Exhibit 2.1
SHARE EXCHANGE AGREEMENT
This Share Exchange Agreement, dated as of May 26, 2004, is made by and
among NANO SUPERLATTICE TECHNOLOGY, Inc., a Delaware corporation (the
"Acquiror"), Xx. Xxx Xxxx Hsin (the "Acquiror Stockholder"), Xx. Xxxxx Xxx-Xxxx
Xxxxx (the "Shareholder Representative"), for and on behalf of each of the
Persons listed on Exhibit A hereto (collectively, the "Shareholders", and
individually a "Shareholder"), and Nano Superlattice Technology Inc., a British
Virgin Islands company (the "Company").
BACKGROUND
The Shareholders have agreed to transfer to the Acquiror, and the Acquiror
has agreed to acquire from the Shareholders, all of the Shares, which Shares
constitute 100% of the outstanding Common Stock, in exchange for 2,504,000
shares of the Acquiror's Common Stock (the "Acquiror Shares"), on the terms and
conditions as set forth herein.
SECTION I
DEFINITIONS
Unless the context otherwise requires, the terms defined in this Section 1
will have the meanings herein specified for all purposes of this Agreement,
applicable to both the singular and plural forms of any of the terms herein
defined.
1.1 "Accredited Investor" has the meaning set forth in Regulation D under
the Securities Act, which is set forth on Exhibit B.
1.2 "Acquiror Balance Sheet" means the Acquiror's balance sheet at March
31, 2004.
1.3 "Acquired Companies" means, collectively, the Company and the Company
Subsidiaries.
1.4 "Acquiror Board" means the Board of Directors of the Acquiror.
1.5 "Acquiror's Common Stock" means the Acquiror common stock, par value
$0.0001 per share.
1.6 "Acquiror Shares" has the meaning set forth in the preamble.
1.7 "Affiliate" means any Person that directly or indirectly controls, is
controlled by or is under common control with the indicated Person.
1.8 "Agreement" means this Share Exchange Agreement, including all
Schedules and Exhibits hereto, as this Share Exchange Agreement may be from time
to time amended, modified or supplemented.
1.9 "Approved Plans" means a stock option or similar plan for the benefit
of employees or others which has been approved by the stockholders of the
Acquiror.
1.10 "Business Day" means a day, other than Saturday and Sunday, on which
banks in New York are open for business.
1.11 "Code" means the Internal Revenue Code of 1986, as amended.
1.12 "Common Stock" means the Company's common stock share.
1.13 "Commission" means the Securities and Exchange Commission or any other
federal agency then administering the Securities Act.
1.14 "Company Benefit Plans" means employee pension benefit plans, medical,
disability, severance pay, educational, life insurance and other employee
welfare benefit plans, and all other bonus, stock option, stock purchase or
other equity-based compensation arrangements, and incentive, deferred
compensation, supplemental retirement, severance, disability, vacation,
cafeteria and other similar employee benefit plans, policies, programs or
contracts (including those which contain change of control provisions or pending
change of control provisions), and any employment, executive compensation or
severance agreements (including those with change of control provisions or
pending change of control provisions), as amended, modified or supplemented, in
any case that (a) are maintained or contributed to (or to which there was an
obligation to contribute) by any Acquired Company, or (b) were formerly
maintained or contributed to (or to which there was an obligation to
contribute), by any Acquired Company, as well as each plan with respect to which
any Acquired Company has or could have any liability, whether direct or indirect
or actual or contingent (including any liability arising out of an
indemnification, guarantee, hold harmless or similar agreement).
1.15 "Company Board" means the Board of Directors of the Company.
1.16 "Company Indemnified Parties" has the meaning set forth in Section
12.2.1.
1.17 "Company Subsidiaries" means all of the direct and indirect
Subsidiaries of the Company, including, without limitation, Nano Superlattice
Technology, a Taiwan company.
1.18 "Covered Persons" has the meaning set forth in Section 8.6.1.
1.19 "Damages" has the meaning set forth in Section 12.2.1.
1.20 ""Distributor" means any underwriter, dealer or other Person who
participates, pursuant to a contractual arrangement, in the distribution of the
securities offered or sold in reliance on Regulation S.
1.21 "Environmental Laws" means any Law or other requirement relating to
the environment, natural resources, or public or employee health and safety.
1.22 "Environmental Permit" means all licenses, permits, authorizations,
approvals, franchises and rights required under any applicable Environmental Law
or Order.
1.23 "Equity Security" means any stock or similar security, including,
without limitation, securities containing equity features and securities
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containing profit participation features, or any security convertible into or
exchangeable for, with or without consideration, any stock or similar security,
or any security carrying any warrant, right or option to subscribe to or
purchase any shares of capital stock, or any such warrant or right.
1.24 "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
1.25 "Exchange Act" means the Securities Exchange Act of 1934 or any
similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same will then be in effect.
1.26 "Exhibits" means the several exhibits referred to and identified in
this Agreement.
1.27 "GAAP" means, with respect to any Person, United States generally
accepted accounting principles applied on a consistent basis with such Person's
past practices.
1.28 "Governmental Authority" means any federal or national, state or
provincial, municipal or local government, governmental authority, regulatory or
administrative agency, governmental commission, department, board, bureau,
agency or instrumentality, political subdivision, commission, court, tribunal,
official, arbitrator or arbitral body, in each case whether U.S. or non-U.S.
1.29 "Indebtedness" means any obligation, contingent or otherwise. Any
obligation secured by a Lien on, or payable out of the proceeds of, or
production from, property of the relevant party will be deemed to be
Indebtedness.
1.30 "Indebtedness for Borrowed Money" means (a) all Indebtedness in
respect of money borrowed; (b) all Indebtedness evidenced by a promissory note,
bond or similar written obligation to pay money; or (c) all such Indebtedness
guaranteed by the relevant party or for which the relevant party is otherwise
contingently liable.
1.31 "Intellectual Property" means all industrial and intellectual
property, including, without limitation, all U.S. and non-U.S. patents, patent
applications, patent rights, trademarks, trademark applications, common law
trademarks, Internet domain names, trade names, service marks, service xxxx
applications, common law service marks, and the goodwill associated therewith,
copyrights, in both published and unpublished works, whether registered or
unregistered, copyright applications, franchises, licenses, know-how, trade
secrets, technical data, designs, customer lists, confidential and proprietary
information, processes and formulae, all computer software programs or
applications, layouts, inventions, development tools and all documentation and
media constituting, describing or relating to the above, including manuals,
memoranda, and records, whether such intellectual property has been created,
applied for or obtained anywhere throughout the world.
1.32 "Laws" means, with respect to any Person, any U.S. or non-U.S.
federal, national, state, provincial, local, municipal, international,
multinational or other law (including common law), constitution, statute, code,
ordinance, rule, regulation or treaty applicable to such Person.
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1.33 "Lien" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind, including, without limitation, any conditional sale
or other title retention agreement, any lease in the nature thereof and the
filing of or agreement to give any financing statement under the Uniform
Commercial Code of any jurisdiction and including any lien or charge arising by
Law.
1.34 "Material Acquiror Contract" means any and all agreements, contracts,
arrangements, leases, commitments or otherwise, of the Acquiror Companies, of
the type and nature that the Acquiror is required to file with the Commission.
1.35 "Material Adverse Effect" means, when used with respect to the
Acquiror Companies or the Acquired Companies, as the case may be, any change,
effect or circumstance which, individually or in the aggregate, would reasonably
be expected to (a) have a material adverse effect on the business, assets,
financial condition or results of operations of the Acquiror Companies or the
Acquired Companies, as the case may be, in each case taken as a whole or (b)
materially impair the ability of the Acquiror or the Company, as the case may
be, to perform their obligations under this Agreement, excluding any change,
effect or circumstance resulting from (i) the announcement, pendency or
consummation of the transactions contemplated by this Agreement, (ii) changes in
the United States securities markets generally, or (iii) changes in general
economic, currency exchange rate, political or regulatory conditions in
industries in which the Acquiror Companies or the Acquired Companies, as the
case may be, operate.
1.36 "Material Company Contract" means any and all agreements, contracts,
arrangements, leases, commitments or otherwise, of the Acquired Companies, of
the type and nature that would be required to be filed with the Commission if
the Company was a reporting company.
1.37 "Order" means any award, decision, injunction, judgment, order,
ruling, subpoena, or verdict entered, issued, made, or rendered by any
Governmental Authority.
1.38 "Organizational Documents" means (a) the articles or certificate of
incorporation and the by-laws or code of regulations of a corporation; (b) the
partnership agreement and any statement of partnership of a general partnership;
(c) the limited partnership agreement and the certificate of limited partnership
of a limited partnership; (d) the articles or certificate of formation and
operating agreement of a limited liability company; (e) any other document
performing a similar function to the documents specified in clauses (a), (b),
(c) and (d) adopted or filed in connection with the creation, formation or
organization of a Person; and (f) any and all amendments to any of the
foregoing.
1.39 "Permitted Liens" means (a) Liens for Taxes not yet payable or in
respect of which the validity thereof is being contested in good faith by
appropriate proceedings and for the payment of which the relevant party has made
adequate reserves; (b) Liens in respect of pledges or deposits under workmen's
compensation laws or similar legislation, carriers, warehousemen, mechanics,
laborers and materialmen and similar Liens, if the obligations secured by such
Liens are not then delinquent or are being contested in good faith by
appropriate proceedings conducted and for the payment of which the relevant
party has made adequate reserves; (c) statutory Liens incidental to the conduct
of the business of the relevant party which were not incurred in connection with
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the borrowing of money or the obtaining of advances or credits and that do not
in the aggregate materially detract from the value of its property or materially
impair the use thereof in the operation of its business; and (d) Liens that
would not have a Material Adverse Effect.
1.40 "Person" means all natural persons, corporations, business trusts,
associations, companies, partnerships, limited liability companies, joint
ventures and other entities, governments, agencies and political subdivisions.
1.41 "Proceeding" means any action, arbitration, audit, hearing,
investigation, litigation, or suit (whether civil, criminal, administrative,
investigative, or informal) commenced, brought, conducted, or heard by or
before, or otherwise involving, any Governmental Authority.
1.42 "Regulation S" means Regulation S under the Securities Act, as the
same may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission.
1.43 "Rule 144" means Rule 144 under the Securities Act, as the same may be
amended from time to time, or any successor statute.
1.44 "Schedule 14(f) Filing" has the meaning set forth in Section 6.4.
1.45 "Schedules" means the several schedules referred to and identified
herein, setting forth certain disclosures, exceptions and other information,
data and documents referred to at various places throughout this Agreement.
1.46 "SEC Documents" has the meaning set forth in Section 6.26.
1.47 "Section 4(2)" means Section 4(2) under the Securities Act, as the
same may be amended from time to time, or any successor statute.
1.48 "Securities Act" means the Securities Act of 1933, as amended, or any
similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same will be in effect at the time.
1.49 "Shares" means the 25,040,000 shares of Common Stock owned by the
Shareholders and exchanged pursuant to this Agreement.
1.50 "Shareholders" has the meaning set forth in the preamble.
1.51 "Subsidiary" means, with respect to any Person, any corporation,
limited liability company, joint venture or partnership of which such Person (a)
beneficially owns, either directly or indirectly, more than 50% of (i) the total
combined voting power of all classes of voting securities of such entity, (ii)
the total combined equity interests, or (iii) the capital or profit interests,
in the case of a partnership; or (b) otherwise has the power to vote or to
direct the voting of sufficient securities to elect a majority of the board of
directors or similar governing body.
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1.52 "Survival Period" has the meaning set forth in Section 12.1.
1.53 "Taxes" means all foreign, federal, state or local taxes, charges,
fees, levies, imposts, duties and other assessments, as applicable, including,
but not limited to, any income, alternative minimum or add-on, estimated, gross
income, gross receipts, sales, use, transfer, transactions, intangibles, ad
valorem, value-added, franchise, registration, title, license, capital, paid-up
capital, profits, withholding, payroll, employment, unemployment, excise,
severance, stamp, occupation, premium, real property, recording, personal
property, federal highway use, commercial rent, environmental (including, but
not limited to, taxes under Section 59A of the Code) or windfall profit tax,
custom, duty or other tax, governmental fee or other like assessment or charge
of any kind whatsoever, together with any interest, penalties or additions to
tax with respect to any of the foregoing; and "Tax" means any of the foregoing
Taxes.
1.54 "Tax Group" means any federal, state, local or foreign consolidated,
affiliated, combined, unitary or other similar group of which the Acquiror is
now or was formerly a member.
1.55 "Tax Return" means any return, declaration, report, claim for refund
or credit, information return, statement or other similar document filed with
any Governmental Authority with respect to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
1.56 "U.S." means the United States of America.
