ACQUISITION AGREEMENT
Agreement dated as of July 13, 1999 between POPstar
Communications, Inc., a Nevada corporation ("POPS"), and
POPstar Global Communications Inc., a British Virgin
Islands corporation ("POPstar").
The parties agree as follows:
1. THE ACQUISITION.
1.1 Purchase and Sale Subject to the Terms and
Conditions of this Agreement. At the
Closing to be held as provided in Section
2, POPS shall deliver the POPS Shares
(defined below) to the shareholders of
POPstar, and the shareholders of POPstar
shall accept the POPS Shares from POPS,
free and clear of all Encumbrances other
than restrictions imposed by Federal and
State securities laws.
1.2 Purchase Price. POPS will exchange
12,885,000 shares of its restricted common
stock (the "POPS Shares") for all of the
outstanding common shares and preferred
shares of POPstar (the "POPstar Shares").
The POPS Shares shall be issued and
delivered to the Shareholders of POPstar
as set forth in Exhibit "A" hereto.
2. THE CLOSING.
2.1 Place and Time. The closing of the sale
and exchange of the POPS Shares for the
POPstar Shares (the "Closing") shall take
place at the Law Offices of M. Xxxxxxx
Xxxxxx, 000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx
000, Xxxxxxx Xxxxx, XX 00000 no later
than the close of business (Orange County
California time) on July 20, 1999, or at
such other place, date and time as the
parties may agree in writing.
2.2 Deliveries by POPstar. At the Closing,
POPstar shall deliver the following to POPS:
a. Certificates representing the
POPstar Shares, duly endorsed
for transfer to POPS and
accompanied by any applicable
stock transfer tax stamps;
POPstar shall immediately
change those certificates for,
and to deliver to POPS at the
Closing, a certificate
representing the POPstar Shares
registered in the name of POPS
(without any legend or other
reference to any Encumbrance).
b. The documents contemplated by Section 3.
c. All other documents,
instruments and writings
required by this Agreement to
be delivered by POPstar at the
Closing and any other documents
or records relating to
POPstar's business reasonably
requested by POPS in connection
with this Agreement.
2.3 Deliveries by POPS. At the Closing, POPS
shall deliver the following to POPstar:
a.. The POPS Shares for further delivery to
the POPstar shareholders as contemplated
by section 1.
b. The documents contemplated by
Section 4.
c. All other documents,
instruments and writings
required by this Agreement to
be delivered by POPS at the
Closing.
3. CONDITIONS TO POPS' OBLIGATIONS.
The obligations of POPS to effect the Closing shall be
subject to the satisfaction at or prior to the Closing of
the following conditions, any one or more of which may be
waived by POPS:
3.1 No Injunction. There shall not be in
effect any injunction, order or decree of
a court of competent jurisdiction that
prevents the consummation of the
transactions contemplated by this
Agreement, that prohibits POPS'
acquisition of the POPstar Shares or that
will require any divestiture as a result
of POPS' acquisition of the POPstar Shares
or that will require all or any part of
the business of POPS to be held separate
and no litigation or proceedings seeking
the issuance of such an injunction, order
or decree or seeking to impose substantial
penalties on POPS or POPstar if this
Agreement is consummated shall be pending.
3.2 Representations, Warranties and
Agreements. (a) The representations and
warranties of POPstar set forth in this
Agreement shall be true and complete in
all material respects as of the Closing
Date as though made at such time, (b)
POPstar shall have performed and complied
in all material respects with the
agreements contained in this Agreement
required to be performed and complied with
by it at or prior to the Closing and (c)
POPS shall have received a certificate to
that effect signed by an authorized
representative of POPstar.
3.3 Regulatory Approvals. All licenses,
authorizations, consents, orders and
regulatory approvals of Governmental
Bodies necessary for the consummation of
POPS' acquisition of the POPstar Shares
shall have been obtained and shall be in
full force and effect.
4. CONDITIONS TO POPSTAR'S OBLIGATIONS.
The obligations of POPstar to effect the Closing shall be
subject to the satisfaction at or prior to the Closing of
the following conditions, any one or more of which may be
waived by POPstar:
4.1 No Injunction. There shall not be in
effect any injunction, order or decree of
a court of competent jurisdiction that
prevents the consummation of the
transactions contemplated by this
Agreement, that prohibits POPS'
acquisition of the POPstar Shares or
POPstar's acquisition of the POPS Shares
or that will require any divestiture as a
result of POPS' acquisition of the Shares
or POPstar's acquisition of the POPS
Shares or that will require all or any
part of the business of POPS or POPstar to
be held separate and no litigation or
proceedings seeking the issuance of such
an injunction, order or decree or seeking
to impose substantial penalties on POPS or
POPstar if this Agreement is consummated
shall be pending.
4.2 Representations, Warranties and
Agreements. (a) The representations and
warranties of POPS set forth in this
Agreement shall be true and complete in
all material respects as of the Closing
Date as though made at such time, (b) POPS
shall have performed and complied in all
material respects with the agreements
contained in this Agreement required to be
performed and complied with by it at or
prior to the Closing and (c) POPstar shall
have received a certificate to that effect
signed by an authorized representative of
POPS.
4.3 Legal Opinion. POPstar shall have
received an opinion from appropriate
counsel to POPS dated the Closing Date, to
the effect that POPS is a corporation duly
organized, validly existing and in good
standing under the laws of the State of
Nevada and has the requisite power and
authority to own, lease and operate its
properties and corporate power to carry on
its business as now being conducted; all
of the outstanding shares of POPS are duly
and validly issued, fully paid and
non-assessable and the issuance of such
shares has complied with the applicable
Federal and State securities laws and the
regulations promulgated thereunder; POPS
is duly qualified and in good standing as
a domestic corporation and is authorized
to do business in all states or other
jurisdictions in which such qualification
or authorization is necessary and there
has not been any claim
by any other state
of jurisdiction to the effect that POPS is
required to qualify or otherwise be
authorized to do business as a foreign
corporation therein; all persons who have
executed or will execute this Agreement on
behalf of POPS or its Shareholders have
been duly authorized to do so; to the best
knowledge of such counsel there is no
action, suit or proceeding and no
investigation by any governmental agency
pending or threatened against POPS or the
assets or business of POPS that could have
a materially adverse effect on the
financial condition of POPS or POPstar.
Such counsel shall also opine as to the
tradability of all free trade Shares of POPS.
