REORGANIZATION AND STOCK PURCHASE AGREEMENT
This REORGANIZATION AND STOCK PURCHASE AGREEMENT dated as of February 28, 2007
(this "Agreement") is by and between Sorell, Inc., a Nevada corporation
("Sorell"), and Tojen. Ltd., a company incorporated pursuant to the laws of
England and Wales ("Tojen").
RECITALS
A: WHEREAS, Sorell desires to acquire directly or indirectly 100% of the
equity of Tojen;
B: WHEREAS, the parties hereto intend that the transaction contemplated
hereby shall be completed as a tax-free exchange of stock.
NOW, THEREFORE, the respective Boards of Directors of Sorell and Xxxxx xxxx it
advisable and in the best interests of their corporations and the respective
shareholders of their corporations that Sorell acquire 100% of the securities of
Tojen, in accordance with the terms and conditions of this Reorganization and
Stock Purchase Agreement.
1. Pre-Closing Actions ofSorell. Immediately upon execution of this
Agreement and prior to any Closing as set forth herein, Sorell shall undertake
the following actions:
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(a) The Board of Directors of Sorell shall unanimously approve and deliver
to Xxxxxx Law Group (the "Escrow Agent") in escrow (the "Escrow") resolutions
with respect to (a) approving all of the transactions set forth herein; (b)
directing the size of the Board of Directors to be two (2) members; (c) electing
Xxx Xxxxx (Chairman) and Xxxx Xxxxxxxxx to the board of directors of Sorell
designated by Tojen, (d) appointing Xxx Xxxxx as Chief Executive Officer of
Sorell and Xxxx Xxxxxxxxx as Chief Operation Officer of Sorell; and (d)
approving a name change of the corporation to "Tojen Holdings, Inc." (the
"Sorell Board Resolutions").
(b) Sorell shall deliver or cause to be delivered to Escrow a total of
75,000,000 shares of Sorell for delivery to shareholders or other designees of
Tojen as advised to Escrow prior to closing (the "Escrowed Sorell Shares").
(c) Sorell shall use its reasonable best efforts to prepare and complete the
documents necessary to be filed with local, state and federal authorities to
consummate the transactions contemplated hereby.
(d) During the Due Diligence Period, Sorell shall make available to Tojen
and Tojen's employees, attorneys, accountants, financial advisors, agents and
representatives during normal business hours all information concerning the
operation, business and prospects of Sorell as may be reasonably requested by
Tojen. Sorell will cooperate with Tojen for the purpose of permitting Tojen to
discuss Sorell's business and prospects with customers, creditors, suppliers and
other persons having business dealings with such party, including without
limitation providing access to all employees, consultants, assets, properties,
books, accounts, records, tax returns, contracts and other documents of Sorell,
provided that such access will not materially interfere with the normal business
operations of Sorell.
2. Pre-Closing Action ofTojen. Immediately upon execution of this Agreement
and prior to the Closing as set forth herein, Tojen shall undertake the
following actions:
(a) The Board of Directors of Tojen shall execute and deliver resolutions
unanimously approving all of the transactions set forth herein.
(b) The shareholders of Tojen shall deliver to Xxxxxx Law Group in escrow
certificates representing 200 shares of common stock of Tojen (the "Escrowed
Tojen Shares"), representing 100% of the issued and outstanding equity of Tojen,
for delivery to Sorell at Closing.
(c) During the Due Diligence Period, Tojen shall make available to Sorell
and Sorell's employees, attorneys, accountants, financial advisors, agents and
representatives during normal business hours all information concerning the
operation, business and prospects of Tojen as may be reasonably requested by
Sorell. Tojen will cooperate with Sorell for the purpose of permitting Sorell
to discuss Tojen's business and prospects with customers, creditors, suppliers
and other persons having business dealings with such party, including without
limitation providing access to all employees, consultants, assets, properties,
books, accounts, records, tax returns, contracts and other documents of Tojen,
provided that such access will not materially interfere with the normal business
operations of Tojen.
3. Conditions to Closing
The parties' obligation to close the proposed Acquisition will be subject to
specified conditions precedent including, but not limited to, the following:
(a) the representations and warranties of Sorell as set forth in Section 6
herein shall remain true and correct as of the Closing Date and no material
adverse change to the financial condition of Sorell shall have occurred;
(b) the representations and warranties of Tojen as set forth in Section 7
herein shall remain true and correct as of the Closing Date and no material
adverse change in the business or financial condition of Tojen shall have
occurred;
(c) all the documents necessary to be filed with local, state and federal
authorities (including the Securities and Exchange Commission) are prepared, and
to the extent applicable, filed.
(d) Sorell shall have provided the board resolutions and any other approval
required to complete the board election; and board resolutions approving the
name change;
(e) Sorell shall retain its good standing as a publicly traded company under
the Securities Exchange Act of 1934, trading on the over-the-counter bulletin
board under the symbol "SLLI.OB";
(f) Sorell shall have prepared and delivered to Tojen within sixty days of
Closing audited and unaudited financial statements which if filed at the time
received would be complete and compliant with Regulation S-X, Section 310,
sufficient for the combined entities to file any and all filings required by the
US Securities and Exchange Commission (the "Sorell Financial Statements");
(g) Tojen shall have prepared and delivered to Sorell within sixty days of
closing audited and unaudited financial statements which if filed at the time
received would be complete and compliant with Regulation S-X, Section 310,
sufficient for the combined entities to file any and all filings required by the
US Securities and Exchange Commission (the "Tojen Financial Statements");
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(h) Sorell shall have completed an Assignment and Assumption Agreement with
Bon Xxxx Xxx pursuant to which it shall have divested itself of any and all
assets and/or obligations of S-Cam Co., Ltd., its prior subsidiary (the
"Spin-off")[note: I think that this needs to be done simultaneous with the
closing; otherwise, Sorrel would be a "shell" at the closing; let me know you
thoughts.]
