Page 1
BINDING LETTER AGREEMENT
LASSEN ENERGY, INC. AND
NATCO INTERNATIONAL INC.
NATCO INTERNATIONAL INC.
Suite 204
13569- 76[th] Avenue
Surrey, B.C.
V3W 2W3
Canada
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Dated: February 19, 2008
LASSEN ENERGY, INC.
Suite 108A #327
000 Xxxxxxxx Xxxxxxx Xx.
Xxxxxxxx, XX 00000
Attn: Xxxxx Xxxx, Chief Executive Officer
Dear Sir:
RE: PURCHASE AND SALE OF SHARES IN LASSEN ENERGY, INC. ("LASSEN")
Further to our various discussions to date, this letter shall, upon acceptance,
constitute the binding letter agreement ("Letter Agreement") between Natco
International Inc., a public company whose shares are listed on the NASD Over-
the-Counter Bulletin Board ("OTCBB") ("NATCO"), Xxxxxx and the undersigned
holders of all the issued and outstanding shares of Lassen (collectively
referred to as the "SHAREHOLDERS"), with respect to the proposed purchase by
NATCO of all of the shares of Xxxxxx (the "SHARES") from the Shareholders in
exchange for newly issued common shares of NATCO, all on the following terms and
conditions.
DEFINITIONS
ANY CAPITALIZED TERMS USED HEREIN AND NOT OTHERWISE EXPRESSLY DEFINED SHALL HAVE
THE MEANINGS SET OUT IN THE ATTACHED SCHEDULE "A".
PURCHASE AND SALE
ON THE FIFTH BUSINESS DAY AFTER RECEIPT OR WAIVER OF THE APPROVALS (HEREINAFTER
DEFINED) OR SUCH OTHER DAY AS LASSEN AND NATCO MAY AGREE TO IN WRITING
(THE "Closing Date"), THE SHAREHOLDERS SHALL, SUBJECT TO COMPLETION OR
WAIVER OF THE CONDITIONS (HEREIN DEFINED), SELL AND TRANSFER THE SHARES TO
NATCO FREE AND CLEAR OF ALL LIENS AND ENCUMBRANCES IN CONSIDERATION OF THE
ISSUANCE OF 32,375,000 COMMON SHARES OF NATCO, REPRESENTING 92.5% OF THE
ISSUED AND OUTSTANDING COMMON SHARES OF NATCO, TO THE SHAREHOLDERS
(COLLECTIVELY, THE "Exchanged Shares").
THE PARTIES HEREBY ACKNOWLEDGE THAT IT IS THEIR INTENT TO MINIMIZE THE TAX
CONSEQUENCES TO THE SHAREHOLDERS, LASSEN AND NATCO ARISING FROM THE
PROPOSED PURCHASE AND SALE AND OTHER TRANSACTIONS CONTEMPLATED HEREIN AND
AGREE THAT, WHERE REASONABLY POSSIBLE, SUCH TRANSACTION SHALL BE
STRUCTURED SO AS TO MINIMIZE THE TAX PAYABLE BY THE PARTIES WITH RESPECT
TO SUCH TRANSACTIONS.
CLOSING
THE COMPLETION OF THE TRANSACTIONS CONTEMPLATED HEREIN (THE "Closing") SHALL
TAKE PLACE ON THE CLOSING DATE AT THE OFFICE OF XXXXX'S SOLICITORS,
LESCHERT AND COMPANY, SUITE 0000, 000 XXXXXXXXX XXXXXX, XXXXXXXXX, XXXXXXX
XXXXXXXX, XXXXXX AT 10:00 A.M., LOCAL TIME, OR AT SUCH OTHER TIME AND
PLACE AS THE PARTIES MAY AGREE TO IN WRITING.
PRELIMINARY TRANSACTIONS AND DUE DILIGENCE REVIEW
UPON EXECUTION OF THIS LETTER AGREEMENT OR AS SOON AS PRACTICABLE THEREAFTER,
THE SHAREHOLDERS AND LASSEN SHALL:
Permit an auditor chosen by NATCO to prepare audited financial statements
for the most recently completed fiscal year of Xxxxxx, with unqualified
audit opinions thereon, and deliver same to NATCO or its advisors, with
all expenses to be paid by XXXXX;
Deliver the minute book, copies of all material contracts and other
documents pertaining to the assets, property, business and affairs of
Xxxxxx, as may be requested by XXXXX xxxxxxxxx;
Subject to the execution by NATCO of a non-disclosure agreement and any
third parties, provide NATCO with copies of all of its intellectual
property of every nature, whether registered or unregistered, including,
without limitation, all copyrights, patents, patent rights, trade-marks,
certification marks and industrial designs, applications of any of the
foregoing, drawings and designs, processes, prototypes and technology
together with all rights under any license agreement, sublicense
agreement, strategic alliance, technology transfer agreement, development
agreement and any other agreements or arrangements relating to any of the
foregoing, except for any trade secrets that are owned by Xxxxxx
(collectively, the "IP Documents");
Provide complete access to NATCO and any third party experts retained by
NATCO to inspect and approve of Xxxxxx'x technologies including, without
limitation, any proprietary manufacturing information, prototypes,
research data, unpatented blue prints, drawings and designs, formulae,
calculations, processes, and test models, except for any trade secrets;
Provide NATCO with copies of any engineering studies, reports, designs and
other documents pertaining to the design, operation and application of
Xxxxxx'x technologies, except for any trade secrets; and
Provide NATCO or its nominee with such other information and documents in
their possession and control as NATCO may consider necessary or advisable
in order to inspect and approve of Lassen, its assets, technologies,
property, contracts and prospects;
ON OR BEFORE MARCH 15[TH], 2008 OR SUCH LATER DATE AS THE PARTIES MAY AGREE TO
IN WRITING (THE "Review Date"), NATCO SHALL:
complete, to its satisfaction the following due diligence reviews (the
"DUE DILIGENCE REVIEWS")
review and approval by XXXXX and such third party experts as NATCO
or its advisors may specify of Xxxxxx'x technologies and the
documents described in paragraph 4.1, subject to execution and
delivery of such confidentiality agreements as Xxxxxx may reasonably
require;
APPROVALS
THE OBLIGATIONS OF THE PARTIES PURSUANT TO THIS LETTER AGREEMENT SHALL BE
SUBJECT TO RECEIPT OF THE FOLLOWING APPROVALS (THE "Approvals"):
the approval of the shareholders and directors of Lassen to any
transaction contemplated herein requiring such approval;
the approval of the directors of NATCO and any authorities having
jurisdiction with respect to NATCO or any or all of the operations
comprising the proposed transaction or whose approval or consent must be
obtained to implement or carry out the operation thereof as now
contemplated ("Regulatory Authorities"); and
completion, to the satisfaction of NATCO, of the Due Diligence Reviews.
THE FOREGOING APPROVALS MAY BE WAIVED AT ANY TIME BY XXXXX IN WRITING AT ANY
TIME.
CONDITIONS
THE OBLIGATIONS OF NATCO PURSUANT TO THIS LETTER AGREEMENT ARE SUBJECT TO
FULFILLMENT OF THE FOLLOWING CONDITIONS ON OR BEFORE THE DATE SPECIFIED
BELOW (COLLECTIVELY, THE "Conditions"):
on or before the Review Date,
Xxxxxx and the Shareholders shall have provided NATCO with all of
the documents and information considered necessary or advisable for
NATCO to complete its Due Diligence Reviews;
NATCO shall have completed the Due Diligence Reviews to its
satisfaction;
Lassen shall, where appropriate, have cancelled any existing
agreement or obligation affecting the Shares which may be required
by NATCO and shall deliver to NATCO copies of cancellation
agreements, duly executed by all holders of such options or rights,
in the form and on terms specified by NATCO; and
NATCO shall have completed the Due Diligence Reviews to its
satisfaction and shall have received such satisfactory assurances
from Regulatory Authorities in connection therewith as NATCO and its
advisors may consider advisable.
On or before March 31[st], 2008 or such later date as the parties may
agree to in writing (the "AGREEMENT DATE"):
the Shareholders and Xxxxxx shall have executed and delivered a
formal agreement pertaining to the transactions contemplated herein
(the "FORMAL AGREEMENT") to be entered into between XXXXX, Xxxxxx
and the Shareholders substantially in the form attached herein as
Schedule "B", together with such additional provisions and
amendments as may be agreed upon between the parties;
Xxxxxx and NATCO shall have settled the form of any agreements or
instruments to be executed and/or delivered by the Shareholders or
Lassen under or in connection with the Formal Agreement; and
(iii) prepare all documents necessary or desirable for filing with
the US Securities and Exchange Commission ("SEC") or the National
Association of Securities Dealers ("NASD") in conjunction with any
transactions contemplated herein.
on or before the Closing Date:
all necessary Approvals shall have been obtained or waived in
writing by XXXXX;
all covenants, agreements and obligations to be performed or
complied with hereunder on the part of the Shareholders and Xxxxxx
at or prior to the Closing, including in particular, the
Shareholders' obligation to deliver the share certificates,
documents and instruments herein provided for, shall have been
performed and complied with as and when required hereunder;
the representations and warranties of the Shareholders and Lassen
contained herein and in the Formal Agreement or any document
delivered thereunder or in connection therewith shall be true and
correct in all material respects at and as of the Closing, except as
may be in writing disclosed to and approved by XXXXX; and
provision by the directors of Lassen of such further
representations, warranties and covenants respecting the status of
Lassen, its assets and prospects as well as respecting the
transferability of the Shares and other matters as NATCO may
reasonably request.
