Exhibit 2.2
SERIES AAA PREFERRED STOCK PURCHASE AGREEMENT
This Series AAA Preferred Stock Purchase Agreement (this "Agreement") is entered
into as of August 1, 2005 (the "Effective Date") by and between CNE Group, Inc.,
a Delaware corporation ("CNE"), and Arrow Pacific Resources (S) Pte. Ltd., a
Singapore registered company ("Arrow Pacific").
In consideration of the mutual promises, covenants and conditions hereinafter
set forth, the parties hereto agree as follows:
1. Definitions.
1.1 Certain Defined Terms. As used in this Agreement, the following
terms shall have the following respective meanings:
"ARR" means Arrow Resources Development Ltd., a Bermuda limited
company and wholly-owned subsidiary of Arrow Pacific.
"Common Stock" means CNE's common stock, $0.00001 par value per
share.
"Merger" means the merger of CNE with and into ARR as contemplated
by the "Agreement and Plan of Merger" (as defined below).
"Agreement and Plan of Merger" means the Agreement and Plan of
Merger by and between CNE and ARR, dated as of even date herewith.
"Preferred Stock" means CNE's Series AAA Preferred Stock.
1.2 Index of Other Defined Terms. In addition to the terms defined
above, the following terms shall have the respective meanings given
thereto in the sections indicated below:
Defined Term Section
------------ -------
"Act" 4.5(b)
---
"Action" 4.10
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"Agreement" Preamble
---------
"Articles" 2.1
--------
"Balance Sheet Date" 4.16
------------------
"Board" 4.18(e)
-----
"Bylaws" 4.12
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"CERCLA" 4.22(a)
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"Closing" 3.1
-------
"Code" 4.20
----
"Company" Preamble
-------
"Company Contracts" 4.12
-----------------
"Conversion Shares" 4.2(c)
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Defined Term Section
------------ -------
"Effective Date" Preamble
--------------
"Financial Statements" 4.16
--------------------
"Hazardous Materials" 4.21(a)
-------------------
"Arrow Pacific" Preamble
-------------
"Schedule of Exceptions" 4
----------------------
"SEC" 4.14
---
"Series AAA Preferred Stock" 2.1
--------------------------
"Shares" 2.2(b)
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This index is for convenience only. The failure of any term that is
defined in this Agreement to appear in this index or in Section 1.1
shall not affect the validity of that term's definition.
2. Agreement to Purchase and Sell Stock
2.1. Authorization. As of the Closing (as defined below), CNE will have
authorized the issuance, pursuant to the terms and conditions of
this Agreement, of 10 million shares of CNE's Series AAA Preferred
Stock, $.00001 par value ("Series AAA Preferred Stock"), having the
rights, preferences, privileges and restrictions set forth in the
Certificate of Designations of CNE attached to this Agreement as
Exhibit B (the "Articles").
2.2. Agreement to Purchase and Sell. Subject to the terms and conditions
hereof, on the date of the Closing, CNE will issue and sell to Arrow
Pacific, and Arrow Pacific will purchase from XXX, 00 million shares
of Series AAA Preferred Stock (the "Shares") in consideration of the
entry by Arrow Pacific into this Agreement and the entry by ARR into
the Agreement and Plan of Merger. Upon Arrow Pacific's execution of
this Agreement and ARR's execution of the Agreement and Plan of
Merger, the consideration for the issuance of the Shares to Arrow
Pacific shall be deemed to have been fully delivered and the Shares
will be deemed fully-paid and non-assessable.
3. Closing; Delivery.
3.1. The Closing. The purchase and sale of the Shares hereunder shall be
held at the offices of Arrow Pacific on August 1, 2005, or at such
other time and place as CNE and Arrow Pacific may mutually agree
(the "Closing").
3.2. Delivery. At the Closing, CNE will deliver to Arrow Pacific a
certificate representing the Shares to be purchased by Arrow Pacific
hereunder.
4. Representations and Warranties of CNE. CNE hereby represents and warrants
to Arrow Pacific that, except as set forth in the Schedule of Exceptions
("Schedule of Exceptions") attached to this Agreement as Exhibit C (which
Schedule of Exceptions shall be deemed to be representations and
warranties to Arrow Pacific), the statements in this Section 4 are all
true and correct:
4.1. Organization, Good Standing and Qualification. CNE is a corporation
duly organized, validly existing and in good standing under, and by
virtue of, the laws of the State of Delaware and has all requisite
corporate power and authority to own its properties and assets and
to carry on its business as now conducted and as presently proposed
to be conducted. CNE is qualified to do business as a foreign
corporation in each jurisdiction where failure to be so qualified
would have a material adverse effect on its financial condition,
business, prospects or operations.