4.4 Regulatory Approvals. All licenses,
authorizations, consents, orders and
regulatory approvals of Governmental
Bodies necessary for the consummation of
POPS' acquisition of the POPstar Shares
and POPstar's acquisition of the POPS
Shares shall have been obtained and shall
be in full force and effect.
4.5 Resignations of Director. All directors
of POPS whose resignations shall have been
requested by POPstar not less than ten
Business Days before the Closing Date
shall have submitted their resignations or
been removed effective as of the Closing
Date.
5. REPRESENTATIONS AND WARRANTIES OF POPSTAR.
POPstar represents and warrants to POPS that, to the
Knowledge of POPstar (which limitation shall not apply to
Section 5.3), and except as set forth in the POPstar
Disclosure Letter:
5.1 Organization of POPstar; Authorization.
POPstar is a corporation duly organized,
validly existing and in good standing
under the laws of the British Virgin
Islands 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 POPstar and this Agreement
constitutes a valid and binding obligation
of POPstar; enforceable against it in
accordance with its terms.
5.2 Capitalization. The authorized capital
stock of POPstar consists of 110,000,000
authorized shares, consisting of
100,000,000 common stock, no par value,
and 10,000,000 preferred shares, no par
value, of which 10,510,000 common shares
and 2,375,000 preferred shares are
presently issued and outstanding. No
shares have been registered under state or
federal securities laws. As of the
Closing Date, all of the issued and
outstanding shares of common stock of
POPstar are validly issued, fully paid and
non-assessable. Except with respect to
(i) Employee Stock Options for an
aggregate of 757,500 common shares; (ii)
6,000,000 common shares reserved to be
issued in connection with existing stock
purchase agreements which are amended to
reflect common shares as of the date
hereof; and (iii) an obligation of POPstar
(after this reorganization) to issue an
aggregate of 10,000 restricted shares to
legal counsel in consideration for legal
services; as of the Closing Date there
will not be outstanding any warrants,
options or other agreements on the part of
POPstar obligating POPstar to issue any
additional shares of common or preferred
stock or any of its securities of any
kind. Except as otherwise set forth
herein, POPstar will not issue any shares
of capital stock from the date of this
Agreement through the Closing Date.
5.3 No Conflict as to POPstar. Neither the
execution and delivery of this Agreement
nor the consummation of the sale of the
POPstar Shares to POPS will (a) violate
any provision of the certificate of
incorporation or by-laws of POPstar or (b)
violate, 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 any
agreement to which POPstar is a party or
(c) violate any statute or law or any
judgment, decree, order, regulation or
rule of any court or other Governmental
Body applicable to POPstar.
5.4 Ownership of POPstar Shares. The delivery
of certificates to POPS provided in
Section 2.2 and the payment to POPstar
provided in Section 2.3 will result in
POPS' immediate acquisition of record and
beneficial ownership of the POPstar
Shares, free and clear of all Encumbrances
subject to applicable State and Federal
securities laws. Except as set forth in
Section 5.2, there are no outstanding
options, rights, conversion rights,
agreements or commitments of any kind
relating to the issuance, sale or transfer
of any Equity Securities or other
securities of POPstar.
5.5 No Conflict as to POPstar and
Subsidiaries. Neither the execution and
delivery of this Agreement nor the
consummation of the sale of the POPstar
Shares to POPS will (a) violate any
provision of the certificate of
incorporation or by-laws (or other
governing instrument) of POPstar 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
POPstar or any of its
Subsidiaries under,
any material agreement or commitment to
which POPstar or 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
POPstar 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 POPstar or any of its
Subsidiaries except, in the case of
violations, conflicts, defaults,
terminations, accelerations or
Encumbrances described in clause (b) of
this Section 5.5, for such matters which
are not likely to have a material adverse
effect on the business or financial
condition of POPstar and its
Subsidiaries, taken as a whole.
5.6 Consents and Approvals of Governmental
Authorities. Except with respect to
applicable State and Federal securities
laws, no consent, approval or
authorization of, or declaration, filing
or registration with, any Governmental
Body is required to be made or obtained by
POPstar or POPS or any of its
Subsidiaries in connection with the
execution, delivery and performance of
this Agreement by POPstar or the
consummation of the sale of the POPstar
Shares to POPS.
5.7 Other Consents. Other than the consent of
the holders of the preferred shares of
POPstar, no consent of any Person is
required to be obtained by POPstar or POPS
to the execution, delivery and performance
of this Agreement or the consummation of
the sale of the POPstar Shares to POPS,
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
POPstar or POPS.
5.8 Financial Statements. POPstar has
delivered to POPS consolidated balance
sheets of POPstar and its Subsidiaries as
at May 31, 1999, and statements of income
and changes in financial position for the
period from inception to the period then
ended, together with the report thereon of
POPstar's independent accountant (the
"POPstar Financial Statements"). Such
POPstar Financial Statements are
internally prepared and unaudited but
fairly present the consolidated financial
condition and results of operations of
POPstar and its Subsidiaries as at the
respective dates thereof and for the
periods therein referred to, all in
accordance with generally accepted United
States accounting principles consistently
applied throughout the periods involved,
except as set forth in the notes thereto.
5.9 Title to Properties. Either POPstar or
one of its Subsidiaries owns all the
material properties and assets that they
purport to own (real, personal and mixed,
tangible and intangible), including,
without limitation, all the material
properties and assets reflected in the
POPstar Financial Statements (except for
property sold since the date of the
POPstar Financial Statements in the
ordinary course of business or leased
under capitalized leases), and all the
material properties and assets purchased
or otherwise acquired by POPstar or any
of its Subsidiaries since the date of the
POPstar Financial Statements. All
properties and assets reflected in the
POPstar Financial Statements are free and
clear of all material Encumbrances and are
not, in the case of real property, subject
to any material rights of way, building
use restrictions, exceptions, variances,
reservations or limitations of any nature
whatsoever except, with respect to all
such properties and assets, (a) mortgages
or security interests shown on the POPstar
Financial Statements as securing specified
liabilities or obligations, with respect
to which no default (or event which, with
notice or lapse of time or both, would
constitute a default) exists, and all of
which are listed in the POPstar Disclosure
Letter, (b) mortgages or security
interests incurred in connection with the
purchase of property or assets after the
date of the POPstar Financial Statements
(such mortgages and security interests
being limited to the property or assets so
acquired), with respect to which no
default (or event which, with notice or
lapse of time or both, would constitute a
default) exists, (c) as to real property,
(i) imperfections of title, if any, none
of which materially detracts from the
value or impairs the use of the property
subject thereto, or impairs the operations
of POPstar or any of its Subsidiaries and
(ii) zoning laws that do not impair the
present or anticipated use of the property
subject thereto, and (d) liens for current
taxes not yet due. The properties and
assets of POPstar and its Subsidiaries
include all rights, properties and other
assets necessary to permit POPstar and
its Subsidiaries to conduct POPstar's
business in all material respects in the
same manner as it is conducted on the date
of this Agreement.