THE ABOVE STATED CONDITIONS SHALL BE FOR THE EXCLUSIVE BENEFIT OF NATCO AND MAY
BE WAIVED, IN WHOLE OR IN PART, BY NATCO AT ANY TIME.
THE OBLIGATIONS OF LASSEN AND SHAREHOLDERS PURSUANT TO THIS LETTER AGREEMENT ARE
SUBJECT TO FULFILLMENT OF THE FOLLOWING CONDITIONS ON OR BEFORE THE DATE
SPECIFIED BELOW:
on or before the Agreement Date:
NATCO shall have executed and delivered the Formal Agreement;
on or before the Closing Date:
NATCO shall have paid or settled all of its outstanding
indebtedness, accounts payable and liabilities such that the rights
of any creditors thereunder are extinguished to the satisfaction of
Xxxxxx;
NATCO shall have completed a reverse split of its outstanding common
shares ("Share Split") on such a basis as may be necessary so that
the number of common shares outstanding immediately prior to Closing
("Pre Split") will be increased to such number of common shares
following completion of the Share Split ("Post Split") that will,
after Closing, represent 7.5% of the common shares of NATCO then
issued and outstanding;
all covenants, agreements and obligations to be performed or
complied with hereunder on the part of NATCO at or prior to the
Closing shall have been performed and complied with as at the
Closing; and
the representations and warranties of NATCO contained herein and in
the Formal Agreement or any document delivered thereunder or in
connection therewith shall be true and correct in all material
respects at and as of the Closing, except as may be in writing
disclosed to and approved by Xxxxxx and Shareholders.
THE ABOVE STATED CONDITIONS SHALL BE FOR THE EXCLUSIVE BENEFIT OF LASSEN AND
SHAREHOLDERS AND MAY BE WAIVED, IN WHOLE OR IN PART, BY LASSEN AND THE
SHAREHOLDERS AT ANY TIME.
6.5 NATCO agrees to indemnify, defend and hold Xxxxxx and the Shareholders
harmless against and in respect of any and all claims, demands, losses,
costs, expenses, obligations, liabilities, damages, recoveries and
deficiencies, including interest, penalties and reasonable attorney fees
asserted by third parties against Xxxxxx and the Shareholders which arise
out of, or result from (i) any breach by NATCO in performing any of its
covenants or agreements under this Letter Agreement or in any schedule,
certificate, exhibit or other instrument furnished or to be furnished by
NATCO under this Letter Agreement, (ii) a failure of any representation or
warranty in this section 6.5, (iii) any untrue statement made by NATCO in
this Letter Agreement or (iv) any lawsuits arising out of previous
business dealings involving NATCO.
REPRESENTATIONS AND WARRANTIES
THE SHAREHOLDERS AND LASSEN ACKNOWLEDGE THAT, AS PART OF THE FORMAL AGREEMENT,
THEY WILL BE REQUIRED TO JOINTLY AND SEVERALLY REPRESENT, WARRANT AND
COVENANT TO NATCO, EFFECTIVE AS AT THE TIME OF CLOSING ON THE CLOSING
DATE, AMONG OTHER THINGS, THAT:
the Shares are validly issued and outstanding as fully paid and non-
assessable shares and the Shareholders are the beneficial owners of and
have the right and authority to dispose of and give good and marketable
title to the Shares free and clear of all liens, charges, encumbrances and
restrictions on transfer of any nature whatsoever save those existing
pursuant to applicable securities legislation;
Lassen is duly incorporated and in good standing with respect to its
annual corporate filings under the laws of the State of California;
the authorized capital of Lassen consists of 1,000,000,000 common
shares,par value $1.00 per share, of which 32,375,000 common shares are
issued and outstanding and there are no individuals or companies who or
which beneficially own, directly or indirectly, any of the issued and
outstanding shares of Lassen other than the Shareholders;
prior to the Closing Date, Xxxxxx will amend its Articles of Incorporation
for the sole purpose of amending the par value of its common shares to
$.001 per share;
there are no options, warrants, rights or agreements outstanding with
respect to the issued or unissued shares and there are no securities
convertible or exchangeable into shares of Xxxxxx except as have been in
writing disclosed to and approved by NATCO prior to the Review Date;
Xxxxxx is not indebted to the Shareholders and the Shareholders are not
indebted to Xxxxxx, except as has been in writing disclosed to and
approved by NATCO prior to the Review Date;
all material transactions of Lassen have been promptly or properly
recorded or filed in or with its respective books and records;
Lassen is not a party to or threatened with any litigation action, suit or
proceeding in any court or before any administrative tribunal which
affects or may affect Lassen or its assets nor, to the knowledge of the
Shareholders and Xxxxxx after due inquiry, is any such action, suit or
proceeding pending or threatened nor is there any basis therefor;
Xxxxxx has made and filed any and all tax returns and other filings as and
when required by the relevant taxation authority, all of which are
accurate and complete in every material respect, and has made and remitted
all required employee deductions, tax remittances and other payments
required by law as and when required and is not currently required to make
any further assessment, reassessment, demand for payment or filing nor, to
the knowledge of the Shareholders and Xxxxxx, after due inquiry, is any
such action or proceeding pending or threatened;
Xxxxxx beneficially owns all right, title and interest in and to each of
the material assets or which are now used by it or are now held by it for
use hereafter to gain revenue from operations, free and clear of all
liens, charges and encumbrances whatsoever, except as has been in writing
disclosed to and approved by NATCO prior to the Review Date;
the financial statements of Xxxxxx for its most recently completed fiscal
year (the "FINANCIAL STATEMENTS") will be prepared in accordance with
generally accepted accounting principles and upon preparation and delivery
hereunder shall be, true and correct in every material respect and present
fairly and accurately the financial condition and position of Xxxxxx as at
the date to which the Financial Statements were prepared (the "STATEMENT
DATE") and the results of its operations for the fiscal period ended on
the Statement Date;
no material adverse changes have occurred in Xxxxxx'x financial condition
as disclosed in the Financial Statements since the Statement Date, except
as has been in writing disclosed to and approved by NATCO prior to the
Review Date;
there are no advances, debts, duties, endorsements, guarantees,
liabilities, obligations, responsibilities and undertakings of Xxxxxx
assumed, created, incurred or made, whether voluntary or involuntary,
however arising, whether due or not due, absolute, contingent, liquidated
or unliquidated, determined or undetermined, direct or indirect, express
or implied, and whether Xxxxxx may be liable individually or jointly with
others ("INDEBTEDNESS"), except as is set forth in the Financial
Statements elsewhere herein; and
Lassen and the Shareholders agree to indemnify, defend and hold NATCO
harmless against and in respect of any and all claims, demands, losses,
costs, expenses, obligations, liabilities, damages, recoveries and
deficiencies, including interest, penalties and reasonable attorney fees
asserted by third parties against NATCO which arise out of, or result from
(i) any breach by Xxxxxx or the Shareholders in performing any of their
covenants or agreements under this Letter Agreement or in any schedule,
certificate, exhibit or other instrument furnished or to be furnished by
Lassen under this Agreement, (ii) a failure of any representation or
warranty in this section 7.1 or (iii) any untrue statement made by Xxxxxx
or the Shareholders in this Letter Agreement.
THE REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS BY THE SHAREHOLDERS OR
LASSEN SET FORTH IN SECTION 7.1 OR CONTAINED ELSEWHERE IN THIS LETTER
AGREEMENT OR ANY CERTIFICATES OR OTHER DOCUMENTS DELIVERED TO NATCO
PURSUANT TO THE PROVISIONS HEREOF OR IN CONNECTION WITH THE TRANSACTIONS
CONTEMPLATED HEREBY, ARE, EXCEPT WHERE OTHERWISE EXPRESSLY STATED, TRUE AS
OF THE DATE AND TIME OF EXECUTION HEREOF BY THE SHAREHOLDERS AND LASSEN
AND SHALL BE TRUE AT AND AS OF TIME OF CLOSING ON THE CLOSING DATE AS IF
THOSE REPRESENTATIONS OR WARRANTIES, COVENANTS AND AGREEMENTS WERE MADE AT
AND AS SUCH TIME. NOTWITHSTANDING ANY INVESTIGATIONS OR ENQUIRIES MADE BY
NATCO PRIOR TO THE CLOSING DATE OR THE WAIVER OF ANY CONDITION BY NATCO,
THE REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS OF THE
SHAREHOLDERS AND LASSEN SHALL SURVIVE THE CLOSING DATE AND NOTWITHSTANDING
THE CLOSING OF THE PURCHASE AND SALE HEREIN PROVIDED FOR, SHALL CONTINUE
IN FULL FORCE AND EFFECT FOR A PERIOD OF ONE YEAR FROM THE CLOSING DATE.
