for any Person under Treasury Regulations Section 1.1502-6
(or any similar provision of state, local or foreign law) as a transferee or
successor, by contract or otherwise.
3.16.6 NO OTHER ARRANGEMENTS. The Company is not a party to any
agreement, contract or arrangement for services that would result, individually
or in the aggregate, in the payment of any amount that would not be deductible
by reason of Section 162(m), 280G or 404 of the Code. The Company is not
"consenting corporations" within the meaning of Section 341(f) of the Code. The
Company does not have any "tax-exempt bond financed property" or "tax-exempt use
property" within the meaning of Section 168(g) or (h), respectively of the Code.
The Company has no outstanding closing agreement, ruling request, request for
consent to change a method of accounting, subpoena or request for information to
or from a Governmental Authority in connection with any Tax matter. During the
last two years, the Company has not engaged in any exchange with a related party
(within the meaning of Section 1031(f) of the Code) under which gain realized
was not recognized by reason of Section 1031 of the Code. The Company is not a
party to any reportable transaction within the meaning of Treasury Regulation
Section 1.6011-4.
3.17 MATERIAL ASSETS. The financial statements of the Company set forth in
the SEC Documents reflect the material properties and assets (real and personal)
owned or leased by the Company.
3.18 INSURANCE COVERAGE. The Seller has made available to the Buyer, prior
to the date of this Agreement, true, correct and complete copies of all
insurance policies maintained by the Company on its properties and assets.
Except as would not have a Material Adverse Effect, all of such policies (a)
taken together, provide adequate insurance coverage for the properties, assets
and operations of the Company for all risks normally insured against by a Person
carrying on the same business as the Company, and (b) are sufficient for
compliance with all applicable Laws and Material Contracts. Except as would not
have a Material Adverse Effect, all of such policies are valid, outstanding and
in full force and effect and, by their express terms, will continue in full
force and effect following the consummation of the transactions contemplated by
this Agreement. Except as set forth on Schedule 3.18, the Company has not
received (a) any refusal of coverage or any notice that a defense will be
afforded with reservation of rights, or (b) any notice of cancellation or any
other indication that any insurance policy is no longer in full force or effect
or will not be renewed or that the issuer of any policy is not willing or able
12
to perform its obligations thereunder. All premiums due on such insurance
policies on or prior to the date hereof have been paid. There are no pending
claims with respect to the Company or its properties or assets under any such
insurance policies, and there are no claims as to which the insurers have
notified the Company that they intend to deny liability. There is no existing
default under any such insurance policies.
3.19 LITIGATION; ORDERS. Except as set forth on Schedule 3.19, there is no
Proceeding (whether federal, state, local or foreign) pending or, to the
knowledge of the Company, threatened against or affecting the Company or the
Company's properties, assets, business or employees. To the knowledge of the
Seller, there is no fact that might result in or form the basis for any such
Proceeding. The Company is not subject to any Orders.
3.20 LICENSES. Except as would not have a Material Adverse Effect, the
Company possesses from the appropriate Governmental Authority all licenses,
permits, authorizations, approvals, franchises and rights that are necessary for
the Company to engage in its business as currently conducted and to permit the
Company to own and use its properties and assets in the manner in which it
currently owns and uses such properties and assets (collectively, "Permits").
The Company has not received notice from any Governmental Authority or other
Person that there is lacking any license, permit, authorization, approval,
franchise or right necessary for the Company to engage in its business as
currently conducted and to permit the Company to own and use its properties and
assets in the manner in which it currently owns and uses such properties and
assets. Except as would not have a Material Adverse Effect, the Permits are
valid and in full force and effect. Except as would not have a Material Adverse
Effect, no event has occurred or circumstance exists that may (with or without
notice or lapse of time): (a) constitute or result, directly or indirectly, in a
violation of or a failure to comply with any Permit; or (b) result, directly or
indirectly, in the revocation, withdrawal, suspension, cancellation or
termination of, or any modification to, any Permit. The Company has not received
notice from any Governmental Authority or any other Person regarding: (a) any
actual, alleged, possible or potential contravention of any Permit; or (b) any
actual, proposed, possible or potential revocation, withdrawal, suspension,
cancellation, termination of, or modification to, any Permit. All applications
required to have been filed for the renewal of such Permits have been duly filed
on a timely basis with the appropriate Persons, and all other filings required
to have been made with respect to such Permits have been duly made on a timely
basis with the appropriate Persons. All Permits are renewable by their terms or
in the ordinary course of business without the need to comply with any special
qualification procedures or to pay any amounts other than routine fees or
similar charges, all of which have, to the extent due, been duly paid.
