EXHIBIT 2
REORGANIZATION AND STOCK PURCHASE AGREEMENT
This REORGANIZATION AND STOCK PURCHASE AGREEMENT dated as of December 24,
2004 (this "Agreement") is by and between Precise Positioning Products, Inc., a
Delaware corporation ("PPPD"), Xxx Xxxxx ("Xxxxx") and other PPPD Shareholders
set forth on the signature page hereto (collectively "PPPD Shareholders"), and
Free DA Connection Services, Inc., a British Columbia corporation ("FDA").
RECITALS
A. WHEREAS, PPPD desires to acquire directly or indirectly 100% of
the equity of FDA;
B: WHEREAS, the shareholders of FDA desire to acquire equity in PPPD
in connection with the proposed acquisition;
C: WHEREAS, the parties hereto intend that the transaction
contemplated here by shall be completed as a tax-free exchange of
stock.
NOW, THEREFORE, The respective Boards of Directors of PPPD and FDA
deem it advisable and in the best interests of their corporations and the
respective shareholders of their corporations that PPPD acquire 100% of the
securities of FDA, in accordance with the terms and conditions of this
Reorganization and Stock Purchase Agreement.
1. PRE-CLOSING ACTIONS OF PPPD AND THE PPPD SHAREHOLDERS. Immediately upon
execution of this Agreement and prior to any Closing as set forth herein,
PPPD shall undertake the following actions:
(a) The Board of Directors of PPPD shall unanimously approve and
deliver to Xxxxxx Law Group ("Escrow") in escrow resolutions with
respect to (a) approving the Transactions set forth herein; (c)
increasing or directing the size of the Board of Directors to be ( )
members; (c) electing ( ) persons to the board of directors of PPPD,
(d) approving a 1 for 380 reverse stock split and (e) approving a name
change of the corporation to "Free DA Connection Services, Inc."
(b) The PPPD Shareholders shall deliver to Escrow a total of
64,000,000 pre reverse split shares of PPPD for delivery to
shareholders or other designees of FDA as advised to Escrow prior to
closing (the "Escrowed PPPD Founder Shares").
(c) PPPD shall use its reasonable best efforts to prepare and
complete the documents necessary to be filed with local, state and
federal authorities to consummate the transactions contemplated
hereby.
(d) During a period from December 24, 2004 through December 31, 2004
(the "Due Diligence Period"), PPPD shall make available to FDA and
FDA's employees, attorneys, accountants, financial advisors, agents
and representatives during normal business hours all information
concerning the operation, business and prospects of PPPD as may be
reasonably requested by FDA. PPPD will cooperate with FPA for the
purpose of permitting FDA to discuss PPPD's business and prospects
with customers, creditors, suppliers and other persons having business
dealings with such party, including without limitation providing
access to all employees, consultants, assets, properties, books,
accounts, records, tax returns, contracts and
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other documents of PPPD, provided that such access will not materially
interfere with the normal business operations of PPPD.
2. PRE-CLOSING ACTION OF FDA. Immediately upon execution of this Agreement and
prior to the Closing as set forth herein, FDA shall undertake the following
actions:
(a) Upon execution of this Agreement, FDA shall deliver or cause to
be delivered to designees of the PPPD Shareholders a total of Ten
Thousand Dollars ($10,000), as a nonrefundable deposit towards the
cash purchase price of PPPD (the "Deposit").
(b) The Board of Directors of FDA shall execute and deliver
resolutions unanimously approving the Transactions set forth herein.
(c) The shareholders of FDA shall execute and deliver resolutions
approving the Transactions contemplated hereby if required.
(d) The shareholders of FDA shall deliver to Xxxxxx Law Group in
escrow certificates representing ( ) shares of common stock of FDA
(the "Escrowed FDA Shares"), representing 100% of the issued and
outstanding equity of FDA, for delivery to PPPD at Closing.
(e) FDA shall deliver or cause to be delivered to Xxxxxx Law Group a
total of One Hundred Fifty-Five Thousand Dollars ($155,000) for
delivery to designees of the PPPD shareholders at Closing (the "Cash
Payment").
(f) During the Due Diligence Period, FDA shall make available to PPPD
and PPPD's employees, attorneys, accountants, financial advisors,
agents and representatives during normal business hours all
information concerning the operation, business and prospects of FDA as
may be reasonably requested by PPPD. FDA will cooperate with PPPD for
the purpose of permitting PPPD to discuss FDA's business and prospects
with customers, creditors, suppliers and other persons having business
dealings with such party, including without limitation providing
access to all employees, consultants, assets, properties, books,
accounts, records, tax returns, contracts and other documents of FDA,
provided that such access will not materially interfere with the
normal business operations of FDA.
3. CONDITIONS TO CLOSING
The parties' obligation to close the proposed Acquisition will be
subject to specified conditions precedent including, but not limited to,
the following:
(a) the representations and warranties of PPPD as set forth in
Section 6 herein shall remain accurate as of the Closing Date and no
material adverse change in the business of PPPD shall have occurred;
(b) the representations and warranties of FDA as set forth in Section
7 herein shall remain accurate as of the Closing Date and no material
adverse change in the business of FDA shall have occurred;
(c) all the documents necessary to be filed with local, state and
federal authorities are prepared
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(d) PPPD shall have provided the board resolutions and any other
approval required to complete the reverse stock split, the board
election and the name change.
(e) the consent by the PPPD stockholders on the transactions
contemplated herein has been completed;
(f) PPPD shall retain its good standing as a publicly traded company
under the Securities Exchange Act, trading on the pink sheets under
the symbol "PPPD".
