SHARE PURCHASE AGREEMENT
THIS AGREEMENT is made as of the 23rd day of May, 2006
AMONG:
AMERICAN UNITED GLOBAL, INC., a corporation formed
pursuant to the laws of the State of Delaware and
having an office for business located at ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, #▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
("AUGI")
AND:
▇▇▇▇▇ ▇▇., a company formed pursuant to the laws of
Hungary and having an office for business located at
▇▇▇▇▇▇▇ ▇▇▇▇▇ u. ▇▇-▇▇ ▇▇▇▇▇▇▇▇ ▇-▇▇▇▇
("▇▇▇▇▇")
AND:
The shareholders of Kraft, each of whom are set forth
on the signature page of this Agreement
(the "Kraft Shareholders")
WHEREAS:
A. The Kraft Shareholders own 100 registered ordinary shares, HUF 10,000 par
value each of Kraft, constituting HUF 50,000,000 registered capital of Kraft,
being 2.0% of the presently issued and outstanding Kraft Shares;
B. AUGI is a reporting company whose common stock is quoted on the Pink Sheets;
and
C. The respective Boards of Directors of AUGI, and Kraft deem it advisable and
in the best interests of AUGI and Kraft that AUGI acquire and Kraft Shareholders
sell (the "Acquisition") pursuant to this Agreement.
NOW THEREFORE THIS AGREEMENT WITNESSETH THAT in consideration of the premises
and the mutual covenants, agreements, representations and warranties contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATION
DEFINITIONS
1.1 In this Agreement the following terms will have the following meanings:
(a) "ACQUISITION" means the Acquisition, at the Closing, of the ordinary
shares of Kraft held by the Kraft Shareholders by AUGI pursuant to
this Agreement;
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(b) "ACQUISITION SHARES" means the 2,000 AUGI Preferred Shares to be
issued to the Kraft Shareholders at Closing pursuant to the terms of
the Acquisition;
(c) "AGREEMENT" means this share purchase agreement among AUGI, Kraft,
and the Kraft Shareholders;
(d) "AUGI ACCOUNTS PAYABLE AND LIABILITIES" means all accounts payable
and liabilities of AUGI, on a consolidated basis, due and owing or
otherwise constituting a binding obligation of AUGI and its
subsidiaries (other than a AUGI Material Contract) as of December
31, 2005 as set forth is Schedule "A" hereto;
(e) "AUGI ACCOUNTS RECEIVABLE" means all accounts receivable and other
debts owing to AUGI, on a consolidated basis, as of December 31,
2005 as set forth in Schedule "B" hereto;
(f) "AUGI ASSETS" means the undertaking and all the property and assets
of the AUGI Business of every kind and description wheresoever
situated including, without limitation, AUGI Equipment, AUGI
Inventory, AUGI Material Contracts, AUGI Accounts Receivable, AUGI
Cash, AUGI Intangible Assets and AUGI Goodwill, and all credit
cards, charge cards and banking cards issued to AUGI;
(g) "AUGI BANK ACCOUNTS" means all of the bank accounts, lock boxes and
safety deposit boxes of AUGI and its subsidiaries or relating to the
AUGI Business as set forth in Schedule "C" hereto;
(h) "AUGI BUSINESS" means all aspects of any business conducted by AUGI
and its subsidiaries;
(i) "AUGI CASH" means all cash on hand or on deposit to the credit of
AUGI and its subsidiaries on the Closing Date;
(j) "AUGI COMMON SHARES" means the shares of common stock in the capital
of AUGI;
(k) "AUGI DEBT TO RELATED PARTIES" means the debts owed by AUGI to any
affiliate, director or officer of AUGI as described in Schedule "D"
hereto;
(l) "AUGI EQUIPMENT" means all machinery, equipment, furniture, and
furnishings used in the AUGI Business, including, without
limitation, the items more particularly described in Schedule "E"
hereto;
(m) "AUGI FINANCIAL STATEMENTS" means, collectively, the audited
consolidated financial statements of AUGI for the fiscal year ended
December 31, 2004, together with the unqualified auditors' report
thereon, and the unaudited consolidated financial statements of AUGI
for the nine month period ended September 30, 2005, true copies of
which are attached as Schedule "F" hereto;
(n) "AUGI GOODWILL" means the goodwill of the AUGI Business including
the right to all corporate, operating and trade names associated
with the AUGI Business, or any variations of such names as part of
or in connection with the AUGI Business, all books and records and
other information relating to the AUGI Business, all necessary
licenses and authorizations and any other rights used in connection
with the AUGI Business;
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(o) "AUGI INSURANCE POLICIES" means the public liability insurance and
insurance against loss or damage to the AUGI Assets and the AUGI
Business as described in Schedule "G" hereto;
(p) "AUGI INTANGIBLE ASSETS" means all of the intangible assets of AUGI
and its subsidiaries, including, without limitation, AUGI Goodwill,
all trademarks, logos, copyrights, designs, and other intellectual
and industrial property of AUGI and its subsidiaries;
(q) "AUGI INVENTORY" means all inventory and supplies of the AUGI
Business as of December 31, 2005, as set forth in Schedule "H"
hereto; and
(r) "AUGI MATERIAL CONTRACTS" means the burden and benefit of and the
right, title and interest of AUGI and its subsidiaries in, to and
under all trade and non-trade contracts, engagements or commitments,
whether written or oral, to which AUGI or its subsidiaries are
entitled whereunder AUGI or its subsidiaries are obligated to pay or
entitled to receive the sum of $10,000 or more including, without
limitation, any pension plans, profit sharing plans, bonus plans,
loan agreements, security agreements, indemnities and guarantees,
any agreements with employees, lessees, licensees, managers,
accountants, suppliers, agents, distributors, officers, directors,
attorneys or others which cannot be terminated without liability on
not more than one month's notice, and those contracts listed in
Schedule "I" hereto.
(s) "CLOSING" means the completion, on the Closing Date, of the
transactions contemplated hereby in accordance with Article 9
hereof;
(t) "CLOSING DATE" means the day on which all conditions precedent to
the completion of the transaction as contemplated hereby have been
satisfied or waived, but in any event no later than 45 days from the
completion and delivery of the Kraft Financials to AUGI and
Sichenzia ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP; provided however;
(U) "FINANCING" is as defined in Section 7.3(i).