4.2. Capitalization.
(a) As of the date hereof, the authorized capital stock of CNE
consists of:
(i) 25 million shares of preferred stock, par value $.00001
per share ("CNE Preferred Stock") of which 13,438,241
shares are outstanding in the following series: Series
AA, A, B, C and E;
(ii) 40 million shares of common stock, par value $.00001 per
share ("CNE Preferred Stock") of which 10,790,915 shares
are outstanding;
(iii) 2,220,000 common stock warrants; and
(iv) 503,500 incentive stock options for common shares.
(b) Upon approval of the CNE shareholders of the Merger and the
completion of the requisite filings with the Delaware
Secretary of State and Bermudan Registrar of Companies, the
entire issued and outstanding capital stock of CNE will
consist of one billion shares of common stock, par value
$.00001 per share, of which 26,000,000 common shares will be
issued or reserved for CNE stockholders of record prior to the
Merger, and 650,000,000 common shares will be issued to Arrow
Pacific.
(c) Except as described in this Section 4.2 (i) no shares of
capital stock or other equity securities of CNE are
authorized, issued or outstanding, or reserved for issuance
and there are no options, warrants or other rights (including
registration rights), agreements, arrangements or commitments
of any character to which CNE or any of its subsidiaries is a
party relating to the issued or unissued capital stock or
other equity interests of CNE or any of its subsidiaries,
requiring CNE or any of its subsidiaries to grant, issue or
sell any shares of the capital stock or other equity interests
of CNE or any of its subsidiaries by sale, lease, license or
otherwise; (ii) neither CNE nor any of its subsidiaries have
any obligation, contingent or otherwise, to repurchase, redeem
or otherwise acquire any shares of the capital stock or other
equity interests of CNE or any of its subsidiaries; (iii) none
of CNE or any of its subsidiaries, directly or indirectly,
owns, or has agreed to purchase or otherwise acquire, the
capital stock or other equity interests of, or any interest
convertible into or exchangeable or exercisable for such
capital stock or such equity interests, of any corporation,
partnership, joint venture or other entity which would be
material in value to CNE; and (iv) there are no voting trusts,
proxies or
other agreements or understandings to which CNE or any of its
subsidiaries is a party with respect to the voting of any
shares of capital stock or other equity interests of CNE or
any of its subsidiaries.
4.3. Subsidiaries. Listed in Section 4.3 of the disclosure schedule
attached to this Agreement as Exhibit D ("Disclosure Schedule")
(which Disclosure Schedule shall be deemed to be representations and
warranties to Arrow Pacific) is each subsidiary of CNE; its
authorized, issued and outstanding capital stock or other equity
interests; the percentage of such capital stock or other equity
interests owned by CNE or any subsidiary of CNE, and the identity of
such owner; the capital stock reserved for future issuance pursuant
to outstanding options or other agreements; and the identity of all
parties to any such option or other agreement. Each subsidiary of
CNE is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation or
organization. Each subsidiary of CNE has all requisite corporate
power and authority to carry on its business as it is now being
conducted. Each subsidiary of CNE is duly qualified as a foreign
corporation or organization authorized to do business, and is in
good standing, in each jurisdiction where the character of its
properties owned or held under lease or the nature of its activities
makes such qualification necessary. All of the outstanding shares of
capital stock or other ownership interests in each of CNE's
subsidiaries have been validly issued, and are fully paid,
nonassessable and are owned by CNE or another subsidiary of CNE free
and clear of all liens and encumbrances, and are not subject to
preemptive rights created by statute, such subsidiary's respective
Certificate of Incorporation or By-laws or any agreement to which
such subsidiary is a party.
4.4. Due Authorization. All corporate action on the part of CNE, its
officers, directors and shareholders necessary for the
authorization, execution and delivery of, and the performance of all
obligations of CNE under this Agreement, and the authorization,
issuance, reservation for issuance and delivery of all of the Shares
being sold under this Agreement has been taken or will be taken
prior to the Closing. This Agreement is a valid and binding
obligation of CNE enforceable in accordance with its terms, subject,
as to enforcement of remedies, to applicable bankruptcy, insolvency,
moratorium, reorganization and similar laws affecting creditors'
rights generally and to general equitable principles. The Shares are
not subject to any preemptive rights or rights of first refusal.