4. AT THE CLOSING.
(a) At the Closing, Xxxxxx Law Group shall release from escrow the
PPPD Board Resolutions effectuating the election of ( ) new members
of the Board of Directors. The members of the Board of Directors prior
to Closing shall submit resignations at Closing.
(b) At the Closing, Xxxxxx Law Group shall release the Escrowed PPPD
Founder Shares to the shareholders or designees of FDA.
(c) At the Closing, Xxxxxx Law Group shall release the Escrowed FDA
Shares to PPPD.
(d) At the Closing, Xxxxxx Law Group shall forward the Cash Payment
to designees of PPPD.
(e) At the Closing, the existing officers of PPPD shall resign and be
replaced by those officers appointed by the new Board of Directors.
5. TIMING OF CLOSING. The Closing shall occur upon the satisfaction of the
conditions set forth in this Agreement and upon instructions from the
parties hereto to the Escrow Agent. The Closing Date shall occur on January
7, 2005, unless the Escrow Agent receives instructions otherwise from the
parties or notice from a party that the conditions set forth herein have
not occurred. In the event the Closing does not occur on or before January
31, 2005, (i) the Escrow Agent shall return the Escrowed PPPD Founder
Shares to PPPD; (ii) the Escrow Agent shall return the Cash Payment to the
party providing such payment, and (iii) the Escrow Agent shall return the
Escrowed FDA Shares to the shareholders of FDA.
6. REPRESENTATIONS OF PPPD. PPPD REPRESENTS AND WARRANTS AS FOLLOWS:
(a) Ownership of Shares. As of the Closing Date, the shareholders or
members of FDA will become sole owner of the Escrowed PPPD Shares. The
Escrowed PPPD Shares will be free from claims, liens or other
encumbrances, except as provided under applicable federal and state
securities laws;
(b) Fully paid and Nonassessable. The Escrowed PPPD Shares constitute
duly and validly issued shares of PPPD, and are fully paid and
nonassessable, and PPPD further represents that it has the power and
the authority to execute this Agreement and to perform the obligations
contemplated hereby;
(c) Organization of PPPD; Authorization. PPPD is a corporation duly
organized, validly existing and in good standing under the laws of
Delaware with full corporate power and authority to execute and
deliver this Agreement and to perform its obligations hereunder. The
execution, delivery and performance of this Agreement have been duly
authorized by all necessary corporate action of PPPD and this
Agreement constitutes a
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valid and binding obligation of PPPD; enforceable against it in
accordance with its terms. PPPD has no subsidiaries.
(d) Capitalization. The authorized capital stock of PPPD consists of
100,000,000 shares of common stock, par value $0.001 per share, and no
shares of preferred stock. As of the date of this Agreement, PPPD has
75,925,820 shares of common stock issued and outstanding and no shares
of preferred stock issued and outstanding. No shares have otherwise
been registered under state or federal securities laws. As of the
Closing Date, all of the issued and outstanding shares of common stock
of PPPD are validly issued, fully paid and non-assessable and there is
not and as of the Closing Date there will not be outstanding any
warrants, options or other agreements on the part of PPPD obligating
PPPD to issue any additional shares of common or preferred stock or
any of its securities of any kind. PPPD will not issue any shares of
capital stock from the date of this Agreement through the Closing
Date. The Common Stock of PPPD is presently trading on the pink sheets
under the symbol "DMLY".
(e) Ownership of PPPD Shares. The delivery of certificates provided
herein for the Escrowed PPPD Shares will result in the shareholders of
FDA immediate acquisition of record and beneficial ownership of the
Escrowed PPPD Shares, free and clear of all encumbrances.
(f) No Conflict as to PPPD and Subsidiaries. Neither the execution
and delivery of this Agreement nor the consummation of the exchange of
the PPPD Shares will (a) violate any provision of the certificate of
incorporation or by-laws (or other governing instrument) of PPPD or
(b) violate, or be in conflict with, or constitute a default (or an
event which, with notice or lapse of time or both, would constitute a
default) under, or result in the termination of, or accelerate the
performance required by, or excuse performance by any Person of any of
its obligations under, or cause the acceleration of the maturity of
any debt or obligation pursuant to, or result in the creation or
imposition of any Encumbrance upon any property or assets of PPPD
under, any material agreement or commitment to which PPPD is a party
or by which its property or assets is bound, or to which any of the
property or assets of PPPD is subject, or (c) violate any statute or
law or any judgment, decree, order, regulation or rule of any court or
other Governmental Body applicable to PPPD except, in the case of
violations, conflicts, defaults, terminations, accelerations or
encumbrances described in clause (b) of this Section for such matters
which are not likely to have a material adverse effect on the business
or financial condition of PPPD.
(g) Consents and Approvals of Governmental Authorities. No consent,
approval or authorization of, or declaration, filing or registration
with, any Governmental Body is required to be made or obtained by PPPD
in connection with the execution, delivery and performance of this
Agreement by PPPD or the consummation of the sale of the Escrowed PPPD
Shares.
(h) Other Consents. No consent of any Person is required to be
obtained by PPPD to the execution, delivery and performance of this
Agreement or the consummation of the sale of the PPPD Shares,
including, but not limited to, consents from parties to leases or
other agreements or commitments, except for any consent which the
failure to obtain would not be likely to have a material adverse
effect on the business and financial condition of PPPD.