(v) "KRAFT ACCOUNTS PAYABLE AND LIABILITIES" means all accounts payable
and liabilities of Kraft, due and owing or otherwise constituting a
binding obligation of Kraft (other than a Kraft Material Contract)
as of December 31, 2005 as set forth in Schedule "J" hereto;
(w) "KRAFT ACCOUNTS RECEIVABLE" means all accounts receivable and other
debts owing to Kraft, as of December 31, 2005 as set forth in
Schedule "K" hereto;
(x) "KRAFT ASSETS" means the undertaking and all the property and assets
of the Kraft Business of every kind and description wheresoever
situated including, without limitation, Kraft Equipment, Kraft
Inventory, Kraft Material Contracts, Kraft Accounts Receivable,
Kraft Cash, Kraft Intangible Assets and Kraft Goodwill, and all
credit cards, charge cards and banking cards issued to Kraft;
(y) "KRAFT BANK ACCOUNTS" means all of the bank accounts, lock boxes and
safety deposit boxes of Kraft or relating to the Kraft Business as
set forth in Schedule "L" hereto;
(z) "KRAFT BUSINESS" means all aspects of the business conducted by
Kraft;
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(aa) "KRAFT CASH" means all cash on hand or on deposit to the credit of
Kraft on the Closing Date;
(bb) "KRAFT DEBT TO RELATED PARTIES" means the debts owed by Kraft and
its subsidiaries to the Kraft Shareholders or to any family member
thereof, or to any affiliate, director or officer of Kraft or the
Kraft Shareholders as described in Schedule "M";
(cc) "KRAFT EQUIPMENT" means all machinery, equipment, furniture, and
furnishings used in the Kraft Business, including, without
limitation, the items more particularly described in Schedule "N"
hereto;
(dd) "KRAFT FINANCIAL STATEMENTS" means collectively, the audited
consolidated financial statements of Kraft for the period from
inception to December 31, 2005 and any additional audited or interim
financial statements as required, true copies of which shall be
attached as Schedule "O" hereto;
(ee) "KRAFT GOODWILL" means the goodwill of the Kraft Business together
with the exclusive right of AUGI to represent itself as carrying on
the Kraft Business in succession of Kraft subject to the terms
hereof, and the right to use any words indicating that the Kraft
Business is so carried on including the right to use the name
"Kraft" or "Kraft International" or any variation thereof as part of
the name of or in connection with the Kraft Business or any part
thereof carried on or to be carried on by Kraft, the right to all
corporate, operating and trade names associated with the Kraft
Business, or any variations of such names as part of or in
connection with the Kraft Business, all telephone listings and
telephone advertising contracts, all lists of customers, books and
records and other information relating to the Kraft Business, all
necessary licenses and authorizations and any other rights used in
connection with the Kraft Business;
(ff) "KRAFT INSURANCE POLICIES" means the public liability insurance and
insurance against loss or damage to Kraft Assets and the Kraft
Business as described in Schedule "P" hereto;
(gg) "KRAFT INTANGIBLE ASSETS" means all of the intangible assets of
Kraft, including, without limitation, Kraft Goodwill, all
trademarks, logos, copyrights, designs, and other intellectual and
industrial property of Kraft and its subsidiaries;
(hh) "KRAFT INVENTORY" means all inventory and supplies of the Kraft
Business as of December 31, 2005 as set forth in Schedule "Q"
hereto;
(ii) "KRAFT MATERIAL CONTRACTS" means the burden and benefit of and the
right, title and interest of Kraft in, to and under all trade and
non-trade contracts, engagements or commitments, whether written or
oral, to which Kraft is entitled in connection with the Kraft
Business whereunder Kraft is obligated to pay or entitled to receive
the sum of $10,000 or more including, without limitation, any
pension plans, profit sharing plans, bonus plans, loan agreements,
security agreements, indemnities and guarantees, any agreements with
employees, lessees, licensees, managers, accountants, suppliers,
agents, distributors, officers, directors, attorneys or others which
cannot be terminated without liability on not more than one month's
notice, and those contracts listed in Schedule "R" hereto;
(jj) "KRAFT RELATED PARTY DEBTS" means the debts owed by the Kraft
Shareholders or by any family member thereof, or by any affiliate,
director or officer of Kraft or the Kraft Shareholders, to Kraft as
described in Schedule "S";
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(kk) "KRAFT SHARES" means all of the issued and outstanding shares of
Kraft's equity stock;
(ll) "PLACE OF CLOSING" means the offices of Sichenzia ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ LLP, or such other place as AUGI and Kraft may mutually
agree upon;
(mm) "AUGI PREFERRED SHARES" means the shares of Series B-4 Preferred
Stock of AUGI, each share of which will be automatically convert
into 350 shares of common stock of AUGI upon the Company increasing
its authorized shares of common stock and, prior to such conversion,
the AUGI Preferred Shares will have all the voting rights of shares
of common stock of AUGI and vote together with the shares of common
stock of AUGI on all matters which such shares will not be affected
by the reverse stock split of AUGI's shares of common stock.
Any other terms defined within the text of this Agreement will have the meanings
so ascribed to them.
CAPTIONS AND SECTION NUMBERS
1.2 The headings and section references in this Agreement are for convenience of
reference only and do not form a part of this Agreement and are not intended to
interpret, define or limit the scope, extent or intent of this Agreement or any
provision thereof.
SECTION REFERENCES AND SCHEDULES
1.3 Any reference to a particular "Article", "section", "paragraph", "clause" or
other subdivision is to the particular Article, section, clause or other
subdivision of this Agreement and any reference to a Schedule by letter will
mean the appropriate Schedule attached to this Agreement and by such reference
the appropriate Schedule is incorporated into and made part of this Agreement.
The Schedules to this Agreement are as follows:
Information concerning AUGI
Schedule "A" AUGI Accounts Payable and Liabilities
Schedule "B" AUGI Accounts Receivable
Schedule "C" AUGI Bank Accounts
Schedule "D" AUGI Debts to Related Parties
Schedule "E" AUGI Equipment
Schedule "F" AUGI Financial Statements
Schedule "G" AUGI Insurance Policies
Schedule "H" AUGI Inventory
Schedule "I" AUGI Material Contracts
Information concerning Kraft
Schedule "J" Kraft Accounts Payable and Liabilities
Schedule "K" Kraft Accounts Receivable
Schedule "L" Kraft Bank Accounts
Schedule "M" Kraft Debts to Related Parties
Schedule "N" Kraft Equipment
Schedule "O" Kraft Financial Statements
Schedule "P" Kraft Insurance Policies
Schedule "Q" Kraft Inventory
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Schedule "R" Kraft Material Contracts
Schedule "S" Kraft Related Party Debts
Additional Information and Documents
Schedule "T" AUGI Derivative Securities
SEVERABILITY OF CLAUSES
1.4 If any part of this Agreement is declared or held to be invalid for any
reason, such invalidity will not affect the validity of the remainder which will
continue in full force and effect and be construed as if this Agreement had been
executed without the invalid portion, and it is hereby declared the intention of
the parties that this Agreement would have been executed without reference to
any portion which may, for any reason, be hereafter declared or held to be
invalid.
ARTICLE 2
THE ACQUISITION
SALE OF SHARES
2.1 The Kraft Shareholders hereby agree to sell to AUGI the Kraft Shares in
exchange for the Acquisition Shares on the Closing Date and to transfer to AUGI
on the Closing Date a 100% undivided interest in and to the Kraft Shares free
from all liens, mortgages, charges, pledges, encumbrances or other burdens with
all rights now or thereafter attached thereto.
ALLOCATION OF CONSIDERATION
2.2 The Acquisition Shares shall be allocated to the Kraft Shareholders on the
basis of 20 Acquisition Shares for each one Kraft Share held by a Kraft
Shareholder as set forth in Schedule 2.2 attached hereto.
ADHERENCE WITH APPLICABLE SECURITIES LAWS
2.2 The Kraft Shareholders agree that they are acquiring the Acquisition Shares
for investment purposes and will not offer, sell or otherwise transfer, pledge
or hypothecate any of the Acquisition Shares issued to them (other than pursuant
to an effective Registration Statement under the Securities Act of 1933, as
amended) directly or indirectly unless:
(a) the sale is to AUGI;
(b) the sale is made pursuant to the exemption from registration
under the Securities Act of 1933, as amended, provided by Rule
144 thereunder; or
(c) the Acquisition Shares are sold in a transaction that does not
require registration under the Securities Act of 1933, as
amended, or any applicable United States state laws and
regulations governing the offer and sale of securities, and
the vendor has furnished to AUGI an opinion of counsel to that
effect or such other written opinion as may be reasonably
required by AUGI.
The Kraft Shareholders acknowledge that the certificates representing the
Acquisition Shares shall bear the following legend:
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NO SALE, OFFER TO SELL, OR TRANSFER OF THE SHARES REPRESENTED BY
THIS CERTIFICATE SHALL BE MADE UNLESS A REGISTRATION STATEMENT UNDER
THE FEDERAL SECURITIES ACT OF 1933, AS AMENDED, IN RESPECT OF SUCH
SHARES IS THEN IN EFFECT OR AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF SAID ACT IS THEN IN FACT APPLICABLE TO SAID SHARES.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
OF AUGI
REPRESENTATIONS AND WARRANTIES
3.1 AUGI hereby represents and warrants in all material respects to Kraft and
the Kraft Shareholders, with the intent that Kraft and the Kraft Shareholders
will rely thereon in entering into this Agreement and in approving and
completing the transactions contemplated hereby, that:
AUGI - CORPORATE STATUS AND CAPACITY
(a) Incorporation. AUGI is a corporation duly incorporated and
upon filing and paying the franchise tax with the state of
Delaware AUGI will be validly subsisting under the laws of the
State of Delaware and in good standing with the office of the
Secretary of State for the State of Delaware;
(b) Carrying on Business. AUGI conducts the business described in
its filings with the Securities and Exchange Commission and
does not conduct any other business. AUGI is duly authorized
to carry on such business in New York, New York. The nature of
the AUGI Business does not require AUGI to register or
otherwise be qualified to carry on business in any other
jurisdictions;
(c) Corporate Capacity. AUGI has the corporate power, capacity and
authority to own the AUGI Assets and to enter into and
complete this Agreement;
(d) Reporting Status; Listing. AUGI is required to file current
reports with the Securities and Exchange Commission pursuant
to section 15(d) of the Securities Exchange Act of 1934, the
AUGI Common Shares are quoted on the Pink Sheets, and all
reports required to be filed by AUGI with the Securities and
Exchange Commission or NASD have been filed;
AUGI - CAPITALIZATION
(e) Authorized Capital. The authorized capital of AUGI consists of
40,000,000 AUGI Common Shares, $0.01 par value and 2,455,094
shares of preferred stock. $0.01 par value, of which
10,877,499 AUGI Common Shares, and 303,599 shares of preferred
stock are presently issued and outstanding;
(f) No Option, Warrant or Other Right. Except as set forth on
Schedule "T", no person, firm or corporation has any
agreement, option, warrant, preemptive right or any other
right capable of becoming an agreement, option, warrant or
right for the acquisition of AUGI Common Shares or for the
purchase, subscription or issuance of any of the unissued
shares in the capital of AUGI;
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AUGI - RECORDS AND FINANCIAL STATEMENTS
(g) Charter Documents. The charter documents of AUGI and its
subsidiaries have not been altered since the incorporation of
each, respectively, except as filed in the record books of
AUGI or its subsidiaries, as the case may be;
(h) Corporate Minute Books. The corporate minute books of AUGI and
its subsidiaries are complete and each of the minutes
contained therein accurately reflect the actions that were
taken at a duly called and held meeting or by consent without
a meeting. All actions by AUGI and its subsidiaries which
required director or shareholder approval are reflected on the
corporate minute books of AUGI and its subsidiaries. AUGI and
its subsidiaries are not in violation or breach of, or in
default with respect to, any term of their respective
Certificates of Incorporation (or other charter documents) or
by-laws.