(i) On or prior to Closing, Sorell shall have completed the conversion of
$2,000,000 original principal amount of Convertible Debentures (the "Convertible
Debentures") into a total of 4,000,000 shares of common stock, and except with
respect to certain warrants outstanding (described in more detail below), there
shall be no further obligations to the holders of such Convertible Debentures.
4. At the Closing.
(a) At the Closing, Xxxxxx Law Group shall release from escrow the Sorell
Board Resolutions effectuating the election of members designated by Tojen to
the Sorell Board of Directors. The members of the Board of Directors of Sorell
prior to Closing shall submit resignations at Closing.
(b) At the Closing, Xxxxxx Law Group shall release the Escrowed Sorell
Shares to the shareholders or designees of Tojen.
(c) At the Closing, Xxxxxx Law Group shall release the Escrowed Tojen Shares
to Sorell.
(d) At the Closing, the existing officers of Sorell shall resign and be
replaced by those officers appointed by the new Board of Directors.
5. Timing ofClosing. The closing of the transactions contemplated by this
Agreement ((the "Closing") shall occur upon the satisfaction of the conditions
set forth in this Agreement and upon instructions from the parties hereto to the
Escrow Agent. The closing date shall occur on February 28, 2007 in the event
such conditions are met, unless the Escrow Agent receives instructions otherwise
from the parties or notice from a party that the conditions set forth herein
have not occurred (the "Closing Date"). Unless otherwise advised in writing by
the parties, in the event the Closing does not occur on or before March 31,
2007, (i) the Escrow Agent shall return the Escrowed Sorell Shares and the
Sorell Board Resolutions to Sorell; and (ii) the Escrow Agent shall return the
Escrowed Tojen Shares to the shareholders of Tojen.
6. Representations ofSorell andS-Cam Co., Ltd (the "Subsidiary"). Each of
Sorell and the Subsidiary, jointly and severally, represents and warrants as
follows:
(a) Ownership of Shares. As of the Closing Date, the shareholders of Tojen
will become the owners of the Escrowed Sorell Shares. The Escrowed Sorell
Shares will be free from claims, liens or other encumbrances, except as provided
under applicable federal and state securities laws;
(b) Fully paid and Nonassessable. The Escrowed Sorell Shares constitute
duly and validly issued shares of Sorell, and are fully paid and nonassessable,
and Sorell further represents that it has the power and the authority to execute
this Agreement and to perform the obligations contemplated hereby;
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(c) Organization of Sorell; Authorization. Sorell 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
Sorell and this Agreement constitutes a valid and binding obligation of Sorell;
enforceable against it in accordance with its terms. Subsequent to the
Spin-off, Sorell has no subsidiaries.
(d) Capitalization. The authorized capital stock of Sorell consists of
100,000,000 shares of common stock, par value $0.001 per share, and no shares of
preferred stock. As of the Closing Date, Sorell will have a total of no more
than 15,163,877 shares of common stock issued and outstanding (including the
issuance of common stock in connection with the conversion of the Convertible
Debt) and no shares of preferred stock issued and outstanding. As of the
Closing Date, all of the issued and outstanding shares of common stock of Sorell
are validly issued, fully paid and non-assessable. Except for 4,000,000
warrants to purchase shares at an exercise price of $0.75 per share held by the
holders of the Convertible Debentures and 800,000 warrants to purchase shares at
an exercise price of $0.50 per share held by the placement agent for the
Convertible Debentures, there is not and as of the Closing Date, there will not
be outstanding any warrants, options or other agreements on the part of Sorell
obligating Sorell to issue any additional shares of common or preferred stock or
any of its securities of any kind. Sorell will not issue any shares of capital
stock from the date of this Agreement through the Closing Date. The Common
Stock of Sorell is presently trading on the over-the-counter bulletin board
maintained by Nasdaq under the symbol "SLLI.OB".
Ownership of Sorell Shares. The delivery of certificates provided herein
for the Escrowed Sorell Shares will result in the shareholders of Tojen
immediate acquisition of record and beneficial ownership of the Escrowed Sorell
Shares, free and clear of all encumbrances.
(e) No Conflict as to Sorell and its Subsidiary. Neither the execution and
delivery of this Agreement nor the consummation of the exchange of the Sorell
Shares will (a) violate any provision of the certificate of incorporation or
by-laws (or other governing instrument) of Sorell 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 Sorell under, any
material agreement or commitment to which Sorell is a party or by which its
property or assets is bound, or to which any of the property or assets of Sorell
is subject, or (c) violate any statute or law or any judgment, decree, order,
regulation or rule of Governmental Body applicable to Sorell except, in the case
of violations, conflicts, defaults, terminations, accelerations or encumbrances
described in clause (b) of this Section for such matters which are not likely to
have a material adverse effect on the business or financial condition of Sorell.
The term "Governmental Body" shall mean any government, municipality or
political subdivision thereof, whether federal, state, local or foreign, or any
governmental or quasi-governmental agency, authority, board, bureau, commission,
department, instrumentality or public body, or any court, arbitrator,
administrative tribunal or public utility.
(g) Consents and Approvals of Governmental Authorities. Except for the
filing of a Form 8-K with the Securities and Exchange Commission and a Form
8-K/A (filed within 71 days which will include the financials and pro-forma
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financials of each of Sorell and Tojen), no consent, approval or authorization
of, or declaration, filing or registration with, any Governmental Body is
required to be made or obtained by Sorell in connection with the execution,
delivery and performance of this Agreement by Sorell or the consummation of the
sale of the Escrowed Sorell Shares.