(i) Title to Properties. PPPD owns all the material properties and
assets that it purports to own (real, personal and mixed, tangible and
intangible). All properties and assets are free and clear of all
material encumbrances and are not, in the case of real property,
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subject to any material rights of way, building use restrictions,
exceptions, variances, reservations or limitations of any nature
whatsoever. The properties and assets of PPPD include all rights,
properties and other assets necessary to permit PPPD to conduct PPPD's
business in all material respects in the same manner as it is
conducted on the date of this Agreement.
(j) Buildings, Plants and Equipment. The buildings, plants,
structures and material items of equipment and other personal property
owned or leased by PPPD are, in all respects material to the business
or financial condition of PPPD, in good operating condition and repair
(ordinary wear and tear excepted) and are adequate in all such
respects for the purposes for which they are being used. PPPD has not
received notification that it is in violation of any applicable
building, zoning, anti-pollution, health, safety or other law,
ordinance or regulation in respect of its buildings, plants or
structures or their operations, which violation is likely to have a
material adverse effect on the business or financial condition of
PPPD, or which would require a payment by PPPD in excess of $2,000 in
the aggregate, and which has not been cured.
(k) No Condemnation or Expropriation. Neither the whole nor any
portion of the property or leaseholds owned or held by PPPD is subject
to any governmental decree or order to be sold or is being condemned,
expropriated or otherwise taken by any Governmental Body or other
Person with or without payment of compensation therefore, which Action
is likely to have a material adverse effect on the business or
financial condition of PPPD.
(l) Litigation. There is no action, suit, inquiry, proceeding or
investigation by or before any Court or Governmental body pending or
threatened in writing against or involving PPPD which is likely to
have a material adverse effect on the business or financial condition
of PPPD, or which would require a payment by PPPD in excess of $2,000
in the aggregate or which questions or challenges the validity of this
Agreement. PPPD is not subject to any judgment, order or decree that
is likely to have a material adverse effect on the business or
financial condition of PPPD, or which would require a payment by PPPD
in excess of $2,000 in the aggregate.
(m) Absence of Certain Changes. PPPD has not:
1. suffered the damage or destruction of any of its properties
or assets (whether or not covered by insurance) which is
materially adverse to the business or financial condition of
PPPD, or made any disposition of any of its material properties
or assets other than in the ordinary course of business;
2. made any change or amendment in its certificate of
incorporation or by-laws, or other governing instruments;
3. other than the PPPD Escrowed Shares, issued or sold any
Equity Securities or other securities, acquired, directly or
indirectly, by redemption or otherwise, any such Equity
Securities, reclassified, split-up or otherwise changed any such
Equity Security, or granted or entered into any options,
warrants, calls or commitments of any kind with respect thereto;
4. organized any new Subsidiary or acquired any Equity
Securities of any Person or any equity or ownership interest in
any business;
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5. borrowed any funds or incurred, or assumed or become subject
to, whether directly or by way of guarantee or otherwise, any
obligation or liability with respect to any such indebtedness for
borrowed money;
6. other than as contemplated herein, paid, discharged or
satisfied any material claim, liability or obligation (absolute,
accrued, contingent or otherwise), other than in the ordinary
course of business;
7. other than as contemplated herein, prepaid any material
obligation having a maturity of more than 90 days from the date
such obligation was issued or incurred;
8. other than as contemplated herein, cancelled any material
debts or waived any material claims or rights, except in the
ordinary course of business;
9. disposed of or permitted to lapse any rights to the use of
any material patent or registered trademark or copyright or other
intellectual property owned or used by it;
10. granted any general increase in the compensation of officers
or employees (including any such increase pursuant to any
employee benefit plan);
11. purchased or entered into any contract or commitment to
purchase any material quantity of raw materials or supplies, or
sold or entered into any contract or commitment to sell any
material quantity of property or assets, except (i) normal
contracts or commitments for the purchase of, and normal
purchases of, raw materials or supplies, made in the ordinary
course business, (ii) normal contracts or commitments for the
sale of, and normal sales of, inventory in the ordinary course of
business, and (iii) other contracts, commitments, purchases or
sales in the ordinary course of business;
12. made any capital expenditures or additions to property,
plant or equipment or acquired any other property or assets
(other than raw materials and supplies) at a cost in excess of
$2,000 in the aggregate;
13. written off or been required to write off any notes or
accounts receivable in an aggregate amount in excess of $2,000;
14. written down or been required to write down any inventory in
an aggregate amount in excess of $ 2,000;
15. entered into any collective bargaining or union contract or
agreement; or
16. other than the ordinary course of business, incurred any
liability required by generally accepted accounting principles to
be reflected on a balance sheet and material to the business or
financial condition of PPPD.
(n) Contracts and Commitments. PPPD is not a party to any:
1. Contract or agreement (other than purchase or sales orders
entered into in the ordinary course of business) involving any
liability on the part of PPPD of more than $2,000 and not
cancellable by PPPD or the relevant Subsidiary (without liability
to PPPD or such Subsidiary) within 60 days. PPPD has delivered to
FDA
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copies of any and all agreements, arrangements, contracts or
other matters relating to PPPD.
2. Lease of personal property involving annual rental payments
in excess of $2,000 and not cancellable by PPPD (without
liability to PPPD) within 90 days;
3. Employee bonus, stock option or stock purchase, performance
unit, profit-sharing, pension, savings, retirement, health,
deferred or incentive compensation, insurance or other material
employee benefit plan (as defined in Section 2(3) of ERISA) or
program for any of the employees, former employees or retired
employees of PPPD;
4. Commitment, contract or agreement that is currently expected
by the management of PPPD to result in any material loss upon
completion or performance thereof;
5. Contract, agreement or commitment, that is material to the
business of PPPD, with any officer, employee, agent, consultant,
advisor, salesman, sales representative, value added reseller,
distributor or dealer; or
6. Employment agreement or other similar agreement that
contains any severance or termination pay, liabilities or
obligations.