1.57 "U.S. person" has the meaning set forth in Regulation S under the
Securities Act and set forth on Exhibit C hereto.
SECTION II
EXCHANGE OF SHARES AND SHARE CONSIDERATION
2.1 SHARE EXCHANGE. Each of the Shareholders desires to transfer to, and
the Acquiror desires to acquire from each Shareholder, that number of Shares set
out beside the respective names of the Shareholders in Exhibit A for the
consideration and on the terms set forth in this Agreement. The aggregate
consideration for the Shares acquired by the Acquiror pursuant to this Agreement
will be the Acquiror Shares to be issued to each of the Shareholders in the
amount set forth next to such Shareholders' name on Exhibit A.
2.2 WITHHOLDING. The Acquiror shall be entitled to deduct and withhold from
the Acquiror Shares otherwise payable pursuant to this Agreement to any holder
of Shares such amounts as it is required to deduct and withhold with respect to
the making of such payment under the Code or any provision of state, local,
provincial or foreign tax Law. To the extent that amounts are so withheld, such
withheld amounts shall be treated for all purposes of this Agreement as having
been paid to the holder of Shares in respect of which such deduction and
withholding was made.
2.3 SECTION 368 REORGANIZATION. For U.S. federal income tax purposes, the
exchange by the Shareholders of the Shares for the Acquiror Shares is intended
to constitute a "reorganization" within the meaning of Section 368(a)(1)(B) of
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the Code. The parties to this Agreement hereby adopt this Agreement as a "plan
of reorganization" within the meaning of Sections 1.368-2(g) and 1.368-3(a) of
the United States Treasury Regulations. Notwithstanding the foregoing or
anything else to the contrary contained in this Agreement, the parties
acknowledge and agree that no party is making any representation or warranty as
to the qualification of the exchange by the Shareholders of the Shares for the
Acquiror Shares as a reorganization under Section 368 of the Code or as to the
effect, if any, that any transaction consummated prior to the Closing has or may
have on any such reorganization status. The parties acknowledge and agree that
each (i) has had the opportunity to obtain independent legal and tax advice with
respect to the transaction contemplated by this Agreement, and (ii) is
responsible for paying its own Taxes, including without limitation, any adverse
Tax consequences that may result if the transaction contemplated by this
Agreement is not determined to qualify as a reorganization under Section 368 of
the Code.
2.3.1 DIRECTORS OF ACQUIROR AT CLOSING. Simultaneously with the
Closing of the transactions contemplated by this Agreement, Mr. Hsin shall
appoint Xxxxx Xxx-Xxxx Xxxxx, Xxxxx-Xxxx Xxxx, Xxxxx Xxxxx-Xxxxx Xxx, and
Yun-Xxxx Xxxxx to the Acquiror Board. Mr. Hsin shall subsequently resign as a
director.
SECTION III
CLOSING
3.1 CLOSING. The closing (the "Closing") of the share exchange will occur
at the offices of Loeb & Loeb, LLP, in New York, New York, on May 25, 2004 or at
such later date as all of the closing conditions set forth in Sections 9 and 10
have been satisfied or waived (the "Closing Date"). At the Closing, the
Shareholder Representative will deliver to the Acquiror certificate(s)
evidencing the number of Shares held by each Shareholder (as set forth in
Exhibit A), along with executed stock powers transferring such Shares to the
Acquiror, against delivery to each Shareholder by the Acquiror of a certificate
evidencing such Shareholder's pro rata share of the Acquiror Shares (as set
forth in Exhibit A).
SECTION IV
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS
4.1 GENERALLY. Each Shareholder, severally and not jointly, hereby
represents and warrants to the Acquiror:
4.1.1 AUTHORITY. Such Shareholder has the right, power, authority and
capacity to execute and deliver this Agreement and each of the Transaction
Documents to which such Shareholder is a party, to consummate the transactions
contemplated by this Agreement and each of the Transaction Documents to which
such Shareholder is a party, and to perform such Shareholder's obligations under
this Agreement and each of the Transaction Documents to which such Shareholder
is a party. This Agreement has been, and each of the Transaction Documents to
which such Shareholder is a party will be, duly and validly authorized and
approved by such Shareholder. Such Shareholder has executed a power of attorney
duly appointing the Shareholder Representative to act on such Shareholder's
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behalf to execute and deliver this Agreement and each of the Transaction
Documents. Assuming this Agreement and the Transaction Documents have been duly
and validly authorized, executed and delivered by the parties thereto other than
such Shareholder, this Agreement is, and as of the Closing each of the
Transaction Documents to which such Shareholder is a party will have been, duly
authorized, executed and delivered by such Shareholder and constitute or will
constitute the legal, valid and binding obligation of such Shareholder,
enforceable against such Shareholder in accordance with their respective terms,
except as such enforcement is limited by general equitable principles, or by
bankruptcy, insolvency and other similar Laws affecting the enforcement of
creditors rights generally.
4.1.2 NO CONFLICT. Neither the execution or delivery by such
Shareholder of this Agreement or any Transaction Document to which such
Shareholder is a party, nor the consummation or performance by such Shareholder
of the transactions contemplated hereby or thereby will, directly or indirectly,
(a) contravene, conflict with, or result in a violation of any provision of the
Organizational Documents of such Shareholder (if such Shareholder is not a
natural person); (b) contravene, conflict with, constitute a default (or an
event or condition which, with notice or lapse of time or both, would constitute
a default) under, or result in the termination or acceleration of, any agreement
or instrument to which such Shareholder is a party or by which the properties or
assets of such Shareholder are bound; or (c) contravene, conflict with, or
result in a violation of, any Law or Order to which such Shareholder, or any of
the properties or assets of such Shareholder, may be subject.
4.1.3 OWNERSHIP OF SHARES. Such Shareholder owns, of record and
beneficially, and has good, valid and indefeasible title to and the right to
transfer to the Acquiror pursuant to this Agreement, such Shareholder's Shares
free and clear of any and all Liens. There are no options, rights, voting
trusts, stockholder agreements or any other contracts or understandings to which
such Shareholder is a party or by which such Shareholder or such Shareholder's
Shares are bound with respect to the issuance, sale, transfer, voting or
registration of such Shareholder's Shares. At the Closing, the Acquiror will
acquire good, valid and marketable title to such Shareholder's Shares free and
clear of any and all Liens.
4.1.4 LITIGATION. There is no pending Proceeding against such
Shareholder that challenges, or may have the effect of preventing, delaying or
making illegal, or otherwise interfering with, any of the transactions
contemplated by this Agreement and, to the knowledge of such Shareholder, no
such Proceeding has been threatened, and no event or circumstance exists that is
reasonably likely to give rise to or serve as a basis for the commencement of
any such Proceeding.
4.1.5 NO BROKERS OR FINDERS. No Person has, or as a result of the
transactions contemplated herein will have, any right or valid claim against
such Shareholder for any commission, fee or other compensation as a finder or
broker, or in any similar capacity, and such Shareholder will indemnify and hold
the Acquiror harmless against any liability or expense arising out of, or in
connection with, any such claim.
4.2 INVESTMENT REPRESENTATIONS. Each Shareholder, severally and not
jointly, hereby represents and warrants to the Acquiror:
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4.2.1 ACKNOWLEDGMENT. Each Shareholder understands and agrees that the
Acquiror Shares have not been registered under the Securities Act or the
securities laws of any state of the U.S. and that the issuance of the Acquiror
Shares is being effected in reliance upon an exemption from registration
afforded either under Section 4(2) of the Securities Act for transactions by an
issuer not involving a public offering or Regulation S for offers and sales of
securities outside the U.S.
4.2.2 STATUS. Each Shareholder, severally and not jointly, represents
and warrants to the Acquiror, either that:
(a) it is an Accredited Investor; or
(b) it is not a U.S. person.
Each Shareholder severally understands that the Acquiror Shares
are being offered and sold to such Shareholder in reliance upon the truth and
accuracy of the representations, warranties, agreements, acknowledgments and
understandings of such Shareholder set forth in this Agreement, in order that
the Acquiror may determine the applicability and availability of the exemptions
from registration of the Acquiror Shares on which the Acquiror is relying.
4.2.3 ADDITIONAL REPRESENTATIONS AND WARRANTIES OF ACCREDITED
INVESTORS. Each Shareholder that is an Accredited Investor, severally and not
jointly, further makes the representations and warranties to the Acquiror set
forth on Exhibit D.
4.2.4 ADDITIONAL REPRESENTATIONS AND WARRANTIES OF NON-U.S. PERSONS.
Each Shareholder that it is not a U.S. person, severally and not jointly,
further makes the representations and warranties to the Acquiror set forth on
Exhibit E.
4.2.5 STOCK LEGENDS. Each Shareholder hereby agrees with the Acquiror
as follows:
(a) SECURITIES ACT LEGEND - ACCREDITED INVESTORS. The
certificates evidencing the Acquiror Shares issued to those Shareholders
who are Accredited Investors, and each certificate issued in transfer
thereof, will bear the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE
SECURITIES LAWS AND NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE
OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED EXCEPT (1)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
AND APPLICABLE STATE SECURITIES LAWS OR (2) PURSUANT TO AN AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
APPLICABLE STATE SECURITIES LAWS, IN WHICH CASE THE HOLDER MUST, PRIOR TO
SUCH TRANSFER, FURNISH TO THE COMPANY AN OPINION OF COUNSEL, WHICH COUNSEL
AND OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH
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SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED
IN THE MANNER CONTEMPLATED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS.
(b) SECURITIES ACT LEGEND - NON-U.S. PERSONS. The certificates
evidencing the Acquiror Shares issued to those Shareholders who are not
U.S. persons, and each certificate issued in transfer thereof, will bear
the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE
SECURITIES LAWS AND NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE
OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED EXCEPT (1) IN
ACCORDANCE WITH THE PROVISIONS OF REGULATION S PROMULGATED UNDER THE
SECURITIES ACT, AND BASED ON AN OPINION OF COUNSEL, WHICH COUNSEL AND
OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT THE PROVISIONS OF
REGULATION S HAVE BEEN SATISFIED, (2) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR
(3) PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, IN WHICH CASE
THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE COMPANY AN OPINION
OF COUNSEL, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE
COMPANY, THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR
OTHERWISE TRANSFERRED IN THE MANNER CONTEMPLATED PURSUANT TO AN AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
APPLICABLE STATE SECURITIES LAWS. HEDGING TRANSACTIONS INVOLVING THE
SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE CONDUCTED UNLESS IN
COMPLIANCE WITH THE SECURITIES ACT.
(c) OTHER LEGENDS. The certificates representing such Acquiror
Shares, and each certificate issued in transfer thereof, will also bear any
other legend required under any applicable Law, including, without
limitation, any U.S. state corporate and state securities law, or contract.
(d) OPINION. No Shareholder will transfer any or all of the
Acquiror Shares pursuant to Regulation S or absent an effective
registration statement under the Securities Act and applicable state
securities law covering the disposition of such Shareholder's Acquiror
Shares, without first providing the Acquiror with an opinion of counsel
(which counsel and opinion are reasonably satisfactory to the Acquiror) to
the effect that such transfer will be made in compliance with Regulation S
or will be exempt from the registration and the prospectus delivery
requirements of the Securities Act and the registration or qualification
requirements of any applicable U.S. state securities laws.
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(e) CONSENT. Each Shareholder understands and acknowledges that
the Acquiror may refuse to transfer the Acquiror Shares, unless such
Shareholder complies with this Section 4.2.5 and any other restrictions on
transferability set forth in Exhibits D and E. Each Shareholder consents to
the Acquiror making a notation on its records or giving instructions to any
transfer agent of the Acquiror's Common Stock in order to implement the
restrictions on transfer of the Acquiror Shares.
SECTION V
REPRESENTATIONS AND WARRANTIES BY THE COMPANY
The Company represents and warrants to the Acquiror as follows:
5.1 ORGANIZATION AND QUALIFICATION. The Company is duly incorporated and
validly existing under the laws of the British Virgin Islands, has all requisite
authority and power (corporate and other), governmental licenses,
authorizations, consents and approvals to carry on its business as presently
conducted and as contemplated to be conducted, to own, hold and operate its
properties and assets as now owned, held and operated by it, to enter into this
Agreement, to carry out the provisions hereof except where the failure to be so
organized, existing and in good standing or to have such authority or power will
not, in the aggregate, either (i) have a material adverse effect on the
business, assets or financial condition of the Company, or (ii) materially
impair the ability of the Company and the Shareholders each to perform their
material obligations under this Agreement (any of such effects or impairments, a
"MATERIAL ADVERSE EFFECT"). The Company is duly qualified, licensed or
domesticated as a foreign corporation in good standing in each jurisdiction
wherein the nature of its activities or its properties owned or leased makes
such qualification, licensing or domestication necessary, except where the
failure to be so qualified, licensed or domesticated will not have a Material
Adverse Effect. Set forth on Schedule 5.1 is a list of those jurisdictions in
which the Company presently conducts its business, or owns, holds and operates
its properties and assets.
