[EXHIBIT 10.1]
SHARE EXCHANGE AGREEMENT
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This SHARE EXCHANGE AGREEMENT (this "Agreement"), dated
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as of August 15, 2007, is by and among Six Diamond Resorts
International (f/n/a Six Diamond Resorts International), a Cayman
Islands exempted company (the "Parent "), Six Diamond Resorts
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International, S.A., a company organized under the laws of the
Republic of Panama (the "Company"), and the Stockholders of the
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Company signatory hereto (the "Stockholders"). Each of the
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parties to this Agreement is individually referred to herein as a
"Party" and collectively, as the "Parties."
BACKGROUND
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The Company has 9,742,000 shares of capital stock (the
"Company Stock") outstanding, all of which are held by the
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Stockholders. Each of the Stockholders is the record and
beneficial owner of the number of shares of Company Stock set
forth opposite such Stockholder's name on Exhibit A attached
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hereto. Each of the Stockholders has agreed to transfer all of
his, her or its shares of Company Stock in exchange for a number
of newly issued Ordinary Shares, $0.00320375 par value, of the
Parent (the "Parent Ordinary Shares") that will, in the
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aggregate, constitute approximately 96.1% of the issued and
outstanding share capital of the Parent on a fully-diluted basis
as of and immediately after the Closing, and before giving effect
to the Financing (as defined in Section 7.12 hereof). The number
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of shares of Parent Ordinary Shares to be received by each
Stockholder shall be as listed opposite such Stockholder's name
on Exhibit A to this Agreement. The aggregate number of shares of
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Parent Ordinary Shares that will be reflected on Exhibit A is
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referred to herein as the "Shares".
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The Board of Directors of the Parent and the Company
have determined that it is desirable to effect this plan of
reorganization and share exchange.
AGREEMENT
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NOW THEREFORE, the parties agree as follows:
ARTICLE I
Exchange of Shares
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SECTION 1.01. Exchange by Stockholders. At the Closing (as
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defined in Section 1.02), each of the Stockholders shall sell,
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transfer, convey, assign and deliver to the Parent its Company
Stock free and clear of all Liens (as defined below) in exchange
for the Parent Ordinary Shares to be listed on Exhibit A
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opposite such Stockholder's name.
SECTION 1.02. Closing. The closing (the "Closing") of the
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transactions contemplated hereby (the "Transactions ") shall take
place at the offices of Six Diamond Resorts International in
Houston, TX commencing at 9:00 a.m. local time on the second
business day following the satisfaction or waiver of all
conditions to the obligations of the parties to consummate the
Transactions contemplated hereby (other than conditions with
respect to actions the respective parties will take at the
Closing itself), or such other date and time as the parties may
mutually determine (the "Closing Date").
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ARTICLE II
Representations and Warranties of Stockholders
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Each of the Stockholders hereby severally (and not jointly)
represents and warrants to the Parent with respect to itself, as
follows:
SECTION 2.01. Good Title. The Stockholder is the record and
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beneficial owner, and has good title to its Company Stock, with
the right and authority to sell and deliver such Company Stock.
Upon delivery of any certificate or certificates duly assigned,
representing the same as herein contemplated and/or upon
registering of the Parent as the new owner of such Company Stock
in the share register of the Company, the Parent will receive
good title to such Company Stock, free and clear of all liens,
security interests, pledges, equities and claims of any kind,
voting trusts, stockholder agreements and other encumbrances
(collectively, "Liens").
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SECTION 2.02. Organization. Each Stockholder that is an
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entity is duly organized and validly existing in its jurisdiction
of organization.
SECTION 2.03. Power and Authority. Each Stockholder that is
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an entity has the legal power and authority to execute and
deliver this Agreement and to perform its obligations hereunder.
All acts required to be taken by the Stockholder to enter into
this Agreement and to carry out the Transactions have been
properly taken. This Agreement constitutes a legal, valid and
binding obligation of the Stockholder, enforceable against such
Stockholder in accordance with the terms hereof.