All such contracts and agreements are in full force and effect.
PPPD is not in breach of, in violation of or in default under, any
agreement, instrument, indenture, deed of trust, commitment, contract
or other obligation of any type to which PPPD is a party or is or may
be bound that relates to the business of PPPD or to which any of the
assets or properties of PPPD is subject, the effect of which breach,
violation or default is likely to materially and adversely affect the
business or financial condition of PPPD.
(o) Labor Relations. PPPD is not a party to any collective bargaining
agreement. Except for any matter which is not likely to have a
material adverse effect on the business or financial condition of
PPPD, (a) PPPD is in compliance with all applicable laws respecting
employment and employment practices, terms and conditions of
employment and wages and hours, and is not engaged in any unfair labor
practice, (b) there is no unfair labor practice complaint against PPPD
pending before the National Labor Relations Board, (c) there is no
labor strike, dispute, slowdown or stoppage actually pending or
threatened against PPPD, (d) no representation question exists
respecting the employees of PPPD, (e) PPPD has not experienced any
strike, work stoppage or other labor difficulty, and (f) no collective
bargaining agreement relating to employees of PPPD is currently being
negotiated.
(p) Compliance with Law. The operations of PPPD have been conducted
in accordance with all applicable laws and regulations of all
Governmental Bodies having jurisdiction over them, except for
violations thereof which are not likely to have a material adverse
effect on the business or financial condition of PPPD, or which would
not require a payment by PPPD in excess of $2,000 in the aggregate, or
which have been cured. PPPD has not received any notification of any
asserted present or past failure by it to comply with any such
applicable laws or regulations. PPPD has all material licenses,
permits, orders or approvals from the Governmental Bodies required for
the conduct of its business, and is not in material violation of any
such licenses, permits, orders and approvals. All such licenses,
permits, orders and approvals are in full force and effect, and no
suspension or cancellation of any thereof has been threatened.
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(q) Tax Matters.
1. PPPD (1) has filed or shall file prior to Closing all
nonconsolidated and noncombined Tax Returns and all consolidated
or combined Tax Returns that include only PPPD and not FDA or its
other Affiliates (for the purposes of this Section, such tax
Returns shall be considered nonconsolidated and noncombined Tax
Returns) required to be filed through the date hereof and will
have paid any Tax due through the date hereof with respect to the
time periods covered by such nonconsolidated and noncombined Tax
Returns and shall timely pay any such Taxes required to be paid
by it after the date hereof with respect to such Tax Returns and
(2) shall prepare and timely file all such nonconsolidated and
noncombined Tax Returns required to be filed after the date
hereof and through the Closing Date and pay all Taxes required to
be paid by it with respect to the periods covered by such Tax
Returns; (B) all such Tax Returns filed pursuant to clause (A)
after the date hereof shall, in each case, be prepared and filed
in a manner consistent in all material respects (including
elections and accounting methods and conventions) with such Tax
Return most recently filed in the relevant jurisdiction prior to
the date hereof, except as otherwise required by law or
regulation. Any such Tax Return filed or required to be filed
after the date hereof shall not reflect any new elections or the
adoption of any new accounting methods or conventions or other
similar items, except to the extent such particular reflection or
adoption is required to comply with any law or regulation.
2. PPPD represents that prior to Closing, all consolidated or
combined Tax Returns (except those described in subparagraph (1)
above) required to be filed by any person through the date hereof
that are required or permitted to include the income, or reflect
the Activities, operations and Transactions, of PPPD for any
taxable period shall have been timely filed, and the income,
activities, operations and Transactions of PPPD shall have been
properly included and reflected thereon. PPPD shall prepare and
file, or cause to be prepared and filed, all such consolidated or
combined Tax Returns that are required or permitted to include
the income, or reflect the activities, operations and
Transactions, of PPPD, with respect to any taxable year or the
portion thereof ending on or prior to the Closing Date,
including, without limitation, PPPD's consolidated federal income
tax return for such taxable years. Prior to Closing, PPPD will
timely file a consolidated federal income tax return for the
taxable year ended December 31, 2004 and such return shall
include and reflect the income, activities, operations and
Transactions of PPPD for the taxable period then ended, and
hereby expressly covenants and agrees to file a consolidated
federal income tax return, and to include and reflect thereon the
income, activities, operations and Transactions of PPPD for the
taxable period through the Closing Date. All Tax Returns filed
pursuant to this subparagraph (2) after the date hereof shall, in
each case, to the extent that such Tax Returns specifically
relate to PPPD and do not generally relate to matters affecting
other members of PPPD's consolidated group, be prepared and filed
in a manner consistent in all material respects (including
elections and accounting methods and conventions) with the Tax
Return most recently filed in the relevant jurisdictions prior to
the date hereof, except as otherwise required by law or
regulation. PPPD has paid or will pay all Taxes that may now or
hereafter be due with respect to the taxable periods covered by
such consolidated or combined Tax Returns.
3. There is no (nor has there been any request for an)
agreement, waiver or consent providing for an extension of time
with respect to the assessment of any Taxes attributable to PPPD,
or its assets or operations and no power of attorney granted by
PPPD with respect to any Tax matter is currently in force.