5.10 Buildings, Plants and Equipment. The
buildings, plants, structures and material
items of equipment and other personal
property owned or leased by POPstar or its
Subsidiaries are, in all respects material
to the business or financial condition of
POPstar 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. POPstar has not received
notification that it or any of its
Subsidiaries 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
POPstar and its Subsidiaries, taken as a
whole or which would require a payment by
POPstar or POPS or any of their
subsidiaries in excess of $2,000 in the
aggregate, and which has not been cured.
5.11 No Condemnation or Expropriation. Neither
the whole nor any portion of the property
or leaseholds owned or held by POPstar 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 therefor, which action is
likely to have a material adverse effect
on the business or financial condition of
POPS and its Subsidiaries, taken as a whole.
5.12 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 POPstar or any of its
Subsidiaries which is likely to have a
material adverse effect on the business or
financial condition of POPstar, POPS and
any of their Subsidiaries, taken as whole,
or which would require a payment by
POPstar or its subsidiaries in excess of
$2,000 in the aggregate or which questions
or challenges the validity of this
Agreement. Neither POPstar 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 POPstar, POPS or
any of their Subsidiaries, taken as a
whole, or which would require a payment by
POPstar or its subsidiaries in excess of
$2,000 in the aggregate.
5.13 Absence of Certain Changes. Except as set
forth in Section 5.13 of the POPstar
Disclosure Letter, since the date of the
POPstar Financial Statements, neither
POPstar nor any of its Subsidiaries has:
a. 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 POPstar 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;
b. made any change or amendment in
its certificate of incorporation
or by-laws, or other governing
instruments;
c. 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;
d. organized any new Subsidiary or
acquired any Equity Securities
of any Person or any equity or
ownership interest in any
business;
e. 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;
f. paid, discharged or satisfied
any material claim, liability or
obligation (absolute, accrued,
contingent or otherwise), other
than in the ordinary course of
business;
g. prepaid any material obligation
having a maturity of more than
90 days from the date such
obligation was issued or
incurred;
h. canceled any material debts or
waived any material claims or
rights, except in the ordinary
course of business;
i. 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;
j. granted any general increase in
the compensation of officers or
employees (including any such
increase pursuant to any
employee benefit plan);
k. 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;
l. 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 $100,000 in
the aggregate;
m. written off or been required to
write off any notes or accounts
receivable in an aggregate
amount in excess of $2,000;
n. written down or been required to
write down any inventory in an
aggregate amount in excess of $
2,000;
o. entered into any collective
bargaining or union contract or
agreement; or
p. 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 POPstar and its subsidiaries
taken as a whole.
5.14 No Material Adverse Change. Since the date
of the POPstar Financial Statements, there
has not been any material adverse change in
the business or financial condition of
POPstar and its Subsidiaries taken as a
whole, other than changes resulting from
economic conditions prevailing in the
United States precious coins, collectibles
and metals industry.
5.15 Contracts and Commitments. Except as set
forth in Section 5.15 of the POPstar
Disclosure Letter, neither POPstar nor any
of its Subsidiaries is a party to any:
a. Contract or agreement (other than purchase
or sales orders entered into in the
ordinary course of business) involving any
liability on the part of POPstar or one of
its Subsidiaries of more than $25,000 and
not cancelable by POPstar or the relevant
Subsidiary (without liability to POPstar or
such Subsidiary) within 60 days;
b. Except with respect to the lease on its
business location, lease of personal
property involving annual rental payments
in excess of $25,000 and not cancelable by
POPstar or the relevant Subsidiary (without
liability to POPstar or such Subsidiary)
within 90 days;
c. Except with respect to the options
referenced above, 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 POPstar or any of its
Subsidiaries;
d. Commitment, contract or agreement that is
currently expected by the management of
POPstar to result in any material loss upon
completion or performance thereof;
e. Contract, agreement or commitment that is
material to the business of POPstar and
its Subsidiaries, taken as a whole, with
any officer, employee, agent, consultant,
advisor, salesman, sales representative,
value added reseller, distributor or
dealer; or
f. 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. Neither POPstar nor any of its Subsidiaries is 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 POPstar or any of its Subsidiaries is a party or is
or may be bound that relates to the business of POPstar
or any of its Subsidiaries or to which any of the assets
or properties of POPstar or any of its Subsidiaries is
subject, the effect of which breach, violation or default
is likely to materially and adversely affect the business
or financial condition of POPstar and its Subsidiaries,
taken as a whole. POPS has not guaranteed or assumed and
specifically does not guarantee or assume any obligations
of POPstar or any of its Subsidiaries.
5.16 Labor Relations. Neither POPstar 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 POPstar and its
Subsidiaries, taken as a whole, (a) POPstar
and each of 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 POPstar 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 POPstar or
any of its Subsidiaries, (d) no
representation question exists respecting
the employees of POPstar or any of its
Subsidiaries, (e) neither POPstar 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 POPstar or any of its Subsidiaries is
currently being negotiated.
5.17 Employee Benefit Plans. No material
employee pension and welfare benefit plans
covering employees of POPstar is (1) a
multi-employer plan as defined in Section
3(37) of ERISA, or (2) a defined benefit
plan as defined in Section 3(35) of ERISA,
any listed individual account pension plan
is duly qualified as tax exempt under the
applicable sections of the Code, each
listed benefit plan and related funding
arrangement, if any, has been maintained in
all material respects in compliance with
its terms and the provisions of ERISA and
the Code.
5.18 Compliance with Law. The operations of
POPstar 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
POPstar and its Subsidiaries, taken as a
whole, or which would not require a payment
by POPstar or its Subsidiaries in excess
of $2,000 in the aggregate, or which have
been cured. Neither POPstar 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. POPstar and its
Subsidiaries have all material licenses,
permits, orders or approvals from the
Governmental Bodies required for 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.