4.5. Valid Issuance of Stock.
(a) The Shares, when issued, sold and delivered in accordance with
the terms of this Agreement, will be duly and validly issued,
fully paid and non assessable. The Conversion Shares have been
duly and validly reserved for issuance and, upon issuance in
accordance with the terms of the Articles, will be duly and
validly issued, fully paid and non assessable.
(b) The outstanding shares of the capital stock of CNE are duly
and validly issued, fully paid and non assessable, and such
shares of such capital stock, and all outstanding stock,
options and other securities of CNE have been issued in full
compliance with the registration and prospectus delivery
requirements of the Securities Act of 1933, as amended (the
"Act"), and the registration and qualification requirements of
all applicable
state securities laws, or in compliance with applicable
exemptions therefrom, and all other provisions of applicable
federal and state securities laws, including, without
limitation, anti-fraud provisions.
4.6. Liabilities. CNE has no liabilities of any kind, whether liquidated,
contingent, inchoate or threatened, that are not reflected on the
Financial Statements. CNE has no indebtedness for borrowed money
that CNE has directly or indirectly created, incurred, assumed, or
guaranteed, or with respect to which CNE has otherwise become
directly or indirectly liable.
4.7. Title to Properties and Assets. CNE has good and marketable title to
its material properties and assets held in each case subject to no
mortgage, pledge, lien, encumbrance, security interest or charge of
any kind, except for purchase money security interests incurred in
the ordinary course of business. With respect to the material
property and assets it leases, CNE is in material compliance with
such leases and, to the best of CNE's knowledge, CNE holds valid
leasehold interests in such assets free of any liens, encumbrances,
security interests or claims of any party other than the lessors of
such property and assets.
4.8. Material Contracts and Obligations. All agreements, contracts,
leases, licenses, instruments, commitments (oral or written),
indebtedness, liabilities and other obligations to which CNE is a
party or by which it is bound that are (i) material to the conduct
and operations of its business and properties; (ii) involve any of
the officers, consultants, directors, employees or shareholders of
CNE; or (iii) obligate CNE to share, license or develop any product
or technology are listed in Section 4.8 of the Disclosure Schedule
and have been made available for inspection by Arrow Pacific and its
counsel. For purposes of this Section 4.8, "material" shall mean any
agreement, contract, indebtedness, liability or other obligation
either: (i) having an aggregate value, cost or amount in excess of
$10,000, or (ii) not terminable upon thirty days notice.
4.9. Litigation. There is no action, suit, proceeding, claim, arbitration
or investigation ("Action") pending (or, to the best of CNE's
knowledge, currently threatened) against CNE, its activities,
properties or assets or, to the best of CNE's knowledge, against any
officer, director or employee of CNE in connection with such
officer's, director's or employee's relationship with, or actions
taken on behalf of CNE. To the best of CNE's knowledge, there is no
factual or legal basis for any such Action that might result,
individually or in the aggregate, in any material adverse change in
the business, properties, assets, financial condition, affairs or
current prospects of CNE. By way of example but not by way of
limitation, there are no Actions pending or, to the best of CNE's
knowledge, threatened (or any reasonable basis therefor known to
CNE) relating to the prior employment of any of CNE's employees or
consultants, their use in connection with CNE's business of any
information, technology or techniques allegedly proprietary to any
of their former employers, clients or other parties, or their
obligations under any agreements with prior employers, clients or
other parties. CNE is not a party to or subject to the provisions of
any order, writ, injunction, judgment or decree of any court or
government agency or instrumentality and there is no Action by CNE
currently pending or which CNE intends to initiate.
4.10. Governmental Consents. All consents, approvals, orders,
authorizations or registrations, qualifications, designations,
declarations or filings with any federal, state or local
governmental authority on the part of CNE required in connection
with the consummation of the transactions contemplated herein shall
have been obtained prior to and be effective as of the Closing.
Based in part on the representations of Arrow Pacific set forth in
Section 5 below, the offer, sale and issuance of the Shares in
conformity with the terms of this Agreement are exempt from the
registration and prospectus delivery requirements of the Act.