TRANSACTIONS ON AND BEFORE CLOSING
THE SHAREHOLDERS AND LASSEN SHALL:
As soon as practicable after the Agreement Date and, in any event, prior
to the Closing Date, deliver the following documents to NATCO or its
solictor in trust to be released in the manner specified herein:
Executed and completed transfers and other documents necessary or
advisable to transfer to NATCO the legal and beneficial ownership of
the Shares; and
a directors' resolution, duly executed by all the directors of
Xxxxxx and dated as of the Closing Date, authorizing and approving
the sale of the Shares to NATCO or its nominees and the issuance of
a new share certificate evidencing same.
On or before the Closing, deliver the following documents to NATCO:
irrevocable instructions to XXXXX's Solicitor to release to NATCO
each of the documents delivered pursuant to this Agreement which
have not previously been released to NATCO;
such other solicitors' opinions, officer's certificates and other
documents respecting ownership and valid transfer of the Shares and
respecting the affairs of Xxxxxx as relate to the transactions
contemplated hereby as may be reasonably requested by XXXXX's
Solicitor; and
All documents required to be delivered to NATCO pursuant to this
paragraph 8 shall be duly executed, authorized and completed and
shall be in the form approved by XXXXX's Solicitor.
ON OR BEFORE CLOSING, NATCO SHALL:
Deliver or cause to be delivered any other documents or instruments
required to be delivered by NATCO under the Formal Agreement, this Letter
Agreement or any other agreement or instrument delivered or entered into
under any of the foregoing; and
Deliver such other documents respecting the completion of the transactions
herein as Xxxxxx and the Shareholders may reasonably request.
TERMINATION
UNLESS OTHERWISE AGREED TO IN WRITING BY ALL OF THE PARTIES HERETO, IF THE
CONDITIONS HAVE NOT BEEN FULFILLED OR WAIVED BY NATCO ON OR BEFORE 5:00
P.M. (VANCOUVER TIME) ON MARCH 15[TH], 2008 (THE "Termination Date"), THIS
LETTER AGREEMENT SHALL, ON THE SECOND BUSINESS DAY AFTER WRITTEN NOTICE BY
XXXXX TO LASSEN, CEASE TO BE EFFECTIVE AND, EXCEPT AS OTHERWISE EXPRESSLY
PROVIDED HEREIN, ALL RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO WILL
TERMINATE FORTHWITH AND ABSOLUTELY.
FORMAL AGREEMENT
UPON ACCEPTANCE OF THIS LETTER AGREEMENT AND COMPLETION OF THE DUE DILIGENCE
REVIEWS AND OTHER MATTERS TO BE COMPLETED ON OR BEFORE THE REVIEW DATE,
THE PARTIES WILL INSTRUCT THEIR RESPECTIVE SOLICITORS TO SETTLE FOR
EXECUTION A FORMAL AGREEMENT SUBSTANTIALLY IN THE FORM ATTACHED AS
SCHEDULE "B" BASED UPON THE TERMS AND CONDITIONS SET OUT HEREIN AND SUCH
OTHER TERMS AND CONDITIONS AS THE PARTIES MAY AGREE TO WHICH SHALL BE
EXECUTED BY ALL PARTIES HERETO AND SUBSTITUTED FOR THIS LETTER AGREEMENT
ON OR BEFORE THE AGREEMENT DATE. UNTIL SUCH TIME AS SUCH FORMAL AGREEMENT
HAS BEEN EXECUTED AND DELIVERED BY THE PARTIES HERETO, THE AGREEMENT
FORMED BY THE ACCEPTANCE HEREOF SHALL REMAIN IN FULL FORCE AND EFFECT.
FURTHER ASSURANCES
THE PARTIES HERETO SHALL EXECUTE SUCH OTHER DOCUMENTS AND DO SUCH OTHER THINGS
AS MAY BE REASONABLY NECESSARY TO GIVE FULL EFFECT TO THE TRANSACTIONS
CONTEMPLATED HEREBY.
PRE-COMPLETION MATTERS
IN CONSIDERATION OF THE MUTUAL PREMISES AND COVENANTS CONTAINED HEREIN AND OTHER
GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF WHICH IS
HEREBY ACKNOWLEDGED, THE PARTIES HERETO AGREE THAT, UPON EXECUTION OF THIS
LETTER AGREEMENT AND CONTINUING UNTIL THE EARLIER OF THE FIRST BUSINESS
DAY AFTER THE EARLIER OF THE CLOSING DATE OR THE TERMINATION DATE:
the Shareholders and Xxxxxx shall maintain this Letter Agreement and all
information pertaining thereto in strict confidence and shall not disclose
same to any person unless approved in writing by NATCO;
NATCO shall maintain this Letter Agreement and all information pertaining
thereto in strict confidence and shall not disclose same to any person
unless approved in writing by Xxxxxx;
the Shareholders shall refrain from and Lassen shall not permit the sale
or transfer (directly or indirectly) of any of the Shares and the
Shareholders and Lassen shall not in any manner permit any encumbrance or
disposition of any of the Shares therein;
Lassen and the Shareholders shall not permit Xxxxxx to transfer, encumber
or otherwise deal with any of its assets and rights (except in the
ordinary course of its business as now carried on by it and on a non-arms
length basis and for normal fair market consideration) and shall not do or
permit any other thing contrary to or in hindrance of the transactions
contemplated herein without the prior written approval of NATCO;
None of the Shareholders shall enter into, solicit or entertain any
negotiations respecting the issuance, sale or disposition of any
securities of Lassen and shall refrain from entering into any transaction
which would have the effect preventing or significantly limiting the
proposed transactions related thereto;
the Shareholders and Lassen shall refrain from purchase or sale (directly
or indirectly) of any securities of NATCO; and
NATCO and its advisors or consultants shall have full access to all
corporate records and other information relevant to Xxxxxx, the Shares,
and the transactions contemplated herein and Xxxxxx shall advise its
solicitors accordingly.
GENERAL PROVISIONS
ANY REFERENCE TO A MONETARY AMOUNT, "CASH", DOLLARS OR "$" (OTHER THAN A
SPECIFIC REFERENCE TO UNITED STATES DOLLARS OR "US$") SHALL BE DEEMED TO
REFER TO THE LAWFUL CURRENCY OF CANADA.
TIME IS OF THE ESSENCE HEREOF.
ANY NOTICE OR OTHER COMMUNICATION BETWEEN EITHER PARTY HEREUNDER WILL BE DEEMED
TO BE PROPERLY GIVEN WHEN IN WRITING AND DELIVERED BY HAND OR MAILED,
POSTAGE PREPAID, OR SENT BY ELECTRONIC COMMUNICATION ON ANY BUSINESS DAY
TO THE INTENDED RECIPIENT AT ITS ADDRESS FIRST WRITTEN ABOVE OR TO SUCH
OTHER ADDRESS OR PERSON AS THE OTHER PARTY MAY FROM TIME TO TIME DESIGNATE
BY NOTICE OR IF SENT BY ELECTRONIC COMMUNICATION TO SUCH TELECOMMUNICATION
ADDRESS AS THE RESPECTIVE PARTIES MAY SPECIFY. ANY NOTICE DELIVERED ON A
BUSINESS DAY WILL BE DEEMED CONCLUSIVELY TO HAVE BEEN EFFECTIVELY GIVEN ON
THE DATE NOTICE WAS DELIVERED. ANY NOTICE SENT BY PREPAID REGISTERED MAIL
WILL BE DEEMED CONCLUSIVELY TO HAVE BEEN EFFECTIVELY GIVEN ON THE THIRD
BUSINESS DAY AFTER POSTING; BUT IF AT THE TIME OF POSTING OR BETWEEN THE
TIME OF POSTING AND THE THIRD BUSINESS DAY THEREAFTER THERE IS A STRIKE,
LOCKOUT OR OTHER LABOR DISTURBANCE AFFECTING POSTAL SERVICE, THEN THE
NOTICE WILL NOT BE EFFECTIVELY GIVEN UNLESS DELIVERED BY HAND OR SENT BY
ELECTRONIC COMMUNICATION.
THIS LETTER AGREEMENT WILL BE GOVERNED BY AND INTERPRETED ACCORDING TO THE LAWS
OF THE STATE OF WASHINGTON, AND THE PARTIES HEREBY IRREVOCABLY AGREE TO
SUBMIT TO THE JURISDICTION OF THE COURTS OF THEREOF IN CONNECTION WITH ANY
DISPUTES ARISING HEREUNDER AND IRREVOCABLY SELECT SEATTLE, WASHINGTON AS
THE PROPER VENUE FOR ANY SUCH DISPUTES.
THIS LETTER AGREEMENT MAY BE EXECUTED IN AS MANY COUNTERPARTS AS MAY BE
NECESSARY, EACH OF WHICH SO EXECUTED SHALL BE DEEMED TO BE AN ORIGINAL AND
SUCH COUNTERPARTS TOGETHER SHALL CONSTITUTE ONE AND THE SAME INSTRUMENT.
Provided the foregoing terms are acceptable to you, please so indicate by
executing and returning the enclosed copy of this letter by no later than
February ___, 2008. Upon receipt of your acceptance of the foregoing terms, we
will proceed expeditiously to prepare formal documentation containing the
foregoing provisions and such other terms, conditions, representations and
warranties as may be mutually agreeable to us.
We hereby acknowledge we will accept delivery by telecopy, telefax or other
means of Electronic Communication producing a printed copy provided that the
original copy of this letter is delivered to us within one week of the date of
delivery of the copy sent by Electronic Communication.