(i) AUGI Financial Statements. The AUGI Financial Statements
present fairly, in all material respects, the assets and
liabilities (whether accrued, absolute, contingent or
otherwise) of AUGI, on a consolidated basis, as of the
respective dates thereof, and the sales and earnings of the
AUGI Business during the periods covered thereby, in all
material respects and have been prepared in substantial
accordance with generally accepted accounting principles
consistently applied;
(j) AUGI Accounts Payable and Liabilities. There are no material
liabilities, contingent or otherwise, of AUGI or its
subsidiaries which are not disclosed in Schedule "A" hereto or
reflected in the AUGI Financial Statements except those
incurred in the ordinary course of business since the date of
the said schedule and the AUGI Financial Statements, and
neither AUGI nor its subsidiaries have guaranteed or agreed to
guarantee any debt, liability or other obligation of any
person, firm or corporation. Without limiting the generality
of the foregoing, all accounts payable and liabilities of AUGI
as of December 31, 2005, are described in Schedule "A" hereto;
(k) AUGI Accounts Receivable. All the AUGI Accounts Receivable
result from bona fide business transactions and services
actually rendered without, to the knowledge and belief of
AUGI, any claim by the obligor for set-off or counterclaim.
Without limiting the generality of the foregoing, all accounts
receivable of AUGI as of December 31, 2005, are described in
Schedule "B" hereto;
(l) AUGI Bank Accounts. All of the AUGI Bank Accounts, their
location, numbers and the authorized signatories thereto are
as set forth in Schedule "C" hereto;
(m) No Debt to Related Parties. Except as disclosed in Schedule
"D" hereto, neither AUGI nor any of its subsidiaries is, and
on Closing will not be, indebted to any affiliate, director or
officer of AUGI except accounts payable on account of bona
fide business transactions of AUGI incurred in normal course
of the AUGI Business, including employment agreements, none of
which are more than 30 days in arrears;
(n) No Related Party Debt to AUGI. No director or officer or
affiliate of AUGI is now indebted to or under any financial
obligation to AUGI or any subsidiary on any account
whatsoever, except for advances on account of travel and other
expenses not exceeding $1,000 in total;
(o) No Dividends. No dividends or other distributions on any
shares in the capital of AUGI have been made, declared or
authorized since the date of AUGI Financial Statements;
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(p) No Payments. No payments of any kind have been made or
authorized since the date of the AUGI Financial Statements to
or on behalf of officers, directors, shareholders or employees
of AUGI or its subsidiaries or under any management agreements
with AUGI or its subsidiaries, except payments made in the
ordinary course of business and at the regular rates of salary
or other remuneration payable to them;
(q) No Pension Plans. There are no pension, profit sharing, group
insurance or similar plans or other deferred compensation
plans affecting AUGI;
(r) No Adverse Events. Since the date of the AUGI Financial
Statements
(i) there has not been any material adverse change in the
consolidated financial position or condition of AUGI,
its subsidiaries, its liabilities or the AUGI Assets
or any damage, loss or other change in circumstances
materially affecting AUGI, the AUGI Business or the
AUGI Assets or AUGI' right to carry on the AUGI
Business, other than changes in the ordinary course
of business,
(ii) there has not been any damage, destruction, loss or
other event (whether or not covered by insurance)
materially and adversely affecting AUGI, its
subsidiaries, the AUGI Business or the AUGI Assets,
(iii) there has not been any material increase in the
compensation payable or to become payable by AUGI to
any of AUGI' officers, employees or agents or any
bonus, payment or arrangement made to or with any of
them,
(iv) the AUGI Business has been and continues to be
carried on in the ordinary course,
(v) AUGI has not waived or surrendered any right of
material value,
(vi) neither AUGI nor its subsidiaries have discharged or
satisfied or paid any lien or encumbrance or
obligation or liability other than current
liabilities in the ordinary course of business, and
(vii) no capital expenditures in excess of $10,000
individually or $30,000 in total have been authorized
or made.
AUGI - INCOME TAX MATTERS
(s) Tax Returns. Except for the form 1120s for the years ended
2002, 2003 and 2004 to be filed with the Internal Revenue
Service, all tax returns and reports of AUGI and its
subsidiaries required by law to be filed have been filed and
are true, complete and correct, and any taxes payable in
accordance with any return filed by AUGI and its subsidiaries
or in accordance with any notice of assessment or reassessment
issued by any taxing authority have been so paid;
(t) Current Taxes. Adequate provisions have been made for taxes
payable for the current period for which tax returns are not
yet required to be filed and there are no agreements, waivers,
or other arrangements providing for an extension of time with
respect to the filing of any tax return by, or payment of, any
tax, governmental charge or deficiency by AUGI or its
subsidiaries. AUGI is not aware of any contingent tax
liabilities or any grounds which would prompt a reassessment
including aggressive treatment of income and expenses in
filing earlier tax returns;
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AUGI - APPLICABLE LAWS AND LEGAL MATTERS
(u) Licenses. AUGI and its subsidiaries hold all licenses and
permits as may be requisite for carrying on the AUGI Business
in the manner in which it has heretofore been carried on,
which licenses and permits have been maintained and continue
to be in good standing except where the failure to obtain or
maintain such licenses or permits would not have a material
adverse effect on the AUGI Business;
(v) Applicable Laws. Neither AUGI nor its subsidiaries have been
charged with or received notice of breach of any laws,
ordinances, statutes, regulations, by-laws, orders or decrees
to which they are subject or which apply to them the violation
of which would have a material adverse effect on the AUGI
Business, and neither AUGI nor its subsidiaries are in breach
of any laws, ordinances, statutes, regulations, bylaws, orders
or decrees the contravention of which would result in a
material adverse impact on the AUGI Business;
(w) Pending or Threatened Litigation. There is no material
litigation or administrative or governmental proceeding
pending or threatened against or relating to AUGI, its
subsidiaries, the AUGI Business, or any of the AUGI Assets nor
does AUGI have any knowledge of any deliberate act or omission
of AUGI or its subsidiaries that would form any material basis
for any such action or proceeding;
(x) No Bankruptcy. Neither AUGI nor its subsidiaries have made any
voluntary assignment or proposal under applicable laws
relating to insolvency and bankruptcy and no bankruptcy
petition has been filed or presented against AUGI or its
subsidiaries and no order has been made or a resolution passed
for the winding-up, dissolution or liquidation of AUGI or its
subsidiaries;
(y) Labor Matters. Neither AUGI nor its subsidiaries are party to
any collective agreement relating to the AUGI Business with
any labor union or other association of employees and no part
of the AUGI Business has been certified as a unit appropriate
for collective bargaining or, to the knowledge of AUGI, has
made any attempt in that regard;
(z) Finder's Fees. Neither AUGI nor its subsidiaries are party to
any agreement which provides for the payment of finder's fees,
brokerage fees, commissions or other fees or amounts which are