4.11. Compliance with Other Instruments. CNE is not in, nor shall the
conduct of its business as proposed to be conducted result in, any
violation, breach or default of any term of CNE's Certificate of
Incorporation (the "Certificate of Incorporation") or CNE's bylaws
(the "Bylaws") or in any material respect of any material term or
provision of any material mortgage, indenture, contract, agreement
or instrument to which CNE is a party or by which it may be bound,
(the "Company Contracts") or of any provision of any material
foreign or domestic state or federal judgment, decree, order,
statute, rule or regulation applicable to or binding upon CNE. The
execution, delivery and performance of and compliance with this
Agreement and the consummation of the transactions contemplated
hereby will not result in any such violation, breach or default, or
be in conflict with or constitute, with or without the passage of
time or the giving of notice or both, either a default under the
Certificate of Incorporation or Bylaws, or any material agreement or
contract of CNE, a default under the Certificate of Incorporation,
the Bylaws or CNE Contracts or, to the best of CNE's knowledge, a
violation of any statutes, laws, regulations or orders, or an event
which results in the creation of any lien, charge or encumbrance
upon any asset of CNE.
4.12. Disclosure. No representation or warranty by CNE in this Agreement
or in any statement or certificate signed by any officer of CNE
furnished or to be furnished to Arrow Pacific pursuant to this
Agreement contains or will contain any untrue statement of a
material fact or omits or will omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances in which they are
made, not misleading. Any financial projections and other estimates
contained in such materials were prepared based on CNE's experience
and on assumptions of fact and opinion as to future events which
CNE, at the date of the issuance of such materials, believed to be
reasonable but which CNE cannot and does not assure or guarantee the
attainment of in any manner. Such materials may contain
forward-looking statements involving known and unknown risks and
uncertainties that may cause CNE's actual results in future periods
or plans for future periods to differ materially from what was
anticipated and no representations or warranties were or are being
made with respect to any such forward-looking statements or the
probability of achieving any of the results projected in any of such
forward-looking statements. As of the date hereof no facts have come
to the attention of CNE which would, in the opinion of its
management, require CNE to revise or amend the assumptions
underlying such projections and other estimates or the conclusions
derived therefrom in any material respect.
4.13. Registration Rights. CNE has not granted or agreed to grant any
person or entity any rights (including piggyback registration
rights) to have any securities of CNE
registered with the United States Securities and Exchange Commission
(the "SEC") or any other governmental authority.
4.14. Insurance. CNE has obtained, or will obtain (within 15 days after
Closing) and will maintain, fire and casualty insurance policies
with extended coverage, sufficient in amount (subject to reasonable
deductibles) to allow it to replace any of its properties that might
be damaged or destroyed.
4.15. Financial Statements. Section 4.15 of the Disclosure Schedule sets
forth the audited balance sheet of CNE dated __________ __, 200__
(the "Balance Sheet Date"); the unaudited balance sheet of CNE dated
__________ ___, 2005; the audited income statement of CNE for the
period ended __________ ___, 200__ and the unaudited income
statement of CNE for the period ended __________ ___, 2005 (all such
financial statements being collectively referred to herein as the
"Financial Statements"). Such Financial Statements (a) are in
accordance with the books and records of CNE, (b) are true, correct
and complete in all material respects and present fairly the
financial condition of CNE at the date or dates therein indicated
and the results of operations for the period or periods therein
specified, and (c) have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis, except
as to the unaudited financial statements, for the omission of notes
thereto and normal year-end audit adjustments. Specifically, but not
by way of limitation, the respective balance sheets of the Financial
Statements disclose all of CNE's material debts, liabilities and
obligations of any nature, whether due or to become due, as of their
respective dates (including, without limitation, absolute
liabilities, accrued liabilities, and contingent liabilities) to the
extent such debts, liabilities and obligations are required to be
disclosed in accordance with generally accepted accounting
principles. CNE has good and marketable title to all assets set
forth on the balance sheets of the Financial Statements, except for
such assets as have been spent, sold or transferred in the ordinary
course of business since their respective dates.
4.16. Certain Actions. Since the Balance Sheet Date, CNE has not: (a)
declared or paid any dividends, or authorized or made any
distribution upon or with respect to any class or series of its
capital stock; (b) incurred any indebtedness for money borrowed or
incurred any other liabilities individually in excess of ten
thousand dollars ($10,000) or in excess of twenty five thousand
dollars ($25,000) in the aggregate; (c) made any loans or advances
to any person, other than ordinary advances for travel expenses and
other customary amounts reimbursable to employees and officers; (d)
sold, exchanged or otherwise disposed of any material assets or
rights other than the sale of inventory in the ordinary course of
its business; or (e) entered into any transactions with any of its
officers, directors or employees or any entity controlled by any of
such individuals.