Yours truly,
by:
NATCO INTERNATIONAL INC.
/S/ Xxx-Xxxxxxxx Xxxx
By: Xxx-Xxxxxxxx Xxxx
Its: President
Acknowledged and agreed to by Xxxxxx this 19 day of February, 2008.
LASSEN ENERGY, INC.
/S/ Xxxxx Xxxx
By: Xxxxx Xxxx
Its: Chairman and CEO
Acknowledged and agreed to this _____ day of February, 2008 by the undersigned
shareholders of Xxxxxx who, by their signature hereto, represent they hold the
number and type of shares of Xxxxxx set out next to their respective names.
Name and Signature of Shareholder Number and Type of Shares held
DBK Corporation
/S/ Xxxxx Xxxx 14,700,000 common shares
By: Xxxxx Xxxx
Its: Chairman and Chief Executive
Officer
Resource Capital Development, Inc.
/S/ Xxxxxx X. Xxxxx
By: Xxxxxx X. Xxxxx 6,300,000 common shares
Its: President
Capital Group Communications, Inc.
/S/ Xxxxx Xxxxx 5,250,000 common shares
By: Xxxxx Xxxxx
Its: President
Xxxxx Xxxxxxxxxx
/S/ Xxxxx Xxxxxxxxxx 1,750,000 common shares
By: Xxxxx Xxxxxxxxxx
Xxxxxx XxXxxxxx
/S/ Xxxxxx XxXxxxxx 1,750,000 common shares
By: Xxxxxx XxXxxxxx
Xxxxxx Xxxxxx, LLC
1,750,000 common shares
/S/ Xxxxx Xxxxxxx
By: Xxxxx Xxxxxxx
Its: Manager
The Xxxx Law Group, PLLC
/S/ Xxxxx X. Xxxx
By: Xxxxx X. Xxxx 875,000 common shares
Its: President
32,375,000 common shares
TOTAL:
SCHEDULE "A" TO LETTER AGREEMENT BETWEEN LASSEN ENERGY, INC. AND NATCO
INTERNATIONAL INC.
1. Definitions
1.1. Where used herein, the following terms shall have the meanings set
out below:
(a) "AGREEMENT" means the agreement between XXXXX, Xxxxxx and the
Shareholders by execution of the Letter Agreement or, after execution
of the Formal Agreement, the Formal Agreement;
(b)"CLOSING" has the meaning ascribed to it in paragraph 3.1;
(c)"CLOSING DATE" has the meaning ascribed to it in paragraph 2.1;
(D) "COMMON SHARES" means the common shares of NATCO, as constituted on
the date hereof;
(E) "ELECTRONIC COMMUNICATION" means telefax, teletype or other means of
electronic communication producing a printed copy but, for greater
clarity, shall not include e-mail unless the other party acknowledges
receipt of same in writing;
(F) "FORMAL AGREEMENT" has the meaning set out in the second paragraph on
the first page hereof;
(G) "LETTER AGREEMENT" means this binding letter agreement, including the
schedules thereto;
(H) "LIEN" means any mortgage, debenture, charge, hypothecation, pledge,
lien, or other security interest or encumbrance of whatever kind or
nature, regardless of form and whether consensual or arising by law,
statutory or otherwise that secures the payment of any indebtedness or
the performance of any obligation or creates in favor of or grants to
any person any proprietary right;
(I) "NATCO" means Natco International Inc.;
(J) "REGULATORY AUTHORITIES" means any authorities having jurisdiction
with respect to NATCO or any or all of the operations comprising the
proposed transaction or whose approval or consent must be obtained to
implement or carry out the operation thereof as now contemplated;
(K) "SHAREHOLDERS" means the shareholders of Xxxxxx including those who
are signatory to this binding letter agreement;
Page 2
BINDING LETTER AGREEMENT
LASSEN ENERGY, INC. AND
NATCO INTERNATIONAL INC.
SCHEDULE "B" TO LETTER AGREEMENT BETWEEN LASSEN ENERGY, INC. AND NATCO
INTERNATIONAL INC.
FORM OF FORMAL AGREEMENT
AGREEMENT
CONCERNING THE EXCHANGE OF SECURITIES
BY AND AMONG
NATCO INTENATIONAL INC.
AND
LASSEN ENERGY, INC. AND
THE SECURITY HOLDERS OF LASSEN ENERGY, INC.
2
Page i
BINDING LETTER AGREEMENT
LASSEN ENERGY, INC. AND
NATCO INTERNATIONAL INC.
INDEX
Page
ARTICLE I - EXCHANGE OF SECURITIES..............................................
Exchange of Securities..........................................................
1.1 Issuance of Securities.................................................
1.2 Exemption from Registration............................................
ARTICLE II - REPRESENTATIONS AND WARRANTIES OF LASSEN ENERGY....................
Representations and Warranties of Xxxxxx......................................
2.1 Organization...........................................................
2.2 Capital................................................................
2.3 Subsidiaries...........................................................
2.4 Directors and Executive Officers.......................................
2.5 Financial Statements...................................................
2.6 Absence of Changes.....................................................
2.7 Absence of Undisclosed Liabilities.....................................
2.8 Tax Returns............................................................
2.9 Investigation of Financial Condition...................................
2.10 Intellectual Property Rights...........................................
2.11 Compliance with Laws...................................................
2.12 Litigation.............................................................
2.13 Authority..............................................................
2.14 Ability to Carry Out Obligations.......................................
2.15 Full Disclosure........................................................
2.16 Assets.................................................................
2.17 Material Contracts.....................................................
2.18 Indemnification........................................................
2.19 Criminal or Civil Acts.................................................
2.20 Restricted Securities..................................................
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF NATCO...........................
Representations and Warranties of NATCO.......................................
3.1 Organization...........................................................
3.2 Capital................................................................
3.3 Subsidiaries...........................................................
3.4 Directors and Officers.................................................
3.5 Financial Statements...................................................
3.6 Absence of Changes.....................................................
3.7 Absence of Undisclosed Liabilities.....................................
3.8 Tax Returns............................................................
3.9 Investigation of Financial Condition...................................
3.10 Intellectual Property Rights...........................................
3.11 Compliance with Laws...................................................
3.12 Litigation.............................................................
3.13 Authority..............................................................
3.14 Ability to Carry Out Obligations.......................................
3.15 Full Disclosure........................................................
3.16 Assets.................................................................
3.17 Material Contracts.....................................................
3.18 Indemnification........................................................
3.19 Criminal or Civil Acts.................................................
ARTICLE IV - COVENANTS PRIOR TO THE CLOSING DATE................................
Covenants Prior to the Closing Date...........................................
4.1 Investigative Rights...................................................
4.2 Conduct of Business....................................................
4.3 Confidential Information...............................................
4.4 Notice of Non-Compliance...............................................
ARTICLE V - CONDITIONS PRECEDENT TO NATCO'S PERFORMANCE.........................
Conditions Precedent to NATCO's Performance...................................
5.1 Conditions.............................................................
5.2 Accuracy of Representations............................................
5.3 Performance............................................................
5.4 Absence of Litigation..................................................
5.5 Officer's Certificate..................................................
5.6 Corporate Action.......................................................
5.7 Acceptance of Financial Statements.....................................
5.8 Xxxxxxxxxx and Approval of Technology..................................
ARTICLE VI - CONDITIONS PRECEDENT TO XXXXXX'X PERFORMANCE.......................
Conditions Precedent to Xxxxxx'x Performance..................................
6.1 Conditions.............................................................
6.2 Accuracy of Representations............................................
6.3 Performance............................................................
6.4 Absence of Litigation..................................................
6.5 Officer's Certificate..................................................
6.6 Payment of Liabilities.................................................
6.7 Directors of NATCO.....................................................
6.8 Officers of NATCO......................................................
6.9 Corporate Action.......................................................
ARTICLE VII - CLOSING...........................................................
Closing.......................................................................
7.1 Closing................................................................
ARTICLE VIII - COVENANTS SUBSEQUENT TO THE CLOSING DATE.........................
Covenants Subsequent to the Closing Date......................................
8.1 Registration and Listing...............................................
ARTICLE IX - MISCELLANEOUS......................................................
Miscellaneous.................................................................
9.1 Captions and Headings..................................................
9.2 No Oral Change.........................................................
9.3 Non-Waiver.............................................................
9.4 Time of Essence........................................................
9.5 Entire Agreement.......................................................
9.6 Choice of Law..........................................................
9.7 Counterparts...........................................................
9.8 Notices................................................................
9.9 Binding Effect.........................................................
9.10 Mutual Cooperation.....................................................
9.11 Finders................................................................
9.12 Announcements..........................................................
9.13 Expenses...............................................................
9.14 Survival of Representations and Warranties.............................
9.15 Exhibits...............................................................
9.16 Termination, Amendment and Waiver......................................
EXHIBITS
0.1 List of Lassen Security Holders to Receive NATCO Stock
0.2 Subscription Agreement
2.5 Lassen Financial Statements
2.7 Lassen Liability Schedule
2.16* Lassen Assets
2.17 Lassen Material Contracts
3.5 NATCO Financial Statements
3.8 NATCO Tax Returns
3.12 NATCO Litigation
3.17* NATCO Assets
*if necessary
i
Page 1
BINDING LETTER AGREEMENT
LASSEN ENERGY, INC. AND
NATCO INTERNATIONAL INC.