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4. There is no action, suit, proceeding, investigation, audit,
claim, demand, deficiency or additional assessment in progress,
pending or threatened against or with respect to any Tax
attributable to PPPD or its assets or operations.
5. All amounts required to be withheld as of the Closing Date
for Taxes or otherwise have been withheld and paid when due to
the appropriate agency or authority.
6. There shall be delivered or made available to FDA at or
prior to Closing true and complete copies of all income Tax
Returns (or with respect to consolidated or combined returns, the
portion thereof) and any other Tax Returns requested by FDA as
may be relevant to PPPD or its assets or operations for any and
all periods ending after December 31, 1998, or for any Tax years
which are subject to audit or investigation by any taxing
authority or entity.
(r) Environmental Matters.
1. At all times prior to the date hereof, PPPD has complied in
all material respects with applicable environmental laws, orders,
regulations, rules and ordinances relating to the properties of
PPPD, the violation of which would have a material adverse effect
on the business or financial condition of PPPD, or which would
require a payment by PPPD in excess of $2,000 in the aggregate,
and which have been duly adopted, imposed or promulgated by any
legislative, executive, administrative or judicial body or
officer of any Governmental Body.
2. The environmental licenses, permits and authorizations that
are material to the operations of PPPD are in full force and
effect.
3. PPPD has not released or caused to be released on or about
the properties currently owned or leased by PPPD (the
"Properties") any (i) pollutants, (ii) contaminants, (iii)
"Hazardous Substances," as that term is defined in Section
101(14) of the Comprehensive Environmental Response Act, as
amended or (iv) "Regulated Substances," as that term in defined
in Section 9001 of the Resource Conservation and Recovery Act, 42
U.S.C. Section 6901, et seq., as amended, which would be required
to be remediated by any governmental agency with jurisdiction
over the Properties under the authority of laws, regulations and
ordinances as in effect and currently interpreted on the date
hereof, which remediation would have a material adverse effect on
the business or financial condition of PPPD.
(s) Absence of Certain Commercial Practices. PPPD has not, directly
or indirectly, paid or delivered any fee, commission or other sum of
money or item of property, however characterized, to any finder,
agent, government official or other party, in the United States or any
other country, which is in any manner related to the business or
operations of PPPD, which PPPD knows or has reason to believe to have
been illegal under any federal, state or local laws of the United
States or any other country having jurisdiction; and PPPD has not
participated, directly or indirectly, in any boycotts or other similar
practices affecting any of its actual or potential customers in
violation of any applicable law or regulation.
(t) Transactions with Directors and Officers. PPPD does not engage in
business with any Person in which any of PPPD's directors or officers
has a material equity interest. No director or officer of PPPD owns
any property, asset or right, which is material to the business of
PPPD.
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(u) Borrowing and Guarantees. PPPD (a) does not have any indebtedness
for borrowed money, (b) are not lending or committed to lend any money
(except for advances to employees in the ordinary course of business),
and (c) are not guarantors or sureties with respect to the obligations
of any Person.
7. REPRESENTATIONS OF FDA. FDA for their respective rights and interests
represent and warrant as follows: (a) Organization; Authorization. FDA is a
corporation duly organized, validly existing and in good standing under the
laws of the British Columbia with full corporate power and authority to
execute and deliver this Agreement and to perform its obligations
hereunder. The execution, delivery and performance of this Agreement have
been duly authorized by all necessary corporate action of FDA and this
Agreement constitutes a valid and binding obligation; enforceable against
in accordance with its terms. FDA has no subsidiaries.
(b) Capitalization. The authorized capital stock of FDA consists of
( ) shares of common stock, par value $( ) per share, and
( ) shares of preferred stock, par value $( ) per share. As of
the date of this Agreement, FDA has ( ) shares of common stock
issued and outstanding and no shares of preferred stock issued and
outstanding. No shares have otherwise been registered under state or
federal securities laws. As of the Closing Date, all of the issued and
outstanding shares of common stock of FDA are validly issued, fully
paid and non-assessable and there is not and as of the Closing Date
there will not be outstanding any warrants, options or other
agreements on the part of FDA obligating any of FDA to issue any
additional shares of common or preferred stock or any of its
securities of any kind. FDA will not issue any shares of capital stock
from the date of this Agreement through the Closing Date.
(c) No Conflict as to FDA and Subsidiaries. Neither the execution and
delivery of this Agreement nor the consummation of the transactions
contemplated herein will (a) violate any provision of the articles of
incorporation or organization of FDA or any of its Subsidiaries or (b)
violate, or be in conflict with, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a
default) under, or result in the termination of, or accelerate the
performance required by, or excuse performance by any Person of any of
its obligations under, or cause the acceleration of the maturity of
any debt or obligation pursuant to, or result in the creation or
imposition of any Encumbrance upon any property or assets of any of
FDA or any of its Subsidiaries under, any material agreement or
commitment to which any of FDA, any of its Subsidiaries is a party or
by which any of their respective property or assets is bound, or to
which any of the property or assets of any of FDA or any of its
Subsidiaries is subject, or (c) violate any statute or law or any
judgment, decree, order, regulation or rule of any court or other
Governmental Body applicable to FDA or any of its Subsidiaries except,
in the case of violations, conflicts, defaults, terminations,
accelerations or Encumbrances described in clause (b) of this Section
for such matters which are not likely to have a material adverse
effect on the business or financial condition of FDA and its
subsidiaries, taken as a whole.