4.17. Activities Since Balance Sheet Date. Since the Balance Sheet Date,
there has not been:
(a) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the assets,
properties, financial
condition, operating results, prospects or business of CNE (as
presently conducted and as presently proposed to be
conducted);
(b) any waiver by CNE of a valuable right or of a material debt
owed to it;
(c) any satisfaction or discharge of any lien, claim or
encumbrance or payment of any obligation by CNE, except such
satisfaction, discharge or payment made in the ordinary course
of business that is not material to the assets, properties,
financial condition, operating results or business of CNE;
(d) any material change or amendment to a material contract or
arrangement by which CNE or any of its assets or properties is
bound or subject, except for changes or amendments which are
expressly provided for or disclosed in this Agreement;
(e) any material change in any compensation arrangement or
agreement with any present or prospective employee, contractor
or director not approved by CNE's Board of Directors (the
"Board"); or
(f) to CNE's knowledge, any other event or condition of any
character which would materially and adversely affect the
assets, properties, financial condition, operating results or
business of CNE.
4.18. Tax Matters. There have been no examinations or audits of any tax
returns or reports by any applicable federal, state or local
governmental agency. CNE has duly filed all federal, state, county
and local tax returns required to have been filed by it and paid all
taxes shown to be due on such returns. There are in effect no
waivers of applicable statutes of limitations with respect to taxes
for any year.
4.19. Tax Elections. CNE has not elected pursuant to the Internal Revenue
Code of 1986, as amended (the "Code"), to be treated as an "S"
corporation or a collapsible corporation pursuant to Section 341(f)
or Section 1362(a) of the Code, nor has it made any other elections
pursuant to the Code (other than elections which relate solely to
matters of accounting, depreciation or amortization) that would have
a material affect on CNE, its financial condition, its business as
presently conducted or presently proposed to be conducted or any of
its properties or material assets.
4.20. Environmental Matters. During the period that CNE has owned or
leased its properties and facilities, (a) CNE has not disposed,
released or threatened to release Hazardous Materials (as defined
below) on, from or under such properties or facilities in violation
of the law, and (b) neither CNE nor, to CNE's knowledge, any third
party, has used, generated, manufactured or stored on, under or
about such properties or facilities or transported to or from such
properties or facilities any Hazardous Materials in violation of the
law. CNE has no knowledge of any presence, disposals, releases or
threatened releases of Hazardous Materials on, from or under any of
such properties or facilities, which may have occurred prior to CNE
having taken possession of any of such properties or facilities. For
purposes of this Agreement, the terms "disposal", "release", and
"threatened release" shall have the definitions assigned thereto by
the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, 42 U.S.C. Section 9601 et seq., as amended ("CERCLA").
For the purposes of this Section, "Hazardous Materials" shall mean
any hazardous or toxic substance, material or waste which is
regulated under, or defined as a "hazardous substance," "pollutant,"
"contaminant," "toxic chemical," "hazardous material," "toxic
substance," or "hazardous chemical," under (i) CERCLA; (ii) the
Emergency Planning and Community Right-to-Know Act, 42 U.S.C.
Section 11001 et seq.; (iii) the Hazardous Materials Transportation
Act, 49 U.S.C. Section 1801, et seq.; (iv) the Toxic Substances
Control Act, 15 U.S.C. Section 2601 et seq.; (v) the Occupational
Safety and Health Act of 1970, 29 U.S.C. Section 651 et seq.; (vi)
regulations promulgated under any of the above statutes; or (vii)
any applicable state or local statute, ordinance, rule, or
regulation that has a scope or purpose similar to those statutes
identified above.
4.21. Interested Party Transactions. No officer or director of CNE or any
"affiliate" or "associate" (as those terms are defined in Rule 405
promulgated under the 0000 Xxx) of any such person has had, either
directly or indirectly, a material interest in: (a) any person or
entity which purchases from or sells, licenses or furnishes to CNE
any goods, property, technology, intellectual or other property
rights or services; or (b) any contract or agreement to which CNE is
a party or by which it may be bound or affected.
4.22. Stock Restriction Agreements. Each person who, pursuant to any
benefit, bonus or incentive plan of CNE, holds any currently
outstanding shares of common stock or other securities of Company or
any option, warrant or right to acquire such shares or other
securities, has entered into or is otherwise bound by, an agreement
granting CNE (a) the right to repurchase the shares for the original
purchase price, or to cancel the option, warrant or right, in the
event the holder's employment or services with CNE terminate for any
reason, subject to release of such repurchase or cancellation right
on terms and conditions specified by the Board, and (b) a right of
first refusal with respect to all such shares. CNE has furnished to
Arrow Pacific true and complete copies of the forms of all such
stock restriction agreements.