AGREEMENT
THIS AGREEMENT ("AGREEMENT") is made this ___ day of February, 2008, by
and between NATCO International Inc., a Delaware corporation ("NATCO"), Lassen
Energy, Inc., a California corporation ("LASSEN") and the security holders of
Lassen (the "LASSEN SECURITY HOLDERS") who are listed on Exhibit 1.1 hereto.
WHEREAS, NATCO desires to acquire all of the issued and outstanding common
stock of Lassen ("LASSEN STOCK") from the Lassen Security Holders in exchange
for common stock of NATCO; and
WHEREAS, all of the Lassen Security Holders agree to exchange one hundred
percent (100%) of the Lassen Stock they hold in Lassen for thirty two million
three hundred seventy five thousand (32,375,000) shares of NATCO common stock
(the "NATCO SHARES").
NOW, THEREFORE, in consideration of the mutual promises, covenants and
representations contained herein, the parties hereto agree as follows:
ARTICLE I
EXCHANGE OF SECURITIES
1.1 ISSUANCE OF SECURITIES. Subject to the terms and conditions of this
Agreement, XXXXX agrees to issue and exchange the NATCO Shares for one hundred
percent (100%) of the issued and outstanding Lassen Stock held by the Lassen
Security Holders (the "SHARE EXCHANGE"). Prior to the Share Exchange, NATCO
shall complete a reverse stock split ("REVERSE SPLIT") with respect to its
common stock currently issued and outstanding, resulting in NATCO having
outstanding a total of two million six hundred twenty five thousand 2,625,000
shares of common stock issued and outstanding on the Closing Date (as
hereinafter defined) immediately prior to the issuance, upon Closing (defined in
Section 7.1) of thirty two million three hundred seventy five thousand
(32,375,000) shares of NATCO common stock to the Lassen Security Holders. The
NATCO Shares will be issued directly to the Lassen Security Holders on the
Closing Date, pursuant to the schedule set forth in Exhibit 1.1.
1.2 EXEMPTION FROM REGISTRATION. The parties hereto intend that the
NATCO Shares to be issued to the Lassen Security Holders shall be exempt from
the registration requirements of the Securities Act of 1933, as amended (the
"SECURITIES ACT"), pursuant to Section 4(2) and/or Regulation D of the
Securities Act and rules and regulations promulgated thereunder. In furtherance
thereof, each of the Lassen Security Holders will execute and deliver to NATCO
subscription agreements for the NATCO Shares, a copy of which is attached as
Exhibit 1.2, on the Closing Date of this Agreement (the "CLOSING DATE").
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF LASSEN
Lassen hereby represents and warrants to NATCO that:
2.1 ORGANIZATION. Lassen is a corporation duly organized, validly
existing and in good standing under the laws of California, has all necessary
corporate powers to own its properties and to carry on its business as now owned
and operated by it, and is duly qualified to do business and is in good standing
in each of the states where its business requires qualification.
2.2 CAPITAL. The Lassen Security Holders will deliver 100% of its issued
and outstanding stock, subscriptions, options, rights, warrants, debentures,
instruments, convertible securities convertible preferred stock, or other
agreements or commitments obligating Lassen to issue any additional Lassen Stock
of any class. There shall be no outstanding preferred stock of Xxxxxx at the
time of the Closing.
2.3 SUBSIDIARIES. Xxxxxx currently does not own any subsidiaries.
2.4 DIRECTORS AND EXECUTIVE OFFICERS. The names and titles of the
directors and executive officers of Xxxxxx are as follows:
(a)
NAME POSITION
Xxxxx Xxxx Director , Chief Executive Officer
(b) Immediately upon the Closing, NATCO shall appoint Xxxxxx'x
designated management team.
2.5 FINANCIAL STATEMENTS. Xxxxxx represents that it shall have the
ability to provide and shall produce, at NATCO's expense, within forty-five (45)
days of Closing, financial statements consisting of a balance sheet and a
related statements of income and cash flow for (I) the prior two (2) fiscal
years (or for the period since inception of Lassen, if less than two years),
(II) for the quarters subsequent to the most recent fiscal year and (III) for
the period subsequent to the most recent quarter if material changes have
occurred (the "LASSEN FINANCIAL STATEMENTS"), which fairly represent the
financial condition of Xxxxxx as of the respective dates and for the periods
involved, and such statements shall be prepared in accordance with generally
accepted accounting principles (GAAP).
The Lassen Financial Statements shall state Zero Dollars ($0) of debt-related
liabilities.
2.6 ABSENCE OF CHANGES. Since December 31, 2007, there has not been any
material change in the financial condition or operations of Xxxxxx, except as
contemplated by this Agreement. As used throughout this Agreement, "material"
means: Any change or effect (or development that, insofar as can be reasonably
foreseen, is likely to result in any change or effect) that causes substantial
increase or diminution in the business, properties, assets, condition (financial
or otherwise) or results of operations of a party. Taken as a whole, material
change shall not include changes in national or international economic
conditions or industry conditions generally; changes or possible changes in
statutes and regulations applicable to a party; or the loss of employees,
customers or suppliers by a party as a direct or indirect consequence of any
announcement relating to this transaction.
2.7 ABSENCE OF UNDISCLOSED LIABILITIES. As of the Closing Date, Xxxxxx
shall not have any material debt, liability or obligation of any nature, whether
accrued, absolute, contingent or otherwise, and whether due or to become due,
that is not reflected in the Lassen Liability Schedule, attached as Exhibit 2.7.
2.8 TAX RETURNS. Xxxxxx has filed all federal, state and local tax
returns required by law and has paid all taxes, assessments and penalties due
and payable. There are no present disputes as to taxes of any nature payable by
Xxxxxx.
2.9 INVESTIGATION OF FINANCIAL CONDITION. Without in any manner reducing
or otherwise mitigating the representations contained herein, NATCO, its legal
counsel and accountants shall have the opportunity to meet with Xxxxxx'x
accountants and attorneys to discuss the financial condition of Xxxxxx during
reasonable business hours and in a manner that does not interfere with the
normal operation of Xxxxxx'x business. Xxxxxx shall make available to NATCO all
books and records of Xxxxxx.
2.10 INTELLECTUAL PROPERTY RIGHTS. Xxxxxx owns or has the right to use
all trademarks, service marks, trade names, copyrights and patents material to
its business.
2.11 COMPLIANCE WITH LAWS. To the best of Xxxxxx'x knowledge, Xxxxxx has
complied with, and is not in violation of, applicable federal, state or local
statutes, laws and regulations, including federal and state securities laws,
except where such non-compliance would not have a material adverse impact upon
its business or properties.
2.12 LITIGATION. Lassen is not a defendant in any suit, action,
arbitration or legal, administrative or other proceeding, or governmental
investigation which is pending or, to the best knowledge of Lassen, threatened
against or affecting Lassen or its business, assets or financial condition.
Lassen is not in default with respect to any order, writ, injunction or decree
of any federal, state, local or foreign court, department, agency or
instrumentality applicable to it. Xxxxxx is not engaged in any material
litigation to recover monies due to it.
2.13 AUTHORITY. The Board of Directors of Xxxxxx has authorized the
execution of this Agreement and the consummation of the transactions
contemplated herein, and Xxxxxx has full power and authority to execute, deliver
and perform this Agreement, and this Agreement is a legal, valid and binding
obligation of Lassen and is enforceable in accordance with its terms and
conditions. A majority of Lassen Security Holders have agreed to and have
approved the terms of this Agreement and the exchange of securities contemplated
hereby.
2.14 ABILITY TO CARRY OUT OBLIGATIONS. The execution and delivery of this
Agreement by Xxxxxx and the performance by Xxxxxx of its obligations hereunder
in the time and manner contemplated will not cause, constitute or conflict with
or result in (a) any breach or violation of any of the provisions of or
constitute a default under any license, indenture, mortgage, instrument, article
of incorporation, bylaw, or other agreement or instrument to which Xxxxxx is a
party, or by which it may be bound, nor will any consents or authorizations of
any party other than those hereto be required, (b) an event that would permit
any party to any agreement or instrument to terminate it or to accelerate the
maturity of any indebtedness or other obligation of Lassen, or (c) an event that
would result in the creation or imposition of any lien, charge or encumbrance on
any asset of Lassen.
2.15 FULL DISCLOSURE. None of the representations and warranties made by
Lassen herein or in any exhibit, certificate or memorandum furnished or to be
furnished by Xxxxxx, or on its behalf, contains or will contain any untrue
statement of material fact or omit any material fact the omission of which would
be misleading.
2.16 ASSETS. Lassen's assets are fully included in Exhibit 2.5, to be
made available at or prior to Closing or, if Exhibit 2.5 is not available at
Closing, attached as Exhibit 2.16 attached hereto, and such assets are not
subject to any claims or encumbrances except as indicated in Exhibit 2.5 or
Schedule 2.16, respectively.
2.17 MATERIAL CONTRACTS. A list of Xxxxxx'x material contracts are
attached hereto as Exhibit 2.17, and such contracts shall be made available for
inspection within five (5) days prior to Closing.