3.21 INTERESTED PARTY TRANSACTIONS. Except as disclosed in Schedule 3.21,
no officer, director or stockholder of the Company or any Affiliate or
"associate" (as such term is defined in Rule 405 of the Commission under the
Securities Act) of any such Person, has or has had, either directly or
indirectly, (1) an interest in any Person which (a) furnishes or sells services
or products which are furnished or sold or are proposed to be furnished or sold
by the Company, or (b) purchases from or sells or furnishes to, or proposes to
purchase from, sell to or furnish the Company any goods or services; or (2) a
beneficial interest in any contract or agreement to which the Company is a party
or by which it may be bound or affected.
13
3.22 GOVERNMENTAL INQUIRIES. The Seller has provided to the Buyer a copy of
each material written inspection report, questionnaire, inquiry, demand or
request for information received by the Company from (and the Company's response
thereto), and each material written statement, report or other document filed by
the Company with, any Governmental Authority. [PLEASE PROVIDE SUCH DOCUMENTS, IF
ANY]
3.23 BANK ACCOUNTS AND SAFE DEPOSIT BOXES. Schedule 3.23 discloses the
title and number of each bank or other deposit or financial account, and each
lock box and safety deposit box used by the Company, the financial institution
at which that account or box is maintained and the names of the persons
authorized to draw against the account or otherwise have access to the account
or box, as the case may be.
3.24 INTELLECTUAL PROPERTY. The Company does not own, use or license any
Intellectual Property in its business as presently conducted.
3.25 TITLE TO AND CONDITION OF PROPERTIES. Except as would not have a
Material Adverse Effect, the Company owns (with good and marketable title in the
case of real property) or holds under valid leases or other rights to use all
real property, plants, machinery, equipment and other personal property
necessary for the conduct of its business as presently conducted, free and clear
of all Liens, except Permitted Liens. The material buildings, plants, machinery
and equipment necessary for the conduct of the business of the Company as
presently conducted are structurally sound, are in good operating condition and
repair and are adequate for the uses to which they are being put, and none of
such buildings, plants, machinery or equipment is in need of maintenance or
repairs, except for ordinary, routine maintenance and repairs that are not
material in nature or cost.
3.26 SEC DOCUMENTS; FINANCIAL STATEMENTS. Except as set forth on Schedule
3.26, the Company has filed all reports required to be filed by it under the
Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the
three years preceding the date hereof (or such shorter period as the Acquiror
was required by law to file such material) (the foregoing materials being
collectively referred to herein as the "SEC Documents") and has filed any such
SEC Documents prior to the expiration of any such extension. As of their
respective dates, the SEC Documents complied in all material respects with the
requirements of the Securities Act and the Exchange Act and the rules and
regulations of the Commission promulgated thereunder, and none of the SEC
Documents, when filed, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statement therein, in light of the circumstances under which
they were made, not misleading. All material agreements to which the Company is
a party or to which the property or assets of the Company are subject have been
appropriately filed as exhibits to the SEC Documents as and to the extent
required under the Exchange Act. The financial statements of the Company
included in the SEC Documents comply in all material respects with applicable
accounting requirement and the rules and regulations of the Commission with
respect thereto as in effect at the time of filing, were prepared in accordance
with GAAP applied on a consistent basis during the periods involved (except as
may be indicated in the notes thereto, or, in the case of unaudited statements
as permitted by Form 10-Q of the Commission), and fairly present in all material
respects (subject in the case of unaudited statements, to normal, recurring
audit adjustments) the financial position of the Acquiror as at the dates
thereof and the results of its operations and cash flows for the periods then
14
ended. The Common Stock is quoted on the OTC Bulletin Board, and the Seller is
not aware of any facts which would make the Common Stock ineligible for
quotation on the OTC Bulletin Board.