5. Representations and Warranties of Arrow Pacific. Arrow Pacific represents
and warrants to CNE as follows:
5.1. Authorization. This Agreement when executed and delivered by Arrow
Pacific will constitute a valid and legally binding obligation of
Arrow Pacific, subject, as to enforcement of remedies, to applicable
bankruptcy, insolvency, moratorium, reorganization and similar laws
affecting creditors' rights generally and to general equitable
principles.
5.2. Investigation; Economic Risk. Arrow Pacific acknowledges that it has
had an opportunity to discuss the business, affairs and current
prospects of CNE with its officers. Arrow Pacific further
acknowledges having had access to information about CNE that it has
requested. Arrow Pacific acknowledges that it is able to fend for
itself in the transactions contemplated by this Agreement and has
the ability to bear the economic risks of its investment pursuant to
this Agreement.
5.3. Purchase for Own Account. The Shares and the Conversion Shares will
be acquired for its own account, not as a nominee or agent, and not
with a view to or in connection with the sale or distribution of any
part thereof.
5.4. Exempt from Registration; Restricted Securities. Arrow Pacific
understands that the Shares and the Conversion Shares will not be
registered under the Act, on the ground that the sale provided for
in this Agreement is exempt from registration under the Act, and
that the reliance of CNE on such exemption is predicated in part on
Arrow Pacific's representations set forth in this Agreement. Arrow
Pacific understands that the Shares and the Conversion Shares being
purchased hereunder are restricted securities within the meaning of
Rule 144 under the Act; and that the Shares and the Conversion
Shares are not registered and must be held indefinitely unless they
are subsequently registered or an exemption from such registration
is available.
5.5. Restrictive Legend. It is understood that each certificate
representing the Shares, and any other securities issued in respect
of the any of the foregoing upon any stock split, stock dividend,
recapitalization, merger or similar event shall be stamped or
otherwise imprinted with a legend substantially in the following
form:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE
SECURITIES LAWS OF ANY STATES. THESE SECURITIES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE
TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE
APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR
EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE
REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY
REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY
SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER
OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE
SECURITIES LAWS.
Certificates bearing the foregoing legend will be replaced with
certificates without such legend if and when the restrictions giving
rise to that legend no longer apply.
6. Protective Provisions. CNE grants Arrow Pacific the following rights,
which will be reflected in the Articles and which rights will terminate
upon the conversion of the Shares into shares of Common Stock.
Notwithstanding any provisions to the contrary in this Agreement or in any
other agreement or document that binds CNE, CNE will not, without the
affirmative vote of the majority of owners of the Shares, perform any of
the following acts:
(a) authorize, create or issue or agree to authorize, create or issue
any capital stock or any other equity security of any kind or class
or increase or decrease (other than by redemption or conversion) the
number of authorized or issued shares of any capital stock or any
other equity in CNE; or (without limiting the intentionally
broad scope of the preceding provision) declare a forward or reverse
stock split or a stock dividend;
(b) take any action that results in the redemption or repurchase of any
shares of Common Stock or any other equity in CNE;
(c) grant registration rights to any holder of the capital stock of CNE;
(d) perform a merger, consolidation or other recapitalization;
(e) sell all, or substantially all, of CNE's assets;
(f) enter into, amend or waive any material agreements, arrangements or
understandings with any affiliates, including, without limitation,
investors;
(g) make a significant change in accounting policy;
(h) incur indebtedness, other than to suppliers and purchasers
consistent with industry practice and otherwise in the ordinary
course of business;
(i) pledge or otherwise encumber a substantial part of its assets;
(j) make loans or otherwise lend money or assets, other than extending
credit in the ordinary course of business;
(k) repay loans, notes payable or other amounts payable to any
investors;
(l) make any distributions to any officer, director or stockholder of
CNE or to any of their family or affiliates;
(m) increase or commit to increase any compensation; or pay or commit to
pay any bonuses to any officer, director or stockholder of CNE or to
any or to any of their family or affiliates;
(n) pay any accounts payable other than in the ordinary course of
business and in a manner that is commercially reasonable;
(o) dissolve or otherwise terminate CNE's existence;
(p) file for bankruptcy protection;
(q) alter CNE's primary business focus;
(r) alter the rights, designations and preferences of any its classes of
its shares of capital stock or other equity in CNE, including,
without limitation , the Shares or the Common Stock;
(s) make any determination concerning the compensation of directors or
committee members for their service on the Board or committee
thereof;
(t) alter the number of directors serving on CNE's board of directors
and the manner in which the composition of the Board of Directors is
determined;
(u) amend, alter or replace CNE's Certificate of Formation or By-Laws in
effect as of the Effective Date; or
(v) amend or terminate this Agreement
7. Conditions to Arrow Pacific's Obligations at the Closing. The obligation
of Arrow Pacific to purchase the Shares at the Closing is subject to the
fulfillment, to the satisfaction of Arrow Pacific on or prior to the
Closing, of the following conditions:
7.1. Representations and Warranties Correct. The representations and
warranties made by CNE in Section 4 hereof shall be true and correct
when made, and shall be true and correct as of the date of Closing
with the same force and effect as if they had been made on and as of
such date, subject to changes contemplated by this Agreement; and
CNE shall have performed all obligations and conditions herein
required to be performed or observed by it on or prior to the
Closing.