(d) Consents and Approvals of Governmental Authorities. No consent,
approval or authorization of, or declaration, filing or registration
with, any Governmental Body is required to be made or obtained by FDA
or any of either of its Subsidiaries in connection with the execution,
delivery and performance of this Agreement by FDA or the consummation
of the transactions contemplated herein.
(e) Other Consents. No consent of any Person is required to be
obtained by FDA to the execution, delivery and performance of this
Agreement or the consummation of the transactions contemplated herein,
including, but not limited to, consents from parties to
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leases or other agreements or commitments, except for any consent
which the failure to obtain would not be likely to have a material
adverse effect on the business and financial condition of FDA.
(f) Buildings, Plants and Equipment. The buildings, plants,
structures and material items of equipment and other personal property
owned or leased by FDA or its Subsidiaries are, in all respects
material to the business or financial condition of FDA and its
Subsidiaries, taken as a whole, in good operating condition and repair
(ordinary wear and tear excepted) and are adequate in all such
respects for the purposes for which they are being used. FDA has not
received notification that it is in violation of any applicable
building, zoning, anti-pollution, health, safety or other law,
ordinance or regulation in respect of its buildings, plants or
structures or their operations, which violation is likely to have a
material adverse effect on the business or financial condition of FDA
and its Subsidiaries, taken as a whole or which would require a
payment by FDA or any of its subsidiaries in excess of $2,000 in the
aggregate, and which has not been cured.
(g) No Condemnation or Expropriation. Neither the whole nor any
portion of the property or leaseholds owned or held by FDA or any of
its Subsidiaries is subject to any governmental decree or order to be
sold or is being condemned, expropriated or otherwise taken by any
Governmental Body or other Person with or without payment of
compensation therefore, which action is likely to have a material
adverse effect on the business or financial condition of FDA and its
Subsidiaries, taken as a whole.
(h) Litigation. There is no action, suit, inquiry, proceeding or
investigation by or before any court or Governmental Body pending or
threatened in writing against or involving FDA or any of its
Subsidiaries which is likely to have a material adverse effect on the
business or financial condition of FDA and any of its Subsidiaries,
taken as whole, or which would require a payment by FDA or its
subsidiaries in excess of $2,000 in the aggregate or which questions
or challenges the validity of this Agreement. Neither FDA nor any or
its Subsidiaries is subject to any judgment, order or decree that is
likely to have a material adverse effect on the business or financial
condition of FDA or any of its Subsidiaries, taken as a whole, or
which would require a payment by FDA or its Subsidiaries in excess of
$2,000 in the aggregate.
(i) Absence of Certain Changes. Neither FDA nor any of its Subsidiaries
has:
1. suffered the damage or destruction of any of its properties
or assets (whether or not covered by insurance) which is
materially adverse to the business or financial condition of FDA
and its Subsidiaries, taken as a whole, or made any disposition
of any of its material properties or assets other than in the
ordinary course of business;
2. made any change or amendment in its certificate of
incorporation or by-laws, or other governing instruments;
3. paid, discharged or satisfied any material claim, liability
or obligation (absolute, accrued, contingent or otherwise), other
than in the ordinary course of business;
4. prepaid any material obligation having a maturity of more
than 90 days from the date such obligation was issued or
incurred;
5. cancelled any material debts or waived any material claims
or rights, except in the ordinary course of business;
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6. disposed of or permitted to lapse any rights to the use of
any material patent or registered trademark or copyright or other
intellectual property owned or used by it;
7. granted any general increase in the compensation of officers
or employees (including any such increase pursuant to any
employee benefit plan);
8. purchased or entered into any contract or commitment to
purchase any material quantity of raw materials or supplies, or
sold or entered into any contract or commitment to sell any
material quantity of property or assets, except (i) normal
contracts or commitments for the purchase of, and normal
purchases of, raw materials or supplies, made in the ordinary
course business, (ii) normal contracts or commitments for the
sale of, and normal sales of, inventory in the ordinary course of
business, and (iii) other contracts, commitments, purchases or
sales in the ordinary course of business;
9. made any capital expenditures or additions to property,
plant or equipment or acquired any other property or assets
(other than raw materials and supplies) at a cost in excess of
$2,000 in the aggregate;
10. written off or been required to write off any notes or
accounts receivable in an aggregate amount in excess of $2,000;
11. written down or been required to write down any inventory in
an aggregate amount in excess of $ 2,000;
12. entered into any collective bargaining or union contract or
agreement; or
13. other than the ordinary course of business, incurred any
liability required by generally accepted accounting principles to
be reflected on a balance sheet and material to the business or
financial condition of FDA and their subsidiaries taken as a
whole.
(j) Labor Relations. Neither FDA nor any of its Subsidiaries is a
party to any collective bargaining agreement. Except for any matter
which is not likely to have a material adverse effect on the business
or financial condition of FDA and its Subsidiaries, taken as a whole,
(a) FDA and its Subsidiaries is in compliance with all applicable laws
respecting employment and employment practices, terms and conditions
of employment and wages and hours, and is not engaged in any unfair
labor practice, (b) there is no unfair labor practice complaint
against FDA or any of its Subsidiaries pending before the National
Labor Relations Board, (c) there is no labor strike, dispute, slowdown
or stoppage actually pending or threatened against FDA or any of its
Subsidiaries, (d) no representation question exists respecting the
employees of FDA or any of its Subsidiaries, (e) neither FDA nor any
of its Subsidiaries has experienced any strike, work stoppage or other
labor difficulty, and (f) no collective bargaining agreement relating
to employees of FDA or any of its Subsidiaries is currently being
negotiated.