2.18 INDEMNIFICATION. Xxxxxx agrees to indemnify, defend and hold NATCO
harmless against and in respect of any and all claims, demands, losses, costs,
expenses, obligations, liabilities, damages, recoveries and deficiencies,
including interest, penalties and reasonable attorney fees asserted by third
parties against NATCO which arise out of, or result from (i) any breach by
Xxxxxx in performing any of its covenants or agreements under this Agreement or
in any schedule, certificate, exhibit or other instrument furnished or to be
furnished by Xxxxxx under this Agreement, (ii) a failure of any representation
or warranty in this Article II or (iii) any untrue statement made by Xxxxxx in
this Agreement.
2.19 CRIMINAL OR CIVIL ACTS. For the period of five years prior to the
execution of this Agreement, no executive officer, director or principal
stockholder of Xxxxxx has been convicted of a felony crime, filed for personal
bankruptcy, been the subject of a Commission or NASD judgment or decree, or is
currently the subject to any investigation in connection with a felony crime or
Commission or NASD proceeding.
2.20 RESTRICTED SECURITIES. Xxxxxx and the Lassen Security Holders
acknowledge that all of the NATCO Shares issued by NATCO are restricted
securities and none of such securities may be sold or publicly traded except in
accordance with the provisions of the Securities Act.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF NATCO
NATCO represents and warrants to Lassen that:
3.1 ORGANIZATION. NATCO is a corporation duly organized, validly
existing and in good standing under the laws of Delaware, has all necessary
corporate powers to carry on its business, and is duly qualified to do business
and is in good standing in each of the states where its business requires
qualification.
3.2 CAPITAL. The authorized capital stock of NATCO consists of: i) fifty
million (50,000,000) shares of $0.001 par value common stock, of which
approximately twenty million four hundred forty seven thousand six hundred
fourteen (20,447,614) shares are currently outstanding; and ii) five million
(5,000,000) shares of $0.001 par value preferred stock, of which zero (0) shares
are currently are outstanding. Following the Reverse Split, two million six
hundred twenty five thousand (2,625,000) shares of NATCO common stock will be
issued and outstanding. Thirty two million three hundred seventy five thousand
(32,375,000) additional shares of NATCO common stock will be issued to the
Lassen Security Holders pursuant to this Agreement at Closing. All of the
outstanding common stock is duly and validly issued, fully paid and
non-assessable. There are no outstanding subscriptions, rights, debentures,
warrants, instruments, convertible securities or other agreements or commitments
obligating NATCO to issue any additional shares of its capital stock of any
class.
3.3 SUBSIDIARIES. NATCO does not have any subsidiaries or own any
interest in any other enterprise.
3.4 DIRECTORS AND OFFICERS. The name and titles of the director and
executive officers of NATCO are as follows:
(a)
NAME POSITION
Xxx-Xxxxxxxx Xxxx Director, President, Chief Executive Officer and Chief Financial Officer
Xxxx Xxxxxx Director and Secretary
Xxxxx Xxxxxxxx-Xxxxxx Director
Xxxxxxx Xxxxxx
Director
(b) Pursuant to this Agreement, NATCO shall appoint two (2) Xxxxxx
designees to the board of directors, the first upon Closing, and the second
within 90 days of Closing (but in no event earlier than 45 days following
Closing, pursuant to Rule 14(f) of the 1934 Exchange Act;
(c) Concurrent to this Agreement, Xxxxx Xxxx and XXXXX will
execute an employment agreement naming Xxxxx Xxxx the Chief Executive Officer of
NATCO.
3.5 FINANCIAL STATEMENTS. Exhibit 3.5 hereto consists of the audited
financial statements of NATCO for the fiscal quarter ended December 31, 2007
(the "NATCO FINANCIAL STATEMENTS") The NATCO Financial Statements have been
prepared in accordance with generally accepted accounting principles and
practices consistently followed by NATCO throughout the period indicated, and
fairly present the financial position of NATCO as of the date of the balance
sheet included in the NATCO Financial Statements and the results of operations
for the period indicated.
3.6 ABSENCE OF CHANGES. Since December 31, 2007, there has not been any
material change in the financial condition or operations of NATCO, except as
publically filed with the Securities and Exchange Commission ("COMMISSION") or
contemplated by this Agreement. As used throughout this Agreement, "material"
means: Any change or effect (or development that, insofar as can be reasonably
foreseen, is likely to result in any change or effect) that causes substantial
increase or diminution in the business, properties, assets, condition (financial
or otherwise) or results of operations of a party. Taken as a whole, material
change shall not include changes in national or international economic
conditions or industry conditions generally; changes or possible changes in
statutes and regulations applicable to a party; or the loss of employees,
customers or suppliers by a party as a direct or indirect consequence of any
announcement relating to this transaction.
3.7 ABSENCE OF UNDISCLOSED LIABILITIES. As of the Closing Date, NATCO
shall not have any material debt, liability or obligation of any nature, whether
accrued, absolute, contingent or otherwise, and whether due or to become due,
that is not reflected in the NATCO Financial Statements.
3.8 TAX RETURNS. NATCO has filed all federal, state and local tax
returns required by law and have paid all taxes, assessments and penalties due
and payable. The provisions for taxes, if any, reflected in Exhibit 3.8 are
adequate for the periods indicated. There are no present disputes as to taxes
of any nature payable by XXXXX.
3.9 INVESTIGATION OF FINANCIAL CONDITION. Without in any manner reducing
or otherwise mitigating the representations contained herein, Lassen, its legal
counsel and accountants shall have the opportunity to meet with XXXXX's
accountants and attorneys to discuss the financial condition of NATCO during
reasonable business hours and in a manner that does not interfere with the
normal operation of NATCO's business. NATCO shall make available to Lassen all
books and records of NATCO.
3.10 INTELLECTUAL PROPERTY RIGHTS. NATCO has no trademarks, service
marks, trade names, copyrights or patents material to its business.
3.11 COMPLIANCE WITH LAWS. To the best of NATCO's knowledge, NATCO has
complied with, and is not in violation of, applicable federal, state or local
statutes, laws and regulations, including federal and state securities laws,
except where such non-compliance would not have a material adverse impact upon
its business or properties.
3.12 LITIGATION. NATCO is not a defendant in any suit, action,
arbitration or legal, administrative or other proceeding, or governmental
investigation which is pending or, to the best knowledge of NATCO, threatened
against or affecting NATCO or its business, assets or financial condition.
NATCO is not in default with respect to any order, writ, injunction or decree of
any federal, state, local or foreign court, department, agency or
instrumentality applicable to it. NATCO is not engaged in any material
litigation to recover monies due to it except as indicated in Exhibit 3.12.
3.13 AUTHORITY. The Board of Directors of NATCO has authorized the
execution of this Agreement and the consummation of the transactions
contemplated herein, and NATCO has full power and authority to execute, deliver
and perform this Agreement, and this Agreement is a legal, valid and binding
obligation of NATCO and is enforceable in accordance with its terms and
conditions.
3.14 ABILITY TO CARRY OUT OBLIGATIONS. The execution and delivery of this
Agreement by NATCO and the performance by NATCO of its obligations hereunder in
the time and manner contemplated will not cause, constitute or conflict with or
result in (a) any breach or violation of any of the provisions of or constitute
a default under any license, indenture, mortgage, instrument, article of
incorporation, bylaw, or other agreement or instrument to which NATCO is a
party, or by which it may be bound, nor will any consents or authorizations of
any party other than those hereto be required, (b) an event that would permit
any party to any agreement or instrument to terminate it or to accelerate the
maturity of any indebtedness or other obligation of NATCO, or (c) an event that
would result in the creation or imposition of any lien, charge or encumbrance on
any asset of NATCO.
3.15 FULL DISCLOSURE. None of the representations and warranties made by
NATCO herein or in any exhibit, certificate or memorandum furnished or to be
furnished by NATCO, or on its behalf, contains or will contain any untrue
statement of material fact or omit any material fact the omission of which would
be misleading.
3.16 ASSETS. NATCO assets are fully included in Exhibit 3.5 and are not
subject to any claims or encumbrances except as indicated in Exhibit 3.5.
3.17 MATERIAL CONTRACTS. A list of NATCO's material contracts are
attached hereto as Exhibit 3.17, and such contracts shall be made available for
inspection within five (5) days prior to Closing.
3.18 INDEMNIFICATION. NATCO agrees to indemnify, defend and hold Xxxxxx
harmless against and in respect of any and all claims, demands, losses, costs,
expenses, obligations, liabilities, damages, recoveries and deficiencies,
including interest, penalties and reasonable attorney fees asserted by third
parties against Lassen which arise out of, or result from (i) any breach by
NATCO in performing any of its covenants or agreements under this Agreement or
in any schedule, certificate, exhibit or other instrument furnished or to be
furnished by NATCO under this Agreement, (ii) a failure of any representation or
warranty in this Article III or (iii) any untrue statement made by NATCO in this
Agreement.
3.19 CRIMINAL OR CIVIL ACTS. For the period of five (5) years prior to
the execution of this Agreement, no executive officer, director or principal
stockholder of NATCO has been convicted of a felony crime, filed for personal
bankruptcy, been the subject of a Commission or NASD judgment or decree, or is
currently the subject to any investigation in connection with a felony crime or
Commission or NASD proceeding.