or may become payable to any third party in connection with
the execution and delivery of this Agreement and the
transactions contemplated herein;
EXECUTION AND PERFORMANCE OF AGREEMENT
(aa) Authorization and Enforceability. The execution and delivery
of this Agreement, and the completion of the transactions
contemplated hereby, have been duly and validly authorized by
all necessary corporate action on the part of AUGI;
(bb) No Violation or Breach. The execution and performance of this
Agreement will not:
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(i) violate the charter documents of AUGI or result in
any breach of, or default under, any loan agreement,
mortgage, deed of trust, or any other agreement to
which AUGI or its subsidiaries are party,
(ii) give any person any right to terminate or cancel any
agreement including, without limitation, the AUGI
Material Contracts, or any right or rights enjoyed by
AUGI or its subsidiaries,
(iii) result in any alteration of AUGI' or its
subsidiaries' obligations under any agreement to
which AUGI or its subsidiaries are party including,
without limitation, the AUGI Material Contracts,
(iv) result in the creation or imposition of any lien,
encumbrance or restriction of any nature whatsoever
in favor of a third party upon or against the AUGI
Assets,
(v) result in the imposition of any tax liability to AUGI
or its subsidiaries relating to the AUGI Assets, or
(vi) violate any court order or decree to which either
AUGI or its subsidiaries are subject;
THE AUGI ASSETS - OWNERSHIP AND CONDITION
(cc) Business Assets. The AUGI Assets comprise all of the property
and assets of the AUGI Business, and no other person, firm or
corporation owns any assets used by AUGI or its subsidiaries
in operating the AUGI Business, whether under a lease, rental
agreement or other arrangement, other than as disclosed in
Schedules "E" or "H" hereto;
(dd) Title. AUGI or its subsidiaries are the legal and beneficial
owner of the AUGI Assets, free and clear of all mortgages,
liens, charges, pledges, security interests, encumbrances or
other claims whatsoever, save and except as disclosed in
Schedules "E" or "H" hereto;
(ee) No Option. No person, firm or corporation has any agreement or
option or a right capable of becoming an agreement for the
purchase of any of the AUGI Assets;
(ff) AUGI Insurance Policies. AUGI and its subsidiaries maintain
the public liability insurance and insurance against loss or
damage to the AUGI Assets and the AUGI Business as described
in Schedule "G" hereto;
(gg) AUGI Material Contracts. The AUGI Material Contracts listed in
Schedule "I" constitute all of the material contracts of AUGI
and its subsidiaries;
(hh) No Default. There has not been any default in any material
obligation of AUGI or any other party to be performed under
any of the AUGI Material Contracts, each of which is in good
standing and in full force and effect and unamended (except as
disclosed in Schedule "I" hereto), and AUGI is not aware of
any default in the obligations of any other party to any of
the AUGI Material Contracts;
(ii) No Compensation on Termination. There are no agreements,
commitments or understandings relating to severance pay or
separation allowances on termination of employment of any
employee of AUGI or its subsidiaries. Neither AUGI nor its
subsidiaries are obliged to pay benefits or share profits with
any employee after termination of employment except as
required by law;
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AUGI ASSETS - AUGI EQUIPMENT
(jj) AUGI Equipment. The AUGI Equipment has been maintained in a
manner consistent with that of a reasonably prudent owner and
such equipment is in good working condition;
AUGI ASSETS - AUGI GOODWILL AND OTHER ASSETS
(kk) AUGI Goodwill. AUGI and its subsidiaries does not carry on the
AUGI Business under any other business or trade names. AUGI
does not have any knowledge of any infringement by AUGI or its
subsidiaries of any patent, trademarks, copyright or trade
secret;
THE AUGI BUSINESS
(ll) Maintenance of Business. Since the date of the AUGI Financial
Statements, AUGI and its subsidiaries have not entered into
any material agreement or commitment except in the ordinary
course and except as disclosed herein;
(mm) Subsidiaries. AUGI does not own any subsidiaries and does not
otherwise own, directly or indirectly, any shares or interest
in any other corporation, partnership, joint venture or firm;
and
AUGI - ACQUISITION SHARES
(nn) Acquisition Shares. The Acquisition Shares when delivered to
the Kraft Shareholders pursuant to the Acquisition shall be
validly issued and outstanding as fully paid and
non-assessable shares and the Acquisition Shares shall be
transferable upon the books of AUGI, in all cases subject to
the provisions and restrictions of all applicable securities
laws.
NON-MERGER AND SURVIVAL
3.2 The representations and warranties of AUGI contained herein will be true at
and as of Closing in all material respects as though such representations and
warranties were made as of such time. Notwithstanding the completion of the
transactions contemplated hereby, the waiver of any condition contained herein
(unless such waiver expressly releases a party from any such representation or
warranty) or any investigation made by Kraft or the Kraft Shareholders, the
representations and warranties of AUGI shall survive the Closing.
INDEMNITY
3.3 AUGI agrees to indemnify and save harmless Kraft and the Kraft Shareholders
from and against any and all claims, demands, actions, suits, proceedings,
assessments, judgments, damages, costs, losses and expenses, including any
payment made in good faith in settlement of any claim (subject to the right of
AUGI to defend any such claim), resulting from the breach by it of any
representation or warranty made under this Agreement or from any
misrepresentation in or omission from any certificate or other instrument
furnished or to be furnished by AUGI to Kraft or the Kraft Shareholders
hereunder.
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ARTICLE 4
COVENANTS OF AUGI
COVENANTS
4.1 AUGI covenants and agrees with Kraft and the Kraft Shareholders that
it will:
(a) Conduct of Business. Until the Closing, conduct the AUGI
Business diligently and in the ordinary course consistent with
the manner in which the AUGI Business generally has been
operated up to the date of execution of this Agreement;
(b) Preservation of Business. Until the Closing, use its best
efforts to preserve the AUGI Business and the AUGI Assets and,
without limitation, preserve for Kraft AUGI's and its
subsidiaries' relationships with any third party having
business relations with them;
(c) Access. Until the Closing, give Kraft, the Kraft Shareholders,
and their representatives full access to all of the
properties, books, contracts, commitments and records of AUGI,
and furnish to Kraft, the Kraft Shareholders and their
representatives all such information as they may reasonably
request; and
(d) Procure Consents. Until the Closing, take all reasonable steps
required to obtain, prior to Closing, any and all third party
consents required to permit the Acquisition and to preserve
and maintain the AUGI Assets notwithstanding the change in
control of Kraft arising from the Acquisition.
AUTHORIZATION
4.2 AUGI hereby agrees to authorize and direct any and all federal, state,
municipal, foreign and international governments and regulatory authorities
having jurisdiction respecting AUGI and its subsidiaries to release any and all
information in their possession respecting AUGI and its subsidiaries to the
Kraft Shareholders. AUGI shall promptly execute and deliver to the Kraft
Shareholders any and all consents to the release of information and specific
authorizations which the Kraft Shareholders reasonably requires to gain access
to any and all such information.