5.19 Tax Matters.
a. POPstar and each of its Subsidiaries (1)
has filed all nonconsolidated and
noncombined Tax Returns and all
consolidated or combined Tax Returns that
include only POPstar and/or its
Subsidiaries and not Seller or its other
Affiliates (for the purposes of this
Section 5.19, such tax Returns shall be
considered nonconsolidated and noncombined
Tax Returns) required to be filed through
the date hereof and has 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.
b. All consolidated or combined Tax Returns
(except those described in subparagraph (a)
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 POPstar or any of its
Subsidiaries for any taxable period have
been timely filed, and the income,
activities, operations and transactions of
POPstar and Subsidiaries have been properly
included and reflected thereon. POPstar
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 POPstar or any
Subsidiary, with respect to any taxable
year or the portion thereof ending on or
prior to the Closing Date, including,
without limitation, POPstar's consolidated
federal income tax return for such taxable
years. POPstar will timely file a
consolidated federal income tax return for
the taxable year ended December 31, 1998
and such return shall include and reflect
the income, activities, operations and
transactions of POPstar and 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 POPstar and Subsidiaries
for the taxable period through the Closing
Date. All Tax Returns filed pursuant to
this subparagraph (b) after the date hereof
shall, in each case, to the extent that
such Tax Returns specifically relate to
POPstar or any of its Subsidiaries and do
not generally relate to matters affecting
other members of POPstar'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. POPstar 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.
c. Neither POPstar nor any of its
Subsidiaries has agreed, or is 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.
d. Neither POPstar nor any of its Subsidiaries
or any predecessor or Affiliate of the
foregoing has, at any time, filed a consent
under Section 341(f)(1) of the Code, or
agreed under Section 341(f)(3) of the Code,
to have the provisions of Section 341(f)(2)
of the Code apply to any sale of its stock.
e. 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 POPstar or its
Subsidiaries, or their assets or operations
and no power of attorney granted by POPstar
or any of its Subsidiaries with respect to
any Tax matter is currently in force.
f. 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
POPstar, its Subsidiaries or their assets
or operations.
g. 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.
h. No property of POPstar is "tax-exempt use
property " within the meaning of Section
168(h) of the Code nor property that
POPstar and/or its Subsidiaries will be
required to treat as being owned by another
person pursuant to Section 168(f)(8) of the
Internal Revenue Code of 1954, as amended
and in effect immediately prior to the
enactment of the Tax Reform Act of 1986.
i. There have been delivered or made available
to POPS 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 POPS as may be relevant to
POPstar, 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.
j. There is no contract, agreement, plan or
arrangement, including but not limited to
the provisions of this Agreement, covering
any employee or former employee of POPstar
or its Subsidiaries that, individually or
collectively, could give rise to the
payment of any amount that would not be
deductible pursuant to Section 280G or 162
of the Code.
5.20 Environmental Matters.
a. At all times prior to the date
hereof, POPstar 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 POPstar
and its Subsidiaries, taken as a
whole, or which would require a
payment by POPstar 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.
b. The environmental licenses,
permits and authorizations that
are material to the operations
of POPstar and its Subsidiaries,
taken as a whole, are in full
force and effect.
c. Neither POPstar nor any of its
Subsidiaries has released or
caused to be released on or
about the properties currently
owned or leased by POPstar or
any of its Subsidiaries (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 POPstar
and its Subsidiaries, taken as a
whole.
5.21 Brokers or Finders. POPstar has not
employed any broker or finder or incurred
any liability for any brokerage or finder's
fees or commissions or similar payments in
connection with the sale of the POPstar
Shares to POPS.
5.22 Absence of Certain Commercial Practices.
Neither POPstar nor any of its
Subsidiaries has, 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 POPstar or its
Subsidiaries, which POPstar or one of its
Subsidiaries 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
neither POPstar nor any of its Subsidiaries
has 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.
5.23 Transactions with Directors and Officers.
Except as set forth in Section 5.23 of the
POPstar Disclosure Letter, POPstar and its
Subsidiaries do not engage in business with
any Person in which any of POPstar's
directors or officers has a material equity
interest. No director or officer of POPstar
owns any property, asset or right which is
material to the business of POPstar and its
Subsidiaries, taken as a whole.
5.24 Borrowing and Guarantees. Except as set
forth in Section 5.24 of the POPstar
Disclosure Letter, POPstar and its
Subsidiaries (a) do 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.
6. REPRESENTATIONS AND WARRANTIES OF POPS.
POPS represents and warrants to POPstar that, to the
Knowledge of POPS (which limitation shall not apply to
Section 6.3), and except as set forth in the POPS
Disclosure Letter:
6.1 Organization of POPstar; Authorization.
POPS is a corporation duly organized,
validly existing and in good standing under
the laws of Nevada 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 POPS and this Agreement
constitutes a valid and binding obligation
of POPS; enforceable against it in
accordance with its terms.
6.2 Capitalization. The authorized capital
stock of POPS consists of 50,000,000 shares
of common stock, par value $.001 per share,
and no shares of preferred stock. As of
the date of this Agreement, POPS has
5,800,000 shares of common stock issued and
outstanding. Prior to the Closing, POPS
will cause the cancellation of 2,400,000
shares of "restricted" common stock held by
affiliates of POPS (the "Cancellation").
Upon completion of the Cancellation, an
aggregate of 3,400,000 common shares of
POPS will be 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 POPS
are validly issued, fully paid and
non-assessable and they are not and as of
the Closing Date there will not be
outstanding any other warrants, options or
other agreements on the part of POPS
obligating POPS to issue any additional
shares of common or preferred stock or any
of its securities of any kind. POPS will
not issue any shares of capital stock from
the date of this Agreement through the
Closing Date. The Common Stock of POPS is
presently listed and trading on the Nasdaq
Over-the-Counter Bulletin Board under the
symbol "POPS."
6.3 No Conflict as to POPS. Neither the
execution and delivery of this Agreement
nor the consummation of the sale of the
POPS Shares to POPstar will (a) violate any
provision of the certificate of
incorporation or by-laws of POPS, or (b)
violate, 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 any agreement to which
POPS is a party or (c) violate any statute
or law or any judgment, decree, order,
regulation or rule of any court or other
Governmental Body applicable to POPS.
6.4 Ownership of POPS Shares. The delivery of
certificates to POPstar provided in Section
2.3 will result in the Shareholders' of
POPstar immediate acquisition of record and
beneficial ownership of the POPS Shares,
free and clear of all Encumbrances other
than as required by Federal and State
securities laws. There are no outstanding
options, rights, conversion rights,
agreements or commitments of any kind
relating to the
issuance, sale or transfer
of any Equity Securities or other
securities of POPS.