SECTION 2.04. No Conflicts. The execution and delivery of
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this Agreement by the Stockholder and the performance by the
Stockholder of its obligations hereunder in accordance with the
terms hereof: (i) will not require the consent of any third party
or any federal, state, local or foreign government or any court
of competent jurisdiction, administrative agency or commission or
other governmental authority or instrumentality, domestic or
foreign ("Governmental Entity") under any statutes, laws,
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ordinances, rules, regulations, orders, writs, injunctions,
judgments, or decrees (collectively, "Laws"); (ii) will not
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violate any Laws applicable to such Stockholder and (iii) will
not violate or breach any contractual obligation to which such
Stockholder is a party.
SECTION 2.05. No Finder's Fee. The Stockholder has not
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created any obligation for any finder's, investment banker's or
broker's fee in connection with the Transactions.
SECTION 2.06. Purchase Entirely for Own Account. The Parent
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Ordinary Shares proposed to be acquired by the Stockholder
hereunder will be acquired for investment for its own account,
and not with a view to the resale or distribution of any part
thereof, and the Stockholder has no present intention of selling
or otherwise distributing the Parent Ordinary Shares, except in
compliance with applicable securities laws.
SECTION 2.07. Available Information. The Stockholder has
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such knowledge and experience in financial and business matters
that it is capable of evaluating the merits and risks of
investment in the Parent.
SECTION 2.08. Non-Registration. The Stockholder understands
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that the Parent Ordinary Shares has not been registered under the
Securities Act of 1933, as amended (the "Securities Act") and, if
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issued in accordance with the provisions of this Agreement, will
be issued by reason of a specific exemption from the registration
provisions of the Securities Act which depends upon, among other
things, the bona fide nature of the investment intent and the
accuracy of the Stockholder's representations as expressed
herein.
SECTION 2.09. Restricted Securities. The Stockholder
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understands that the Parent Ordinary Shares is characterized as
"restricted securities" under the Securities Act inasmuch as this
Agreement contemplates that, if acquired by the Stockholder
pursuant hereto, the Parent Ordinary Shares would be acquired in
a transaction not involving a public offering. The Stockholder
further acknowledges that if the Parent Ordinary Shares is issued
to the Stockholder in accordance with the provisions of this
Agreement, such Parent Ordinary Shares may not be resold without
registration under the Securities Act or the existence of an
exemption therefrom. The Stockholder represents that it is
familiar with Rule 144 promulgated under the Securities Act, as
presently in effect, and understands the resale limitations
imposed thereby and by the Securities Act.
SECTION 2.10. Legends. It is understood that the Parent
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Ordinary Shares will bear the following legend or one that is
substantially similar to the following legend:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "SECURITIES ACT") OR UNDER
APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED
UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAWS OR PURSUANT TO AVAILABLE EXEMPTIONS FROM
SUCH REGISTRATION, PROVIDED THAT THE SELLER DELIVERS TO
THE COMPANY AN OPINION OF COUNSEL (WHICH OPINION IS
REASONABLY SATISFACTORY TO THE COMPANY) CONFIRMING THE
AVAILABILITY OF SUCH EXEMPTION. THESE SECURITIES MAY BE
PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT
SECURED BY SUCH SECURITIES TO THE EXTENT PERMITTED BY
APPLICABLE FEDERAL AND STATE SECURITIES LAWS.
(a) Any legend required by the "blue sky" laws of any
state to the extent such laws are applicable to the
securities represented by the certificate so legended.
SECTION 2.11. Accredited Investor. The Stockholder is an
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"accredited investor" within the meaning of Rule 501 under the
Securities Act and was not organized for the specific purpose of
acquiring the Parent Ordinary Shares.