SURVIVAL
4.3 The covenants set forth in this Article shall survive the Closing for the
benefit of Kraft and the Kraft Shareholders.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF
THE KRAFT SHAREHOLDERS
REPRESENTATIONS AND WARRANTIES
5.1 The Kraft Shareholders hereby jointly and severally represent and warrant in
all material respects to AUGI, with the intent that it will rely thereon in
entering into this Agreement and in approving and completing the transactions
contemplated hereby, that:
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KRAFT - COMPANY STATUS AND CAPACITY
(a) Formation. Kraft is a company duly formed and validly
subsisting under the laws of Hungary;
(b) Carrying on Business. Kraft carries on the Kraft Business
primarily in Hungary and does not carry on any material
business activity in any other jurisdiction. Kraft is duly
authorized to carry on the Kraft Business in Hungary. The
nature of the Kraft Business does not require Kraft to
register or otherwise be qualified to carry on business in any
other jurisdiction;
(c) Legal Capacity. Kraft has the legal power, capacity and
authority to own Kraft Assets, to carry on the Business of
Kraft and to enter into and complete this Agreement;
KRAFT - CAPITALIZATION
(d) Authorized Capital. The authorized capital of Kraft consists
of 5,000 shares of capital stock;
(e) Ownership of Kraft Shares. The issued and outstanding share
capital of Kraft will on Closing consist of 5,000 shares, each
with HUF 10,000 par value, each ordinary registered shares
(equivalent to common stock under Delaware law) (being the
Kraft Shares), which shares on Closing shall be validly issued
and outstanding as fully paid and non-assessable shares. The
Kraft Shareholders will be at Closing the registered and
beneficial owners of the 5,000 Kraft Shares. The Kraft Shares
owned by the Kraft Shareholders will on Closing be free and
clear of any and all liens, charges, pledges, encumbrances,
restrictions on transfer and adverse claims whatsoever;
(f) No Option, Warrant or Other Right. No person, firm or
corporation has any agreement, option, warrant, preemptive
right or any other right capable of becoming an agreement,
option, warrant or right for the acquisition of Kraft Shares
held by the Kraft Shareholders or for the purchase,
subscription or issuance of any of the unissued shares in the
capital of Kraft;
(g) No Restrictions. There are no restrictions on the transfer,
sale or other disposition of Kraft Shares contained in the
charter documents of Kraft or under any agreement;
KRAFT - RECORDS AND FINANCIAL STATEMENTS
(h) Charter Documents. The charter documents of Kraft have not
been altered since its formation date, except as filed in the
record books of Kraft;
(i) Minute Books. The minute books of Kraft are complete and each
of the minutes contained therein accurately reflect the
actions that were taken at a duly called and held meeting or
by consent without a meeting. All actions by Kraft which
required director or shareholder approval are reflected on the
corporate minute books of Kraft. Kraft is not in violation or
breach of, or in default with respect to, any term of its
Certificate of Incorporation (or other charter documents) or
by-laws.
(j) Kraft Financial Statements. The Kraft Financial Statements
present fairly, in all material respects, the assets and
liabilities (whether accrued, absolute, contingent or
otherwise) of Kraft as of the date thereof, and the sales and
earnings of the Kraft Business during the periods covered
thereby, in all material respects, and have been prepared in
substantial accordance with generally accepted accounting
principles consistently applied;
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(k) Kraft Accounts Payable and Liabilities. There are no material
liabilities, contingent or otherwise, of Kraft which are not
disclosed in Schedule "J" hereto or reflected in the Kraft
Financial Statements except those incurred in the ordinary
course of business since the date of the said schedule and the
Kraft Financial Statements, and Kraft has not guaranteed or
agreed to guarantee any debt, liability or other obligation of
any person, firm or corporation. Without limiting the
generality of the foregoing, all accounts payable and
liabilities of Kraft as of December 31, 2005 are described in
Schedule "J" hereto;
(l) Kraft Accounts Receivable. All the Kraft Accounts Receivable
result from bona fide business transactions and services
actually rendered without, to the knowledge and belief of the
Kraft Shareholders, any claim by the obligor for set-off or
counterclaim. Without limiting the generality of the
foregoing, all accounts receivable of Kraft as of December 31,
2005, are described in Schedule "K" hereto;
(m) Kraft Bank Accounts. All of the Kraft Bank Accounts, their
location, numbers and the authorized signatories thereto are
as set forth in Schedule "L" hereto;
(n) No Debt to Related Parties. Except as disclosed in Schedule
"M" hereto, Kraft is not and on Closing will not be, indebted
to the Kraft Shareholders nor to any family member thereof,
nor to any affiliate, director or officer of Kraft or the
Kraft Shareholders except accounts payable on account of bona
fide business transactions of Kraft incurred in normal course
of Kraft Business, including employment agreements with the
Kraft Shareholders, none of which are more than 30 days in
arrears;
(o) No Related Party Debt to Kraft. Except as set forth on
Schedule "M" hereto, no Kraft Shareholder nor any director,
officer or affiliate of Kraft is now indebted to or under any
financial obligation to Kraft on any account whatsoever,
except for advances on account of travel and other expenses
not exceeding $5,000 in total;
(p) No Dividends. No dividends or other distributions on any
shares in the capital of Kraft have been made, declared or
authorized since the date of the Kraft Financial Statements;
(q) No Payments. No payments of any kind have been made or
authorized since the date of the Kraft Financial Statements to
or on behalf of the Kraft Shareholders or to or on behalf of
officers, directors, shareholders or employees of Kraft or
under any management agreements with Kraft, except payments
made in the ordinary course of business and at the regular
rates of salary or other remuneration payable to them;
(r) No Pension Plans. There are no pension, profit sharing, group
insurance or similar plans or other deferred compensation
plans affecting Kraft, except as set forth in the Kraft
Financial Statements;
(s) No Adverse Events. Since the date of the Kraft Financial
Statements:
(i) there has not been any material adverse change in the
consolidated financial position or condition of
Kraft, its liabilities or the Kraft Assets or any
damage, loss or other change in circumstances
materially affecting Kraft, the Kraft Business or the
Kraft Assets or Kraft's right to carry on the Kraft
Business, other than changes in the ordinary course
of business,
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(ii) there has not been any damage, destruction, loss or
other event (whether or not covered by insurance)
materially and adversely affecting Kraft, the Kraft
Business or the Kraft Assets,
(iii) there has not been any material increase in the
compensation payable or to become payable by Kraft to
the Kraft Shareholders or to any of Kraft's officers,
employees or agents or any bonus, payment or
arrangement made to or with any of them,
(iv) the Kraft Business has been and continues to be
carried on in the ordinary course,
(v) Kraft has not waived or surrendered any right of
material value,
(vi) Kraft has not discharged or satisfied or paid any
lien or encumbrance or obligation or liability other
than current liabilities in the ordinary course of
business, and
(vii) no capital expenditures in excess of $10,000
individually or $30,000 in total have been authorized
or made;
KRAFT - INCOME TAX MATTERS
(t) Tax Returns. All tax returns and reports of Kraft required by
law to be filed have been filed and are true, complete and
correct, and any taxes payable in accordance with any return
filed by Kraft or in accordance with any notice of assessment
or reassessment issued by any taxing authority have been so
paid;
(u) Current Taxes. Adequate provisions have been made for taxes
payable for the current period for which tax returns are not
yet required to be filed and there are no agreements, waivers,
or other arrangements providing for an extension of time with
respect to the filing of any tax return by, or payment of, any
tax, governmental charge or deficiency by Kraft. Kraft is not
aware of any contingent tax liabilities or any grounds which
would prompt a reassessment including aggressive treatment of
income and expenses in filing earlier tax returns;
KRAFT - APPLICABLE LAWS AND LEGAL MATTERS
(v) Licenses. Kraft holds all licenses and permits as may be
requisite for carrying on the Kraft Business in the manner in
which it has heretofore been carried on, which licenses and
permits have been maintained and continue to be in good
standing except where the failure to obtain or maintain such
licenses or permits would not have a material adverse effect
on the Kraft Business;
(w) Applicable Laws. Kraft has not been charged with or received
notice of breach of any laws, ordinances, statutes,
regulations, by-laws, orders or decrees to which they are
subject or which applies to them the violation of which would
have a material adverse effect on the Kraft Business, and, to
the knowledge of the Kraft Shareholders, Kraft is not in
breach of any laws, ordinances, statutes, regulations,
by-laws, orders or decrees the contravention of which would
result in a material adverse impact on the Kraft Business;
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(x) Pending or Threatened Litigation. There is no material
litigation or administrative or governmental proceeding
pending or threatened against or relating to Kraft, the Kraft
Business, or any of the Kraft Assets, nor do the Kraft
Shareholders have any knowledge of any deliberate act or
omission of Kraft that would form any material basis for any
such action or proceeding;
(y) No Bankruptcy. Kraft has not made any voluntary assignment or
proposal under applicable laws relating to insolvency and
bankruptcy and no bankruptcy petition has been filed or
presented against Kraft and no order has been made or a
resolution passed for the winding-up, dissolution or