6.5 No Conflict as to POPS and Subsidiaries.
Neither the execution and delivery of this
Agreement nor the consummation of the sale
of the POPS Shares to POPstar will (a)
violate any provision of the certificate of
incorporation or by-laws (or other
governing instrument) of POPS 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 POPS or any
of its Subsidiaries under, any material
agreement or commitment to which POPS or
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 POPS 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 POPS
or any of its Subsidiaries except, in the
case of violations, conflicts, defaults,
terminations, accelerations or Encumbrances
described in clause (b) of this Section
6.5, for such matters which are not likely
to have a material adverse effect on the
business or financial condition of POPS
and its Subsidiaries, taken as a whole.
6.6 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 POPS or
POPstar or any of either of their
Subsidiaries in connection with the
execution, delivery and performance of this
Agreement by POPS or the consummation of
the sale of the POPS Shares to POPstar.
6.7 Other Consents. No consent of any Person is
required to be obtained by POPstar or POPS
to the execution, delivery and performance
of this Agreement or the consummation of
the sale of the POPS Shares to POPstar,
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
POPstar or POPS.
6.8 Financial Statements. POPS has delivered to
POPstar consolidated balance sheets of
POPS and its Subsidiaries as at December
31, 1997 and December 31, 1998, and
statements of income and changes in
financial position for each of the years in
the two-year period then ended, together
with the report thereon of POPS'
independent accountant (the "POPS Financial
Statements"). Such POPS Financial
Statements and notes fairly present the
consolidated financial condition and
results of operations of POPS and its
Subsidiaries as at the respective dates
thereof and for the periods therein
referred to, all in accordance with
generally accepted United States accounting
principles consistently applied throughout
the periods involved, except as set forth
in the notes thereto, and shall be
utilizable in any SEC filing in compliance
with Rule 310 of Regulation S-B promulgated
under the Securities Act.
6.9 Title to Properties. Either POPS or one of
its Subsidiaries owns all the material
properties and assets that they purport to
own (real, personal and mixed, tangible and
intangible), including, without limitation,
all the material properties and assets
reflected in the POPS Financial Statements
and all the material properties and assets
purchased or otherwise acquired by POPS or
any of its Subsidiaries since the date of
the POPS Financial Statements. All
properties and assets reflected in the POPS
Financial Statements are free and clear of
all material Encumbrances and are not, in
the case of real property, subject to any
material rights of way, building use
restrictions, exceptions, variances,
reservations or limitations of any nature
whatsoever except, with respect to all such
properties and assets, (a) mortgages or
security interests shown on the POPS
Financial Statements as securing specified
liabilities or obligations, with respect to
which no default (or event which, with
notice or lapse of time or both, would
constitute a default) exists, and all of
which are listed in the POPS Disclosure
Letter, (b) mortgages or security interests
incurred in connection with the purchase of
property or assets after the date of the
POPS Financial Statements (such mortgages
and security interests being limited to the
property or assets so acquired), with
respect to which no default (or event
which, with notice or lapse of time or
both, would constitute a default) exists,
(c) as to real property, (i) imperfections
of title, if any, none of which materially
detracts from the value or impairs the use
of the property subject thereto, or impairs
the operations of POPS or any of its
Subsidiaries and (ii) zoning laws that do
not impair the present or anticipated use
of the property subject thereto, and (d)
liens for current taxes not yet due. The
properties and assets of POPS and its
Subsidiaries include all rights, properties
and other assets necessary to permit POPS
and its Subsidiaries to conduct POPS'
business in all material respects in the
same manner as it is conducted on the date
of this Agreement.
6.10 Buildings, Plants and Equipment. The
buildings, plants, structures and material
items of equipment and other personal
property owned or leased by POPS or its
Subsidiaries are, in all respects material
to the business or
financial condition of
POPS 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.
POPS has not received notification that it
or any of its Subsidiaries 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 POPS
and its Subsidiaries, taken as a whole or
which would require a payment by POPstar
or POPS or any of their subsidiaries in
excess of $2,000 in the aggregate, and
which has not been cured.
6.11 No Condemnation or Expropriation. Neither
the whole nor any portion of the property
or leaseholds owned or held by POPS 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 therefor, which action is
likely to have a material adverse effect on
the business or financial condition of
POPstar and its Subsidiaries, taken as a
whole.
6.12 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 POPS or any of its Subsidiaries
which is likely to have a material adverse
effect on the business or financial
condition of POPstar, POPS and any of
their Subsidiaries, taken as whole, or
which would require a payment by POPS or
its subsidiaries in excess of $2,000 in
the aggregate or which questions or
challenges the validity of this Agreement.
Neither POPS 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 POPstar, POPS or any of their
Subsidiaries, taken as a whole, or which
would require a payment by POPS or its
subsidiaries in excess of $2,000 in the
aggregate.
6.13 Absence of Certain Changes. Since the date
of the POPS Financial Statements, neither
POPS nor any of its Subsidiaries has:
a. 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 POPS 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;
b. made any change or amendment in
its certificate of incorporation
or by-laws, or other governing
instruments;
c. 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;
d. organized any new Subsidiary or
acquired any Equity Securities
of any Person or any equity or
ownership interest in any
business;
e. 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;
f. paid, discharged or satisfied
any material claim, liability or
obligation (absolute, accrued,
contingent or otherwise), other
than in the ordinary course of
business;
g. prepaid any material obligation
having a maturity of more than
90 days from the date such
obligation was issued or
incurred;
h. canceled any material debts or
waived any material claims or
rights, except in the ordinary
course of business;
i. 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;
j. granted any general increase in
the compensation of officers or
employees (including any such
increase pursuant to any
employee benefit plan);
k. 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;
l. 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;
m. written off or been required to
write off any notes or accounts
receivable in an aggregate
amount in excess of $2,000;
n. written down or been required to
write down any inventory in an
aggregate amount in excess of $
2,000;
o. entered into any collective
bargaining or union contract or
agreement; or
p. 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 POPS and its subsidiaries
taken as a whole.
6.14 No Material Adverse Change. Since the date
of the POPS Financial Statements, there has
not been any material adverse change in the
business or financial condition of POPS
and its Subsidiaries taken as a whole,
other than changes resulting from economic
conditions prevailing in the United States
precious coins, collectibles and metals
industry.