5.2 SUBSIDIARIES. Except as set forth on Schedule 5.2, the Company does not
own directly or indirectly, any equity or other ownership interest in any
corporation, partnership, joint venture or other entity or enterprise.
5.3 ARTICLES OF INCORPORATION AND BYLAWS. The Organizational Documents of
the Company that have been delivered to the Acquiror prior to the execution of
this Agreement are true and complete and have not been amended or repealed. The
Company is not in violation or breach of any of the provisions of the Company
Organizational Documents, except for such violations or breaches as, in the
aggregate, will not have a Material Adverse Effect.
5.4 AUTHORIZATION AND VALIDITY OF THIS AGREEMENT. The execution, delivery
and performance by the Company of this Agreement and the recording of the
transfer of the Shares and the delivery of the Shares are within the Company's
corporate powers, have been duly authorized by all necessary corporate action,
do not require from the Board of Directors or Shareholders of the Company any
consent or approval that has not been validly and lawfully obtained, require no
authorization, consent, approval, license, exemption of or filing or
registration with any court or governmental department, commission, board,
11
bureau, agency or instrumentality of government that has not been validly and
lawfully obtained, filed or registered, as the case may be, except for those
that, if not obtained or made would not have a Material Adverse Effect.
5.5 NO VIOLATION. Neither the execution, delivery or performance by the
Company of this Agreement or any other agreement or instrument contemplated
hereby to which the Company is a party, nor the consummation by the Company of
the transactions contemplated hereby will violate any provision of the
Organizational Documents, or violate or be in conflict with, or constitute a
default (or an event or condition which, with notice or lapse of time or both,
would constitute a default) under, or result in the termination or acceleration
of, or result in the creation of imposition of any Lien under, any agreement or
instrument to which the company is a party or by which the Company is or will be
bound or subject, or violate any laws.
5.6 BINDING OBLIGATIONS. Assuming this Agreement has been duly and validly
authorized, executed and delivered by the Acquiror, the Acquiror Stockholder and
the Shareholders, this Agreement is, and as of the Closing each other agreement
or instrument contemplated hereby to which the Company is a party, will have
been duly authorized, executed and delivered by the Company and will be the
legal, valid and binding Agreement of the Company and is enforceable against the
Company in accordance with its terms, except as such enforcement is limited by
general equitable principles, or by bankruptcy, insolvency and other similar
laws affecting the enforcement of creditors rights generally.
5.7 CAPITALIZATION AND RELATED MATTERS.
5.7.1 CAPITALIZATION. The authorized capital stock of the Company
consists of _____ shares of Common Stock, of which 25,040,000 shares are issued
and outstanding. There are no outstanding or authorized options, warrants,
calls, subscriptions, rights (including any preemptive rights or rights of first
refusal), agreements or commitments of any character obligating the Company to
issue any shares of its Common Stock or any other Equity Security of the
Company. All issued and outstanding shares of the Company's capital stock are
duly authorized, validly issued, fully paid and nonassessable and have not been
issued in violation of any preemptive or similar rights.
5.7.2 NO REDEMPTION REQUIREMENTS. There are no outstanding contractual
obligations (contingent or otherwise) of the Company to retire, repurchase,
redeem or otherwise acquire any outstanding shares of capital stock of, or other
ownership interests in, the Company or to provide funds to or make any
investment (in the form of a loan, capital contribution or otherwise) in any
other entity.
5.7.3 DULY AUTHORIZED. The exchange of the Shares has been duly
authorized and, upon delivery to the Acquiror of certificates therefor in
accordance with the terms of this Agreement, the Shares will have been validly
issued and fully paid and will be nonassessable, have the rights, preferences
and privileges specified, will be free of preemptive rights and will be free and
clear of all Liens and restrictions, or that might have been created by the
Acquiror and restrictions on transfer imposed by this Agreement and the
Securities Act.
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5.8 SHAREHOLDERS. Exhibit A contains a true and complete list of the names
and addresses of the record holders of all of the outstanding Equity Securities
of the Company. Except as expressly provided in this Agreement, no holder of
Shares or any other security of the Company or any other Person is entitled to
any preemptive right, right of first refusal or similar right as a result of the
issuance of the shares or otherwise. There is no voting trust, agreement or
arrangement among any of the holders of any Equity Securities of the Company
affecting the exercise of the voting rights of any such Equity Securities.
5.9 COMPLIANCE WITH LAWS AND OTHER INSTRUMENTS. Except as would not have a
Material Adverse Effect, the business and operations of the Company have been
and are being conducted in accordance with all applicable foreign, federal,
state and local laws, rules and regulations and all applicable orders,
injunctions, decrees, writs, judgments, determinations and awards of all courts
and governmental agencies and instrumentalities. Except as would not have a
Material Adverse Effect, the Company is not, and is not alleged to be, in
violation of, or (with or without notice or lapse of time or both) in default
under, or in breach of, any term or provision of the Organizational Documents or
of any indenture, loan or credit agreement, note, deed of trust, mortgage,
security agreement or other material agreement, lease, license or other
instrument, commitment, obligation or arrangement to which the Company is a
party or by which any of the Company's properties, assets or rights are bound or
affected. To the knowledge of the Company, no other party to any material
contract, agreement, lease, license, commitment, instrument or other obligation
to which the Company is a party is (with or without notice or lapse of time or
both) in default thereunder or in breach of any term thereof. The Company is not
subject to any obligation or restriction of any kind or character, nor is there,
to the knowledge of the Company, any event or circumstance relating to the
Company that materially and adversely affects in any way its business,
properties, assets or prospects or that prohibits the Company from entering into
this Agreement or would prevent or make burdensome its performance of or
compliance with all or any part of this Agreement or the consummation of the
transactions contemplated hereby or thereby.
5.10 CERTAIN PROCEEDINGS. There is no pending Proceeding that has been
commenced against the Company and that challenges, or may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any of the
transactions contemplated in this Agreement. To the Company's knowledge, no such
Proceeding has been threatened.
5.11 NO BROKERS OR FINDERS. No person has, or as a result of the
transactions contemplated herein will have, any right or valid claim against the
Company for any commission, fee or other compensation as a finder or broker, or
in any similar capacity, and the Company will indemnify and hold the Acquiror
harmless against any liability or expense arising out of, or in connection with,
any such claim.
5.12 TITLE TO AND CONDITION OF PROPERTIES. The Company owns or holds under
valid leases or other rights to use all real property, plants, machinery and
equipment necessary for the conduct of the business of the Company as presently
conducted, except where the failure to own or hold such property, plants,
machinery and equipment would not have a Material Adverse Effect on the Company.
The material buildings, plants, machinery and equipment necessary for the
conduct of the business of the Company as presently conducted are structurally
sound, are in good operating condition and repair and are adequate for the uses
13
to which they are being put, in each case, taken as a whole, and none of such
buildings, plants, machinery or equipment is in need of maintenance or repairs,
except for ordinary, routine maintenance and repairs that are not material in
nature or cost.
5.13 BOARD OF DIRECTORS RECOMMENDATION. The Company Board, at a meeting
duly called and held, has by unanimous vote of those directors present (who
constituted 100% of the directors then in office), determined that this
Agreement and the transactions contemplated by this Agreement, are advisable and
in the best interests of the Company's Shareholders.
SECTION VI
REPRESENTATIONS AND WARRANTIES OF THE ACQUIROR AND THE ACQUIROR STOCKHOLDER
The Acquiror and the Acquiror Stockholder, jointly and severally represent
and warrant to the Shareholders and the Company as follows:
6.1 ORGANIZATION AND QUALIFICATION. The Acquiror is duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization, has all requisite authority and power (corporate and other),
governmental licenses, authorizations, consents and approvals to carry on its
business as presently conducted and to own, hold and operate its properties and
assets as now owned, held and operated by it, except where the failure to be so
organized, existing and in good standing, or to have such authority and power,
governmental licenses, authorizations, consents or approvals would not have a
Material Adverse Effect. The Acquiror is duly qualified, licensed or
domesticated as a foreign corporation in good standing in each jurisdiction
wherein the nature of its activities or its properties owned, held or operated
makes such qualification, licensing or domestication necessary, except where the
failure to be so duly qualified, licensed or domesticated and in good standing
would not have a Material Adverse Effect. Schedule 6.1 sets forth a true,
correct and complete list of the Acquiror's jurisdiction of organization and
each other jurisdiction in which the Acquiror presently conducts its business or
owns, holds and operates its properties and assets.
6.2 SUBSIDIARIES. The Acquiror does not own, directly or indirectly, any
equity or other ownership interest in any corporation, partnership, joint
venture or other entity or enterprise.
6.3 ORGANIZATIONAL DOCUMENTS. True, correct and complete copies of the
Organizational Documents of the Acquiror have been delivered to the Company
prior to the execution of this Agreement, and no action has been taken to amend
or repeal such Organizational Documents. The Acquiror is not in violation or
breach of any of the provisions of its Organizational Documents, except for such
violations or breaches as would not have a Material Adverse Effect.
6.4 AUTHORIZATION. The Acquiror has all requisite authority and power
(corporate and other), governmental licenses, authorizations, consents and
approvals to enter into this Agreement and each of the Transaction Documents to
which the Acquiror is a party, to consummate the transactions contemplated by
14
this Agreement and each of the Transaction Documents to which the Acquiror is a
party and to perform its obligations under this Agreement and each of the
Transaction Documents to which the Acquiror is a party. The execution, delivery
and performance by the Acquiror of this Agreement and each of the Transaction
Documents to which the Acquiror is a party have been duly authorized by all
necessary corporate action and do not require from the Acquiror Board or the
stockholders of the Acquiror any consent or approval that has not been validly
and lawfully obtained. The execution, delivery and performance by the Acquiror
of this Agreement and each of the Transaction Documents to which the Acquiror is
a party requires no authorization, consent, approval, license, exemption of or
filing or registration with any Governmental Authority or other Person other
than customary filings with the Commission for transactions of the type
contemplated by this Agreement.
6.5 NO VIOLATION. Neither the execution or delivery by the Acquiror of this
Agreement or any Transaction Document to which the Acquiror is a party, nor the
consummation or performance by the Acquiror of the transactions contemplated
hereby or thereby will, directly or indirectly, (a) contravene, conflict with,
or result in a violation of any provision of the Organizational Documents of the
Acquiror; (b) contravene, conflict with, constitute a default (or an event or
condition which, with notice or lapse of time or both, would constitute a
default) under, or result in the termination or acceleration of, or result in
the imposition or creation of any Lien under, any agreement or instrument to
which the Acquiror is a party or by which the properties or assets of the
Acquiror are bound; (c) contravene, conflict with, or result in a violation of,
any Law or Order to which the Acquiror, or any of the properties or assets owned
or used by the Acquiror, may be subject; or (d) contravene, conflict with, or
result in a violation of, the terms or requirements of, or give any Governmental
Authority the right to revoke, withdraw, suspend, cancel, terminate or modify,
any licenses, permits, authorizations, approvals, franchises or other rights
held by the Acquiror or that otherwise relate to the business of, or any of the
properties or assets owned or used by, the Acquiror, except, in the case of
clause (b), (c), or (d), for any such contraventions, conflicts, violations, or
other occurrences as would not have a Material Adverse Effect.
6.6 BINDING OBLIGATIONS. Assuming this Agreement and the Transaction
Documents have been duly and validly authorized, executed and delivered by the
parties thereto other than the Acquiror, this Agreement has been, and as of the
Closing each of the Transaction Documents to which the Acquiror is a party will
be, duly authorized, executed and delivered by the Acquiror and constitutes or
will constitute, as the case may be, the legal, valid and binding obligations of
the Acquiror, enforceable against the Acquiror in accordance with their
respective terms, except as such enforcement is limited by general equitable
principles, or by bankruptcy, insolvency and other similar Laws affecting the
enforcement of creditors rights generally.
6.7 SECURITIES LAWS. Assuming the accuracy of the representations and
warranties of the Shareholders contained in Section 4 and Exhibits D and E, the
issuance of the Acquiror Shares pursuant to this Agreement are and will be (a)
exempt from the registration and prospectus delivery requirements of the
Securities Act, (b) have been registered or qualified (or are exempt from
registration and qualification) under the registration permit or qualification
requirements of all applicable state securities laws, and (c) accomplished in
conformity with all other applicable federal and state securities laws.