ARTICLE IV
COVENANTS PRIOR TO THE CLOSING DATE
4.1 INVESTIGATIVE RIGHTS. Prior to the Closing Date, each party shall
provide to the other party, and such other party's counsel, accountants,
auditors and other authorized representatives, full access during normal
business hours and upon reasonable advance written notice to all of each party's
properties, books, contracts, commitments and records for the purpose of
examining the same. Each party shall furnish the other party with all
information concerning each party's affairs as the other party may reasonably
request. If during the investigative period one party learns that a
representation of the other party was not accurate, no such claim may be
asserted by the party so learning that a representation of the other party was
not accurate.
4.2 CONDUCT OF BUSINESS. Prior to the Closing Date, each party shall
conduct its business in the normal course and shall not sell, pledge or assign
any assets without the prior written approval of the other party, except in the
normal course of business. Neither party shall amend its Articles of
Incorporation or Bylaws (except as may be described in this Agreement), declare
dividends, redeem or sell stock or other securities. Neither party shall enter
into negotiations with any third party or complete any transaction with a third
party involving the sale of any of its assets or the exchange of any of its
common stock.
4.3 CONFIDENTIAL INFORMATION. Each party will treat all non-public,
confidential and trade secret information received from the other party as
confidential, and such party shall not disclose or use such information in a
manner contrary to the purposes of this Agreement. Moreover, all such
information shall be returned to the other party in the event this Agreement is
terminated.
4.4 NOTICE OF NON-COMPLIANCE. Each party shall give prompt notice to
the other party of any representation or warranty made by it in this Agreement
becoming untrue or inaccurate in any respect or the failure by it to comply with
or satisfy in any material respect any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement.
ARTICLE V
CONDITIONS PRECEDENT TO XXXXX'S PERFORMANCE
5.1 CONDITIONS. NATCO's obligations hereunder shall be subject to the
satisfaction at or before the Closing Date of all the conditions set forth in
this Article V. NATCO may waive any or all of these conditions in whole or in
part without prior notice; provided, however, that no such waiver of a condition
shall constitute a waiver by NATCO of any other condition of or any of NATCO's
other rights or remedies, at law or in equity, if Xxxxxx shall be in default of
any of its representations, warranties or covenants under this Agreement.
5.2 ACCURACY OF REPRESENTATIONS. Except as otherwise permitted by this
Agreement, all representations and warranties by Xxxxxx in this Agreement or in
any written statement that shall be delivered to NATCO by Xxxxxx under this
Agreement shall be true and accurate on and as of the Closing Date as though
made at that time.
5.3 PERFORMANCE. Xxxxxx shall have performed, satisfied and complied
with all covenants, agreements and conditions required by this Agreement to be
performed or complied with by it on or before the Closing Date.
5.4 ABSENCE OF LITIGATION. No action, suit or proceeding, including
injunctive actions, before any court or any governmental body or authority,
pertaining to the transaction contemplated by this Agreement or to its
consummation, shall have been instituted or threatened against Lassen on or
before the Closing Date.
5.5 OFFICER'S CERTIFICATE. Xxxxxx shall have delivered to NATCO a
certificate dated the Closing Date signed by the Chief Executive Officer of
Xxxxxx certifying that each of the conditions specified in this Article has been
fulfilled and that all of the representations set forth in Article II are true
and correct as of the Closing Date.
5.6 CORPORATE ACTION. Xxxxxx shall have obtained the approval of the
Lassen Security Holders for the transaction contemplated by this Agreement.
5.7 ACCEPTANCE OF FINANCIAL STATEMENTS. NATCO shall have reviewed and in
its sole discretion accepted, prior to the Closing Date, the Lassen Financial
Statements as set forth in Exhibit 2.5.
5.8 VALIDATION AND APPROVAL OF TECHNOLOGY. As part of its due
diligence, NATCO and/or its designated representative(s), at its own expense,
shall have had the opportunity to conduct a complete site inspection,
demonstration and review of Lassen's technologies and products that is
satisfactory to NATCO, at a time practical to both Lassen and NATCO.
ARTICLE VI
CONDITIONS PRECEDENT TO XXXXXX'X PERFORMANCE
6.1 CONDITIONS. Xxxxxx'x obligations hereunder shall be subject to the
satisfaction at or before the Closing Date of all the conditions set forth in
this Article VI. Lassen may waive any or all of these conditions in whole or in
part without prior notice; provided, however, that no such waiver of a condition
shall constitute a waiver by Lassen of any other condition of or any of Lassen's
rights or remedies, at law or in equity, if NATCO shall be in default of any of
its representations, warranties or covenants under this Agreement.
6.2 ACCURACY OF REPRESENTATIONS. Except as otherwise permitted by this
Agreement, all representations and warranties by NATCO in this Agreement or in
any written statement that shall be delivered to Lassen by NATCO under this
Agreement shall be true and accurate on and as of the Closing Date as though
made at that time.
6.3 PERFORMANCE. NATCO shall have performed, satisfied and complied with
all covenants, agreements and conditions required by this Agreement to be
performed or complied with by it on or before the Closing Date.
6.4 ABSENCE OF LITIGATION. No action, suit or proceeding before any
court or any governmental body or authority, pertaining to the transaction
contemplated by this Agreement or to its consummation, shall have been
instituted or threatened against NATCO on or before the Closing Date.
6.5 OFFICER'S CERTIFICATE. NATCO shall have delivered to Xxxxxx a
certificate dated the Closing Date signed by the Chief Executive Officer of
NATCO certifying that each of the conditions specified in this Article has been
fulfilled and that all of the representations set forth in Article III are true
and correct as of the Closing Date.
6.6 PAYMENT OF LIABILITIES. On or before the Closing Date, NATCO shall
have paid any outstanding obligations and liabilities of NATCO through the
Closing Date, including obligations created subsequent to the execution of this
Agreement.
6.7 DIRECTORS OF NATCO. On the Closing Date, all but one of the members
of the Board of Directors of NATCO shall resign and the Board of Directors of
NATCO shall simultaneously appoint two (2) designees of Xxxxxx to NATCO Board of
Directors.
6.8 OFFICERS OF NATCO. On the Closing Date, the newly constituted Board
of Directors of NATCO shall elect Xxxxx Xxxx as the Chief Executive Officer of
NATCO and NATCO's existing executive officers shall resign. Concurrent to this
Agreement, the Board of Directors of NATCO shall execute an employment agreement
naming Xxxxx Xxxx to the position of Chief Executive Officer of NATCO.
6.9 CORPORATE ACTION. NATCO currently has twenty million four hundred
forty seven thousand six hundred fourteen (20,447,614) shares of its common
stock outstanding. Prior to the Closing Date, NATCO shall complete the Reverse
Split with respect to the shares of its common stock issued and outstanding,
resulting in NATCO having a total of two million six hundred twenty five
thousand (2,625,000) shares of its common stock issued and outstanding on the
Closing Date immediately prior to the issuances of the NATCO Shares to the
Lassen Security Holders.
ARTICLE VII
CLOSING
7.1 CLOSING. The closing of this Agreement shall be held at the offices
of The Xxxx Law Group, PLLC, or at any mutually agreeable place within thirty
(30) days of the mutual execution of this Agreement, unless extended by mutual
agreement ("CLOSING"). At Closing:
(a) Xxxxxx shall deliver to NATCO (i) copies of Exhibit 1.2 executed by
all of the Lassen Security Holders, (ii) an assignment of all of the
Lassen Stock to NATCO, (iii) the officer's certificate described in
Section 5.5, (iv) signed minutes of its directors approving this
Agreement.
(b) NATCO shall deliver to Xxxxxx (i) certificates representing thirty
two million three hundred seventy five thousand (32,375,000) NATCO
Shares issued in the names of the Lassen Security Holders, pursuant
to Exhibit 1.1, (ii) the officer's certificate described in Section
6.5, and (iii) signed minutes of its directors approving this
Agreement.
ARTICLE VIII
COVENANTS SUBSEQUENT TO THE CLOSING DATE
8.1 REGISTRATION AND LISTING. Following the Closing Date, NATCO shall:
(a) Continue NATCO's common stock quotation on the Electronic
Over-the-Counter Bulletin Board system;
(b) Comply with the Form 8-K requirements of the Securities
Exchange Act of 1934 (the "EXCHANGE ACT"), including the
timely preparation and filing of audited financial statements
as required by Form 8-K;
(c) Promptly retain a qualified investor and public relations
firm; and
(d) Clear any Exchange Act Rule 144 sales of NATCO common stock
offered by any NATCO common stockholder including affiliates
or former affiliates of NATCO within forty-eight (48) hours of
the filing of the Notice of Sale pursuant to Rule 144.
A.2 CORPORATE ACTION. NATCO shall file the required documents and take
the required actions to change its name to "P2 Solar, Inc." or to such
other name as deemed acceptable to the directors and management of
Xxxxxx, within thirty (30) days following the Closing.
ARTICLE IX
MISCELLANEOUS
9.1 CAPTIONS AND HEADINGS. The article and Section headings throughout
this Agreement are for convenience and reference only and shall not define,
limit or add to the meaning of any provision of this Agreement.
9.2 NO ORAL CHANGE. This Agreement and any provision hereof may not be
waived, changed, modified or discharged orally, but only by an agreement in
writing signed by the party against whom enforcement of any such waiver, change,
modification or discharge is sought.