3.27 STOCK OPTION PLANS; EMPLOYEE BENEFITS.
3.27.1 Set forth on Schedule 3.27.1 is a complete list of all stock
option plans providing for the grant by the Company of stock options to
directors, officers or employees. Except as disclosed on Schedule 3.27.1, all
such stock option plans are Approved Plans.
3.27.2 The Company has no employee benefit plans or arrangements
covering their present and former employees or providing benefits to such
persons in respect of services provided the Company.
3.27.3 Neither the consummation of the transactions contemplated
hereby alone, nor in combination with another event, with respect to each
director, officer, employee and consultant of the Company, will result in (a)
any payment (including, without limitation, severance, unemployment compensation
or bonus payments) becoming due from the Company, (b) any increase in the amount
of compensation or benefits payable to any such individual or (c) any
acceleration of the vesting or timing of payment of compensation payable to any
such individual. No agreement, arrangement or other contract of the Company
provides benefits or payments contingent upon, triggered by, or increased as a
result of a change in the ownership or effective control of the Company.
3.28 ENVIRONMENTAL AND SAFETY MATTERS. Except as set forth on Schedule 3.28
or in the SEC Documents and except as would not have a Material Adverse Effect:
3.28.1 The Company has at all time been and is in compliance with all
Environmental Laws applicable to the Company.
3.28.2 There are no Proceedings pending or threatened against the
Company alleging the violation of any Environmental Law or Environmental Permit
applicable to the Company or alleging that the Company is a potentially
responsible party for any environmental site contamination.
3.28.3 Neither this Agreement nor the consummation of the transactions
contemplated by this Agreement shall impose any obligations to notify or obtain
the consent of any Governmental Authority or third Persons under any
Environmental Laws applicable to any Acquiror Company.
3.29 MONEY LAUNDERING LAWS. The operations of the Company are and have been
conducted at all times in compliance with applicable financial recordkeeping and
reporting requirements of the Currency and Foreign Transactions Reporting Act of
1970, as amended, the money laundering statutes of all U.S. and non-U.S.
jurisdictions, the rules and regulations thereunder and any related or similar
rules, regulations or guidelines, issued, administered or enforced by any
Governmental Authority (collectively, the "Money Laundering Laws") and no
Proceeding involving any Acquiror Company with respect to the Money Laundering
Laws is pending or, to the knowledge of the Company, threatened.
15
SECTION IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER
4.1 GENERALLY. The Buyer hereby represents and warrants to the Seller:
4.1.1 STATUS. By its execution of this Agreement, the Buyer represents
and warrants to the Seller as indicated on its signature page to this Agreement,
either that:
(a) it is an Accredited Investor; or
(b) it is not a U.S. person.
The Buyer understands that the Shares are being offered and sold to the Buyer in
reliance upon the truth and accuracy of the representations, warranties,
agreements, acknowledgments and understandings of the Buyer set forth in this
Agreement, in order that the Seller may determine the applicability and
availability of the exemptions from registration of the Shares on which the
Seller is relying.
4.1.2 ADDITIONAL REPRESENTATIONS AND WARRANTIES OF ACCREDITED
INVESTORS. If an Accredited Investor, the Buyer further makes the
representations and warranties to the Seller set forth on Exhibit B.
4.1.3 ADDITIONAL REPRESENTATIONS AND WARRANTIES OF NON-U.S. PERSONS.
If not a U.S. person, the Buyer further makes the representations and warranties
to the Seller set forth on Exhibit C.
4.1.4 STOCK LEGENDS. The Buyer hereby agrees with the Seller as
follows:
(A) SECURITIES ACT LEGEND - ACCREDITED INVESTORS. If an Accredited
Investor, the certificates evidencing the Shares issued to the Buyer, and
each certificate issued in transfer thereof, will bear the following
legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE
SECURITIES LAWS AND NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE
OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED EXCEPT (1)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
AND APPLICABLE STATE SECURITIES LAWS OR (2) PURSUANT TO AN AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
APPLICABLE STATE SECURITIES LAWS, IN WHICH CASE THE HOLDER MUST, PRIOR TO
SUCH TRANSFER, FURNISH TO THE COMPANY AN OPINION OF COUNSEL, WHICH COUNSEL
AND OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH
SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED
IN THE MANNER CONTEMPLATED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE
16
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS.