7.2. Performance of Obligations. CNE shall have performed and complied
with all agreements, obligations and conditions contained in this
Agreement that are required to be performed or complied with by it
on or before the Closing and shall have obtained all approvals,
consents and qualifications necessary to complete the purchase and
sale described herein.
7.3. Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated hereby and all
documents and instruments incident to such transactions shall be
satisfactory in substance and form to Arrow Pacific, and Arrow
Pacific shall have received all such counterpart originals or
certified or other copies of such documents as it may reasonably
request.
7.4. Consents and Waivers. CNE shall have obtained any and all consents
and waivers necessary or appropriate for consummation of the
transactions contemplated by this Agreement.
7.5. Compliance Certificate. At the Closing, CNE shall deliver to Arrow
Pacific a certificate, dated the date of Closing, and signed by
CNE's President certifying that the conditions specified in Sections
7.1, 7.2, 7.7 and 7.8 have been fulfilled.
7.6. Securities Laws. The offer and sale of the Shares to Arrow Pacific
pursuant to this Agreement shall be exempt from the registration
requirements of the Act and the registration and/or qualification
requirements of all applicable state securities laws.
7.7. Amendment to Articles. The Articles shall have been duly adopted by
CNE by all necessary corporate action of its Board of Directors and
shareholders and shall have been duly filed with and accepted by the
Secretary of State of the State of Delaware.
7.8 American Stock Exchange Listing. CNE shall, at all times from the
date of this Agreement through the Closing, have maintained its
listing for trading on the American Stock Exchange.
8. Conditions to CNE's Obligations at the Closing. The obligations of CNE
under this Agreement are subject to the fulfillment at or before the
Closing of the following conditions:
8.1. Representations and Warranties. The representations and warranties
of Arrow Pacific contained in Section 5 hereof shall be true as of
the Closing.
8.2. Agreement and Plan of Merger. Arrow Pacific shall have entered into
and delivered to CNE the Agreement and Plan of Merger.
9. Miscellaneous.
9.1. Governing Law. This Agreement shall be governed in all respects by
the laws of the state of Delaware without regard to provisions
regarding choice of laws.
9.2. Survival. The representations, warranties, covenants and agreements
made herein shall survive any investigation made by any party hereto
and the closing of the transactions contemplated hereby.
9.3. Successors and Assigns. This Agreement and the rights and
obligations herein may not be assigned by Arrow Pacific or CNE
without the written consent of the non-assigning party.
9.4. Entire Agreement. This Agreement, including the schedules and
exhibits hereto (which are hereby expressly incorporated herein by
this reference), constitute the entire understanding and agreement
between the parties with regard to the subjects hereof and thereof;
provided, however, that nothing in this Agreement shall be deemed to
terminate or supersede the provisions of any confidentiality and
nondisclosure agreements executed by the parties hereto prior to the
Effective Date, which agreements shall continue in full force and
effect until terminated in accordance with their respective terms.
9.5. Notices. Except as may be otherwise provided herein, all notices,
requests, waivers and other communications made pursuant to this
Agreement shall be in writing and shall be conclusively deemed to
have been duly given (a) when hand delivered to the other party; (b)
when received when sent by facsimile at the address and number set
forth below; (c) three business days after deposit in the U.S. mail
with first class or certified mail receipt requested postage prepaid
and addressed to the other party as set forth below; or (d) the next
business day after deposit with a national overnight delivery
service, postage prepaid, addressed to the parties as set forth
below with next-business-day delivery guaranteed, provided that the
sending party receives a confirmation of delivery from the delivery
service provider.