15
6.8 CAPITALIZATION AND RELATED MATTERS.
6.8.1 CAPITALIZATION. The authorized capital stock of the Acquiror
consists of 80,000,000 shares of the Acquiror's Common Stock, of which 233,000
shares are issued and outstanding. All issued and outstanding shares of the
Acquiror's Common Stock are duly authorized, validly issued, fully paid and
nonassessable, and have not been issued in violation of any preemptive or
similar rights. On the Closing Date, the Acquiror will have sufficient
authorized and unissued Acquiror's Common Stock to consummate the transactions
contemplated hereby. There are no outstanding or authorized options, warrants,
purchase agreements, participation agreements, subscription rights, conversion
rights, exchange rights or other securities or contracts that could require the
Acquiror to issue, sell or otherwise cause to become outstanding any of its
authorized but unissued shares of capital stock or any securities convertible
into, exchangeable for or carrying a right or option to purchase shares of
capital stock or to create, authorize, issue, sell or otherwise cause to become
outstanding any new class of capital stock. There are no outstanding
stockholders' agreements, voting trusts or arrangements, registration rights
agreements, rights of first refusal or other contracts pertaining to the capital
stock of the Acquiror. The issuance of all of the shares of Acquiror's Common
Stock described in this Section 6.8.1 have been in compliance with U.S. federal
and state securities laws.
6.8.2 NO REDEMPTION REQUIREMENTS. There are no outstanding contractual
obligations (contingent or otherwise) of the Acquiror to retire, repurchase,
redeem or otherwise acquire any outstanding shares of capital stock of, or other
ownership interests in, the Acquiror or to provide funds to or make any
investment (in the form of a loan, capital contribution or otherwise) in any
other Person.
6.8.3 DULY AUTHORIZED. The issuance of the Acquiror Shares has been
duly authorized and, upon delivery to the Shareholders of certificates therefor
in accordance with the terms of this Agreement, the Acquiror Shares will have
been validly issued and fully paid, and will be nonassessable, have the rights,
preferences and privileges specified, will be free of preemptive rights and will
be free and clear of all Liens and restrictions, other than Liens created by the
Shareholders and restrictions on transfer imposed by this Agreement and the
Securities Act.
6.9 COMPLIANCE WITH LAWS. Except as would not have a Material Adverse
Effect, the business and operations of the Acquiror have been and are being
conducted in accordance with all applicable Laws and Orders. Except as would not
have a Material Adverse Effect, the Acquiror has not received notice of any
violation (or any Proceeding involving an allegation of any violation) of any
applicable Law or Order by or affecting the Acquiror and, to the knowledge of
the Acquiror, no Proceeding involving an allegation of violation of any
applicable Law or Order is threatened or contemplated. Except as would not have
a Material Adverse Effect, the Acquiror is subject to any obligation or
restriction of any kind or character, nor is there, to the knowledge of the
Acquiror, any event or circumstance relating to the Acquiror that materially and
adversely affects in any way its business, properties, assets or prospects or
that prohibits the Acquiror from entering into this Agreement or would prevent
16
or make burdensome its performance of or compliance with all or any part of this
Agreement or the consummation of the transactions contemplated hereby.
6.10 CERTAIN PROCEEDINGS. There is no pending Proceeding that has been
commenced against the Acquiror and that challenges, or may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any of the
transactions contemplated by this Agreement. To the knowledge of the Acquiror,
no such Proceeding has been threatened.
6.11 NO BROKERS OR FINDERS. No Person has, or as a result of the
transactions contemplated herein will have, any right or valid claim against the
Acquiror for any commission, fee or other compensation as a finder or broker, or
in any similar capacity, and the Acquiror will indemnify and hold the Company
harmless against any liability or expense arising out of, or in connection with,
any such claim.
6.12 ABSENCE OF UNDISCLOSED LIABILITIES. The Acquiror has no debt,
obligation or liability (whether accrued, absolute, contingent, liquidated or
otherwise, whether due or to become due, whether or not known to the Acquiror)
arising out of any transaction entered into at or prior to the Closing or any
act or omission at or prior to the Closing, except to the extent set forth on or
reserved against on the Acquiror Balance Sheet. The Acquiror has not incurred
any liabilities or obligations under agreements entered into, in the usual and
ordinary course of business since March 31, 2004 .
6.13 CHANGES. The Acquiror has not, since March 31, 2004:
6.13.1 ORDINARY COURSE OF BUSINESS. Conducted its business or entered
into any transaction other than in the usual and ordinary course of business,
except for this Agreement.
6.13.2 ADVERSE CHANGES. Suffered or experienced any change in, or
affecting, its condition (financial or otherwise), properties, assets,
liabilities, business, operations, results of operations or prospects other than
changes, events or conditions in the usual and ordinary course of its business,
none of which would have a Material Adverse Effect;
6.13.3 LOANS. Made any loans or advances to any Person other than
travel advances and reimbursement of expenses made to employees, officers and
directors in the ordinary course of business;
6.13.4 LIENS. Created or permitted to exist any Lien on any material
property or asset of the Acquiror Companies, other than Permitted Liens;
6.13.5 CAPITAL STOCK. Issued, sold, disposed of or encumbered, or
authorized the issuance, sale, disposition or encumbrance of, or granted or
issued any option to acquire any shares of its capital stock or any other of its
securities or any Equity Security, or altered the term of any of its outstanding
securities or made any change in its outstanding shares of capital stock or its
capitalization, whether by reason of reclassification, recapitalization, stock
split, combination, exchange or readjustment of shares, stock dividend or
otherwise;
17
6.13.6 DIVIDENDS. Declared, set aside, made or paid any dividend or
other distribution to any of its stockholders;
6.13.7 MATERIAL ACQUIROR CONTRACTS. Terminated or modified any Material
Acquiror Contract, except for termination upon expiration in accordance with the
terms thereof;
6.13.8 CLAIMS. Released, waived or cancelled any claims or rights
relating to or affecting the Acquiror in excess of $2,000 in the aggregate or
instituted or settled any Proceeding involving in excess of $10,000 in the
aggregate;
6.13.9 DISCHARGED LIABILITIES. Paid, discharged or satisfied any claim,
obligation or liability in excess of $2,000 in the aggregate, except for
liabilities incurred prior to the date of this Agreement in the ordinary course
of business;
6.13.10 INDEBTEDNESS. Created, incurred, assumed or otherwise become
liable for any Indebtedness in excess of $2,000 in the aggregate;
6.13.11 GUARANTEES. Guaranteed or endorsed in a material amount any
obligation or net worth of any Person;
6.13.12 ACQUISITIONS. Acquired the capital stock or other securities or
any ownership interest in, or substantially all of the assets of, any other
Person;
6.13.13 ACCOUNTING. Changed its method of accounting or the accounting
principles or practices utilized in the preparation of its financial statements,
other than as required by GAAP;
6.13.14 AGREEMENTS. Entered into any agreement, or otherwise obligated
itself, to do any of the foregoing.
6.14 MATERIAL ACQUIROR CONTRACTS. Except to the extent filed with the SEC
Documents, the Acquiror has made available to the Company, prior to the date of
this Agreement, true, correct and complete copies of each written Material
Acquiror Contract, including each amendment, supplement and modification
thereto.
6.14.1 NO DEFAULTS. Each Material Acquiror Contract is a valid and
binding agreement of the Acquiror that is party thereto, and is in full force
and effect. Except as would not have a Material Adverse Effect, the Acquiror is
not in breach or default of any Material Acquiror Contract to which it is a
party and, to the knowledge of the Acquiror, no other party to any Material
Acquiror Contract is in breach or default thereof. Except as would not have a
Material Adverse Effect, no event has occurred or circumstance exists that (with
or without notice or lapse of time) would (a) contravene, conflict with or
result in a violation or breach of, or become a default or event of default
under, any provision of any Material Acquiror Contract or (b) permit the
Acquiror or any other Person the right to declare a default or exercise any
remedy under, or to accelerate the maturity or performance of, or to cancel,
terminate or modify any Material Acquiror Contract. The Acquiror has not
received notice of the pending or threatened cancellation, revocation or
termination of any Material Acquiror Contract to which it is a party. There are
18
no renegotiations of, or attempts to renegotiate, or outstanding rights to
renegotiate any material terms of any Material Acquiror Contract.
6.15 EMPLOYEES.
6.15.1 The Acquiror has no employees, independent contractors or other
Persons providing research or other services to them. Except as would not have a
Material Adverse Effect, the Acquiror is in full compliance with all Laws
regarding employment, wages, hours, benefits, equal opportunity, collective
bargaining, the payment of Social Security and other taxes, occupational safety
and health and plant closing. The Acquiror is not liable for the payment of any
compensation, damages, taxes, fines, penalties or other amounts, however
designated, for failure to comply with any of the foregoing Laws.
6.15.2 No director, officer or employee of the Acquiror is a party to,
or is otherwise bound by, any contract (including any confidentiality,
noncompetition or proprietary rights agreement) with any other Person that in
any way adversely affects or will materially affect (a) the performance of his
or her duties as a director, officer or employee of the Acquiror or (b) the
ability of the Acquiror to conduct its business. Each employee of the Acquiror
is employed on an at-will basis and the Acquiror does not have any contract with
any of its employees which would interfere with the Acquiror's ability to
discharge its employees.
6.16 TAX RETURNS AND AUDITS.
6.16.1 TAX RETURNS. (a) All material Tax Returns required to be filed
by or on behalf of the Acquiror have been timely filed and all such Tax Returns
were (at the time they were filed) and are true, correct and complete in all
material respects; (b) all material Taxes of the Acquiror required to have been
paid (whether or not reflected on any Tax Return) have been fully and timely
paid, except those Taxes which are presently being contested in good faith or
for which an adequate reserve for the payment of such Taxes has been established
on the Acquiror Balance Sheet; (c) no waivers of statutes of limitation have
been given or requested with respect to the Acquiror in connection with any Tax
Returns covering the Acquiror or with respect to any Taxes payable by it; (d) no
Governmental Authority in a jurisdiction where the Acquiror does not file Tax
Returns, has made a claim, assertion or threat to the Acquiror that the Acquiror
is or may be subject to taxation by such jurisdiction; (e) the Acquiror has duly
and timely collected or withheld, paid over and reported to the appropriate
Governmental Authority all amounts required to be so collected or withheld for
all periods under all applicable laws; (f) there are no Liens with respect to
Taxes on the Acquiror's property or assets other than Permitted Liens; (g) there
are no Tax rulings, requests for rulings, or closing agreements relating to the
Acquiror for any period (or portion of a period) that would affect any period
after the date hereof; and (h) any adjustment of Taxes of the Acquiror made by a
Governmental Authority in any examination that the Acquiror is required to
report to the appropriate state, local or foreign taxing authorities has been
reported, and any additional Taxes due with respect thereto have been paid.
6.16.2 NO ADJUSTMENTS, CHANGES. Neither the Acquiror nor any other
Person on behalf of the Acquiror (a) has executed or entered into a closing
agreement pursuant to Section 7121 of the Code or any predecessor provision
thereof or any similar provision of state, local or foreign law; or (b) has
19
agreed to or is required to make any adjustments pursuant to Section 481(a) of
the Code or any similar provision of state, local or foreign law.
6.16.3 NO DISPUTES. There is no pending audit, examination,
investigation, dispute, proceeding or claim with respect to any Taxes of the
Acquiror, nor is any such claim or dispute pending or contemplated. The Acquiror
has delivered to the Company true, correct and complete copies of all Tax
Returns, examination reports and statements of deficiencies assessed or asserted
against or agreed to by the Acquiror since its inception and any and all
correspondence with respect to the foregoing.
6.16.4 NOT A U.S. REAL PROPERTY HOLDING CORPORATION. The Acquiror is
not and has not been a United States real property holding corporation within
the meaning of Section 897(c)(2) of the Code at any time during the applicable
period specified in Section 897(c)(1)(A)(ii) of the Code.
6.16.5 NO TAX ALLOCATION, SHARING. The Acquiror is not a party to any
Tax allocation or sharing agreement. The Acquiror (a) has not been a member of a
Tax Group filing a consolidated income Tax Return under Section 1501 of the Code
(or any similar provision of state, local or foreign law), and (b) has no
liability for Taxes for any Person under Treasury Regulations Section 1.1502-6
(or any similar provision of state, local or foreign law) as a transferee or
successor, by contract or otherwise.