(B) SECURITIES ACT LEGEND - NON-U.S. PERSONS. If not a U.S. person,
the certificates evidencing the Shares issued to the Buyer, and each
certificate issued in transfer thereof, will bear the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE
SECURITIES LAWS AND NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE
OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED EXCEPT (1) IN
ACCORDANCE WITH THE PROVISIONS OF REGULATION S PROMULGATED UNDER THE
SECURITIES ACT, AND BASED ON AN OPINION OF COUNSEL, WHICH COUNSEL AND
OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT THE PROVISIONS OF
REGULATION S HAVE BEEN SATISFIED, (2) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR
(3) PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, IN WHICH CASE
THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE COMPANY AN OPINION
OF COUNSEL, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE
COMPANY, THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR
OTHERWISE TRANSFERRED IN THE MANNER CONTEMPLATED PURSUANT TO AN AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
APPLICABLE STATE SECURITIES LAWS. HEDGING TRANSACTIONS INVOLVING THE
SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE CONDUCTED UNLESS IN
COMPLIANCE WITH THE SECURITIES ACT.
(C) OTHER LEGENDS. The certificates representing the Shares, and each
certificate issued in transfer thereof, will also bear any other legend
required under any applicable Law, including, without limitation, any U.S.
state corporate and state securities law, or contract.
(D) OPINION. The Buyer will not transfer any or all of the Shares
pursuant to Regulation S or absent an effective registration statement
under the Securities Act and applicable state securities law covering the
disposition of the Shares, without first providing the Company with an
opinion of counsel (which counsel and opinion are reasonably satisfactory
to the Company) to the effect that such transfer will be made in compliance
with Regulation S or will be exempt from the registration and the
prospectus delivery requirements of the Securities Act and the registration
or qualification requirements of any applicable U.S. state securities laws.
17
(E) CONSENT. The Buyer understands and acknowledges that the Company
may refuse to transfer the Shares, unless the Buyer complies with this
Section 3.1.3 and any other restrictions on transferability set forth in
Exhibits B and C. The Buyer consents to the Company making a notation on
its records or giving instructions to any transfer agent of the Common
Stock in order to implement the restrictions on transfer of the Shares.
SECTION V
INDEMNIFICATION; REMEDIES
5.1 SURVIVAL. All representations, warranties, covenants, and obligations
in this Agreement shall survive the Closing and expire on the sixth anniversary
of the Closing. The right to indemnification, payment of Damages or other remedy
based on such representations, warranties, covenants, and obligations will not
be affected by any investigation conducted with respect to the accuracy or
inaccuracy of or compliance with, any such representation, warranty, covenant,
or obligation. The waiver of any condition based on the accuracy of any
representation or warranty, or on the performance of or compliance with any
covenant or obligation, will not affect the right to indemnification, payment of
Damages, or other remedy based on such representations, warranties, covenants,
and obligations.
5.2 INDEMNIFICATION BY THE SELLER. With respect to those representations
and warranties made by Seller in Sections 3.1, 3.3, 3.7, 3.8 and 3.26 of this
Agreement, for a period of eight (8) weeks from and after the Closing, the
Seller shall indemnify and hold harmless the Buyer (the "Indemnified Party"),
from and against any damages arising, directly or indirectly, from or in
connection with ("Damages") any breach of any such representation and warranty
made by Seller in the above referenced sections of this Agreement.
5.3 LIMITATIONS ON AMOUNT - THE SELLER. The Indemnified Party shall not be
entitled to aggregate indemnification pursuant to Section 5.2 in excess of the
amount of the Purchase Price.
5.4 BREACH BY THE SELLER. Nothing in this Section 5 shall limit the Buyer's
right to pursue any appropriate legal or equitable remedy against the Seller
with respect to any Damages arising, directly or indirectly, from or in
connection with any breach by the Seller of any representation or warranty made
by the Seller in this Agreement or in any certificate delivered by the Seller
pursuant to this Agreement.