(h) Other Consents. Except for consents from the holders of the Escrowed
Sorell Shares, no consent of any Person is required to be obtained by Sorell to
the execution, delivery and performance of this Agreement or the consummation of
the sale of the Sorell Shares, including, but not limited to, consents from
parties to leases or other agreements or commitments, except for any consent
which the failure to obtain would not be likely to have a material adverse
effect on the business and financial condition of Sorell.
(i) Litigation. There is no action, suit, inquiry, proceeding or
investigation by or before any Governmental body pending or threatened in
writing against or involving Sorell, or which questions or challenges the
validity of this Agreement. Sorell is not subject to any judgment, order or
decree that is likely to have a material adverse effect on the business or
financial condition of Sorell.
(j) Absence of Certain Changes. From December 31, 2006, to the date hereof,
Sorell has not:
1. suffered damage or destruction of any of its properties or assets
(whether or not covered by insurance) which is materially adverse to the
financial condition of Sorell, or made any disposition of any of its material
properties or assets other than in the ordinary course of business;
2. made any change or amendment in its certificate of incorporation or
by-laws, or other governing instruments, except as contemplated hereby or
required to effect the transactions set forth herein;
3. other than the Sorell Escrowed Shares or other than the total issued and
outstanding shares set forth in paragraph 6(d) hereto, issued or sold any equity
securities or other securities, acquired, directly or indirectly, by redemption
or otherwise, any such securities, reclassified, split-up or otherwise changed
any such security, or granted or entered into any options, warrants, calls or
commitments of any kind with respect thereto;
4. organized any new subsidiary or acquired any securities of any Person or
any equity or ownership interest in any business;
5. borrowed any funds or incurred, or assumed or become subject to, whether
directly or by way of guarantee or otherwise, any obligation or liability with
respect to any such indebtedness for borrowed money;
6. paid, discharged or satisfied any material claim, liability or obligation
(absolute, accrued, contingent or otherwise), other than the Spin-off or
otherwise in the ordinary course of business;
7. prepaid any material obligation having a maturity of more than 90 days
from the date such obligation was issued or incurred;
8. cancelled any material debts or waived any material claims or rights,
except for the Spin-off or otherwise in the ordinary course of business;
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9. disposed of or permitted to lapse any rights to the use of any material
patent or registered trademark or copyright or other intellectual property owned
or used by it;
9. granted any general increase in the compensation of officers or employees
(including any such increase pursuant to any employee benefit plan);
10. 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;
11. made any capital expenditures or additions to property, plant or
equipment or acquired any other property or assets;
12. written off or been required to write off any notes or accounts
receivable;
13. written down or been required to write down any inventory;
14. entered into any collective bargaining or union contract or agreement;
and
15. incurred any liability (in excess of $2,000.00) or other obligation.
(k) Contracts and Commitments. Sorell is not a party to any:
1. Contract or agreement (except for this Agreement) involving any
liability, obligation or covenant on the part of Sorell.
2. Lease of personal property;
3. Employee bonus, stock option or stock purchase, performance unit,
profit-sharing, pension, savings, retirement, health, deferred or incentive
compensation, insurance or other material employee benefit plan (as defined in
Section 2(3) of ERISA) or program for any of the employees, former employees or
retired employees of Sorell;
4. Commitment, contract or agreement that is currently expected by the
management of Sorell to result in any material loss upon completion or
performance thereof;
5. Contract, agreement or commitment with any officer, employee, agent,
consultant, advisor, salesman, sales representative, value added reseller,
distributor or dealer, except for a management contract with Sorell's president;
or
6. Employment agreement or other similar agreement.
(l) Compliance with Law. The operations of Sorell 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 Sorell. Sorell has not received any notification of any asserted present or
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past failure by it to comply with any such applicable laws or regulations.
Sorell has all material licenses, permits, orders or approvals from the
Governmental Bodies required for the conduct of its business, and is not in
material violation of any such licenses, permits, orders and approvals. All such
licenses, permits, orders and approvals are in full force and effect, and no
suspension or cancellation of any thereof has been threatened.
(m) Tax Matters.
1. Sorell (1) has filed or shall file prior to Closing all nonconsolidated
and noncombined Tax Returns and all consolidated or combined Tax Returns that
include only Sorell and not Tojen or its other Affiliates (for the purposes of
this Section, such tax Returns shall be considered nonconsolidated and
noncombined Tax Returns) required to be filed through the date hereof and 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. "Affiliate" of any person means any other
person directly or indirectly through one or more intermediary persons,
controlling, controlled by or under common control with such person. "Tax"
(including, with correlative meaning, the terms "Taxes" and "Taxable") shall
mean: (i)(A) any net income, gross income, gross receipts, sales, use, ad
valorem, transfer, transfer gains, franchise, profits, license, withholding,
payroll, employment, excise, severance, stamp, rent, recording, occupation,
premium, real or personal property, intangibles, environmental or windfall
profits tax, alternative or add-on minimum tax, customs duty or other tax, fee,
duty, levy, impost, assessment or charge of any kind whatsoever (including but
not limited to taxes assessed to real property and water and sewer rents
relating thereto), together with; (B) any interest and any penalty, addition to
tax or additional amount imposed by any Governmental Body (domestic or foreign)
(a "Tax Authority") responsible for the imposition of any such tax and interest
on such penalties, additions to tax, fines or additional amounts, in each case,
with respect to any party hereto, its business or tassets (or the transfer
thereof); (ii) any liability for the payment of any amount of the type described
in the immediately preceding clause (i) as a result of a party hereto being a
member of an affiliated or combined group with any other person at any time on
or prior to the date of Closing; and (iii) any liability of a party hereto for
the payment of any amounts of the type described in the immediately preceding
clause (i) as a result of a contractual obligation to indemnify any other
person. "Tax Return" shall mean any return or report (including elections,
declarations, disclosures, schedules, estimates and information returns)
required to be supplied to any Tax Authority.