6.16.6 NO OTHER ARRANGEMENTS. The Acquiror is not a party to any
agreement, contract or arrangement for services that would result, individually
or in the aggregate, in the payment of any amount that would not be deductible
by reason of Section 162(m), 280G or 404 of the Code. The Acquiror is not a
"consenting corporation" within the meaning of Section 341(f) of the Code. The
Acquiror does not have any "tax-exempt bond financed property" or "tax-exempt
use property" within the meaning of Section 168(g) or (h), respectively of the
Code. The Acquiror does not have any outstanding closing agreement, ruling
request, request for consent to change a method of accounting, subpoena or
request for information to or from a Governmental Authority in connection with
any Tax matter. During the last two years, the Acquiror has not engaged in any
exchange with a related party (within the meaning of Section 1031(f) of the
Code) under which gain realized was not recognized by reason of Section 1031 of
the Code. The Acquiror is not a party to any reportable transaction within the
meaning of Treasury Regulation Section 1.6011-4.
6.17 MATERIAL ASSETS. The financial statements of the Acquiror set forth in
the SEC Documents reflect the material properties and assets (real and personal)
owned or leased by the Acquiror.
6.18 INSURANCE COVERAGE. The Acquiror has made available to the Company,
prior to the date of this Agreement, true, correct and complete copies of all
insurance policies maintained by each Acquiror Company on its properties and
assets. Except as would not have a Material Adverse Effect, all of such policies
(a) taken together, provide adequate insurance coverage for the properties,
assets and operations of the Acquiror for all risks normally insured against by
a Person carrying on the same business as the Acquiror, and (b) are sufficient
for compliance with all applicable Laws and Material Acquiror Contracts. Except
as would not have a Material Adverse Effect, all of such policies are valid,
20
outstanding and in full force and effect and, by their express terms, will
continue in full force and effect following the consummation of the transactions
contemplated by this Agreement. The Acquiror has not received (a) any refusal of
coverage or any notice that a defense will be afforded with reservation of
rights, or (b) any notice of cancellation or any other indication that any
insurance policy is no longer in full force or effect or will not be renewed or
that the issuer of any policy is not willing or able to perform its obligations
thereunder. All premiums due on such insurance policies on or prior to the date
hereof have been paid. There are no pending claims with respect to the Acquiror
or its properties or assets under any such insurance policies, and there are no
claims as to which the insurers have notified the Acquiror that they intend to
deny liability. There is no existing default under any such insurance policies.
6.19 LITIGATION; ORDERS. There is no Proceeding (whether federal, state,
local or foreign) pending or, to the knowledge of the Acquiror, threatened
against or affecting the Acquiror or its properties, assets, business or
employees. To the knowledge of the Acquiror, there is no fact that might result
in or form the basis for any such Proceeding. The Acquiror is not subject to any
Orders.
6.20 LICENSES. Except as would not have a Material Adverse Effect, the
Acquiror possesses from the appropriate Governmental Authority all licenses,
permits, authorizations, approvals, franchises and rights that are necessary for
the Acquiror to engage in its business as currently conducted and to permit the
Acquiror to own and use its properties and assets in the manner in which it
currently owns and uses such properties and assets (collectively, "Acquiror
Permits"). The Acquiror has not received notice from any Governmental Authority
or other Person that there is lacking any license, permit, authorization,
approval, franchise or right necessary for the Acquiror to engage in its
business as currently conducted and to permit the Acquiror to own and use its
properties and assets in the manner in which it currently owns and uses such
properties and assets. Except as would not have a Material Adverse Effect, the
Acquiror Permits are valid and in full force and effect. Except as would not
have a Material Adverse Effect, no event has occurred or circumstance exists
that may (with or without notice or lapse of time): (a) constitute or result,
directly or indirectly, in a violation of or a failure to comply with any
Acquiror Permit; or (b) result, directly or indirectly, in the revocation,
withdrawal, suspension, cancellation or termination of, or any modification to,
any Acquiror Permit. The Acquiror has not received notice from any Governmental
Authority or any other Person regarding: (a) any actual, alleged, possible or
potential contravention of any Acquiror Permit; or (b) any actual, proposed,
possible or potential revocation, withdrawal, suspension, cancellation,
termination of, or modification to, any Acquiror Permit. All applications
required to have been filed for the renewal of such Acquiror Permits have been
duly filed on a timely basis with the appropriate Persons, and all other filings
required to have been made with respect to such Acquiror Permits have been duly
made on a timely basis with the appropriate Persons. All Acquiror Permits are
renewable by their terms or in the ordinary course of business without the need
to comply with any special qualification procedures or to pay any amounts other
than routine fees or similar charges, all of which have, to the extent due, been
duly paid.
6.21 INTERESTED PARTY TRANSACTIONS. No officer, director or stockholder of
the Acquiror or any Affiliate or "associate" (as such term is defined in Rule
405 of the Commission under the Securities Act) of any such Person, has or has
had, either directly or indirectly, (1) an interest in any Person which (a)
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furnishes or sells services or products which are furnished or sold or are
proposed to be furnished or sold by the Acquiror, or (b) purchases from or sells
or furnishes to, or proposes to purchase from, sell to or furnish the Acquiror
any goods or services; or (2) a beneficial interest in any contract or agreement
to which the Acquiror is a party or by which it may be bound or affected.
6.22 GOVERNMENTAL INQUIRIES. The Acquiror has provided to the Company a
copy of each material written inspection report, questionnaire, inquiry, demand
or request for information received by the Acquiror and the Acquiror's response
thereto, and each material written statement, report or other document filed by
the Acquiror with, any Governmental Authority.
6.23 INTELLECTUAL PROPERTY. The Acquiror does not own, use or license any
Intellectual Property in its business as presently conducted.
6.24 TITLE TO AND CONDITION OF PROPERTIES. Except as would not have a
Material Adverse Effect, the Acquiror owns (with good and marketable title in
the case of real property) or holds under valid leases or other rights to use
all real property, plants, machinery, equipment and other personal property
necessary for the conduct of its business as presently conducted, free and clear
of all Liens, except Permitted Liens. The material buildings, plants, machinery
and equipment necessary for the conduct of the business of the Acquiror as
presently conducted are structurally sound, are in good operating condition and
repair and are adequate for the uses to which they are being put, and none of
such buildings, plants, machinery or equipment is in need of maintenance or
repairs, except for ordinary, routine maintenance and repairs that are not
material in nature or cost.
6.25 SEC DOCUMENTS; FINANCIAL STATEMENTS. The Acquiror has filed all
reports required to be filed by it under the Exchange Act, including pursuant to
Section 13(a) or 15(d) thereof, for the three years preceding the date hereof
(or such shorter period as the Acquiror was required by law to file such
material) (the foregoing materials being collectively referred to herein as the
"SEC Documents") and has filed any such SEC Documents prior to the expiration of
any such extension. As of their respective dates, the SEC Documents complied in
all material respects with the requirements of the Securities Act and the
Exchange Act and the rules and regulations of the Commission promulgated
thereunder, and none of the SEC Documents, when filed, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statement therein, in light of
the circumstances under which they were made, not misleading. All material
agreements to which the Acquiror is a party or to which the property or assets
of the Acquiror are subject have been appropriately filed as exhibits to the SEC
Documents as and to the extent required under the Exchange Act. The financial
statements of the Acquiror included in the SEC Documents comply in all material
respects with applicable accounting requirement and the rules and regulations of
the Commission with respect thereto as in effect at the time of filing, were
prepared in accordance with GAAP applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto, or, in the
case of unaudited statements as permitted by Form 10-Q of the Commission), and
fairly present in all material respects (subject in the case of unaudited
statements, to normal, recurring audit adjustments) the financial position of
the Acquiror as at the dates thereof and the results of its operations and cash
flows for the periods then ended. The Acquiror's Common Stock is quoted on the
22
OTC Bulletin Board, and the Acquiror is not aware of any facts which would make
the Acquiror's Common Stock ineligible for quotation on the OTC Bulletin Board.
6.26 STOCK OPTION PLANS; EMPLOYEE BENEFITS.
6.26.1 The Acquiror does not have any stock option plans providing for
the grant by the Acquiror of stock options to directors, officers or employees.
6.26.2 The Acquiror does not have any employee benefit plans or
arrangements covering their present and former employees or providing benefits
to such persons in respect of services provided to the Acquiror.
6.26.3 Neither the consummation of the transactions contemplated hereby
alone, nor in combination with another event, with respect to each director,
officer, employee and consultant of the Acquiror, will result in (a) any payment
(including, without limitation, severance, unemployment compensation or bonus
payments) becoming due from the Acquiror, (b) any increase in the amount of
compensation or benefits payable to any such individual or (c) any acceleration
of the vesting or timing of payment of compensation payable to any such
individual. No agreement, arrangement or other contract of the Acquiror provides
benefits or payments contingent upon, triggered by, or increased as a result of
a change in the ownership or effective control of the Acquiror.
6.27 ENVIRONMENTAL AND SAFETY MATTERS. Except as set forth in the SEC
Documents and except as would not have a Material Adverse Effect:
6.27.1 The Acquiror has at all times been and is in compliance with all
Environmental Laws applicable to the Acquiror.
6.27.2 There are no Proceedings pending or threatened against the
Acquiror alleging the violation of any Environmental Law or Environmental Permit
applicable to the Acquiror or alleging that the Acquiror is a potentially
responsible party for any environmental site contamination.
6.27.3 Neither this Agreement nor the consummation of the transactions
contemplated by this Agreement shall impose any obligations to notify or obtain
the consent of any Governmental Authority or third Persons under any
Environmental Laws applicable to the Acquiror.
6.28 MONEY LAUNDERING LAWS. The operations of the Acquiror are and have
been conducted at all times in compliance with applicable financial
recordkeeping and reporting requirements of the Currency and Foreign
Transactions Reporting Act of 1970, as amended, the money laundering statutes of
all U.S. and non-U.S. jurisdictions, the rules and regulations thereunder and
any related or similar rules, regulations or guidelines, issued, administered or
enforced by any Governmental Authority (collectively, the "Money Laundering
Laws") and no Proceeding involving the Acquiror with respect to the Money
Laundering Laws is pending or, to the knowledge of the Acquiror, threatened.
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6.29 BOARD OF DIRECTORS RECOMMENDATION. The sole director of the Acquiror
Board, at a meeting duly called and held, has determined that this Agreement and
the transactions contemplated by this Agreement are advisable and in the best
interests of the Acquiror's stockholders and has duly authorized this Agreement
and the transactions contemplated by this Agreement.
SECTION VII
COVENANTS OF THE COMPANY AND THE SHAREHOLDERS
7.1 REQUIRED FILINGS AND APPROVALS.
7.1.1 As promptly as practicable after the date of this Agreement, the
Company will, and will cause each Company Subsidiary to, make all filings
required to be made by it in order to consummate the transactions contemplated
by this Agreement, if applicable. Between the date of this Agreement and the
Closing Date, the Company will, and will cause each Company Subsidiary to, (a)
cooperate with the Acquiror with respect to all filings that the Acquiror elects
to make or is required to make in connection with the transactions contemplated
by this Agreement, and (b) cooperate with the Acquiror in obtaining any consents
or approvals required to be obtained by the Acquiror in connection herewith.
SECTION VIII
COVENANTS OF THE ACQUIROR AND THE ACQUIROR STOCKHOLDER
8.1 REQUIRED FILINGS AND APPROVALS.
8.1.1 As promptly as practicable after the date of this Agreement, the
Acquiror will make all filings legally required to be made by it to consummate
the transactions contemplated by this Agreement. Between the date of this
Agreement and the Closing Date, the Acquiror will cooperate with the Company
with respect to all filings that the Company is legally required to make in
connection with the transactions contemplated hereby.
8.2 INDEMNIFICATION AND INSURANCE.
8.2.1 From the date of this Agreement and after the Closing Date, the
Acquiror shall to the fullest extent permitted under applicable Law or its
Organizational Documents, indemnify and hold harmless, each present director,
officer or employee of the Acquiror (collectively, the "Covered Persons")
against any costs or expenses (including attorneys' fees), judgments, fines,
losses, claims, damages, liabilities and amounts paid in settlement in
connection with any Proceeding (x) arising out of or pertaining to the
transactions contemplated by this Agreement or (y) otherwise with respect to any
acts or omissions occurring at or prior to the Closing Date, to the same extent
as provided in the Acquiror's Organizational Documents or any applicable
contract or agreement as in effect on the date hereof, in each case for a period
of six years after the Closing Date. In the event of any such Proceeding
(whether arising before or after the Closing Date), (i) any counsel retained by
the Covered Persons for any period after the Closing Date shall be reasonably
satisfactory to the Acquiror, (ii) after the Closing Date, the Acquiror shall
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pay the reasonable fees and expenses of such counsel, promptly after statements
therefor are received, provided that the Covered Persons shall be required to
reimburse the Acquiror for such payments in the circumstances and to the extent
required by the Acquiror's Organizational Documents, any applicable contract or
agreement or applicable Law, and (iii) the Acquiror will cooperate in the
defense of any such matter; PROVIDED, HOWEVER, that the Acquiror shall not be
liable for any settlement effected without its written consent (which consent
shall not be unreasonably withheld); and provided, further, that, in the event
that any claim or claims for indemnification are asserted or made within such
six-year period, all rights to indemnification in respect of any such claim or
claims shall continue until the disposition of any and all such claims. The
Covered Persons as a group may retain only one law firm to represent them in
each applicable jurisdiction with respect to any single action unless there is,
under applicable standards of professional conduct, a conflict on any
significant issue between the positions of any two or more Covered Persons, in
which case each Covered Persons with respect to whom such a conflict exists (or
group of such Covered Persons who among them have no such conflict) may retain
one separate law firm in each applicable jurisdiction.