SECTION VI
GENERAL PROVISIONS
6.1 EXPENSES. Except as otherwise expressly provided in this Agreement,
each party to this Agreement will bear its respective expenses incurred in
connection with the preparation, execution, and performance of this Agreement
and the transactions contemplated by this Agreement, including all fees and
expenses of agents, representatives, counsel, and accountants. In the event of
termination of this Agreement, the obligation of each party to pay its own
18
expenses will be subject to any rights of such party arising from a breach of
this Agreement by another party.
6.2 CONFIDENTIALITY.
6.2.1 Subsequent to the date of this Agreement, the Buyer and the
Seller will maintain in confidence, any written, oral, or other information
obtained in confidence from another party in connection with this Agreement or
the transactions contemplated by this Agreement, unless (a) such information is
already known to such party or to others not bound by a duty of confidentiality
or such information becomes publicly available through no fault of such party,
(b) the use of such information is necessary or appropriate in making any
required filing with the Commission, or obtaining any consent or approval
required for the consummation of the transactions contemplated by this
Agreement, or (c) the furnishing or use of such information is required by or
necessary or appropriate in connection with legal proceedings.
6.2.2 In the event that any party is required to disclose any
information of another party pursuant to clause (b) or (c) of Section 6.2.1, the
party requested or required to make the disclosure (the "Disclosing Party")
shall provide the party that provided such information (the "Providing Party")
with prompt notice of any such requirement so that the providing party may seek
a protective order or other appropriate remedy and/or waive compliance with the
provisions of this Section 6.2.2. If, in the absence of a protective order or
other remedy or the receipt of a waiver by the Providing Party, the Disclosing
Party is nonetheless, in the opinion of counsel, legally compelled to disclose
the information of the Providing Party, the Disclosing Party may, without
liability hereunder, disclose only that portion of the Providing Party's
information which such counsel advises is legally required to be disclosed,
provided that the Disclosing Party exercises its reasonable efforts to preserve
the confidentiality of the Providing Party's information, including, without
limitation, by cooperating with the Providing Party to obtain an appropriate
protective order or other relief assurance that confidential treatment will be
accorded the Providing Party's information.
6.2.3 If the transactions contemplated by this Agreement are not
consummated, each party will return or destroy as much of such written
information as the other party may reasonably request.
6.3 NOTICES. All notices, consents, waivers, and other communications under
this Agreement must be in writing and will be deemed to have been duly given
when (a) delivered by hand (with written confirmation of receipt), or (b) when
received by the addressee, if sent by a nationally recognized overnight delivery
service (receipt requested), in each case to the appropriate addresses set forth
below (or to such other addresses as a party may designate by notice to the
other parties):
If to the Seller:
Xxxxx Xxxxxx
000 - 000 Xxxxxxxxx Xxxxxx, Xxxxxxxxx, XX.
X0X 0X0
19
If to the Buyer:
Xxxxx Xxxxxxxxxx
Xxxxxxxxxxxxx 0, 0000 Xxxxxx, Xxxxxxxxxxx
6.4 FURTHER ASSURANCES. The parties agree (a) to furnish upon request to
each other such further information, (b) to execute and deliver to each other
such other documents, and (c) to do such other acts and things, all as the other
party may reasonably request for the purpose of carrying out the intent of this
Agreement and the documents referred to in this Agreement.
6.5 WAIVER. The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither the failure nor any delay by any party
in exercising any right, power, or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right, power,
or privilege will preclude any other or further exercise of such right, power,
or privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right arising out of
this Agreement or the documents referred to in this Agreement can be discharged
by one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party; (b) no waiver that may be
given by a party will be applicable except in the specific instance for which it
is given; and (c) no notice to or demand on one party will be deemed to be a
waiver of any obligation of such party or of the right of the party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.
6.6 ENTIRE AGREEMENT AND MODIFICATION. This Agreement supersedes all prior
agreements between the parties with respect to its subject matter and
constitutes (along with the documents referred to in this Agreement) a complete
and exclusive statement of the terms of the agreement between the parties with
respect to its subject matter. This Agreement may not be amended except by a
written agreement executed by the party against whom the enforcement of such
amendment is sought.