liquidation of Kraft;
(z) Labor Matters. Kraft is not party to any collective agreement
relating to the Kraft Business with any labor union or other
association of employees and no part of the Kraft Business has
been certified as a unit appropriate for collective bargaining
or, to the knowledge of the Kraft Shareholders, has made any
attempt in that regard;
(aa) Finder's Fees. Other than an agreement with Niklai & Partners
in connection with raising capital in Hungary, such that
Niklai & Partners will become eligible to receive 7.5% of the
capital raised in Hungary, in the event that such capital will
be added to the US $5,250,000 raised in the US, or 10% in the
event that capital raised in Hungary will be included in the
US $5,250,000 to be raised in the US, Kraft is not a party to
any agreement which provides for the payment of finder's fees,
brokerage fees, commissions or other fees or amounts which are
or may become payable to any third party in connection with
the execution and delivery of this Agreement and the
transactions contemplated herein;
EXECUTION AND PERFORMANCE OF AGREEMENT
(bb) Authorization and Enforceability. The execution and delivery
of this Agreement, and the completion of the transactions
contemplated hereby, have been duly and validly authorized by
all necessary corporate action on the part of Kraft;
(cc) No Violation or Breach. The execution and performance of this
Agreement will not
(i) violate the charter documents of Kraft or result in
any breach of, or default under, any loan agreement,
mortgage, deed of trust, or any other agreement to
which Kraft is a party,
(ii) give any person any right to terminate or cancel any
agreement including, without limitation, Kraft
Material Contracts, or any right or rights enjoyed by
Kraft,
(iii) result in any alteration of Kraft's obligations under
any agreement to which Kraft is a party including,
without limitation, the Kraft Material Contracts,
(iv) result in the creation or imposition of any lien,
encumbrance or restriction of any nature whatsoever
in favor of a third party upon or against the Kraft
Assets,
(v) result in the imposition of any tax liability to
Kraft relating to Kraft Assets or the Kraft Shares,
or
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(vi) violate any court order or decree to which either
Kraft is subject;
KRAFT ASSETS - OWNERSHIP AND CONDITION
(dd) Business Assets. The Kraft Assets, comprise all of the
property and assets of the Kraft Business, and neither the
Kraft Shareholders nor any other person, firm or corporation
owns any assets used by Kraft in operating the Kraft Business,
whether under a lease, rental agreement or other arrangement,
other than as disclosed in Schedules "N" or "Q" hereto;
(ee) Title. Kraft is the legal and beneficial owner of the Kraft
Assets, free and clear of all mortgages, liens, charges,
pledges, security interests, encumbrances or other claims
whatsoever, save and except as disclosed in Schedules "N" or
"Q" hereto;
(ff) No Option. No person, firm or corporation has any agreement or
option or a right capable of becoming an agreement for the
purchase of any of the Kraft Assets;
(gg) Kraft Insurance Policies. Kraft maintains the public liability
insurance and insurance against loss or damage to the Kraft
Assets and the Kraft Business as described in Schedule "P"
hereto;
(hh) Kraft Material Contracts. The Kraft Material Contracts listed
in Schedule "R" constitute all of the material contracts of
Kraft;
(ii) No Default. There has not been any default in any material
obligation of Kraft or any other party to be performed under
any of Kraft Material Contracts, each of which is in good
standing and in full force and effect and unamended (except as
disclosed in Schedule "R"), and Kraft is not aware of any
default in the obligations of any other party to any of the
Kraft Material Contracts;
(jj) No Compensation on Termination. There are no agreements,
commitments or understandings relating to severance pay or
separation allowances on termination of employment of any
employee of Kraft. Kraft is not obliged to pay benefits or
share profits with any employee after termination of
employment except as required by law;
KRAFT ASSETS - KRAFT EQUIPMENT
(kk) Kraft Equipment. The Kraft Equipment has been maintained in a
manner consistent with that of a reasonably prudent owner and
such equipment is in good working condition;
KRAFT ASSETS - KRAFT GOODWILL AND OTHER ASSETS
(ll) Kraft Goodwill. Kraft carries on the Kraft Business only under
the name " ▇▇▇▇▇ ▇▇." and variations thereof and under no
other business or trade names. The Kraft Shareholders do not
have any knowledge of any infringement by Kraft of any patent,
trademark, copyright or trade secret;
THE BUSINESS OF KRAFT
(mm) Maintenance of Business. Since the date of the Kraft Financial
Statements, the Kraft Business has been carried on in the
ordinary course and Kraft has not entered into any material
agreement or commitment except in the ordinary course; and
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(nn) Subsidiaries. Kraft does not own any subsidiaries and does not
otherwise own, directly or indirectly, any shares or interest
in any other corporation, partnership, joint venture or firm
and Kraft does not own any subsidiary and does not otherwise
own, directly or indirectly, any shares or interest in any
other corporation, partnership, joint venture or firm.
NON-MERGER AND SURVIVAL
5.2 The representations and warranties of Kraft contained herein will be true at
and as of Closing in all material respects as though such representations and
warranties were made as of such time. Notwithstanding the completion of the
transactions contemplated hereby, the waiver of any condition contained herein
(unless such waiver expressly releases a party from any such representation or
warranty) or any investigation made by AUGI, the representations and warranties
of Kraft shall survive the Closing.
INDEMNITY
5.3 The Kraft Shareholders agree to indemnify and save harmless AUGI from and
against any and all claims, demands, actions, suits, proceedings, assessments,
judgments, damages, costs, losses and expenses, including any payment made in
good faith in settlement of any claim (collectively, the "Claims") (subject to
the right of the Kraft Shareholders to defend any such claim), resulting from
the breach by any of them of any representation or warranty of such party made
under this Agreement or from any misrepresentation in or omission from any
certificate or other instrument furnished or to be furnished by Kraft or the
Kraft Shareholders to AUGI hereunder; provided, however, the Kraft Shareholders
shall not be required to indemnify AUGI for any such Claims in excess of the
value of the Kraft Shares.
ARTICLE 6
COVENANTS OF KRAFT AND
THE KRAFT SHAREHOLDERS
COVENANTS
6.1 Kraft and the Kraft Shareholders covenant and agree with AUGI that they
will:
(a) Conduct of Business. Until the Closing, conduct the Kraft
Business diligently and in the ordinary course consistent with
the manner in which the Kraft Business generally has been
operated up to the date of execution of this Agreement;
(b) Preservation of Business. Until the Closing, use their best
efforts to preserve the Kraft Business and the Kraft Assets
and, without limitation, preserve for AUGI Kraft's
relationships with their suppliers, customers and others
having business relations with them;
(c) Access. Until the Closing, give AUGI and its representatives
full access to all of the properties, books, contracts,
commitments and records of Kraft relating to Kraft, the Kraft
Business and the Kraft Assets, and furnish to AUGI and its
representatives all such information as they may reasonably
request;
(d) Procure Consents. Until the Closing, take all reasonable steps
required to obtain, prior to Closing, any and all third party
consents required to permit the Acquisition and to preserve
and maintain the Kraft Assets, including the Kraft Material
Contracts, notwithstanding the change in control of Kraft
arising from the Acquisition;
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(e) Reporting and Internal Controls. From and after the Closing,
the Kraft Shareholders shall forthwith take all required
actions to implement internal controls on the business of
Kraft to ensure that Kraft and AUGI comply with Section
13(b)(2) of the Securities and Exchange Act of 1934;
(f) 1934 Act Reports. From and after the Closing Date, take all
such steps as are necessary to discharge all reporting
obligations imposed upon them by the Securities Exchange Act
of 1934; and
(g) Standstill; Proxy. From the date hereof until the Closing
Date, the Kraft Shareholders will take no action that will in
any way affect or negatively impact this Agreement, the
Acquisition or the Financing and they will not take any other
action with respect to their shares of Kraft including
entering into any agreement with respect to the disposition of
such shares unless such other party agrees to the terms of
this Agreement. Further, provided that AUGI successfully
completes the Financing prior to the Closing Date, each Kraft
Shareholder constitutes and appoints ▇▇▇▇▇▇ ▇▇▇▇▇ or such
other designee of AUGI, his, her or its true and lawful
attorney-in-fact and agent, acting alone, with full powers of
substitution and resubstitution, for him, her or it and in
his, her or its name, place and stead, in any and all
capacities, to sign any and all documents and to take the
required action to close the Acquisition, granting unto said
attorney-in-fact and agent, each acting alone, full powers and
authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents
and purposes as he, she or it might or could do in person,
hereby ratifying and confirming all said attorney-in-fact and
agent, acting alone, or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
AUTHORIZATION
6.2 Kraft hereby agrees to authorize and direct any and all federal, state,
municipal, foreign and international governments and regulatory authorities
having jurisdiction respecting Kraft to release any and all information in their
possession respecting Kraft to AUGI. Kraft shall promptly execute and deliver to
AUGI any and all consents to the release of information and specific
authorizations which AUGI reasonably require to gain access to any and all such
information.
SURVIVAL
6.3 The covenants set forth in this Article shall survive the Closing for the
benefit of AUGI.