(k) Compliance with Law. The operations of FDA and its Subsidiaries
have been conducted in accordance with all applicable laws and
regulations of all Governmental Bodies having jurisdiction over them,
except for violations thereof which are not likely to have a material
adverse effect on the business or financial condition of FDA and its
Subsidiaries, taken as a whole, or which would not require a payment
by FDA or its Subsidiaries in excess of $2,000 in the aggregate, or
which have been cured. Neither FDA nor any of its Subsidiaries has
received any notification of any asserted present or past failure by
it to comply with any such applicable laws or regulations. FDA and its
Subsidiaries have all material licenses, permits, orders or approvals
from the Governmental Bodies required for
12
the conduct of their businesses, and are not in material violation of
any such licenses, permits, orders and approvals. All such licenses,
permits, orders and approvals are in full force and effect, and no
suspension or cancellation of any thereof has been threatened.
(l) Tax Matters.
1. Each of FDA and its Subsidiaires (1) has filed or shall file
prior to Closing all nonconsolidated and noncombined Tax Returns
and all consolidated or combined Tax Returns that include only
FDA and not PPPD or its other Affiliates (for the purposes of
this Section, such tax Returns shall be considered
nonconsolidated and noncombined Tax Returns) required to be filed
through the date hereof and will have paid any Tax due through
the date hereof with respect to the time periods covered by such
nonconsolidated and noncombined Tax Returns and shall timely pay
any such Taxes required to be paid by it after the date hereof
with respect to such Tax Returns and (2) shall prepare and timely
file all such nonconsolidated and noncombined Tax Returns
required to be filed after the date hereof and through the
Closing Date and pay all Taxes required to be paid by it with
respect to the periods covered by such Tax Returns; (B) all such
Tax Returns filed pursuant to clause (A) after the date hereof
shall, in each case, be prepared and filed in a manner consistent
in all material respects (including elections and accounting
methods and conventions) with such Tax Return most recently filed
in the relevant jurisdiction prior to the date hereof, except as
otherwise required by law or regulation. Any such Tax Return
filed or required to be filed after the date hereof shall not
reflect any new elections or the adoption of any new accounting
methods or conventions or other similar items, except to the
extent such particular reflection or adoption is required to
comply with any law or regulation.
2. Each of FDA and its Subsidiaries represents that prior to
Closing, all consolidated or combined Tax Returns (except those
described in subparagraph (1) above) required to be filed by any
person through the date hereof that are required or permitted to
include the income, or reflect the Activities, operations and
Transactions, of FDA and its Subsidiaries for any taxable period
shall have been timely filed, and the income, activities,
operations and Transactions of FDA and its Subsidiaries shall
have been properly included and reflected thereon. FDA and its
Subsidiaries shall prepare and file, or cause to be prepared and
filed, all such consolidated or combined Tax Returns that are
required or permitted to include the income, or reflect the
activities, operations and transactions, of FDA and its
Subsidiaries, with respect to any taxable year or the portion
thereof ending on or prior to the Closing Date, including,
without limitation, FDA' and Subsidiaries' consolidated federal
income tax return for such taxable years. Prior to Closing, FDA
and its Subsidiaries will timely file a consolidated federal
income tax return for the taxable year ended December 31, 2004
and such return shall include and reflect the income, activities,
operations and transactions of FDA and its Subsidiaries for the
taxable period then ended, and hereby expressly covenants and
agrees to file a consolidated federal income tax return, and to
include and reflect thereon the income, activities, operations
and Transactions of FDA and its Subsidiaries for the taxable
period through the Closing Date. All Tax Returns filed pursuant
to this subparagraph (2) after the date hereof shall, in each
case, to the extent that such Tax Returns specifically relate to
FDA and its Subsidiaries, be prepared and filed in a manner
consistent in all material respects (including elections and
accounting methods and conventions) with the Tax Return most
recently filed in the relevant jurisdictions prior to the date
hereof, except as otherwise required by law or regulation. Each
of FDA and its Subsidiaries has paid or will pay all Taxes that
may now or hereafter be due with respect to the taxable periods
covered by such consolidated or combined Tax Returns.
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3. Neither FDA nor its Subsidiaries have agreed, or are
required, to make any adjustment (x) under Section 481(a) of the
Code by reason of a change in accounting method or otherwise or
(y) pursuant to any provision of the Tax Reform Act of 1986, the
Revenue Act of 1987 or the Technical and Miscellaneous Revenue
Act of 1988.
4. There is no (nor has there been any request for an)
agreement, waiver or consent providing for an extension of time
with respect to the assessment of any Taxes attributable to FDA
or its Subsidiaries, or their assets or operations and no power
of attorney granted by FDA or its Subsidiaries with respect to
any Tax matter is currently in force.
5. There is no action, suit, proceeding, investigation, audit,
claim, demand, deficiency or additional assessment in progress,
pending or threatened against or with respect to any Tax
attributable to FDA, its Subsidiaries or their assets or
operations.
6. All amounts required to be withheld as of the Closing Date
for Taxes or otherwise have been withheld and paid when due to
the appropriate agency or authority.
7. There shall be delivered or made available to PPPD at or
prior to Closing true and complete copies of all income Tax
Returns (or with respect to consolidated or combined returns, the
portion thereof) and any other Tax Returns requested by PPPD as
may be relevant to FDA, its Subsidiaries, or their assets or
operations for any and all periods ending after December 31,
1998, or for any Tax years which are subject to audit or
investigation by any taxing authority or entity.