2. Sorell represents that prior to Closing, all consolidated or combined Tax
Returns (except those described in subparagraph (1) above) required to be filed
by any person through the date hereof that are required or permitted to include
the income, or reflect the activities, operations and transactions, of Sorell
for any taxable period shall have been timely filed, and the income, activities,
operations and transactions of Sorell shall have been properly included and
reflected thereon. Sorell 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 Sorell, with respect to any taxable year or the portion thereof
ending on or prior to the Closing Date, including, without limitation, Sorell's
consolidated federal income tax return for such taxable years. Prior to Closing,
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Sorell will timely file a consolidated federal income tax return for the taxable
year ended December 31, 2006 and such return shall include and reflect the
income, activities, operations and transactions of Sorell 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 Sorell for the taxable period
through the Closing Date. All Tax Returns filed pursuant to this subparagraph
(2) after the date hereof shall, in each case, to the extent that such Tax
Returns specifically relate to Sorell and do not generally relate to matters
affecting other members of Sorell'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. Sorell has paid or will pay all Taxes that may now or hereafter be
due with respect to the taxable periods covered by such consolidated or combined
Tax Returns.
3. There is no (nor has there been any request for an) agreement, waiver or
consent providing for an extension of time with respect to the assessment of any
Taxes attributable to Sorell, or its assets or operations and no power of
attorney granted by Sorell with respect to any Tax matter is currently in force.
4. There is no action, suit, proceeding, investigation, audit, claim,
demand, deficiency or additional assessment in progress, pending or threatened
against or with respect to any Tax attributable to Sorell or its assets or
operations.
5. All amounts required to be withheld as of the Closing Date for Taxes or
otherwise have been withheld and paid when due to the appropriate agency or
authority.
(n) Borrowing and Guarantees. Except as reflected on its financial
statements for the period ended December 31, 2006, Sorell (a) does not have any
indebtedness for borrowed money, (b) are not lending or committed to lend any
money (except for advances to employees in the ordinary course of business), and
(c) are not guarantors or sureties with respect to the obligations of any
Person. Following the Spin Off and the conversion of the Convertible Debt, at
the Closing, Sorell (a) will 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.
(o) Environmental Matters.
1. At all times prior to the date hereof, each of Sorell and its Subsidiary
have complied in all material respects with applicable environmental laws,
orders, regulations, rules and ordinances, the violation of which would have a
material adverse effect on the business or financial condition of Sorell and its
Subsidiary, taken as a whole, or which would require a payment by Sorell or its
Subsidiary in excess of $10,000 in the aggregate, and which have been duly
adopted, imposed or promulgated by any legislative, executive, administrative or
judicial body or officer of any Governmental Body.
2. The environmental licenses, permits and authorizations that are material
to the operations of Sorell and its Subsidiary, taken as a whole, are in full
force and effect.
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(p) Securities Matters As of the Closing Date, Sorell has made in a timely
manner all filings (the "Filings") with the Securities and Exchange Commission
(the "Commission") which it is required to make under the Securities Act of
1933, as amended, and/or under the Securities Xxxxxxxx Xxx 0000, as amended
(collectively, the "Acts"). At the time filed, each Filing complied as to form
in all material respects with the applicable requirements of the Acts and the
rules and regulations of the Commission thereunder and, at the time made, no
Filing contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary in order to make the
statements therein not misleading.
(q) Disclosure. Neither this Agreement, the Schedules hereto nor any of the
Transaction Documents contain any untrue statement of a material fact with
respect to Sorell and its Subsidiary, or omit to state a material fact necessary
in order to make the statements contained herein or therein with respect to
Sorell and its Subsidiary not misleading. Neither Sorell nor its Subsidiary has
any knowledge of any events, transactions or other facts which, either
individually or in the aggregate, may give rise to circumstances or conditions
which would have a material adverse effect on the general affairs or the
condition of business of Sorell. "Transaction Documents" shall mean,
collectively, this Agreement, and each of the other agreements and instruments
to be executed and delivered by all or some of the parties hereto in connection
with the consummation of the transactions contemplated hereby.
7. Representations of Tojen. Tojen for their respective rights and interests
represent and warrant as follows:
(a) Organization; Authorization. Tojen is a corporation duly organized,
validly existing and in good standing under the laws of its country of
organization 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 Tojen and this Agreement constitutes a valid and binding
obligation; enforceable against in accordance with its terms. Tojen has no
subsidiaries.
(b) Capitalization. As of the date of this Agreement, Tojen has 200 shares
of common stock issued and outstanding and no shares of preferred stock issued
and outstanding. No shares have otherwise been registered under state or U.S.
federal securities laws. As of the Closing Date, all of the issued and
outstanding shares of common stock of Tojen are validly issued, fully paid and
non-assessable. As of the Closing Date, except for warrants to acquire 10.5
shares of Tojen, there will not be outstanding any warrants, options or other
agreements on the part of Tojen obligating any of Tojen to issue any additional
shares of common or preferred stock or any of its securities of any kind. Tojen
will not issue any shares of capital stock from the date of this Agreement
through the Closing Date. The Escrowed Tojen Shares will be free from claims,
liens or other encumbrances, except as provided under applicable federal and
state securities laws;
(c) No Conflict as to Tojen and Subsidiaries. Neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
herein will (a) violate any provision of the articles of incorporation or
organization of Tojen or any of its Subsidiaries or (b) violate, or be in
conflict with, or constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under, or result in the termination
of, or accelerate the performance required by, or excuse performance by any
Person of any of its obligations under, or cause the acceleration of the
maturity of any debt or obligation pursuant to, or result in the creation or
imposition of any Encumbrance upon any property or assets of any of Tojen or any
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of its Subsidiaries under, any material agreement or commitment to which any of
Tojen, any of its Subsidiaries is a party or by which any of their respective
property or assets is bound, or to which any of the property or assets of any of
Tojen 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 Tojen or any of its Subsidiaries except, in the
case of violations, conflicts, defaults, terminations, accelerations or
Encumbrances described in clause (b) of this Section for such matters which are
not likely to have a material adverse effect on the business or financial
condition of Tojen and its subsidiaries, taken as a whole.