8.2.2 This Section 8.6 shall survive the consummation of the
transactions contemplated by this Agreement at the Closing Date, is intended to
benefit the Covered Persons, shall be binding on all successors and assigns of
the Acquiror and shall be enforceable by the Covered Persons.
8.3 RULE 144 REPORTING. With a view to making available to the Acquiror's
stockholders the benefit of certain rules and regulations of the Commission
which may permit the sale of the Acquiror Common Stock to the public without
registration, from and after the Closing Date, the Acquiror agrees to:
8.3.1 Make and keep public information available, as those terms are
understood and defined in Rule 144; and
8.3.2 File with the Commission, in a timely manner, all reports and
other documents required of the Acquiror under the Exchange Act.
8.4 SEC DOCUMENTS. From and after the Closing Date, in the event the
Commission notifies the Acquiror of its intent to review any SEC Document filed
prior to Closing or the Acquiror receives any oral or written comments from the
Commission with respect to any SEC Document filed prior to Closing, the Acquiror
shall promptly notify the Acquiror Stockholder and the Acquiror Stockholder
shall fully cooperate with the Acquiror.
SECTION IX
CONDITIONS PRECEDENT TO THE ACQUIROR'S
OBLIGATION TO CLOSE
The Acquiror's obligation to acquire the Shares and to take the other
actions required to be taken by the Acquiror at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by the Acquiror, in whole or in part):
25
9.1 ACCURACY OF REPRESENTATIONS. The representations and warranties of the
Company and the Shareholders set forth in this Agreement or in any Schedule or
certificate delivered pursuant hereto that are not qualified as to materiality
shall be true and correct in all material respects as of the date of this
Agreement, and shall be deemed repeated as of the Closing Date and shall then be
true and correct in all material respects, except to the extent a representation
or warranty is expressly limited by its terms to another date and without giving
effect to any supplemental Schedule.
9.2 PERFORMANCE BY THE COMPANY AND SHAREHOLDERS.
9.2.1 All of the covenants and obligations that the Company and
Shareholders are required to perform or to comply with pursuant to this
Agreement at or prior to the Closing (considered collectively), and each of
these covenants and obligations (considered individually), must have been duly
performed and complied with in all material respects.
9.2.2 Each document required to be delivered by the Company and the
Shareholders pursuant to this Agreement at or prior to Closing must have been
delivered.
9.3 NO FORCE MAJEUR EVENT. Since March 31, 2004, there shall not have been
any delay, error, failure or interruption in the conduct of the business of any
Acquired Company, or any loss, injury, delay, damage, distress, or other
casualty, due to force majeur including but not limited to (a) acts of God; (b)
fire or explosion; (c) war, acts of terrorism or other civil unrest; or (d)
national emergency.
9.4 CERTIFICATE OF OFFICER. The Company will have delivered to the Acquiror
a certificate, dated the Closing Date, executed by an officer of the Company,
certifying the satisfaction of the conditions specified in Sections 9.1, 9.2 and
9.3.
9.5 CERTIFICATE OF SHAREHOLDERS. The Shareholder Representative will have
delivered to the Acquiror, on behalf of each Shareholder, a certificate, dated
the Closing Date, executed by the Shareholder Representative, certifying the
satisfaction of the conditions specified in Sections 9.1 and 9.2.
9.6 CONSENTS. All material consents, waivers, approvals, authorizations or
orders required to be obtained, and all filings required to be made, by the
Company and/or the Shareholders for the authorization, execution and delivery of
this Agreement and the consummation by them of the transactions contemplated by
this Agreement, shall have been obtained and made by the Company or the
Shareholders, as the case may be, except where the failure to receive such
consents, waivers, approvals, authorizations or orders or to make such filings
would not have a Material Adverse Effect on the Company or the Acquiror.
9.7 DOCUMENTS. The Company and the Shareholders must have caused the
following documents to be delivered to the Acquiror:
9.7.1 share certificates evidencing the number of Shares held by each
Shareholder (as set forth in Exhibit A), along with executed stock powers
transferring such Shares to the Acquiror;
26
9.7.2 a Secretary's Certificate of the Company, dated the Closing Date,
certifying attached copies of (A) the Organizational Documents of the Company
and each Company Subsidiary, (B) the resolutions of the Company Board and the
Shareholders approving this Agreement and the transactions contemplated hereby;
and (C) the incumbency of each authorized officer of the Company signing this
Agreement and any other agreement or instrument contemplated hereby to which the
Company is a party;
9.7.3 a certified certificate of good standing, or equivalent thereof,
of the Company;
9.7.4 each of the Transaction Documents to which the Company and/or the
Shareholders is a party, duly executed; and
9.7.5 such other documents as the Acquiror may reasonably request for
the purpose of (i) evidencing the accuracy of any of the representations and
warranties of the Company and the Shareholders pursuant to Section 9.1, (ii)
evidencing the performance of, or compliance by the Company and the Shareholders
with, any covenant or obligation required to be performed or complied with by
the Company or the Shareholders, as the case may be, (iii) evidencing the
satisfaction of any condition referred to in this Section 9, or (iv) otherwise
facilitating the consummation or performance of any of the transactions
contemplated by this Agreement.
9.8 NO PROCEEDINGS. Since the date of this Agreement, there must not have
been commenced or threatened against the Acquiror, the Company or any
Shareholder, or against any Affiliate thereof, any Proceeding (which Proceeding
remains unresolved as of the Closing Date) (a) involving any challenge to, or
seeking damages or other relief in connection with, any of the transactions
contemplated by this Agreement, or (b) that may have the effect of preventing,
delaying, making illegal, or otherwise interfering with any of the transactions
contemplated by this Agreement.
9.9 NO CLAIM REGARDING STOCK OWNERSHIP OR CONSIDERATION. There must not
have been made or threatened by any Person any claim asserting that such Person
(a) is the holder of, or has the right to acquire or to obtain beneficial
ownership of the Shares or any other stock, voting, equity, or ownership
interest in, the Company, or (b) is entitled to all or any portion of the
Acquiror Shares.
SECTION X
CONDITIONS PRECEDENT TO THE OBLIGATION OF THE COMPANY
AND THE SHAREHOLDERS TO THE CLOSING
The Shareholders' obligation to transfer the Shares and the obligations of
the Company to take the other actions required to be taken by the Company at the
Closing are subject to the satisfaction, at or prior to the Closing, of each of
the following conditions (any of which may be waived by the Company and the
Shareholders, in whole or in part):
10.1 ACCURACY OF REPRESENTATIONS. The representations and warranties of the
Acquiror and the Acquiror Stockholder set forth in this Agreement or in any
27
Schedule or certificate delivered pursuant hereto that are not qualified as to
materiality shall be true and correct in all material respects as of the date
hereof, except to the extent a representation or warranty is expressly limited
by its terms to another date and without giving effect to any supplemental
Schedule.
10.2 PERFORMANCE BY THE ACQUIROR.
10.2.1 All of the covenants and obligations that the Acquiror and the
Acquiror Stockholder are required to perform or to comply with pursuant to this
Agreement at or prior to the Closing (considered collectively), and each of
these covenants and obligations (considered individually), must have been
performed and complied with in all respects.
10.2.2 Each document required to be delivered by the Acquiror and the
Acquiror Stockholder pursuant to this Agreement must have been delivered.
10.3 NO FORCE MAJEUR EVENT. Since March 31, 2004, there shall not have been
any delay, error, failure or interruption in the conduct of the business of the
Acquiror, or any loss, injury, delay, damage, distress, or other casualty, due
to force majeur including but not limited to (a) acts of God; (b) fire or
explosion; (c) war, acts of terrorism or other civil unrest; or (d) national
emergency.
10.4 CERTIFICATE OF OFFICER. The Acquiror will have delivered to the
Company a certificate, dated the Closing Date, executed by an officer of the
Acquiror, certifying the satisfaction of the conditions specified in Sections
10.1, 10.2. and 10.3.
10.5 CONSENTS. All material consents, waivers, approvals, authorizations or
orders required to be obtained, and all filings required to be made, by the
Acquiror for the authorization, execution and delivery of this Agreement and the
consummation by it of the transactions contemplated by this Agreement, shall
have been obtained and made by the Acquiror, except where the failure to receive
such consents, waivers, approvals, authorizations or orders or to make such
filings would not have a Material Adverse Effect on the Company or the Acquiror.
10.6 DOCUMENTS. The Acquiror must have caused the following documents to be
delivered to the Company and/or the Shareholders:
10.6.1 share certificates evidencing each Shareholder's pro rata share
of the Acquiror Shares (as set forth in Exhibit A);
10.6.2 a Secretary's Certificate, dated the Closing Date certifying
attached copies of (A) the Organizational Documents of the Acquiror, (B) the
resolutions of the Acquiror Board approving this Agreement and the transactions
contemplated hereby; and (C) the incumbency of each authorized officer of the
Acquiror signing this Agreement and any other agreement or instrument
contemplated hereby to which the Acquiror is a party;
10.6.3 a Certificate of Good Standing of the Acquiror;
10.6.4 such other documents as the Company may reasonably request for
the purpose of (i) evidencing the accuracy of any representation or warranty of
28
the Acquiror pursuant to Section 10.1, (ii) evidencing the performance by the
Acquiror of, or the compliance by the Acquiror with, any covenant or obligation
required to be performed or complied with by the Acquiror, (iii) evidencing the
satisfaction of any condition referred to in this Section 10, or (iv) otherwise
facilitating the consummation of any of the transactions contemplated by this
Agreement.
10.7 NO PROCEEDINGS. Since the date of this Agreement, there must not have
been commenced or threatened against the Acquiror, the Company or any
Shareholder, or against any Affiliate thereof, any Proceeding (which Proceeding
remains unresolved as of the Closing Date) (a) involving any challenge to, or
seeking damages or other relief in connection with, any of the transactions
contemplated hereby, or (b) that may have the effect of preventing, delaying,
making illegal, or otherwise interfering with any of the transactions
contemplated hereby.
SECTION XI
TERMINATION
11.1 TERMINATION EVENTS. This Agreement may, by notice given prior to or at
the Closing, be terminated:
11.1.1 by mutual consent of the Acquiror and the Shareholders (acting
jointly);
11.1.2 by the Acquiror, if any of the conditions in Section 9 have not
been satisfied as of the Closing Date or if satisfaction of such a condition is
or becomes impossible (other than through the failure of the Acquiror to comply
with its obligations under this Agreement) and the Acquiror has not waived such
condition on or before the Closing Date; or (ii) by the Shareholders (acting
jointly), if any of the conditions in Section 10 have not been satisfied as of
the Closing Date or if satisfaction of such a condition is or becomes impossible
(other than through the failure of any Shareholder to comply with its
obligations under this Agreement) and the Shareholders (acting jointly) have not
waived such condition on or before the Closing Date;
11.1.3 by either the Acquiror or the Shareholders (acting jointly), if
there shall have been entered a final, nonappealable order or injunction of any
Governmental Authority restraining or prohibiting the consummation of the
transactions contemplated hereby;
11.1.4 by the Acquiror, if, prior to the Closing Date, the Company or
any Shareholder is in material breach of any representation, warranty, covenant
or agreement herein contained and such breach shall not be cured within 10 days
of the date of notice of default served by the Acquiror claiming such breach;
PROVIDED, HOWEVER, that the right to terminate this Agreement pursuant to this
Section 11.1.5 shall not be available to the Acquiror if the Acquiror is in
material breach of this Agreement at the time notice of termination is
delivered;
11.1.5 by the Shareholders (acting jointly), if, prior to the Closing
Date, the Acquiror is in material breach of any representation, warranty,
covenant or agreement herein contained and such breach shall not be cured within
10 days of the date of notice of default served by the Shareholders claiming
such breach or, if such breach is not curable within such 10 day period, such
longer period of time as is necessary to cure such breach; PROVIDED, HOWEVER,
29
that the right to terminate this Agreement pursuant to this Section 11.1.6 shall
not be available to the Shareholders (acting jointly) if any Shareholder is in
material breach of this Agreement at the time notice of termination is
delivered; or
11.2 EFFECT OF TERMINATION.
11.2.1 If the Acquiror terminates this Agreement pursuant to Section
11.1.5 or the Shareholders (acting jointly) terminate this Agreement pursuant to
Section 11.1.6, then the non-terminating party shall immediately pay to the
terminating party a termination fee equal to $50,000 in cash (the "Termination
Fee").