(m) Environmental Matters.
1. At all times prior to the date hereof, FDA and its
Subsidiaries have complied in all material respects with
applicable environmental laws, orders, regulations, rules and
ordinances relating to the Properties (as hereinafter defined),
the violation of which would have a material adverse effect on
the business or financial condition of FDA and its Subsidiaries,
taken as a whole, or which would require a payment by FDA or its
Subsidiaries in excess of $2,000 in the aggregate, and which have
been duly adopted, imposed or promulgated by any legislative,
executive, administrative or judicial body or officer of any
Governmental Body.
2. The environmental licenses, permits and authorizations that
are material to the operations of FDA and its Subsidiaries, taken
as a whole, are in full force and effect.
11. NOTICES.
Any notice which any of the parties hereto may desire to serve upon
any of the other parties hereto shall be in writing and shall be
conclusively deemed to have been received by the party at its address, if
mailed, postage prepaid, United States mail, registered, return receipt
requested, to the following addresses:
If to PPPD: Precise Positioning Products, Inc.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Facsimile No.: ( ) -
Attention: Xxx Xxxxx
If to FDA: Free DA Connection Services, Inc.
0000 Xxxxxxxxxx Xxxxx
00
Xxxxx Xxxxxx, XX X0X 0X0
Xxxxxx
Facsimile No.: ( ) -
Attn: Xxxxx X. Xxxxxxxxx
13. SUCCESSORS.
This Agreement shall be binding upon and inure to the benefit of the
heirs, personal representatives and successors and assigns of the parties.
14. CHOICE OF LAW.
This Agreement shall be construed and enforced in accordance with the
laws of the State of Delaware, and the parties submit to the exclusive
jurisdiction of the courts of Delaware in respect of all disputes arising
hereunder.
15. COUNTERPARTS.
This Agreement may be signed in one or more counterparts, all of which
taken together shall constitute an entire agreement.
16. CONFIDENTIAL INFORMATION.
Each of PPPD and FDA hereby acknowledges and agrees that all
information disclosed to each other whether written or oral, relating to
the other's business activities, its customer names, addresses, all
operating plans, information relating to its existing services, new or
envisioned products or services and the development thereof, scientific,
engineering, or technical information relating to the others business,
marketing or product promotional material, including brochures, product
literature, plan sheets, and any and all reports generated to customers,
with regard to customers, unpublished list of names, and all information
relating to order processing, pricing, cost and quotations, and any and all
information relating to relationships with customers, is considered
confidential information, and is proprietary to, and is considered the
invaluable trade secret of such party (collectively "Confidential
Information"). Any disclosure of any Confidential Information by any party
hereto, its employees, or representatives shall cause immediate,
substantial, and irreparable harm and loss to the other. Each party
understands that the other desires to keep such Confidential Information in
the strictest confidence, and that such party's agreement to do so is a
continuing condition of the receipt and possession of Confidential
Information, and a material provision of this agreement, and a condition
that shall survive the termination of this Agreement. Consequently, each
party shall use Confidential Information for the sole purpose of performing
its obligations as provided herein.
17. PUBLIC ANNOUNCEMENT.
The parties shall make no public announcement concerning this
agreement, their discussions or any other letters, memos or agreements
between the parties relating to this agreement until such time as they
agree to the contents of a mutually satisfactory press release which they
intend to release on the date of execution of this Agreement. Either of the
parties, but only after reasonable consultation with the other, may make
disclosure if required under applicable law.
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18. ENTIRE AGREEMENT.
This Agreement sets forth the entire agreement and understanding of
the Parties hereto with respect to the transactions contemplated hereby,
and supersedes all prior agreements, arrangements and understandings
related to the subject matter hereof. No understanding, promise,
inducement, statement of intention, representation, warranty, covenant or
condition, written or oral, express or implied, whether by statute or
otherwise, has been made by any Party hereto which is not embodied in this
Agreement or the written statements, certificates, or other documents
delivered pursuant hereto or in connection with the transactions
contemplated hereby, and no party hereto shall be bound by or liable for
any alleged understanding, promise, inducement, statement, representation,
warranty, covenant or condition not so set forth.
19. COSTS AND EXPENSES.
Except as otherwise specifically set forth herein, each party will
bear its own attorneys, brokers, investment bankers, agents, and finders
employed by, such party. The parties will indemnify each other against any
claims, costs, losses, expenses or liabilities arising from any claim for
commissions, finder's fees or other compensation in connection with the
transactions contemplated herein which may be asserted by any person based
on any agreement or arrangement for payment by the other party.
20. ATTORNEY'S FEES.
Should any action be commenced between the parties to this Agreement
concerning the matters set forth in this Agreement or the right and duties
of either in relation thereto, the prevailing party in such Action shall be
entitled, in addition to such other relief as may be granted, to a
reasonable sum as and for its Attorney's Fees and Costs.
21. FINDERS.
PPPD and the PPPD Shareholders jointly and severally represent and
warrant that there are no finders or other parties which have represented
PPPD in connection with this transaction. In the event any such finders
make a claim for any fee, share issuance of other compensation in
connection with the transactions contemplated hereby, they shall be the
sole responsibility of the PPPD shareholders.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
For and on behalf of: Precise Positioning Products, Inc.
a Delaware corporation
By:
--------------------------
President and Chief Executive Officer
For and on behalf of: Free DA Connection Service, Inc.
a British Columbia corporation
By:
--------------------------
President and Chief Executive Officer
PPPD Shareholders:
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Xxx Xxxxx 40,000,000 shares
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