ARTICLE 7
CONDITIONS PRECEDENT
CONDITIONS PRECEDENT IN FAVOR OF AUGI
7.1 AUGI's obligations to carry out the transactions contemplated hereby are
subject to the fulfillment of each of the following conditions precedent on or
before the Closing:
(a) all documents or copies of documents required to be executed
and delivered to AUGI hereunder will have been so executed and
delivered;
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(b) all of the terms, covenants and conditions of this Agreement
to be complied with or performed by Kraft or the Kraft
Shareholders at or prior to the Closing will have been
complied with or performed;
(c) title to the Kraft Shares held by the Kraft Shareholders and
to the Kraft Assets will be free and clear of all mortgages,
liens, charges, pledges, security interests, encumbrances or
other claims whatsoever, save and except as disclosed herein,
and the Kraft Shares shall be duly transferred to AUGI;
(d) subject to Article 8 hereof, there will not have occurred
(i) any material adverse change in the financial position
or condition of Kraft, its liabilities or the Kraft
Assets or any damage, loss or other change in
circumstances materially and adversely affecting
Kraft, the Kraft Business or the Kraft Assets or
Kraft's right to carry on the Kraft Business, other
than changes in the ordinary course of business, none
of which has been materially adverse, or
(ii) any damage, destruction, loss or other event,
including changes to any laws or statutes applicable
to Kraft or the Kraft Business (whether or not
covered by insurance) materially and adversely
affecting Kraft, the Kraft Business or the Kraft
Assets;
(e) the transactions contemplated hereby shall have been approved
by all other regulatory authorities having jurisdiction over
the subject matter hereof, if any
(f) the transactions contemplated hereby shall have been approved
by the Board of Directors and shareholders of Kraft; and
(g) on or prior to the Closing Date, Kraft shall have delivered
the Kraft Financial Statements.
WAIVER BY AUGI
7.2 The conditions precedent set out in the preceding section are inserted for
the exclusive benefit of AUGI and any such condition may be waived in whole or
in part by AUGI at or prior to the Closing by delivering to Kraft a written
waiver to that effect signed by AUGI. In the event that the conditions precedent
set out in the preceding section are not satisfied on or before the Closing,
AUGI shall be released from all obligations under this Agreement.
CONDITIONS PRECEDENT IN FAVOR OF KRAFT AND THE KRAFT SHAREHOLDERS
7.3 The obligations of Kraft and the Kraft Shareholders to carry out the
transactions contemplated hereby are subject to the fulfillment of each of the
following conditions precedent on or before the Closing:
(a) all documents or copies of documents required to be executed
and delivered to Kraft hereunder will have been so executed
and delivered;
(b) all of the terms, covenants and conditions of this Agreement
to be complied with or performed by AUGI at or prior to the
Closing will have been complied with or performed;
(c) AUGI will have delivered the Acquisition Shares to be issued
pursuant to the terms of the Acquisition to Kraft at the
Closing and the Acquisition Shares will be registered on the
books of AUGI in the name of the holder of Kraft Shares at the
time of Closing;
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(d) title to the Acquisition Shares will be free and clear of all
mortgages, liens, charges, pledges, security interests,
encumbrances or other claims whatsoever;
(e) subject to Article 8 hereof, there will not have occurred
(i) any material adverse change in the financial position
or condition of AUGI, its subsidiaries, their
liabilities or the AUGI Assets or any damage, loss or
other change in circumstances materially and
adversely affecting AUGI, the AUGI Business or the
AUGI Assets or AUGI' right to carry on the AUGI
Business, other than changes in the ordinary course
of business, none of which has been materially
adverse, or
(ii) any damage, destruction, loss or other event,
including changes to any laws or statutes applicable
to AUGI or the AUGI Business (whether or not covered
by insurance) materially and adversely affecting
AUGI, its subsidiaries, the AUGI Business or the AUGI
Assets;
(f) the transactions contemplated hereby shall have been approved
by all other regulatory authorities having jurisdiction over
the subject matter hereof, if any;
(g) the transactions contemplated hereby shall have been approved
by the Board of Directors of AUGI;
(i) on or prior to the Closing Date, close on a minimum of US
$6,000,000 financing in the form of a convertible debenture
financing (the "Financing"), in accordance with the Term Sheet
annexed hereto as Schedule 7.3(i);
(h) Zoltan Kiss shall have been appointed as the Chairman of the
Board of the Board of Directors of AUGI;
(i) on or prior to the Closing Date, AUGI shall have entered into
a settlement agreement with The ▇▇▇▇▇ Family Trust (the
"Trust") whereby the Trust shall forgive all debt and related
interest owed to it by AUGI in consideration of the transfer
of all shares of AUGI received by AUGI from ▇▇▇▇▇▇▇ Vox, if
any, and all securities of Informedix Holdings, Inc.,
Spongtech Delivery Systems, Inc. and ScanTek Medical, Inc.
held by AUGI and transfer of any rights held by AUGI with
respect to any litigation that may be brought by AUGI against
New York Medical Inc.; and
(j) on or prior to the Closing Date, ▇▇▇▇▇ Family Irrevocable
Trust (the "Trust") and AUGI shall enter into a pledge
agreement whereby the Trust shall agree to place 1,000,000
shares of AUGI common stock in an escrow account for a period
of one (1) year from the Closing (the "Pledge Period"), which
such shares shall be utilized to satisfy any claim commenced
by United Parcel Service in connection with the UPS Note. In
the event that United Parcel Service commences an action
against AUGI with respect to the UPS Note, the Trust agrees
that during the Pledge Period the Trust shall pledge further
shares of AUGI common stock equal to the value of the claim
divided the market price of AUGI at that time. The Trust shall
retain the ability to settle any action commenced by United
Parcel Service.
-23-
WAIVER BY KRAFT AND THE KRAFT SHAREHOLDERS
7.4 The conditions precedent set out in the preceding section are inserted for
the exclusive benefit of Kraft and the Kraft Shareholders and any such condition
may be waived in whole or in part by Kraft or the Kraft Shareholders at or prior
to the Closing by delivering to AUGI a written waiver to that effect signed by
Kraft and the Kraft Shareholders. In the event that the conditions precedent set
out in the preceding section are not satisfied on or before the Closing, Kraft
and the Kraft Shareholders shall be released from all obligations under this
Agreement.
NATURE OF CONDITIONS PRECEDENT
7.5 The conditions precedent set forth in this Article are conditions of
completion of the transactions contemplated by this Agreement and are not
conditions precedent to the existence of a binding agreement. Each party
acknowledges receipt of the sum of $1.00 and other good and valuable
consideration as separate and distinct consideration for agreeing to the
conditions of precedent in favor of the other party or parties set forth in this
Article.
TERMINATION
7.6 Notwithstanding any provision herein to the contrary, if the Closing does
not occur on or before 45 days from the completion and delivery of the Kraft
Financials to AUGI and Sichenzia ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP (the "Termination
Date"), this Agreement will be at an end and will have no further force or
effect, unless otherwise agreed upon by the parties in writing.
CONFIDENTIALITY
7.7 Notwithstanding any provision herein to the contrary, the parties hereto
agree that the existence and terms of this Agreement are confidential and that
if this Agreement is terminated pursuant to the preceding section the parties
agree to return to one another any and all financial, technical and business
documents delivered to the other party or parties in connection with the
negotiation and execution of this Agreement and shall keep the terms of this
Agreement and all information and documents received from Kraft and AUGI and the
contents thereof confidential and not utilize nor reveal or release same,
provided, however, that AUGI will be required to issue a news release regarding
the execution and consummation of this Agreement and file a Current Report on
Form 8-K with the Securities and Exchange Commission respecting the proposed
Acquisition contemplated hereby together with such other documents as are
required to maintain the currency of AUGI's filings with the Securities and
Exchange Commission.
ARTICLE 8
RISK
MATERIAL CHANGE IN THE BUSINESS OF KRAFT
8.1 If any material loss or damage to the Kraft Business occurs prior to Closing
and such loss or damage, in AUGI' reasonable opinion, cannot be substantially
repaired or replaced within sixty (60) days, AUGI shall, within two (2) days
following any such loss or damage, by notice in writing to Kraft, at its option,
either:
(a) terminate this Agreement, in which case no party will be under
any further obligation to any other party; or
(b) elect to complete the Acquisition and the other transactions
contemplated hereby, in which case the proceeds and the rights
to receive the proceeds of all insurance covering such loss or
damage will, as a condition precedent to AUGI' obligations to
carry out the transactions contemplated hereby, be vested in
Kraft or otherwise adequately secured to the satisfaction of
AUGI on or before the Closing Date.