ARTICLE III
Representations and Warranties of the Company
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The Company represents and warrants to the Parent that:
SECTION 3.01. Organization, Standing and Power. The Company
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is duly organized, validly existing and in good standing under
the laws of the jurisdiction in which it is organized and has the
corporate power and authority and possesses all governmental
franchises, licenses, permits, authorizations and approvals
necessary to enable it to own, lease or otherwise hold its
properties and assets and to conduct its businesses as presently
conducted, other than such franchises, licenses, permits,
authorizations and approvals the lack of which, individually or
in the aggregate, has not had and would not reasonably be
expected to have a material adverse effect on the Company, a
material adverse effect on the ability of the Company to perform
its obligations under this Agreement or on the ability of the
Company to consummate the Transactions (a "Company Material
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Adverse Effect"). The Company is duly qualified to do business in
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each jurisdiction where the nature of its business or its
ownership or leasing of its properties make such qualification
necessary except where the failure to so qualify would not
reasonably be expected to have a Company Material Adverse Effect.
The Company has delivered to the Parent true and complete copies
of the memorandum and articles of association of the Company and
such other constituent instruments of the Company as may exist,
each as amended to the date of this Agreement (as so amended, the
"Company Constituent Instruments"), and the comparable charter,
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organizational documents and other constituent instruments of
each Company Subsidiary, in each case as amended through the date
of this Agreement.
SECTION 3.02. Company Subsidiaries; Equity Interests.
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(a) The Company has no subsidiaries and does not own,
directly or indirectly, any capital stock, membership
interest, partnership interest, joint venture interest or
other equity interest in any person.
SECTION 3.03. Capital Structure. The authorized capital
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stock of the Company consists of 100,000,000 ordinary shares,
$.00320375 par value, of which 400,433 shares are issued and
outstanding. Except as set forth above, no shares of capital
stock or other voting securities of the Company are issued,
reserved for issuance or outstanding. All outstanding shares of
the capital stock of the Company are duly authorized, validly
issued, fully paid and nonassessable and not subject to or issued
in violation of any purchase option, call option, right of first
refusal, preemptive right, subscription right or any similar
right under any provision of the applicable corporate laws of the
Republic of Panama, the Company Constituent Instruments or any
Contract (as defined in Section 3.05) to which the Company is a
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party or otherwise bound. Except as set forth in this Section
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3.03, there are not any bonds, debentures, notes or other
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indebtedness of Company having the right to vote (or convertible
into, or exchangeable for, securities having the right to vote)
on any matters on which holders of Company Stock may vote
("Voting Company Debt"). Except as set forth above, as of the
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date of this Agreement, there are not any options, warrants,
rights, convertible or exchangeable securities, "phantom" stock
rights, stock appreciation rights, stock-based performance units,
commitments, Contracts, arrangements or undertakings of any kind
to which the Company is a party or by which any of them is bound
(i) obligating the Company to issue, deliver or sell, or cause to
be issued, delivered or sold, additional shares of capital stock
or other equity interests in, or any security convertible or
exercisable for or exchangeable into any capital stock of or
other equity interest in, the Company or any Voting Company Debt,
(ii) obligating the Company to issue, grant, extend or enter into
any such option, warrant, call, right, security, commitment,
Contract, arrangement or undertaking or (iii) that give any
person the right to receive any economic benefit or right similar
to or derived from the economic benefits and rights occurring to
holders of the capital stock of the Company. There are not any
outstanding contractual obligations of the Company to repurchase,
redeem or otherwise acquire any shares of capital stock of
Parent.
SECTION 3.04. Authority; Execution and Delivery;
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Enforceability. The Company has all requisite corporate power and
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authority to execute and deliver this Agreement and to consummate
the Transactions. The execution and delivery by the Company of
this Agreement and the consummation by the Company of the
Transactions have been duly authorized and approved by the Board
of Directors of the Company and no other corporate proceedings on
the part of the Company are necessary to authorize this Agreement
and the Transactions. When executed and delivered, this Agreement
will be enforceable against the Company in accordance with its
terms.