6.15 Contracts and Commitments. Neither POPS nor
any of its Subsidiaries is a party to any:
a. Contract or agreement (other than purchase
or sales orders entered into in the
ordinary course of business) involving any
liability on the part of POPS or one of
its Subsidiaries of more than $2,000 and
not cancelable by POPS or the relevant
Subsidiary (without liability to POPS or
such Subsidiary) within 60 days;
b. Lease of personal property involving annual
rental payments in excess of $2,000 and
not cancelable by POPS or the relevant
Subsidiary (without liability to POPS or
such Subsidiary) within 90 days;
c. 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
POPS or any of its Subsidiaries;
d. Commitment, contract or agreement that is
currently expected by the management of
POPS to result in any material loss upon
completion or performance thereof;
e. Contract, agreement or commitment that is
material to the business of POPS and its
Subsidiaries, taken as a whole, with any
officer, employee, agent, consultant,
advisor, salesman, sales representative,
value added reseller, distributor or
dealer; or
f. 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. Neither POPS nor any of its Subsidiaries is 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 POPS or any of its Subsidiaries is a party or is or
may be bound that relates to the business of POPS or any
of its Subsidiaries or to which any of the assets or
properties of POPS or any of its Subsidiaries is subject,
the effect of which breach, violation or default is likely
to materially and adversely affect the business or
financial condition of POPS and its Subsidiaries, taken as
a whole.
6.16 Labor Relations. Neither POPS 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 POPS and its
Subsidiaries, taken as a whole, (a) POPS
and each of 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 POPS 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 POPS or any
of its Subsidiaries, (d) no representation
question exists respecting the employees of
POPS or any of its Subsidiaries, (e)
neither POPS 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 POPS or any of its
Subsidiaries is currently being negotiated.
6.17 Employee Benefit Plans. No material
employee pension and welfare benefit plans
covering employees of POPS and its
Subsidiaries is (1) a multi-employer plan
as defined in Section 3(37) of ERISA, or
(2) a defined benefit plan as defined in
Section 3(35) of ERISA, any listed
individual account pension plan is duly
qualified as tax exempt under the
applicable sections of the Code, each
listed benefit plan and related funding
arrangement, if any, has been maintained in
all material respects in compliance with
its terms and the provisions of ERISA and
the Code.
6.18 Compliance with Law. The operations of POPS
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 POPS and
its Subsidiaries, taken as a whole, or
which would not require a payment by POPS
or its Subsidiaries in excess of $2,000 in
the aggregate, or which have been cured.
Neither POPS 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. POPS and its Subsidiaries
have all material licenses, permits, orders
or approvals from the Governmental Bodies
required for 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.
6.19 Tax Matters.
a. POPS and each of its Subsidiaries (1) has
filed all nonconsolidated and noncombined
Tax Returns and all consolidated or
combined Tax Returns that include only POPS
and/or its Subsidiaries and not Seller or
its other Affiliates (for the purposes of
this Section 6.19, such tax Returns shall
be considered nonconsolidated and
noncombined Tax Returns) required to be
filed through the date hereof and has 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.
b. All consolidated or combined Tax Returns
(except those described in subparagraph (a)
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 POPS or any of its
Subsidiaries for any taxable period have
been timely filed, and the income,
activities, operations and transactions of
POPS and Subsidiaries have been properly
included and reflected thereon. POPS 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 POPS or any Subsidiary,
with respect to any taxable year or the
portion thereof ending on or prior to the
Closing Date, including, without
limitation, POPS' consolidated federal
income tax return for such taxable years.
POPS will timely file a consolidated
federal income tax return for the taxable
year ended December 31, 1998 and such
return shall include and reflect the
income, activities, operations and
transactions of POPS and 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
POPS and Subsidiaries for the taxable
period through the Closing Date. All Tax
Returns filed pursuant to this subparagraph
(b) after the date hereof shall, in each
case, to the extent that such Tax Returns
specifically relate to POPS or any of its
Subsidiaries and do not generally relate to
matters affecting other members of POPS'
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. POPS 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.
c. Neither POPS nor any of its Subsidiaries
has agreed, or is 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.
d. Neither POPS nor any of its Subsidiaries or
any predecessor or Affiliate of the
foregoing has, at any time, filed a consent
under Section 341(f)(1) of the Code, or
agreed under Section 341(f)(3) of the Code,
to have the provisions of Section 341(f)(2)
of the Code apply to any sale of its stock.
e. 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 POPS or its Subsidiaries,
or their assets or operations and no power
of attorney granted by POPS or any of its
Subsidiaries with respect to any Tax matter
is currently in force.
f. 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
POPS, its Subsidiaries or their assets or
operations.
g. 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.
h. No property of POPS is "tax-exempt use
property " within the meaning of Section
168(h) of the Code nor property that POPS
and/or its Subsidiaries will be required to
treat as being owned by another person
pursuant to Section 168(f)(8) of the
Internal Revenue Code of 1954, as amended
and in effect immediately prior to the
enactment of the Tax Reform Act of 1986.
i. There have been delivered or made available
to POPstar 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 POPstar as may be relevant to
POPS, 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.
j. There is no contract, agreement, plan or
arrangement, including but not limited to
the provisions of this Agreement, covering
any employee or former employee of POPS or
its Subsidiaries that, individually or
collectively, could give rise to the
payment of any amount that would not be
deductible pursuant to Section 280G or 162
of the Code.
6.20 Environmental Matters.
a. At all times prior to the date
hereof, POPS 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 POPS and
its Subsidiaries, taken as a
whole, or which would require a
payment by POPS 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.
b. The environmental licenses,
permits and authorizations that
are material to the operations
of POPS and its Subsidiaries,
taken as a whole, are in full
force and effect.
c. Neither POPS nor any of its
Subsidiaries has released or
caused to be released on or
about the properties currently
owned or leased by POPS or any
of its Subsidiaries (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 POPS and
its Subsidiaries, taken as a whole.
6.21 Brokers or Finders. POPS has not employed
any broker or finder or incurred any
liability for any brokerage or finder's
fees or commissions or similar payments in
connection with the sale of the POPS Shares
to POPstar.
6.22 Absence of Certain Commercial Practices.
Neither POPS nor any of its Subsidiaries
has, 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 POPS or its Subsidiaries,
which POPS or one of its Subsidiaries 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 neither
POPS nor any of its Subsidiaries has
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.
6.23 Transactions with Directors and Officers.
POPS and its Subsidiaries do not engage in
business with any Person in which any of
POPS' directors or officers has a material
equity interest. No director or officer of
POPS owns any property, asset or right
which is material to the business of POPS
and its Subsidiaries, taken as a whole.
6.24 Borrowing and Guarantees. POPS and its
Subsidiaries (a) do 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.
6.25 Purchase for Investment. POPS is purchasing
the POPstar Shares solely for its own
account for the purpose of investment and
not with a view to, or for sale in
connection with, any distribution of any
portion thereof in violation of any
applicable securities law.