(d) Consents and Approvals of Governmental Authorities. No consent, approval
or authorization of, or declaration, filing or registration with, any
Governmental Body is required to be made or obtained by Tojen or any of either
of its Subsidiaries in connection with the execution, delivery and performance
of this Agreement by Tojen or the consummation of the transactions contemplated
herein.
(e) Other Consents. No consent of any Person is required to be obtained by
Tojen to the execution, delivery and performance of this Agreement or the
consummation of the transactions contemplated herein, including, but not limited
to, consents from parties to 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 Tojen.
(f) Buildings, Plants and Equipment. The buildings, plants, structures and
material items of equipment and other personal property owned or leased by Tojen
or its Subsidiaries are, in all respects material to the business or financial
condition of Tojen 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. Tojen has not
received notification that it is in violation of any applicable building,
zoning, anti-pollution, health, safety or other law, ordinance or regulation in
respect of its buildings, plants or structures or their operations, which
violation is likely to have a material adverse effect on the business or
financial condition of Tojen and its Subsidiaries, taken as a whole or which
would require a payment by Tojen or any of its subsidiaries in excess of
$10,000 in the aggregate, and which has not been cured.
(g) No Condemnation or Expropriation. Neither the whole nor any portion of
the property or leaseholds owned or held by Tojen or any of its Subsidiaries is
subject to any governmental decree or order to be sold or is being condemned,
expropriated or otherwise taken by any Governmental Body or other Person with or
without payment of compensation therefore, which action is likely to have a
material adverse effect on the business or financial condition of Tojen and its
Subsidiaries, taken as a whole.
(h) Litigation. There is no action, suit, inquiry, proceeding or
investigation by or before any court or Governmental Body pending or threatened
in writing against or involving Tojen or any of its Subsidiaries which is likely
to have a material adverse effect on the business or financial condition of
Tojen and any of its Subsidiaries, taken as whole, or which would require a
payment by Tojen or its subsidiaries in excess of $10,000 in the aggregate or
which questions or challenges the validity of this Agreement. Neither Tojen 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 Tojen or any of its Subsidiaries, taken as a whole, or which would require a
payment by Tojen or its Subsidiaries in excess of $10,000 in the aggregate.
(i) Absence of Certain Changes. From December 31, 2006, to the date hereof,
neither Tojen nor any of its Subsidiaries has:
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1. suffered the damage or destruction of any of its properties or assets
(whether or not covered by insurance) which is materially adverse to the
business or financial condition of Tojen and its Subsidiaries, taken as a
whole, or made any disposition of any of its material properties or assets other
than in the ordinary course of business;
2. made any change or amendment in its articles of incorporation or
memorandum of understanding, or other governing instruments;
3. paid, discharged or satisfied any material claim, liability or obligation
(absolute, accrued, contingent or otherwise), other than in the ordinary course
of business;
4. prepaid any material obligation having a maturity of more than 90 days
from the date such obligation was issued or incurred;
5. cancelled any material debts or waived any material claims or rights,
except in the ordinary course of business;
6. disposed of or permitted to lapse any rights to the use of any material
patent or registered trademark or copyright or other intellectual property owned
or used by it;
7. granted any general increase in the compensation of officers or employees
(including any such increase pursuant to any employee benefit plan);
8. purchased or entered into any contract or commitment to purchase any
material quantity of raw materials or supplies, or sold or entered into any
contract or commitment to sell any material quantity of property or assets,
except (i) normal contracts or commitments for the purchase of, and normal
purchases of, raw materials or supplies, made in the ordinary course business,
(ii) normal contracts or commitments for the sale of, and normal sales of,
inventory in the ordinary course of business, and (iii) other contracts,
commitments, purchases or sales in the ordinary course of business;
9. made any capital expenditures or additions to property, plant or
equipment or acquired any other property or assets (other than raw materials and
supplies) at a cost in excess of $10,000 in the aggregate;
10. written off or been required to write off any notes or accounts
receivable in an aggregate amount in excess of $10,000;
11. written down or been required to write down any inventory in an
aggregate amount in excess of $10,000;
12. entered into any collective bargaining or union contract or agreement;
or
13. other than the ordinary course of business, incurred any liability
required by generally accepted accounting principles to be reflected on a
balance sheet and material to the business or financial condition of Tojen and
their subsidiaries taken as a whole.
(j) Labor Relations. Neither Tojen 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
Tojen and its Subsidiaries, taken as a whole, (a) Tojen and its Subsidiaries are
in compliance with all applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours, and is not
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engaged in any unfair labor practice, (b) there is no labor strike, dispute,
slowdown or stoppage actually pending or threatened against Tojen or any of its
Subsidiaries, (c) no representation question exists respecting the employees of
Tojen or any of its Subsidiaries, (d) neither Tojen nor any of its Subsidiaries
has experienced any strike, work stoppage or other labor difficulty, and (e) no
collective bargaining agreement relating to employees of Tojen or any of its
Subsidiaries is currently being negotiated.