-24-
MATERIAL CHANGE IN THE AUGI BUSINESS
8.2 If any material loss or damage to the AUGI Business occurs prior to Closing
and such loss or damage, in Kraft's reasonable opinion, cannot be substantially
repaired or replaced within sixty (60) days, Kraft shall, within two (2) days
following any such loss or damage, by notice in writing to AUGI, at its option,
either:
(a) terminate this Agreement, in which case no party will be under
any further obligation to any other party; or
(b) elect to complete the Acquisition and the other transactions
contemplated hereby, in which case the proceeds and the rights
to receive the proceeds of all insurance covering such loss or
damage will, as a condition precedent to Kraft's obligations
to carry out the transactions contemplated hereby, be vested
in AUGI or otherwise adequately secured to the satisfaction of
Kraft on or before the Closing Date.
ARTICLE 9
CLOSING
CLOSING
9.1 The Acquisition and the other transactions contemplated by this Agreement
will be closed at the Place of Closing on Closing Date in accordance with the
closing procedure set out in this Article.
DOCUMENTS TO BE DELIVERED BY KRAFT
9.2 On or before the Closing, Kraft and the Kraft Shareholders will deliver or
cause to be delivered to AUGI:
(a) the original or certified copies of the charter documents of
Kraft, including amendments thereof, and all corporate records
documents and instruments of Kraft, the corporate seal of
Kraft and all books and accounts of Kraft;
(b) all reasonable consents or approvals required to be obtained
by Kraft for the purposes of completing the Acquisition and
preserving and maintaining the interests of Kraft under any
and all Kraft Material Contracts and in relation to Kraft
Assets;
(c) certified copies of such resolutions and minutes of the
shareholders and directors of Kraft as are required to be
passed to authorize the execution, delivery and implementation
of this Agreement;
(d) an acknowledgement from Kraft and the Kraft Shareholders of
the satisfaction of the conditions precedent set forth in
section 7.3 hereof;
(e) the certificates or other evidence of ownership of the Kraft
Shares, together with such other documents or instruments
required to effect transfer of ownership of the Kraft Shares
to AUGI; and
-25-
(f) such other documents as AUGI may reasonably require to give
effect to the terms and intention of this Agreement.
DOCUMENTS TO BE DELIVERED BY AUGI
9.3 On or before the Closing, AUGI shall deliver or cause to be delivered to
Kraft and the Kraft Shareholders:
(a) share certificates representing the Acquisition Shares duly
registered in the names of the holders of shares of Kraft
Common Stock;
(b) certified copies of such resolutions of the directors of AUGI
as are required to be passed to authorize the execution,
delivery and implementation of this Agreement;
(c) a certified copy of a resolution of the directors of AUGI
dated as of the Closing Date appointing the nominees of Kraft
as officers of Kraft and appointing the nominee of the Kraft
Shareholders to the board of directors of AUGI;
(d) an acknowledgement from AUGI of the satisfaction of the
conditions precedent set forth in section 7.1 hereof;
(e) certificate or incorporation and good standing certificate of
AUGI; and
(f) such other documents as Kraft may reasonably require to give
effect to the terms and intention of this Agreement.
ARTICLE 10
POST-CLOSING MATTERS
Forthwith after the Closing, AUGI, Kraft and the Kraft Shareholders, as
the case may be, agree to use all their best efforts to:
(a) issue a news release reporting the Closing;
(b) file a Form 8-K with the Securities and Exchange Commission
disclosing the terms of this Agreement within 4 days of the
Closing and, not more than 71 days following the filing of the
Form 8-K, file an amended Form 8-K which includes the audited
financial statements of Kraft as well as pro forma financial
information of Kraft and AUGI as required by Item 310 of
Regulation SB as promulgated by the Securities and Exchange
Commission;
(c) file reports on Forms 13D and 3 with the Securities and
Exchange Commission disclosing the acquisition of the
Acquisition Shares by the Kraft Shareholders;
(d) prepare and deliver the Kraft Financial Statements;
(e) change the name of AUGI to "Energy Solutions, Inc." of such
other name as determined by the Board of Directors of AUGI;
and
(f) use its best efforts to enter into agreements with Terra Solar
for the exclusive licensing rights to market Terra Solar
technology in North America, South America , Europe and Africa
and to install Terra Solar technology and equipment.
-26-
ARTICLE 11
GENERAL PROVISIONS
ARBITRATION
11.1 The parties hereto shall attempt to resolve any dispute, controversy,
difference or claim arising out of or relating to this Agreement by negotiation
in good faith. If such good negotiation fails to resolve such dispute,
controversy, difference or claim within fifteen (15) days after any party
delivers to any other party a notice of its intent to submit such matter to
arbitration, then any party to such dispute, controversy, difference or claim
may submit such matter to arbitration in the City of New York, New York.
NOTICE
11.2 Any notice required or permitted to be given by any party will be deemed to
be given when in writing and delivered to the address for notice of the intended
recipient by personal delivery, prepaid single certified or registered mail, or
telecopier. Any notice delivered by mail shall be deemed to have been received
on the fourth business day after and excluding the date of mailing, except in
the event of a disruption in regular postal service in which event such notice
shall be deemed to be delivered on the actual date of receipt. Any notice
delivered personally or by telecopier shall be deemed to have been received on
the actual date of delivery.
ADDRESSES FOR SERVICE
11.3 The address for service of notice of each of the parties hereto is as
follows:
(a) AUGI:
American United Global, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, #▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Sichenzia ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
(b) Kraft or the Kraft Shareholders:
▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇ ▇▇▇▇▇ u. ▇▇-▇▇
▇▇▇▇▇▇▇▇ ▇-▇▇▇▇
▇▇▇▇▇▇▇
-27-
CHANGE OF ADDRESS
11.4 Any party may, by notice to the other parties change its address for notice
to some other address in North America and will so change its address for notice
whenever the existing address or notice ceases to be adequate for delivery by
hand. A post office box may not be used as an address for service.
FURTHER ASSURANCES
11.5 Each of the parties will execute and deliver such further and other
documents and do and perform such further and other acts as any other party may
reasonably require to carry out and give effect to the terms and intention of
this Agreement.
TIME OF THE ESSENCE
11.6 Time is expressly declared to be the essence of this Agreement.
ENTIRE AGREEMENT
11.7 The provisions contained herein constitute the entire agreement among
Kraft, the Kraft Shareholders and AUGI respecting the subject matter hereof and
supersede all previous communications, representations and agreements, whether
verbal or written, among Kraft, the Kraft Shareholders and AUGI with respect to
the subject matter hereof.
ENUREMENT
11.8 This Agreement will enure to the benefit of and be binding upon the parties
hereto and their respective heirs, executors, administrators, successors and
permitted assigns.
ASSIGNMENT
11.9 This Agreement is not assignable without the prior written consent of the
parties hereto.
COUNTERPARTS
11.10 This Agreement may be executed in counterparts, each of which when
executed by any party will be deemed to be an original and all of which
counterparts will together constitute one and the same Agreement. Delivery of
executed copies of this Agreement by telecopier will constitute proper delivery,
provided that originally executed counterparts are delivered to the parties
within a reasonable time thereafter.
APPLICABLE LAW
11.11 This Agreement is subject to the laws of the State of New York.
[Remainder of page intentionally left blank.]
-28-
IN WITNESS WHEREOF the parties have executed this Agreement
effective as of the day and year first above written.
AMERICAN UNITED GLOBAL, INC.
By: /s/▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, CEO
▇▇▇▇▇ ▇▇.
By: /s/Zoltan Kiss
Zoltan Kiss, Director
SHAREHOLDERS OF ▇▇▇▇▇ ▇▇.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇ /s/▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-29-
SCHEDULE 2.2
NAME OF SHAREHOLDER SHARES OF KRAFT PREFERRED SHARES SHARES OF AMERICAN
OF ▇▇▇▇▇ ▇▇. RT. OWNED OF AMERICAN UNITED GLOBAL,
UNITED GLOBAL, INC. TO BE ISSUED
INC. UPON CONVERSION OF
THE PREFERRED SHARE
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▇▇▇▇ ▇. ▇▇▇▇▇▇ 50 1,000 350,000
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▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 50 1,000 350,000
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100 2,000 700,000
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