6.7 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS. No party may assign
any of its rights under this Agreement without the prior consent of the other
parties. Subject to the preceding sentence, this Agreement will apply to, be
binding in all respects upon, and inure to the benefit of and be enforceable by
the respective successors and permitted assigns of the parties. Nothing
expressed or referred to in this Agreement will be construed to give any Person
other than the parties to this Agreement any legal or equitable right, remedy,
or claim under or with respect to this Agreement or any provision of this
Agreement. This Agreement and all of its provisions and conditions are for the
sole and exclusive benefit of the parties to this Agreement and their successors
and assigns.
6.8 SEVERABILITY. If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
20
6.9 SECTION HEADINGS, CONSTRUCTION. The headings of Sections in this
Agreement are provided for convenience only and will not affect its construction
or interpretation. All references to "Section" or "Sections" refer to the
corresponding Section or Sections of this Agreement. All words used in this
Agreement will be construed to be of such gender or number as the circumstances
require. Unless otherwise expressly provided, the word "including" does not
limit the preceding words or terms.
6.10 GOVERNING LAW. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of
Nevada, without regard to the principles of conflicts of law thereof. Each party
agrees that all legal proceedings concerning the interpretations, enforcement
and defense of the transactions contemplated by this Agreement (whether brought
against a party hereto or its respective affiliates, directors, officers,
shareholders, employees or agents) shall be commenced exclusively in courts
sitting in the State of Nevada. Each party hereto hereby irrevocably submits to
the exclusive jurisdiction of the courts sitting in the State of Nevada for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is improper. Nothing contained herein shall be
deemed to limit in any way any right to serve process in any manner permitted by
law. If either party shall commence an action or proceeding to enforce any
provisions of this Agreement, then the prevailing party in such action or
proceeding shall be reimbursed by the other party for its attorneys fees and
other costs and expenses incurred with the investigation, preparation and
prosecution of such action or proceeding.
6.11 COUNTERPARTS AND FACSIMILE SIGNATURES. This Agreement may be executed
in one or more counterparts, each of which will be deemed to be an original copy
of this Agreement and all of which, when taken together, will be deemed to
constitute one and the same agreement. Facsimile signatures are acceptable and
deemed original signatures.
21
COUNTERPART SIGNATURE PAGE
IN WITNESS WHEREOF, the parties have executed and delivered this Stock
Purchase Agreement as of the date first written above.
SELLER:
Signed: /s/ Xxxxx Xxxxxx
---------------------------------
Xxxxx Xxxxxx
BUYER:
Signed: /s/ Xxxxx Xxxxxxxxxx
---------------------------------
Xxxxx Xxxxxxxxxx
22
EXHIBIT A
DEFINITION OF "ACCREDITED INVESTOR"
The term "accredited investor" means:
(1) A bank as defined in Section 3(a)(2) of the Securities Act, or a savings
and loan association or other institution as defined in Section 3(a)(5)(A)
of the Securities Act, whether acting in its individual or fiduciary
capacity; a broker or dealer registered pursuant to Section 15 of the
Securities Exchange Act of 1934; an insurance company as defined in Section
2(13) of the Securities Act; an investment company registered under the
Investment Company Act of 1940 (the "Investment Company Act") or a business
development company as defined in Section 2(a)(48) of the Investment
Company Act; a Small Business Investment Company licensed by the U.S. Small
Business Administration under Section 301(c) or (d) of the Small Business
Investment Act of 1958; a plan established and maintained by a state, its
political subdivisions or any agency or instrumentality of a state or its
political subdivisions for the benefit of its employees, if such plan has
total assets in excess of $5,000,000; an employee benefit plan within the
meaning of the Employee Retirement Income Security Act of 1974 ("ERISA"),
if the investment decision is made by a plan fiduciary, as defined in
Section 3(21) of ERISA, which is either a bank, savings and loan
association, insurance company, or registered investment advisor, or if the
employee benefit plan has total assets in excess of $5,000,000 or, if a
self-directed plan, with investment decisions made solely by persons that
are accredited investors.
(2) A private business development company as defined in Section 202(a)(22) of
the Investment Advisers Act of 1940.