(k) Compliance with Law. The operations of Tojen 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 Tojen and its Subsidiaries, taken as a whole, or which
would not require a payment by Tojen or its Subsidiaries in excess of $10,000 in
the aggregate, or which have been cured. Neither Tojen 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. Tojen 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.
(l) Tax Matters.
1. Each of Tojen and its Subsidiaires (1) has filed or shall file prior to
Closing all nonconsolidated and noncombined Tax Returns and all consolidated or
combined Tax Returns that include only Tojen and not Sorell or its other
Affiliates (for the purposes of this Section, such tax Returns shall be
considered nonconsolidated and noncombined Tax Returns) required to be filed
through the date hereof and will have paid any Tax due through the date hereof
with respect to the time periods covered by such nonconsolidated and noncombined
Tax Returns and shall timely pay any such Taxes required to be paid by it after
the date hereof with respect to such Tax Returns and (2) shall prepare and
timely file all such nonconsolidated and noncombined Tax Returns required to be
filed after the date hereof and through the Closing Date and pay all Taxes
required to be paid by it with respect to the periods covered by such Tax
Returns; (B) all such Tax Returns filed pursuant to clause (A) after the date
hereof shall, in each case, be prepared and filed in a manner consistent in all
material respects (including elections and accounting methods and conventions)
with such Tax Return most recently filed in the relevant jurisdiction prior to
the date hereof, except as otherwise required by law or regulation. Any such
Tax Return filed or required to be filed after the date hereof shall not reflect
any new elections or the adoption of any new accounting methods or conventions
or other similar items, except to the extent such particular reflection or
adoption is required to comply with any law or regulation.
2. Each of Tojen and its Subsidiaries represents that prior to Closing, all
consolidated or combined Tax Returns (except those described in subparagraph (1)
above) required to be filed by any person through the date hereof that are
required or permitted to include the income, or reflect the activities,
operations and transactions, of Tojen and its Subsidiaries for any taxable
period shall have been timely filed, and the income, activities, operations and
transactions of Tojen and its Subsidiaries shall have been properly included and
reflected thereon. Tojen and its Subsidiaries shall prepare and file, or cause
to be prepared and filed, all such consolidated or combined Tax Returns that are
required or permitted to include the income, or reflect the activities,
operations and transactions, of Tojen and its Subsidiaries, with respect to any
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taxable year or the portion thereof ending on or prior to the Closing Date,
including, without limitation, Tojen' and Subsidiaries' consolidated federal
income tax return for such taxable years. Prior to Closing, Tojen and its
Subsidiaries will timely file a consolidated federal income tax return for the
taxable year ended December 31, 2006 and such return shall include and reflect
the income, activities, operations and transactions of Tojen and its
Subsidiaries for the taxable period then ended, and hereby expressly covenants
and agrees to file a consolidated federal income tax return, and to include and
reflect thereon the income, activities, operations and transactions of Tojen and
its Subsidiaries for the taxable period through the Closing Date. All Tax
Returns filed pursuant to this subparagraph (2) after the date hereof shall, in
each case, to the extent that such Tax Returns specifically relate to Tojen and
its Subsidiaries, be prepared and filed in a manner consistent in all material
respects (including elections and accounting methods and conventions) with the
Tax Return most recently filed in the relevant jurisdictions prior to the date
hereof, except as otherwise required by law or regulation. Each of Tojen and
its Subsidiaries has paid or will pay all Taxes that may now or hereafter be due
with respect to the taxable periods covered by such consolidated or combined Tax
Returns.
3. 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.
4. There shall be delivered or made available to Sorell at or prior to
Closing true and complete copies of all income Tax Returns (or with respect to
consolidated or combined returns, the portion thereof) and any other Tax Returns
requested by Sorell as may be relevant to Tojen, its Subsidiaries, or their
assets or operations for any and all periods ending after December 31, 2000, or
for any Tax years which are subject to audit or investigation by any taxing
authority or entity.
(m) Environmental Matters.
1. At all times prior to the date hereof, Tojen and its Subsidiaries have
complied in all material respects with applicable environmental laws, orders,
regulations, rules and ordinances, the violation of which would have a material
adverse effect on the business or financial condition of Tojen and its
Subsidiaries, taken as a whole, or which would require a payment by Tojen or its
Subsidiaries in excess of $10,000 in the aggregate, and which have been duly
adopted, imposed or promulgated by any legislative, executive, administrative or
judicial body or officer of any Governmental Body.
2. The environmental licenses, permits and authorizations that are material
to the operations of Tojen and its Subsidiaries, taken as a whole, are in full
force and effect.
(n) Disclosure. Neither this Agreement, the Schedules hereto nor any of the
Transaction Documents contain any untrue statement of a material fact with
respect to Tojen and its Subsidiaries, or omit to state a material fact
necessary in order to make the statements contained herein or therein with
respect to Tojen and its Subsidiaries not misleading. Neither Tojen nor its
Subsidiaries has any knowledge of any events, transactions or other facts which,
either individually or in the aggregate, may give rise to circumstances or
conditions which would have a material adverse effect on the general affairs or
the condition of business of Tojen.
8. Stock Market Application.
Sorell is a Nevada public corporation that currently trades on the
over-the-counter bulletin board. Upon completion of the Closing, Tojen agrees
13
to seek to list the securities of the combined entities on the Nasdaq National
Market System or on the American Stock Exchange. Tojen will be responsible for
any and all costs associated with such filing including applicable audit costs.
9.Indemnification.