7. ACCESS AND REPORTING; FILINGS WITH
GOVERNMENTAL AUTHORITIES; OTHER COVENANTS.
7.1 Access Between the date of this Agreement
and the Closing Date. Each of POPstar and
POPS shall (a) give to the other and its
authorized representatives reasonable
access to all plants, offices, warehouse
and other facilities and properties of
POPstar or POPS, as the case may be, and to
its books and records, (b) permit the other
to make inspections thereof, and
(c) cause
its officers and its advisors to furnish
the other with such financial and operating
data and other information with respect to
the business and properties of such party
and its Subsidiaries and to discuss with
such and its authorized representatives its
affairs and those of its Subsidiaries, all
as the other may from time to time
reasonably request.
7.2 Exclusivity. From the date hereof until
the earlier of the Closing or the
termination of this Agreement, POPS shall
not solicit or negotiate or enter into any
agreement with any other Person with
respect to or in furtherance of any
proposal for a merger or business
combination involving, or acquisition of
any interest in, or (except in the ordinary
course of business) sale of assets by,
POPS, except for the exchange of the POPS
Shares for the POPstar Shares from
POPstar's shareholders.
7.3 Publicity. Between the date of this
Agreement and the Closing Date, POPS and
POPstar shall discuss and coordinate with
respect to any public filing or
announcement or any internal or private
announcement (including any general
announcement to employees) concerning the
contemplated transaction.
7.4 Regulatory Matters. POPstar and POPS shall
(a) file with applicable regulatory
authorities any applications and related
documents required to be filed by them in
order to consummate the contemplated
transaction and (b) cooperate with each
other as they may reasonably request in
connection with the foregoing.
7.5 Confidentiality. Prior to the Closing Date
(or at any time if the Closing does not
occur) each of POPstar and POPS shall keep
confidential and not disclose to any Person
(other than its employees, attorneys,
accountants and advisors) or use (except in
connection with the transactions
contemplated hereby) all non-public
information obtained pursuant to Section
7.1. Following the Closing, each of POPstar
and POPS shall keep confidential and not
disclose to any Person (other than its
employees, attorneys, accountants and
advisors) or use (except in connection with
preparing Tax Returns and conducting
proceeds relating to Taxes) any nonpublic
information relating to the other. This
Section 7.6 shall not be violated by
disclosure pursuant to court order or as
otherwise required by law, on condition
that notice of the requirement for such
disclosure is given the other party prior
to making any disclosure and the party
subject to such requirement cooperates as
the other may reasonably request in
resisting it. If the Closing does not
occur, each of POPstar and POPS shall
return to the other, or destroy, all
information it shall have received from the
other in connection with this Agreement and
the transactions contemplated
hereby,
together with any copies or summaries
thereof or extracts therefrom. Each of
POPstar and POPS shall use their best
efforts to cause their respective
representatives, employees, attorneys,
accountants and advisors to whom
information is disclosed pursuant to
Section 7.1 to comply with the provisions
of this Section 7.6.
7.6 Reverse Split; Antidilution. POPstar and
its officers and directors hereby agree
that for a period of 12 months from the
date hereof the merged company shall not
engage in any reverse stock splits or other
stock combinations or change any other
attributes of any of the Company's stock.
POPstar and its officers and directors
hereby agree that except with respect to
issuances of stock otherwise provided for
herein, the Company shall not issue any new
series of stock at a purchase price of less
than $1.00 per share without the consent of
a majority of the initial POPS
shareholders.
7.7 Rule 504 Sales. POPstar agrees not to make
any sales of securities in accordance with
Rule 504 promulgated under Regulation D of
the Securities Act.
8. CONDUCT OF POPS' BUSINESS PRIOR TO THE CLOSING.
8.1 Operation in Ordinary Course. Between the
date of this Agreement and the Closing
Date, POPS shall conduct its businesses in
all material respects in the ordinary course.
8.2 Business Organization. Between the date of
this Agreement and the Closing Date, POPS
shall (a) preserve substantially intact the
business organization of POPS; and (b)
preserve in all material respects the
present business relationships and good
will of POPS and each of its Subsidiaries.
8.3 Corporate Organization. Between the date of
this Agreement and the Closing Date, POPS
shall not cause or permit any amendment of
its certificate of incorporation or by-laws
(or other governing instrument) and shall not:
a. issue, sell or otherwise dispose of any of
its Equity Securities, or create, sell or
otherwise dispose of any options, rights,
conversion rights or other agreements or
commitments of any kind relating to the
issuance, sale or disposition of any of its
Equity Securities;
b. create or suffer to be created any
Encumbrance thereon, or create, sell or
otherwise dispose of any options, rights,
conversion rights or other agreements or
commitments of any kind relating to the
sale or disposition of any Equity Securities;
c. reclassify, split up or otherwise change
any of its Equity Securities;
d. be party to any merger, consolidation or
other business combination;
e. sell, lease, license or otherwise dispose
of any of its properties or assets
(including, but not limited to rights with
respect to patents and registered
trademarks and copyrights or other
proprietary rights), in an amount which is
material to the business or financial
condition of POPS and its Subsidiaries,
taken as a whole, except in the ordinary
course of business; or
f. organize any new Subsidiary or acquire any
Equity Securities of any Person or any
equity or ownership interest in any
business.
8.4 Other Restrictions. Between the date of
this Agreement and the Closing Date, POPS
shall not:
a. borrow any funds or otherwise
become subject to, whether
directly or by way of guarantee
or otherwise, any indebtedness
for borrowed money;
b. create any material Encumbrance
on any of its material
properties or assets;
c. except in the ordinary course of
business, increase in any manner
the compensation of any director
or officer or increase in any
manner the compensation of any
class of employees;
d. create or materially modify any
material bonus, deferred
compensation, pension, profit
sharing, retirement, insurance,
stock purchase, stock option, or
other fringe benefit plan,
arrangement or practice or any
other employee benefit plan (as
defined in section 3(3) of ERISA);
e. make any capital expenditure or
acquire any property or assets;
f. enter into any agreement that
materially restricts POPS,
POPstar or any of their
Subsidiaries from carrying on
business;
g. pay, discharge or satisfy any
material claim, liability or
obligation, absolute, accrued,
contingent or otherwise, other
than the payment, discharge or
satisfaction in the ordinary
course of business of
liabilities or obligations
reflected in the POPS Financial
Statements or incurred in the
ordinary course of business and
consistent with past practice
since the date of the POPS
Financial Statements; or
h. cancel any material debts or
waive any material claims or
rights.