(3) An organization described in Section 501(c)(3) of the Internal Revenue
Code, corporation, Massachusetts or similar business trust, or partnership,
not formed for the specific purpose of acquiring the securities offered,
with total assets in excess of $5,000,000.
(4) A director or executive officer of the Acquiror.
(5) A natural person whose individual net worth, or joint net worth with that
person's spouse, at the time of his or her purchase exceeds $1,000,000.
(6) A natural person who had an individual income in excess of $200,000 in each
of the two most recent years or joint income with that person's spouse in
excess of $300,000 in each of those years and has a reasonable expectation
of reaching the same income level in the current year.
(7) A trust, with total assets in excess of $5,000,000, not formed for the
specific purpose of acquiring the securities offered, whose purchase is
directed by a sophisticated person as described in Rule 506(b)(2)(ii)
(i.e., a person who has such knowledge and experience in financial and
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business matters that he is capable of evaluating the merits and risks of
the prospective investment).
(8) An entity in which all of the equity owners are accredited investors. (If
this alternative is checked, the Shareholder must identify each equity
owner and provide statements signed by each demonstrating how each is
qualified as an accredited investor.)
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EXHIBIT B
ACCREDITED INVESTOR REPRESENTATIONS
Each Shareholder indicating that it is an Accredited Investor, severally and not
jointly, further represents and warrants to the Acquiror as follows:
1. Such Shareholder qualifies as an Accredited Investor on the basis set forth
on its signature page to this Agreement.
2. Such Shareholder has sufficient knowledge and experience in finance,
securities, investments and other business matters to be able to protect
such Shareholder's interests in connection with the transactions
contemplated by this Agreement.
3. Such Shareholder has consulted, to the extent that it has deemed necessary,
with its tax, legal, accounting and financial advisors concerning its
investment in the Acquiror Shares.
4. Such Shareholder understands the various risks of an investment in the
Acquiror Shares and can afford to bear such risks for an indefinite period
of time, including, without limitation, the risk of losing its entire
investment in the Acquiror Shares.
5. Such Shareholder has had access to the Acquiror's publicly filed reports
with the SEC.
6. Such Shareholder has been furnished during the course of the transactions
contemplated by this Agreement with all other public information regarding
the Acquiror that such Shareholder has requested and all such public
information is sufficient for such Shareholder to evaluate the risks of
investing in the Acquiror Shares.
7. Such Shareholder has been afforded the opportunity to ask questions of and
receive answers concerning the Acquiror and the terms and conditions of the
issuance of the Acquiror Shares.
8. Such Shareholder is not relying on any representations and warranties
concerning the Acquiror made by the Acquiror or any officer, employee or
agent of the Acquiror, other than those contained in this Agreement.
9. Such Shareholder is acquiring the Acquiror Shares for such Shareholder's
own account, for investment and not for distribution or resale to others.
10. Such Shareholder will not sell or otherwise transfer the Acquiror Shares,
unless either (A) the transfer of such securities is registered under the
Securities Act or (B) an exemption from registration of such securities is
available.
11. Such Shareholder understands and acknowledges that the Acquiror is under no
obligation to register the Acquiror Shares for sale under the Securities
Act.
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12. Such Shareholder consents to the placement of a legend on any certificate
or other document evidencing the Acquiror Shares substantially in the form
set forth in Section 4.2.5(a).
13. Such Shareholder represents that the address furnished by such Shareholder
on its signature page to this Agreement and in Exhibit A is such
Shareholder's principal residence if he is an individual or its principal
business address if it is a corporation or other entity.
14. Such Shareholder understands and acknowledges that the Acquiror Shares have
not been recommended by any federal or state securities commission or
regulatory authority, that the foregoing authorities have not confirmed the
accuracy or determined the adequacy of any information concerning the
Acquiror that has been supplied to such Shareholder and that any
representation to the contrary is a criminal offense.
15. Such Shareholder acknowledges that the representations, warranties and
agreements made by such Shareholder herein shall survive the execution and
delivery of this Agreement and the purchase of the Acquiror Shares.
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EXHIBIT C
NON-U.S. PERSON REPRESENTATIONS
Each Shareholder indicating that it is not a U.S. person, severally and not
jointly, further represents and warrants to the Acquiror as follows:
1. At the time of (a) the offer by the Acquiror and (b) the acceptance of the
offer by such Shareholder, of the Acquiror Shares, such Shareholder was
outside the United States.