(a) Survival of Representations, Warranties and Covenants. Notwithstanding
any right of Tojen fully to investigate the affairs of Sorell and its Subsidiary
and the rights of Sorell to fully investigate the affairs of Tojen, and
notwithstanding any knowledge of facts determined or determinable by Tojen or
Sorell, pursuant to such investigation or right of investigation, Tojen and
Sorell, have the right to rely fully upon the representations, warranties,
covenants and agreements of Sorell, and Tojen respectively, contained in this
Agreement, or listed or disclosed on any Schedule hereto or in any instrument
delivered in connection with or pursuant to any of the foregoing. All such
representations, warranties, covenants and agreements shall survive the
execution and delivery of this Agreement and the Closing hereunder.
Notwithstanding the foregoing, all representations and warranties of Sorell and
Tojen respectively, contained in this Agreement, on any Schedule hereto or in
any instrument delivered in connection with or pursuant to this Agreement shall
terminate and expire twenty four (24) months after the date of Closing;
provided, however, that the liability of a party shall not terminate as to any
specific claim or claims of the type which arise or result from or are related
to a claim for fraud.
(b) Obligation of Sorell and its Subsidiary to Indemnify. Each of Sorell and
its Subsidiary agrees to indemnify, defend and hold harmless Tojen (and their
respective directors, officers, employees, Affiliates, successors and assigns)
from and against all claims, losses, liabilities, regulatory actions, damages,
deficiencies, judgments, settlements, costs of investigation or other expenses
(including Taxes, interest, penalties and reasonable attorneys' fees and fees of
other experts and disbursements and expenses incurred in enforcing this
indemnification) (collectively, the "Losses") suffered or incurred by Tojen, or
any of the foregoing persons arising out of any breach of the representations
and warranties, covenants and agreements of Sorell contained in this Agreement
or in the Schedules or any other Transaction Document.
(c) Obligation of Tojen to Indemnify. Tojen agrees to indemnify, defend and
hold harmless Sorell (and any heirs, successor or assignee thereof) from and
against any Losses suffered or incurred by Sorell arising out of any breach of
the representations and warranties, covenants and agreements of Tojen contained
in this Agreement or in the Schedules or any other Transaction Document.
(d) Notice and Opportunity to Defend Third Party Claims. (i) Within ten
(10) days following receipt by any party hereto (the "Indemnitee") of notice of
any demand, claim, circumstance or Tax Audit which would or might give rise to a
claim, or the commencement (or threatened commencement) of any action,
proceeding or investigation that may result in Losses (an "Asserted Liability"),
the Indemnitee shall give notice thereof (the "Claims Notice") to the party or
parties obligated to provide indemnification pursuant to Sections 9(b), or 9(c)
(collectively, the "Indemnifying Party"). The Claims Notice shall describe the
Asserted Liability in reasonable detail and shall indicate the amount
(estimated, if necessary, and to the extent feasible) of the Losses that has
been or may be suffered by the Indemnitee.
(ii) The Indemnifying Party may elect to defend, at its own expense
and with its own counsel, any Asserted Liability unless: (i) the Asserted
Liability includes a claim seeking an order for injunction or other equitable or
declaratory relief against the Indemnitee, in which case the Indemnitee may at
its own cost and expense and at its option defend the portion of the Asserted
Liability seeking equitable or declaratory relief against the Indemnitee, or
14
(ii) the Indemnitee shall have reasonably, and in good faith, after consultation
with the Indemnifying Party, concluded that: (x) there is a conflict of interest
between the Indemnitee and the Indemnifying Party which could prevent or
negatively influence the Indemnifying Party from impartially or adequately
conducting such defense; or (y) the Indemnitee shall have one or more defenses
not available to the Indemnifying Party but only to the extent such defense
cannot legally be asserted by the Indemnifying Party on behalf of the
Indemnitee. If the Indemnifying Party elects to defend such Asserted Liability,
it shall within ten (10) days (or sooner, if the nature of the Asserted
Liability so requires) notify the Indemnitee of its intent to do so, and the
Indemnitee shall cooperate, at the expense of the Indemnifying Party, in the
defense of such Asserted Liability. If the Indemnifying Party elects not to
defend the Asserted Liability, is not permitted to defend the Asserted Liability
by reason of the first sentence of this Section 9(d)(ii), fails to notify the
Indemnitee of its election as herein provided or contests its obligation to
indemnify under this Agreement with respect to such Asserted Liability, the
Indemnitee may pay, compromise or defend such Asserted Liability at the sole
cost and expense of the Indemnifying Party. Notwithstanding the foregoing,
neither the Indemnifying Party nor the Indemnitee may settle or compromise any
claim over the reasonable written objection of the other, provided that the
Indemnitee may settle or compromise any claim as to which the Indemnifying Party
has failed to notify the Indemnitee of its election under this Section 9(d) or
as to which the Indemnifying Party is contesting its indemnification obligations
hereunder. If the Indemnifying Party desires to accept a reasonable, final and
complete settlement of an Asserted Liability so that such Indemnitee's Loss is
paid in full and the Indemnitee refuses to consent to such settlement, then the
Indemnifying Party's liability to the Indemnitee shall be limited to the amount
offered in the settlement. The Indemnifying Party will exercise good faith in
accepting any reasonable, final and complete settlement of an Asserted
Liability. In the event the Indemnifying Party elects to defend any Asserted
Liability, the Indemnitee may participate, at its own expense, in the defense of
such Asserted Liability. In the event the Indemnifying Party is not permitted
by the Indemnitee to defend the Asserted Liability, it may nevertheless
participate at its own expense in the defense of such Asserted Liability. If
the Indemnifying Party chooses to defend any Asserted Liability, the Indemnitee
shall make available to the Indemnifying Party any books, records or other
documents within its control that are necessary or appropriate for such defense.