SECTION 3.05. No Conflicts; Consents.
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(a) The execution and delivery by the Company of this
Agreement does not, and the consummation of the Transactions and
compliance with the terms hereof and thereof will not, conflict
with, or result in any violation of or default (with or without
notice or lapse of time, or both) under, or give rise to a right
of termination, cancellation or acceleration of any obligation or
to loss of a material benefit under, or result in the creation of
any Lien upon any of the properties or assets of the Company
under, any provision of (i) the Company Constituent Instruments,
(ii) any material contract, lease, license, indenture, note,
bond, agreement, permit, concession, franchise or other
instrument (a "Contract ") to which the Company is a party or by
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which any of its properties or assets is bound or (iii) subject
to the filings and other matters referred to in Section 3.05(b),
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any material judgment, order or decree ("Judgment") or material
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Law applicable to the Company or its properties or assets, other
than, in the case of clauses (ii) and (iii) above, any such items
that, individually or in the aggregate, have not had and would
not reasonably be expected to have a Company Material Adverse
Effect.
(b) Except for required filings with the Securities and
Exchange Commission (the "SEC") and applicable "Blue Sky" or
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state securities commissions, no material consent, approval,
license, permit, order or authorization ("Consent") of, or
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registration, declaration or filing with, or permit from, any
Governmental Entity is required to be obtained or made by or with
respect to the Company or any Company Subsidiary in connection
with the execution, delivery and performance of this Agreement or
the consummation of the Transactions.
SECTION 3.06. Taxes.
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(a) The Company has timely filed, or has caused to be
timely filed on its behalf, all Tax Returns required to be filed
by it, and all such Tax Returns are true, complete and accurate,
except to the extent any failure to file or any inaccuracies in
any filed Tax Returns, individually or in the aggregate, have not
had and would not reasonably be expected to have a Company
Material Adverse Effect. All Taxes shown to be due on such Tax
Returns, or otherwise owed, have been timely paid, except to the
extent that any failure to pay, individually or in the aggregate,
has not had and would not reasonably be expected to have a
Company Material Adverse Effect. There are no unpaid taxes in any
material amount claimed to be due by the taxing authority of any
jurisdiction, and the officers of the Company know of no basis
for any such claim.
(b) The Company Financial Statements (as defined in
Section 3.15) reflect an adequate reserve for all Taxes payable
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by the Company (in addition to any reserve for deferred Taxes to
reflect timing differences between book and Tax items) for all
Taxable periods and portions thereof through the date of such
financial statements. No deficiency with respect to any Taxes has
been proposed, asserted or assessed against the Company, and no
requests for waivers of the time to assess any such Taxes are
pending, except to the extent any such deficiency or request for
waiver, individually or in the aggregate, has not had and would
not reasonably be expected to have a Company Material Adverse
Effect.
(c) For purposes of this Agreement:
"Taxes" includes all forms of taxation, whenever created
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or imposed, and whether of the United States or elsewhere, and
whether imposed by a local, municipal, governmental, state,
foreign, federal or other Governmental Entity, or in connection
with any agreement with respect to Taxes, including all interest,
penalties and additions imposed with respect to such amounts.
"Tax Return" means all federal, state, local, provincial
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and foreign Tax returns, declarations, statements, reports,
schedules, forms and information returns and any amended Tax
return relating to Taxes.
SECTION 3.07. Benefit Plans.
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(a) The Company does not have or maintain any
collective bargaining agreement or any bonus, pension, profit
sharing, deferred compensation, incentive compensation, stock
ownership, stock purchase, stock option, phantom stock,
retirement, vacation, severance, disability, death benefit,
hospitalization, medical or other plan, arrangement or
understanding (whether or not legally binding) providing
benefits to any current or former employee, officer or director
of the Company or any Company Subsidiary (collectively, "Company
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Benefit Plans"). There are not any severance or termination
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agreements or arrangements between the Company and any current
or former employee, officer or director of the Company, nor does
the Company have any general severance plan or policy.