2. No offer to acquire the Acquiror Shares or otherwise to participate in the
transactions contemplated by this Agreement was made to such Shareholder or
its representatives inside the United States.
3. Such Shareholder is not purchasing the Acquiror Shares for the account or
benefit of any U.S. person, or with a view towards distribution to any U.S.
person, in violation of the registration requirements of the Securities
Act.
4. Such Shareholder will make all subsequent offers and sales of the Acquiror
Shares either (x) outside of the United States in compliance with
Regulation S; (y) pursuant to a registration under the Securities Act; or
(z) pursuant to an available exemption from registration under the
Securities Act. Specifically, such Shareholder will not resell the Acquiror
Shares to any U.S. person or within the United States prior to the
expiration of a period commencing on the Closing Date and ending on the
date that is one year thereafter (the "Distribution Compliance Period"),
except pursuant to registration under the Securities Act or an exemption
from registration under the Securities Act.
5. Such Shareholder is acquiring the Acquiror Shares for such Shareholder's
own account, for investment and not for distribution or resale to others.
6. Such Shareholder has no present plan or intention to sell the Acquiror
Shares in the United States or to a U.S. person at any predetermined time,
has made no predetermined arrangements to sell the Acquiror Shares and is
not acting as a Distributor of such securities.
7. Neither such Shareholder, its Affiliates nor any Person acting on such
Shareholder's behalf, has entered into, has the intention of entering into,
or will enter into any put option, short position or other similar
instrument or position in the U.S. with respect to the Acquiror Shares at
any time after the Closing Date through the Distribution Compliance Period
except in compliance with the Securities Act.
8. Such Shareholder consents to the placement of a legend on any certificate
or other document evidencing the Acquiror Shares substantially in the form
set forth in Section 4.2.5(b).
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9. Such Shareholder is not acquiring the Acquiror Shares in a transaction (or
an element of a series of transactions) that is part of any plan or scheme
to evade the registration provisions of the Securities Act.
10. Such Shareholder has sufficient knowledge and experience in finance,
securities, investments and other business matters to be able to protect
such Shareholder's interests in connection with the transactions
contemplated by this Agreement.
11. Such Shareholder has consulted, to the extent that it has deemed necessary,
with its tax, legal, accounting and financial advisors concerning its
investment in the Acquiror Shares.
12. Such Shareholder understands the various risks of an investment in the
Acquiror Shares and can afford to bear such risks for an indefinite period
of time, including, without limitation, the risk of losing its entire
investment in the Acquiror Shares.
13. Such Shareholder has had access to the Acquiror's publicly filed reports
with the SEC.
14. Such Shareholder has been furnished during the course of the transactions
contemplated by this Agreement with all other public information regarding
the Acquiror that such Shareholder has requested and all such public
information is sufficient for such Shareholder to evaluate the risks of
investing in the Acquiror Shares.
15. Such Shareholder has been afforded the opportunity to ask questions of and
receive answers concerning the Acquiror and the terms and conditions of the
issuance of the Acquiror Shares.
16. Such Shareholder is not relying on any representations and warranties
concerning the Acquiror made by the Acquiror or any officer, employee or
agent of the Acquiror, other than those contained in this Agreement.
17. Such Shareholder will not sell or otherwise transfer the Acquiror Shares,
unless either (A) the transfer of such securities is registered under the
Securities Act or (B) an exemption from registration of such securities is
available.
18. Such Shareholder understands and acknowledges that the Acquiror is under no
obligation to register the Acquiror Shares for sale under the Securities
Act.
19. Such Shareholder understands and acknowledges that the Acquiror Shares have
not been recommended by any federal or state securities commission or
regulatory authority, that the foregoing authorities have not confirmed the
accuracy or determined the adequacy of any information concerning the
Acquiror that has been supplied to such Shareholder and that any
representation to the contrary is a criminal offense.
20. Such Shareholder acknowledges that the representations, warranties and
agreements made by such Shareholder herein shall survive the execution and
delivery of this Agreement and the purchase of the Acquiror Shares.
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