11.2.2 Each party's right of termination under Section 11.1 is in
addition to any other rights it may have under this Agreement or otherwise, and
the exercise of a right of termination will not be an election of remedies. If
this Agreement is terminated pursuant to Section 11.1, all further obligations
of the parties under this Agreement will terminate, except that the obligations
in Sections 5.12, 6.11, 11.2, and 13 will survive; PROVIDED, HOWEVER, that if
this Agreement is terminated by a party because of the breach of the Agreement
by another party or because one or more of the conditions to the terminating
party's obligations under this Agreement is not satisfied as a result of another
party's failure to comply with its obligations under this Agreement, the
terminating party's right to pursue all legal remedies will survive such
termination unimpaired.
SECTION XII
INDEMNIFICATION; REMEDIES
12.1 SURVIVAL. All representations, warranties, covenants, and obligations
in this Agreement shall survive the Closing and expire on the sixth anniversary
of the Closing (the "Survival Period"). The right to indemnification, payment of
Damages or other remedy based on such representations, warranties, covenants,
and obligations will not be affected by any investigation conducted with respect
to, or any knowledge acquired (or capable of being acquired) at any time,
whether before or after the execution and delivery of this Agreement or the
Closing Date, with respect to the accuracy or inaccuracy of or compliance with,
any such representation, warranty, covenant, or obligation. The waiver of any
condition based on the accuracy of any representation or warranty, or on the
performance of or compliance with any covenant or obligation, will not affect
the right to indemnification, payment of Damages, or other remedy based on such
representations, warranties, covenants, and obligations.
12.2 INDEMNIFICATION BY THE ACQUIROR STOCKHOLDER.
12.2.1 From and after the Closing until the expiration of the Survival
Period, the Acquiror Stockholder shall indemnify and hold harmless the Company
and the Shareholders (collectively, the "Company Indemnified Parties"), from and
against any damages arising, directly or indirectly, from or in connection with
("Damages"):
(a) any breach of any representation or warranty made by the
Acquiror or the Acquiror Stockholder in this Agreement or in any
certificate delivered by the Acquiror pursuant to this Agreement; or
30
(b) any breach by the Acquiror of any covenant or obligation of
the Acquiror in this Agreement required to be performed by the Acquiror or
the Acquiror Stockholder on or prior to the Closing Date.
12.3 LIMITATIONS ON AMOUNT - THE ACQUIROR. No Company Indemnified Party
shall be entitled to indemnification pursuant to Section 12.3, unless and until
the aggregate amount of Damages to all Company Indemnified Parties with respect
to such matters under Section 12.3.1 exceeds $50,000, at which time, the Company
Indemnified Parties shall be entitled to indemnification for the total amount of
such Damages in excess of $50,000.
12.4 DETERMINING DAMAGES. Materiality qualifications to the representations
and warranties of the Company and the Acquiror shall not be taken into account
in determining the amount of Damages occasioned by a breach of any such
representation and warranty for purposes of determining whether the basket set
forth in Section 12.3 has been met.
12.5 BREACH BY SHAREHOLDERS. Nothing in this Section 12 shall limit the
Acquiror's right to pursue any appropriate legal or equitable remedy against any
Shareholder with respect to any Damages arising, directly or indirectly, from or
in connection with: (a) any breach by such Shareholder of any representation or
warranty made by such Shareholder in this Agreement or in any certificate
delivered by such Shareholder pursuant to this Agreement or (b) any breach by
such Shareholder of its covenants or obligations in this Agreement. All claims
of the Acquiror pursuant to this Section 12 shall be brought by the Acquiror
Stockholder on behalf of the Acquiror and those Persons who were stockholders of
the Acquiror immediately prior to the Closing.
SECTION XIII
GENERAL PROVISIONS
13.1 EXPENSES. Except as otherwise expressly provided in this Agreement,
each party to this Agreement will bear its respective expenses incurred in
connection with the preparation, execution, and performance of this Agreement
and the transactions contemplated by this Agreement, including all fees and
expenses of agents, representatives, counsel, and accountants. In the event of
termination of this Agreement, the obligation of each party to pay its own
expenses will be subject to any rights of such party arising from a breach of
this Agreement by another party.
13.2 PUBLIC ANNOUNCEMENTS. The Acquiror shall promptly, but no later than
three business days following the effective date of this Agreement, issue a
press release disclosing the transactions contemplated hereby. Between the date
of this Agreement and the Closing Date, the Company and the Acquiror shall
consult with each other in issuing any other press releases or otherwise making
public statements or filings and other communications with the Commission or any
regulatory agency or stock market or trading facility with respect to the
transactions contemplated hereby and neither party shall issue any such press
release or otherwise make any such public statement, filings or other
communications without the prior written consent of the other, which consent
shall not be unreasonably withheld or delayed, except that no prior consent
shall be required if such disclosure is required by law, in which case the
31
disclosing party shall provide the other party with prior notice of such public
statement, filing or other communication and shall incorporate into such public
statement, filing or other communication the reasonable comments of the other
party.
13.3 CONFIDENTIALITY.
13.3.1 Subsequent to the date of this Agreement, the Acquiror, the
Acquiror Stockholder the Shareholders and the Company will maintain in
confidence, and will cause their respective directors, officers, employees,
agents, and advisors to maintain in confidence, any written, oral, or other
information obtained in confidence from another party in connection with this
Agreement or the transactions contemplated by this Agreement, unless (a) such
information is already known to such party or to others not bound by a duty of
confidentiality or such information becomes publicly available through no fault
of such party, (b) the use of such information is necessary or appropriate in
making any required filing with the Commission, or obtaining any consent or
approval required for the consummation of the transactions contemplated by this
Agreement, or (c) the furnishing or use of such information is required by or
necessary or appropriate in connection with legal proceedings.
13.3.2 In the event that any party is required to disclose any
information of another party pursuant to clause (b) or (c) of Section 13.3.1,
the party requested or required to make the disclosure (the "disclosing party")
shall provide the party that provided such information (the "providing party")
with prompt notice of any such requirement so that the providing party may seek
a protective order or other appropriate remedy and/or waive compliance with the
provisions of this Section 13.3. If, in the absence of a protective order or
other remedy or the receipt of a waiver by the providing party, the disclosing
party is nonetheless, in the opinion of counsel, legally compelled to disclose
the information of the providing party, the disclosing party may, without
liability hereunder, disclose only that portion of the providing party's
information which such counsel advises is legally required to be disclosed,
provided that the disclosing party exercises its reasonable efforts to preserve
the confidentiality of the providing party's information, including, without
limitation, by cooperating with the providing party to obtain an appropriate
protective order or other relief assurance that confidential treatment will be
accorded the providing party's information.
13.3.3 If the transactions contemplated by this Agreement are not
consummated, each party will return or destroy as much of such written
information as the other party may reasonably request.
13.4 NOTICES. All notices, consents, waivers, and other communications
under this Agreement must be in writing and will be deemed to have been duly
given when (a) delivered by hand (with written confirmation of receipt), (b)
sent by telecopier (with written confirmation of receipt), or (c) when received
by the addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
party may designate by notice to the other parties):
32
If to Acquiror: with a copy to:
Nano Superlattice Technology, Inc. Loeb & Loeb, LLP
Miao LiCity 000 Xxxx Xxxxxx
Xxxxx Xxxxx Xxxx #000 Xxx Xxxx, XX 00000
Taiwan, ROC Attention: Xxxxxxxx X. Xxxxxxxx, Esq.
Telephone No.: 000-000-0000
Facsimile No.: 000-000-0000
Attention: Xxx Xxxx Hsin
Telephone No.: 000-0-000-0000
If to Company: with a copy to:
Nano Superlattice Technology Inc. Loeb & Loeb LLP
Xx. 000 Xxxxxxxx Xx. 000 Xxxx Xxxxxx
Xxxxxxxx Xxxxxxxx, Xxxxxxx Xxxxxx 000 Xxx Xxxx, Xxx Xxxx 00000
Taiwan, ROC
Attention: Xxxxx Xxxxx Attention: Xxxxxxxx X. Xxxxxxxx, Esq.
Telephone No.: 000-0-000-0000 Telephone No.: 000-000-0000
Facsimile No.: 000-000-0000
13.5 ARBITRATION. Any dispute or controversy under this Agreement shall be
settled exclusively by arbitration in the City of New York, County of New York
in accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitration award in any court having
jurisdiction.
13.6 FURTHER ASSURANCES. The parties agree (a) to furnish upon request to
each other such further information, (b) to execute and deliver to each other
such other documents, and (c) to do such other acts and things, all as the other
party may reasonably request for the purpose of carrying out the intent of this
Agreement and the documents referred to in this Agreement.
13.7 WAIVER. The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither the failure nor any delay by any party
in exercising any right, power, or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right, power,
or privilege will preclude any other or further exercise of such right, power,
or privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right arising out of
this Agreement or the documents referred to in this Agreement can be discharged
by one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party; (b) no waiver that may be
given by a party will be applicable except in the specific instance for which it
is given; and (c) no notice to or demand on one party will be deemed to be a
waiver of any obligation of such party or of the right of the party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.
33
13.8 ENTIRE AGREEMENT AND MODIFICATION. This Agreement supersedes all prior
agreements between the parties with respect to its subject matter and
constitutes (along with the documents referred to in this Agreement) a complete
and exclusive statement of the terms of the agreement between the parties with
respect to its subject matter. This Agreement may not be amended except by a
written agreement executed by the party against whom the enforcement of such
amendment is sought.
13.9 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS. No party may
assign any of its rights under this Agreement without the prior consent of the
other parties. Subject to the preceding sentence, this Agreement will apply to,
be binding in all respects upon, and inure to the benefit of and be enforceable
by the respective successors and permitted assigns of the parties. Except as set
forth in Section 8.7 and Section 12.3, nothing expressed or referred to in this
Agreement will be construed to give any Person other than the parties to this
Agreement any legal or equitable right, remedy, or claim under or with respect
to this Agreement or any provision of this Agreement. This Agreement and all of
its provisions and conditions are for the sole and exclusive benefit of the
parties to this Agreement and their successors and assigns.
13.10 SEVERABILITY. If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
13.11 SECTION HEADINGS, CONSTRUCTION. The headings of Sections in this
Agreement are provided for convenience only and will not affect its construction
or interpretation. All references to "Section" or "Sections" refer to the
corresponding Section or Sections of this Agreement. All words used in this
Agreement will be construed to be of such gender or number as the circumstances
require. Unless otherwise expressly provided, the word "including" does not
limit the preceding words or terms.
13.12 GOVERNING LAW. This Agreement will be governed by the laws of the
State of New York without regard to conflicts of laws principles.
13.13 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
34
COUNTERPART SIGNATURE PAGE
IN WITNESS WHEREOF, the parties have executed and delivered this Share
Exchange Agreement as of the date first written above.
Acquiror:
NANO SUPERLATTICE TECHNOLOGY INC.
Acquiror Stockholder:
Signed: /s/ Xxx Xxxx Hsin
Printed name: Xxx Xxxx Hsin Signed: /s/ Xxx Xxxx Hsin
Title: President Printed name: Xxx Xxxx Hsin
Company: Shareholder Representative:
NANO SUPERLATTICE TECHNOLOGY INC.