(b) Since the Company's inception, there has not been
any adoption or amendment in any material respect by the Company
of any Company Benefit Plan.
SECTION 3.08. Litigation. There is no action, suit, inquiry,
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notice of violation, proceeding (including any partial proceeding
such as a deposition) or investigation pending or threatened in
writing against or affecting the Company or any of its properties
before or by any court, arbitrator, governmental or
administrative agency, regulatory authority (federal, state,
county, local or foreign), stock market, stock exchange or
trading facility ("Action") which (i) adversely affects or
challenges the legality, validity or enforceability of any of
this Agreement or the Shares or (ii) could, if there were an
unfavorable decision, individually or in the aggregate, have or
reasonably be expected to result in a Company Material Adverse
Effect. Neither the Company, nor any director or officer thereof
(in his or her capacity as such), is or has been the subject of
any Action involving a claim or violation of or liability under
federal or state securities laws or a claim of breach of
fiduciary duty.
SECTION 3.09. Compliance with Applicable Laws. The Company
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is in compliance with all applicable Laws, including those
relating to occupational health and safety and the environment,
except for instances of noncompliance that, individually and in
the aggregate, have not had and would not reasonably be expected
to have a Company Material Adverse Effect. The Company has not
received any written communication during the past two years from
a Governmental Entity that alleges that the Company is not in
compliance in any material respect with any applicable Law. This
Section 3.09 does not relate to matters with respect to Taxes,
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which are the subject of Section 3.06.
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SECTION 3.10. Brokers; Schedule of Fees and Expenses. No
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broker, investment banker, financial advisor or other person is
entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the Transactions
based upon arrangements made by or on behalf of the Company.
SECTION 3.11. Contracts. Except as disclosed in the Company
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Disclosure Letter, there are no Contracts that are material to
the business, properties, assets, condition (financial or
otherwise), results of operations or prospects of the Company and
its subsidiaries taken as a whole. Neither the Company nor any
Company Subsidiary is in violation of or in default under (nor
does there exist any condition which upon the passage of time or
the giving of notice would cause such a violation of or default
under) any Contract to which it is a party or by which it or any
of its properties or assets is bound, except for violations or
defaults that would not, individually or in the aggregate,
reasonably be expected to result in a Company Material Adverse
Effect.
SECTION 3.12. Title to Properties. Except as set forth on
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Schedule 3.12, the Company does not own any real property. The
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Company has sufficient title to, or valid leasehold interests in,
all of its properties and assets used in the conduct of its
businesses. All such assets and properties, other than assets and
properties in which the Company has leasehold interests, are free
and clear of all Liens and except for Liens that, in the
aggregate, do not and will not materially interfere with the
ability of the Company to conduct business as currently
conducted.
SECTION 3.13. Intellectual Property. The Company owns, or
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has validly licensed or otherwise has the right to use, all
patents, patent rights, trademarks, trademark rights, trade
names, trade name rights, service marks, service xxxx rights,
copyrights and other proprietary intellectual property rights and
computer programs (collectively, "Intellectual Property Rights")
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which are material to the conduct of the business of the Company.
Schedule 3.13 sets forth a true and correct description of all
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Intellectual Property Rights which are material to the conduct of
the business of the Company. There are no claims pending or, to
the knowledge of the Company, threatened that the Company is
infringing or otherwise adversely affecting the rights of any
person with regard to any Intellectual Property Right. To the
knowledge of the Company, no person is infringing the rights of
the Company with respect to any Intellectual Property Right.
SECTION 3.14. Labor Matters. There are no collective
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bargaining or other labor union agreements to which the Company
is a party or by which it is bound. No material labor dispute
exists or, to the knowledge of the Company, is imminent with
respect to any of the employees of the Company.