If to CNE to: If to Arrow Pacific to:
------------ ----------------------
Chairman and Chief Executive Officer Arrow Pacific Resources (S) Pte. Ltd.,
CNE Group, Inc. Carnegie Hall Tower
000 Xxxx 00xx Xxxxxx, Xxxxx 000 000 X. 00xx Xxxxxx
Xxx Xxxx, XX 00000 Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000 Facsimile:____________
Each person making a communication hereunder by facsimile shall
promptly confirm by telephone to the person to whom such
communication was addressed each communication made by it by
facsimile pursuant hereto but the absence of such confirmation shall
not affect the validity of any such communication. A party may
change or supplement the addresses given above, or designate
additional addresses, for purposes of this Section 9.5 by giving the
other party written notice of the new address in the manner set
forth above.
9.6. Amendments and Waivers. Any term of this Agreement may be amended
only with the written consent of CNE and Arrow Pacific.
9.7. Delays or Omissions. No delay or omission to exercise any right,
power or remedy accruing to CNE or to Arrow Pacific, upon any breach
or default of any party hereto under this Agreement, shall impair
any such right, power or remedy of CNE, or Arrow Pacific nor shall
it be construed to be a waiver of any such breach or default, or an
acquiescence therein, or of any similar breach of default thereafter
occurring; nor shall any waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent or
approval of any kind or character on the part of CNE or Arrow
Pacific of any breach of default under this Agreement or any waiver
on the part of CNE or Arrow Pacific of any provisions or conditions
of this Agreement, must be in writing and shall be effective only to
the extent specifically set forth in such writing. All remedies,
either under this Agreement, or by law or otherwise afforded to CNE
or Arrow Pacific shall be cumulative and not alternative.
9.8. Legal Fees. Each Party will pay the fees of its own accountants,
attorneys, investment advisors and other professionals that that
party incurred in connection with the preparation of this Agreement
and the consummation of the transactions that this Agreement
contemplates; provided, however, that Arrow Pacific shall reimburse
CNE for such fees in the amount of Fifty Thousand Dollars ($50,000)
immediately upon the execution of this Agreement and the Merger
Agreement, provided and subject to the condition that CNE is then
listed and approved for trading on the American Stock Exchange. In
the event of any action at law, suit in equity or arbitration
proceeding in relation to this Agreement or any Shares or other
securities of CNE issued or to be issued, the prevailing party shall
be paid by the other party a reasonable sum for such prevailing
party's attorney's fees and expenses in connection with such action,
suit or proceeding.
9.9. Finder's Fees. Each party (a) represents and warrants to the other
party hereto that it has retained no finder or broker in connection
with the transactions contemplated by this Agreement, and (b) hereby
agrees to indemnify and to hold harmless the other party hereto from
and against any liability for any commission or compensation in the
nature of a finder's fee of any broker or other person or firm (and
the costs and expenses of defending against such liability or
asserted liability) for which the indemnifying party or any of its
employees or representatives are responsible.
63
9.10. Titles and Subtitles. The titles of the sections and subsections of
this Agreement are for convenience of reference only and are not to
be considered in construing this Agreement.
9.11. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which
together shall constitute one instrument.
9.12. Severability. Should any provision of this Agreement be determined
to be illegal or unenforceable, such determination shall not affect
the remaining provisions of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year herein above first written.
CNE Group, Inc. Arrow Pacific Resources (S) Pte.
Ltd.,
By: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxx Xxxxxxx
------------------------------------- ------------------------------
Xxxxxx X. Xxxxxx, Chairman Xxxxx Xxxxxxx, CEO/President
and Chief Executive Officer
By: /s/ Xxxxxxx X. Xxxxxxxxxx
-------------------------------------
Xxxxxxx X. Xxxxxxxxxx, Vice
President and Chief Financial Officer
EXHIBIT A
Arrow Pacific
#of Series AAA Preferred
Arrow Pacific: Shares Purchased Purchase Price
--------------------------------------------------------------------------------
EXHIBIT B
CERTIFICATE OF DESIGNATIONS
EXHIBIT C
SCHEDULE OF EXCEPTIONS
EXHIBIT D
DISCLOSURE SCHEDULE