Signed: /s/ Xxxxx Xxxxx
Signed: /s/ Xxxxx Xxxxx
Printed name: Xxxxx Xxxxx
Printed name: Xxxxx Xxxxx
Title:
35
EXHIBIT A
SHARES AND ACQUIROR SHARES TO BE EXCHANGED
Total Shares to be delivered by the Shareholders to Acquiror: 25,040,000
Total Acquiror Shares to be delivered by the Acquiror to the
Shareholders: 2,504,000
Name and Address of Number of Company Number of Acquiror Shares
Each Shareholder Shares Owned to be Delivered
---------------- ------------ ---------------
36
EXHIBIT B
DEFINITION OF "ACCREDITED INVESTOR"
The term "accredited investor" means:
(1) A bank as defined in Section 3(a)(2) of the Securities Act, or a savings
and loan association or other institution as defined in Section 3(a)(5)(A)
of the Securities Act, whether acting in its individual or fiduciary
capacity; a broker or dealer registered pursuant to Section 15 of the
Securities Exchange Act of 1934; an insurance company as defined in Section
2(13) of the Securities Act; an investment company registered under the
Investment Company Act of 1940 (the "Investment Company Act") or a business
development company as defined in Section 2(a)(48) of the Investment
Company Act; a Small Business Investment Company licensed by the U.S. Small
Business Administration under Section 301(c) or (d) of the Small Business
Investment Act of 1958; a plan established and maintained by a state, its
political subdivisions or any agency or instrumentality of a state or its
political subdivisions for the benefit of its employees, if such plan has
total assets in excess of $5,000,000; an employee benefit plan within the
meaning of the Employee Retirement Income Security Act of 1974 ("ERISA"),
if the investment decision is made by a plan fiduciary, as defined in
Section 3(21) of ERISA, which is either a bank, savings and loan
association, insurance company, or registered investment advisor, or if the
employee benefit plan has total assets in excess of $5,000,000 or, if a
self-directed plan, with investment decisions made solely by persons that
are accredited investors.
(2) A private business development company as defined in Section 202(a)(22) of
the Investment Advisers Act of 1940.
(3) An organization described in Section 501(c)(3) of the Internal Revenue
Code, corporation, Massachusetts or similar business trust, or partnership,
not formed for the specific purpose of acquiring the securities offered,
with total assets in excess of $5,000,000.
(4) A director or executive officer of the Acquiror.
(5) A natural person whose individual net worth, or joint net worth with that
person's spouse, at the time of his or her purchase exceeds $1,000,000.
(6) A natural person who had an individual income in excess of $200,000 in each
of the two most recent years or joint income with that person's spouse in
excess of $300,000 in each of those years and has a reasonable expectation
of reaching the same income level in the current year.
(7) A trust, with total assets in excess of $5,000,000, not formed for the
specific purpose of acquiring the securities offered, whose purchase is
directed by a sophisticated person as described in Rule 506(b)(2)(ii)
37
(i.e., a person who has such knowledge and experience in financial and
business matters that he is capable of evaluating the merits and risks of
the prospective investment).
(8) An entity in which all of the equity owners are accredited investors. (If
this alternative is checked, the Shareholder must identify each equity
owner and provide statements signed by each demonstrating how each is
qualified as an accredited investor.)
38
EXHIBIT C
DEFINITION OF "U.S. PERSON"
(1) "U.S. person" (as defined in Regulation S) means:
(i) Any natural person resident in the United States;
(ii) Any partnership or corporation organized or incorporated under the
laws of the United States;
(iii) Any estate of which any executor or administrator is a U.S. person;
(iv) Any trust of which any trustee is a U.S. person;
(v) Any agency or branch of a foreign entity located in the United
States;
(vi) Any non-discretionary account or similar account (other than an
estate or trust) held by a dealer or other fiduciary for the benefit
or account of a U.S. person;
(vii) Any discretionary account or similar account (other than an estate
or trust) held by a dealer or other fiduciary organized,
incorporated, or (if an individual) resident in the United States;
and
(viii)Any partnership or corporation if: (A) organized or incorporated
under the laws of any foreign jurisdiction; and (B) formed by a U.S.
person principally for the purpose of investing in securities not
registered under the Securities Act, unless it is organized or
incorporated, and owned, by accredited investors (as defined in Rule
501(a)) who are not natural persons, estates or trusts.
(2) Notwithstanding paragraph (1) above, any discretionary account or similar
account (other than an estate or trust) held for the benefit or account of
a non-U.S. person by a dealer or other professional fiduciary organized,
incorporated, or (if an individual) resident in the United States shall not
be deemed a "U.S. person."
(3) Notwithstanding paragraph (1), any estate of which any professional
fiduciary acting as executor or administrator is a U.S. person shall not be
deemed a U.S. person if:
(i) An executor or administrator of the estate who is not a U.S. person
has sole or shared investment discretion with respect to the assets
of the estate; and
(ii) The estate is governed by foreign law.
(4) Notwithstanding paragraph (1), any trust of which any professional
fiduciary acting as trustee is a U.S. person shall not be deemed a U.S.
person if a trustee who is not a U.S. person has sole or shared investment
discretion with respect to the trust assets, and no beneficiary of the
trust (and no settlor if the trust is revocable) is a U.S. person.
39
(5) Notwithstanding paragraph (1), an employee benefit plan established and
administered in accordance with the law of a country other than the United
States and customary practices and documentation of such country shall not
be deemed a U.S. person.
(6) Notwithstanding paragraph (1), any agency or branch of a U.S. person
located outside the United States shall not be deemed a "U.S. person" if:
(i) The agency or branch operates for valid business reasons; and
(ii) The agency or branch is engaged in the business of insurance or
banking and is subject to substantive insurance or banking
regulation, respectively, in the jurisdiction where located.
(7) The International Monetary Fund, the International Bank for Reconstruction
and Development, the Inter-American Development Bank, the Asian Development
Bank, the African Development Bank, the United Nations, and their agencies,
affiliates and pension plans, and any other similar international
organizations, their agencies, affiliates and pension plans shall not be
deemed "U.S. persons."
40
EXHIBIT D
ACCREDITED INVESTOR REPRESENTATIONS
Each Shareholder indicating that it is an Accredited Investor, severally and not
jointly, further represents and warrants to the Acquiror as follows:
1. Such Shareholder qualifies as an Accredited Investor on the basis set forth
on its signature page to this Agreement.
2. Such Shareholder has sufficient knowledge and experience in finance,
securities, investments and other business matters to be able to protect
such Shareholder's interests in connection with the transactions
contemplated by this Agreement.
3. Such Shareholder has consulted, to the extent that it has deemed necessary,
with its tax, legal, accounting and financial advisors concerning its
investment in the Acquiror Shares.
4. Such Shareholder understands the various risks of an investment in the
Acquiror Shares and can afford to bear such risks for an indefinite period
of time, including, without limitation, the risk of losing its entire
investment in the Acquiror Shares.
5. Such Shareholder has had access to the Acquiror's publicly filed reports
with the SEC.
6. Such Shareholder has been furnished during the course of the transactions
contemplated by this Agreement with all other public information regarding
the Acquiror that such Shareholder has requested and all such public
information is sufficient for such Shareholder to evaluate the risks of
investing in the Acquiror Shares.
7. Such Shareholder has been afforded the opportunity to ask questions of and
receive answers concerning the Acquiror and the terms and conditions of the
issuance of the Acquiror Shares.
8. Such Shareholder is not relying on any representations and warranties
concerning the Acquiror made by the Acquiror or any officer, employee or
agent of the Acquiror, other than those contained in this Agreement.
9. Such Shareholder is acquiring the Acquiror Shares for such Shareholder's
own account, for investment and not for distribution or resale to others.
10. Such Shareholder will not sell or otherwise transfer the Acquiror Shares,
unless either (A) the transfer of such securities is registered under the
Securities Act or (B) an exemption from registration of such securities is
available.
11. Such Shareholder understands and acknowledges that the Acquiror is under no
obligation to register the Acquiror Shares for sale under the Securities
Act.
41
12. Such Shareholder consents to the placement of a legend on any certificate
or other document evidencing the Acquiror Shares substantially in the form
set forth in Section 4.2.5(a).
13. Such Shareholder represents that the address furnished by such Shareholder
on its signature page to this Agreement and in Exhibit A is such
Shareholder's principal residence if he is an individual or its principal
business address if it is a corporation or other entity.
14. Such Shareholder understands and acknowledges that the Acquiror Shares have
not been recommended by any federal or state securities commission or
regulatory authority, that the foregoing authorities have not confirmed the
accuracy or determined the adequacy of any information concerning the
Acquiror that has been supplied to such Shareholder and that any
representation to the contrary is a criminal offense.
15. Such Shareholder acknowledges that the representations, warranties and
agreements made by such Shareholder herein shall survive the execution and
delivery of this Agreement and the purchase of the Acquiror Shares.
42
EXHIBIT E
NON-U.S. PERSON REPRESENTATIONS
Each Shareholder indicating that it is not a U.S. person, severally and not
jointly, further represents and warrants to the Acquiror as follows:
1. At the time of (a) the offer by the Acquiror and (b) the acceptance of the
offer by such Shareholder, of the Acquiror Shares, such Shareholder was
outside the United States.
2. No offer to acquire the Acquiror Shares or otherwise to participate in the
transactions contemplated by this Agreement was made to such Shareholder or
its representatives inside the United States.
3. Such Shareholder is not purchasing the Acquiror Shares for the account or
benefit of any U.S. person, or with a view towards distribution to any U.S.
person, in violation of the registration requirements of the Securities
Act.
4. Such Shareholder will make all subsequent offers and sales of the Acquiror
Shares either (x) outside of the United States in compliance with
Regulation S; (y) pursuant to a registration under the Securities Act; or
(z) pursuant to an available exemption from registration under the
Securities Act. Specifically, such Shareholder will not resell the Acquiror
Shares to any U.S. person or within the United States prior to the
expiration of a period commencing on the Closing Date and ending on the
date that is one year thereafter (the "Distribution Compliance Period"),
except pursuant to registration under the Securities Act or an exemption
from registration under the Securities Act.
5. Such Shareholder is acquiring the Acquiror Shares for such Shareholder's
own account, for investment and not for distribution or resale to others.
6. Such Shareholder has no present plan or intention to sell the Acquiror
Shares in the United States or to a U.S. person at any predetermined time,
has made no predetermined arrangements to sell the Acquiror Shares and is
not acting as a Distributor of such securities.
7. Neither such Shareholder, its Affiliates nor any Person acting on such
Shareholder's behalf, has entered into, has the intention of entering into,
or will enter into any put option, short position or other similar
instrument or position in the U.S. with respect to the Acquiror Shares at
any time after the Closing Date through the Distribution Compliance Period
except in compliance with the Securities Act.
8. Such Shareholder consents to the placement of a legend on any certificate
or other document evidencing the Acquiror Shares substantially in the form
set forth in Section 4.2.5(b).
43
9. Such Shareholder is not acquiring the Acquiror Shares in a transaction (or
an element of a series of transactions) that is part of any plan or scheme
to evade the registration provisions of the Securities Act.
10. Such Shareholder has sufficient knowledge and experience in finance,
securities, investments and other business matters to be able to protect
such Shareholder's interests in connection with the transactions
contemplated by this Agreement.
11. Such Shareholder has consulted, to the extent that it has deemed necessary,
with its tax, legal, accounting and financial advisors concerning its
investment in the Acquiror Shares.
12. Such Shareholder understands the various risks of an investment in the
Acquiror Shares and can afford to bear such risks for an indefinite period
of time, including, without limitation, the risk of losing its entire
investment in the Acquiror Shares.
13. Such Shareholder has had access to the Acquiror's publicly filed reports
with the SEC.
14. Such Shareholder has been furnished during the course of the transactions
contemplated by this Agreement with all other public information regarding
the Acquiror that such Shareholder has requested and all such public
information is sufficient for such Shareholder to evaluate the risks of
investing in the Acquiror Shares.
15. Such Shareholder has been afforded the opportunity to ask questions of and
receive answers concerning the Acquiror and the terms and conditions of the
issuance of the Acquiror Shares.
16. Such Shareholder is not relying on any representations and warranties
concerning the Acquiror made by the Acquiror or any officer, employee or
agent of the Acquiror, other than those contained in this Agreement.
17. Such Shareholder will not sell or otherwise transfer the Acquiror Shares,
unless either (A) the transfer of such securities is registered under the
Securities Act or (B) an exemption from registration of such securities is
available.
18. Such Shareholder understands and acknowledges that the Acquiror is under no
obligation to register the Acquiror Shares for sale under the Securities
Act.
19. Such Shareholder represents that the address furnished by such Shareholder
on its signature page to this Agreement and in Exhibit A is such
Shareholder's principal residence if he is an individual or its principal
business address if it is a corporation or other entity.
20. Such Shareholder understands and acknowledges that the Acquiror Shares have
not been recommended by any federal or state securities commission or
regulatory authority, that the foregoing authorities have not confirmed the
accuracy or determined the adequacy of any information concerning the
Acquiror that has been supplied to such Shareholder and that any
representation to the contrary is a criminal offense.
44
21. Such Shareholder acknowledges that the representations, warranties and
agreements made by such Shareholder herein shall survive the execution and
delivery of this Agreement and the purchase of the Acquiror Shares.
45