Any Losses of any Indemnitee for which an Indemnifying Party is liable for
indemnification hereunder shall be paid upon written demand therefor.
(e) Exclusive Remedy. The parties agree that the indemnification provisions
of this Section___ shall constitute the sole or exclusive remedy of any party in
seeking damages or other monetary relief with respect to this Agreement and the
Contemplated transactions, provided that, nothing herein shall be construed to
limit the right of any party to seek: (i) injunctive relief for a breach of this
Agreement; or (ii) legal or equitable relief for a claim for fraud.
10. Notices.
Any notice which any of the parties hereto may desire to serve upon any of the
other parties hereto shall be in writing and shall be conclusively deemed to
have been received by the party at its address, if mailed, postage prepaid,
United States mail, registered, return receipt requested, to the following
addresses:
15
If to Sorell Sorell, Inc.
Buk-Ri 00, Xxxx-xxxx
Xxxxxx Xxxx, Xxxxxxxx-xx
Xxxxx Xxxxx
Facsimile No.: ____________
Attention: Bon Xxxx Xxx, Chairman and CEO
If to Tojen: Tojen, Ltd.
00 Xxxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx
Xxxxxxx ST148TA
Facsimile No.: ________________
Attn: Xxx Xxxxx, Chairman
11. Successors.
This Agreement shall be binding upon and inure to the benefit of the heirs,
personal representatives and successors and assigns of the parties.
12. Choice of Law.
This Agreement shall be construed and enforced in accordance with the laws
of the State of Nevada, and the parties submit to the exclusive jurisdiction of
the courts of Nevada in respect of all disputes arising hereunder.
13. Counterparts.
This Agreement may be signed in one or more counterparts, all of which
taken together shall constitute an entire agreement.
14. Confidential Information.
Each of Sorell and Tojen hereby acknowledges and agrees that all
information disclosed to each other whether written or oral, relating to the
other's business activities, its customer names, addresses, all operating plans,
information relating to its existing services, new or envisioned products or
services and the development thereof, scientific, engineering, or technical
information relating to the others business, marketing or product promotional
material, including brochures, product literature, plan sheets, and any and all
reports generated to customers, with regard to customers, unpublished list of
names, and all information relating to order processing, pricing, cost and
quotations, and any and all information relating to relationships with
customers, is considered confidential information, and is proprietary to, and is
considered the invaluable trade secret of such party (collectively "Confidential
Information"). Any disclosure of any Confidential Information by any party
hereto, its employees, or representatives shall cause immediate, substantial,
and irreparable harm and loss to the other. Each party understands that the
other desires to keep such Confidential Information in the strictest confidence,
and that such party's agreement to do so is a continuing condition of the
receipt and possession of Confidential Information, and a material provision of
this agreement, and a condition that shall survive the termination of this
Agreement. Consequently, each party shall use Confidential Information for the
sole purpose of performing its obligations as provided herein.
16
15. Public Announcement.
The parties shall make no public announcement concerning this agreement,
their discussions or any other letters, memos or agreements between the parties
relating to this agreement until such time as they agree to the contents of a
mutually satisfactory press release which they intend to release on the date of
execution of this Agreement. Either of the parties, but only after reasonable
consultation with the other, may make disclosure if required under applicable
law.
16. Entire Agreement.
This Agreement sets forth the entire agreement and understanding of the
Parties hereto with respect to the transactions contemplated hereby, and
supersedes all prior agreements, arrangements and understandings related to the
subject matter hereof. No understanding, promise, inducement, statement of
intention, representation, warranty, covenant or condition, written or oral,
express or implied, whether by statute or otherwise, has been made by any Party
hereto which is not embodied in this Agreement or the written statements,
certificates, or other documents delivered pursuant hereto or in connection with
the transactions contemplated hereby, and no party hereto shall be bound by or
liable for any alleged understanding, promise, inducement, statement,
representation, warranty, covenant or condition not so set forth.
17. Costs and Expenses.
Except as otherwise specifically set forth herein, each party will bear its
own attorneys, brokers, investment bankers, agents, and finders employed by,
such party. The parties will indemnify each other against any claims, costs,
losses, expenses or liabilities arising from any claim for commissions, finder's
fees or other compensation in connection with the transactions contemplated
herein which may be asserted by any person based on any agreement or arrangement
for payment by the other party.
18. Attorney's Fees.
Should any action be commenced between the parties to this Agreement
concerning the matters set forth in this Agreement or the right and duties of
either in relation thereto, the prevailing party in such Action shall be
entitled, in addition to such other relief as may be granted, to a reasonable
sum as and for its Attorney's Fees and Costs.
19. Finders.
Sorell represents and warrants that there are no finders or other parties
which have represented Sorell in connection with this transaction which have not
been previously provided with appropriate compensation. In the event any such
finders make a claim for any fee, share issuance of other compensation in
connection with the transactions contemplated hereby, they shall be the sole
responsibility of Sorell. Tojen represents and warrants that there are no
finders or other parties which have represented Tojen in connection with this
transaction. In the event any such finders make a claim for any fee, share
issuance of other compensation in connection with the transactions contemplated
hereby, they shall be the sole responsibility of Tojen.
17
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
For and on behalf of: Sorell, Inc.
a Nevada corporation
By: /s/ Bon Xxxx Xxx
Bon Xxxx Xxx
Chairman and Chief Executive Officer
For and on behalf of: Tojen, Ltd.
a _____________
By: /s/ Xxx Xxxxx
Xxx Xxxxx
Director
For and on behalf of Solely with respect to Sections 6 and 9:
[the Subsidiary]
a _____________
By: /s/ Bon Xxxx Xxx
Bon Xxxx Xxx
[Title]
18
SCHEDULE