9.3 NON-WAIVER. The failure of any party to insist in any one or more
cases upon the performance of any of the provisions, covenants or conditions of
this Agreement or to exercise any option herein contained shall not be construed
as a waiver or relinquishment for the future of any such provisions, covenants
or conditions. No waiver by any party of one breach by another party shall be
construed as a waiver with respect to any other subsequent breach.
9.4 TIME OF ESSENCE. Time is of the essence of this Agreement and of
each and every provision hereof.
9.5 ENTIRE AGREEMENT. This Agreement contains the entire Agreement and
understanding between the parties hereto and supersedes all prior agreements and
understandings.
9.6 CHOICE OF LAW. This Agreement and its application shall be governed
by the laws of the state of Washington.
9.7 COUNTERPARTS. This Agreement may be executed simultaneously in one
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
9.8 NOTICES. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given on the date of service if served personally on the party to whom notice is
to be given, or on the third day after mailing if mailed to the party to whom
notice is to be given, by first class mail, registered or certified, postage
prepaid, and properly addressed as follows:
NATCO: NATCO International Inc.
#000
00000- 00 Xxxxxx
Xxxxxx, XX X0X 0X0
Xxxxxx
Attn: Xxx-Xxxxxxxx
Xxxx, Chief Executive Officer
With a copy to: Xxxxx X. Xxxxxxxx
Leschert & Company Law Corporation
000 Xxxxxxxxx Xxxxxx
0000 - 000 Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx
X0X 0X0
Lassen: Lassen Energy, Inc.
Suite 108A #327
000 Xxxxxxxx Xxxxxxx Xx.
Xxxxxxxx, XX 00000
Attn: Xxxxx Xxxx, Chief Executive Officer
With a copy to: The Xxxx Law Group, PLLC
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx Xxxx
9.9 BINDING EFFECT. This Agreement shall inure to and be binding upon
the heirs, executors, personal representatives, successors and assigns of each
of the parties to this Agreement.
9.10 MUTUAL COOPERATION. The parties hereto shall cooperate with each
other to achieve the purpose of this Agreement and shall execute such other and
further documents and take such other and further actions as may be necessary or
convenient to effect the transaction described herein.
9.11 FINDERS. There are no finders in connection with this transaction.
9.12 ANNOUNCEMENTS. The parties will consult and cooperate with each
other as to the timing and content of any public announcements regarding this
Agreement.
9.13 EXPENSES. Each party will bear their own expenses, including legal
fees incurred in connection with this Agreement. The Lassen Security Holders
shall not be responsible for any costs incurred in connection with the
transaction contemplated by this Agreement.
9.14 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations,
warranties, covenants and agreements of the parties set forth in this Agreement
or in any instrument, certificate, opinion or other writing providing for in it,
shall survive the Closing Date.
9.15 EXHIBITS. As of the execution hereof, the parties have provided each
other with the exhibits described herein. Any material changes to the exhibits
shall be immediately disclosed to the other party.
9.16 TERMINATION, AMENDMENT AND WAIVER.
(a) TERMINATION. This Agreement may be terminated at any time prior to
the Closing Date, whether before or after approval of matters presented in
connection with the share exchange by and between the stockholders of NATCO and
the stockholders of Lassen:
(1) By mutual written consent of Xxxxxx and NATCO;
(2) By either Xxxxxx or NATCO;
(i) If any court of competent jurisdiction or any
governmental, administrative or regulatory authority,
agency or body shall have issued an order, decree or
ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the transactions
contemplated by this Agreement; or
(ii) If the transaction shall not have been consummated on
or before thirty (30) days following mutual execution
of this Agreement, unless the failure to consummate the
transaction is the result of a material breach of this
Agreement by the party seeking to terminate this
Agreement.
(3) By Xxxxxx, if NATCO breaches any of its representations or
warranties hereof or fails to perform in any material respect any of its
covenants, agreements or obligations under this Agreement; and
(4) By NATCO, if Lassen breaches any of its representations or
warranties hereof or fails to perform in any material respect any of its
covenants, agreements or obligations under this Agreement.
(b) EFFECT OF TERMINATION. In the event of termination of this
Agreement by either NATCO or Lassen, as provided herein, this Agreement shall
forthwith become void and have no effect, without any liability or obligation on
the part of Lassen or NATCO, and such termination shall not relieve any party
hereto for any intentional breach prior to such termination by a party hereto of
any of its representations or warranties or any of its covenants or agreements
set forth in this Agreement.
(c) EXTENSION; WAIVER. At any time prior to the Closing Date, the
parties may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligation of the other acts of the other parties, (b)
waive any inaccuracies in the representations and warranties contained herein or
in any document delivered pursuant hereto or waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of a party
to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party. The failure of any party
to this Agreement to assert any of its rights under this Agreement or otherwise
shall not constitute a waiver of such rights.
(d) PROCEDURE FOR TERMINATION, AMENDMENT, EXTENSION OR WAIVER. A
termination of this Agreement, an amendment of this Agreement or an extension or
waiver shall, in order to be effective, require in the case of Lassen or NATCO,
action by its respective Board of Directors or the duly authorized designee of
such Board of Directors.
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BINDING LETTER AGREEMENT
LASSEN ENERGY, INC. AND
NATCO INTERNATIONAL INC.
In witness whereof, the parties have executed this Agreement concerning
the exchange of securities on the date indicated above.
NATCO INTERNATIONAL INC.
By: Xxx Xxxx
Its: Chairman and Chief Executive
Officer
LASSEN ENERGY, INC. AND ITS SECURITY HOLDERS
By: Xxxxx Xxxx
Its: Chairman and Chief Executive
Officer
15
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BINDING LETTER AGREEMENT
LASSEN ENERGY, INC. AND
NATCO INTERNATIONAL INC.
EXHIBIT 1.1
LIST OF LASSEN SECURITY HOLDERS TO RECEIVE NATCO COMMON STOCK
(To be provided prior to Closing)
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BINDING LETTER AGREEMENT
LASSEN ENERGY, INC. AND
NATCO INTERNATIONAL INC.
EXHIBIT 1.2
SUBSCRIPTION AGREEMENT
(To be provided prior to Closing)
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Page 1
BINDING LETTER AGREEMENT
LASSEN ENERGY, INC. AND
NATCO INTERNATIONAL INC.
EXHIBIT 2.5
LASSEN FINANCIAL STATEMENTS
(To be provided prior to Closing)
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BINDING LETTER AGREEMENT
LASSEN ENERGY, INC. AND
NATCO INTERNATIONAL INC.
EXHIBIT 2.7
LASSEN LIABILITY SCHEDULE
(To be provided prior to Closing)
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BINDING LETTER AGREEMENT
LASSEN ENERGY, INC. AND
NATCO INTERNATIONAL INC.
EXHIBIT 2.16
LASSEN ASSETS
(To be provided prior to Closing, if necessary)
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BINDING LETTER AGREEMENT
LASSEN ENERGY, INC. AND
NATCO INTERNATIONAL INC.
EXHIBIT 2.17
LASSEN MATERIAL CONTRACTS
(To be provided prior to Closing)
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BINDING LETTER AGREEMENT
LASSEN ENERGY, INC. AND
NATCO INTERNATIONAL INC.
EXHIBIT 3.5
NETCO FINANCIAL STATEMENTS
(To be provided prior to Closing)
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BINDING LETTER AGREEMENT
LASSEN ENERGY, INC. AND
NATCO INTERNATIONAL INC.
EXHIBIT 3.8
NATCO TAX RETURNS
(To be provided prior to Closing)
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BINDING LETTER AGREEMENT
LASSEN ENERGY, INC. AND
NATCO INTERNATIONAL INC.
EXHIBIT 3.12
NATCO LITIGATION
NATCO has commenced legal proceedings in British Columbia Supreme Court against
Photo Violation Technologies Corp. ("PVT") and its president, Xxxx Xxxxxxxxx
(a.k.a., Xxxx Xxxxxxx) ("Xxxxxxxxx"), claiming punitive, exemplary and
consequential damages and other remedies arising from breach of contract and
wrongful conduct on the part of Xxxxxxxxx ("PVT LAWSUIT"). NATCO claims PVT has
breached the agreement among NATCO, PVT and Xxxxxxxxx, entered into on or about
March 16, 2007, which provides for completion of a previously announced reverse
merger between NATCO and PVT (the "REVERSE MERGER"). NATCO also claims in Court
documents that Xxxxxxxxx has engaged in a number of wrongful acts, including
inducing breach of contract, attempting to divert prospective investors from
NATCO to PVT, failing to provide financial statements and other necessary
documents and wrongfully instructing PVT's counsel to purportedly terminate the
Reverse Merger. NATCO is seeking to recover approximately $1.5 million which
was advanced to PVT in contemplation of the Reverse Merger, plus obtain
additional damage and other relief against PVT and Xxxxxxxxx arising from their
conduct.
Prior to the Closing, NATCO will assign its rights and obligations to the PVT
Lawsuit to a third party, who in turn will execute a full indemnification in
favor of NATCO from all actions arising from the Reverse Merger and PVT Lawsuit.
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BINDING LETTER AGREEMENT
LASSEN ENERGY, INC. AND
NATCO INTERNATIONAL INC.
EXHIBIT 3.17
NATCO ASSETS
(To be provided prior to Closing, if necessary)
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