9. DEFINITIONS.
As used in this Agreement, the following terms have the
meanings specified or referred to in this Section 9.
9.1 "Business Day" Any day that is not a
Saturday or Sunday or a day on which banks
located in the City of New York are
authorized or required to be closed.
9.2 "Code" The Internal Revenue Code of
1986, as amended.
9.3 "Disclosure Letter" A letter dated the
date of this Agreement, executed by either
POPstar and POPS, addressed and delivered
to the other and containing information
required by this Agreement and exceptions
to the representations and warranties under
this Agreement.
9.4 "Encumbrances" Any security interest,
mortgage, lien, charge, adverse claim or
restriction of any kind, including, but not
limited to, any restriction on the use,
voting, transfer, receipt of income or
other exercise of any attributes of
ownership, other than a restriction on
transfer arising under Federal or state
securities laws.
9.5 "Equity Securities" See Rule 3a 11 1
under the Securities Exchange Act of 1934.
9.6 "ERISA" The Employee Retirement Income
Security Act of 1974, as amended.
9.7 "Governmental Body" Any domestic or
foreign national, state or municipal or
other local government or multi-national
body (including, but not limited to, the
European Economic Community), any
subdivision, agency, commission or
authority thereof.
9.8 "Knowledge" Actual knowledge, after
reasonable investigation.
9.9 "Person" Any individual, corporation,
partnership, joint venture, trust,
association, unincorporated organization,
other entity, or Governmental Body.
9.10 "Subsidiary" With respect to any Person,
any corporation of which securities having
the power to elect a majority of that
corporation's Board
of Directors (other
than securities having that power only upon
the happening of a contingency that has not
occurred) are held by such Person or one or
more of its Subsidiaries.
10. TERMINATION.
10.1 Termination. This Agreement may be
terminated before the Closing occurs only
as follows:
a. By written agreement of POPstar and POPS at
any time.
b. By POPS, by notice to POPstar at any time,
if one or more of the conditions specified
in Section 4 is not satisfied at the time
at which the Closing (as it may be deferred
pursuant to Section 2.1) would otherwise
occur or if satisfaction of such a
condition is or becomes impossible.
c. By POPstar, by notice to POPS at any time,
if one or more of the conditions specified
in Section 3 is not satisfied at the time
at which the Closing (as it may be deferred
pursuant to Section 2.1), would otherwise
occur of if satisfaction of such a
condition is or becomes impossible.
d. By POPstar to POPS, by notice to the other
at any time after July 31, 1999.
10.2 Effect of Termination. If this Agreement is
terminated pursuant to Section 10.1, this
Agreement shall terminate without any
liability or further obligation of any
party to another.
11. NOTICES. All notices, consents, assignments and other
communications under this Agreement shall be in writing
and shall be deemed to have been duly given when (a)
delivered by hand, (b) sent by telex or facsimile (with
receipt confirmed), provided that a copy is mailed by
registered mail, return receipt requested, or (c) received
by the delivery service (receipt requested), in each case
to the appropriate addresses, telex numbers and facsimile
numbers set forth below (or to such other addresses, telex
numbers and facsimile numbers as a party may designate as
to itself by notice to the other parties).
(a) If to POPS:
c/x Xxxxxxx & Xxxxxxxx, Ltd.
0000 X. Xxxxxxxx Xxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Xxxx Xxxxxxxx
(b) If to POPstar:
POPstar Global Communications Inc.
KPMG Centre
Tropic Isle Building
P.O. Box 3443, Road Town
Tortola, British Virgin Islands
Facsimile No.: (000) 000-0000
Attention: Xxx Xxx
with a copy to:
Law Offices of M. Xxxxxxx Xxxxxx
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Facsimile No.: (000) 000-0000
12. MISCELLANEOUS.
12.2 Expenses. Each party shall bear its own
expenses incident to the preparation,
negotiation, execution and delivery of this
Agreement and the performance of its
obligations hereunder.
12.3 Captions. The captions in this Agreement
are for convenience of reference only and
shall not be given any effect in the
interpretation of this agreement.
12.4 No Waiver. The failure of a party to insist
upon strict adherence to any term of this
Agreement on any occasion shall not be
considered a waiver or deprive that party
of the right thereafter to insist upon
strict adherence to that term or any other
term of this Agreement. Any waiver must be
in writing.
12.5 Exclusive Agreement; Amendment. This
Agreement supersedes all prior agreements
among the parties with respect to its
subject matter with respect thereto and
cannot be changed or terminated orally.
12.6 Counterparts. This Agreement may be
executed in two or more counterparts, each
of which shall be considered an original,
but all of which together shall constitute
the same instrument.
12.7 Governing Law. This Agreement and (unless
otherwise provided) all amendments hereof
and waivers and consents hereunder shall be
governed by the internal law of the State
of California, without regard to the
conflicts of law principles thereof.
12.8 Binding Effect. This Agreement shall inure
to the benefit of and be binding upon the
parties hereto and their respective
successors and assigns, provided that
neither party may assign its rights
hereunder without the consent of the other,
provided that, after the Closing, no
consent of POPstar shall be needed in
connection with any merger or consolidation
of POPS with or into another entity.
IN WITNESS WHEREOF, the corporate parties hereto have
caused this Agreement to be executed by their respective
officers, hereunto duly authorized, and entered into as of
the date first above written.
ATTEST: POPSTAR COMMUNICATIONS, INC.,
A NEVADA CORPORATION
By: /s/ Xxxxx X. Xxxxxxxxxxx
Secretary President
ATTEST: POPSTAR GLOBAL COMMUNICATIONS INC.,
A BRITISH VIRGIN ISLAND CORPORATION
By: /s/ Xxxxxxxx Xxx
Secretary President
EXHIBIT A
POPstar SHAREHOLDERS
Name POPS Shares to be Issued
Pang Xxx XXXX, as trustee for
Xxxxxxxx Xxx Family Trust 6,525,000
Pang Xxx XXXX, as trustee for
Xxxx XxXxxxxxx Family Trust 2,000,000
Stargate Trust 1,525,000
Xxx Lit XXXX 25,000
Xxxxx XXXXX 25,000
Sou Won XXXXX 25,000
Xxxxxx In-sing XXXXX 25,000
Xxxxxx XXXX 100,000
Xxxxx & Xxxxxxxxx Holding Ltd. 250,000
MRC Legal Services Corporation 10,000
Kemayan E.C. Hybrid Ltd. 1,750,000
Sunfield Industries Limited 625,000