SECTION 3.15. Financial Statements. Prior to the Closing the
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Company will deliver to the Parent its audited consolidated
financial statements for the fiscal years ended December 31, 2006
and unaudited consolidated financial statements for the period
ended June 30, 2007 (collectively, the "Company Financial
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Statements"). Upon delivery, the Company Financial Statements
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will have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout
the periods indicated and in respect of interim periods subject
to year end adjustments. The Company Financial Statements will
fairly present in all material respects the financial condition
and operating results of the Company, as of the dates, and for
the periods, indicated therein. The Company will not have any
material liabilities or obligations, contingent or otherwise,
other than (i) liabilities incurred in the ordinary course of
business subsequent to June, 2007, and (ii) obligations under
contracts and commitments incurred in the ordinary course of
business and not required under generally accepted accounting
principles to be reflected in the Company Financial Statements,
which, in both cases, individually and in the aggregate would not
be reasonably expected to result in a Company Material Adverse
Effect.
SECTION 3.16. Insurance. Schedule 3.16 sets forth a list and
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description of all insurance policies existing as of the date
hereof providing insurance coverage of any nature to the Company.
All such policies are sufficient all the Company to continue its
business on terms consistent with market for the Company's line
of business, are in full force and effect and are enforceable in
accordance with their terms, free of any right of termination on
the part of any insurance carrier. No claims have been made on
any such policies.
SECTION 3.17. Transactions With Affiliates and Employees.
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Except as set forth in the Company Financial Statements, none of
the officers or directors of the Company and, to the knowledge of
the Company, none of the employees of the Company is presently a
party to any transaction with the Company (other than for
services as employees, officers and directors), including any
contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or
personal property to or from, or otherwise requiring payments to
or from any officer, director or such employee or, to the
knowledge of the Company, any entity in which any officer,
director, or any such employee has a substantial interest or is
an officer, director, trustee or partner.
SECTION 3.18. Internal Accounting Controls. The Company
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maintains a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed
in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain asset
accountability, (iii) access to assets is permitted only in
accordance with management's general or specific authorization,
and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate
action is taken with respect to any differences. The Company has
established disclosure controls and procedures for the Company
and designed such disclosure controls and procedures to ensure
that material information relating to the Company is made known
to the officers by others within the Company. The Company's
officers have evaluated the effectiveness of the Company's
controls and procedures. Since December 31, 2006, there have been
no significant changes in the Company's internal controls or, to
the Company's knowledge, in other factors that could
significantly affect the Company's internal controls.
SECTION 3.19. Solvency. Based on the financial condition of
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the Company as of the closing date (and assuming that the closing
shall have occurred), (i) the Company's fair saleable value of
its assets exceeds the amount that will be required to be paid on
or in respect of the Company's existing debts and other
liabilities (including known contingent liabilities) as they
mature, (ii) the Company's assets do not constitute unreasonably
small capital to carry on its business for the current fiscal
year as now conducted and as proposed to be conducted including
its capital needs taking into account the particular capital
requirements of the business conducted by the Company, and
projected capital requirements and capital availability thereof,
and (iii) the current cash flow of the Company, together with the
proceeds the Company would receive, were it to liquidate all of
its assets, after taking into account all anticipated uses of the
cash, would be sufficient to pay all amounts on or in respect of
its debt when such amounts are required to be paid. The Company
does not intend to incur debts beyond its ability to pay such
debts as they mature (taking into account the timing and amounts
of cash to be payable on or in respect of its debt).
SECTION 3.20. Application of Takeover Protections. The
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Company has taken all necessary action, if any, in order to
render inapplicable any control share acquisition, business
combination, poison pill (including any distribution under a
rights agreement) or other similar anti-takeover provision under
the Company's charter documents or the laws of its state of
incorporation that is or could become applicable to the
Stockholders as a result of the Stockholders and the Company
fulfilling their obligations or exercising their rights under
this Agreement, including, without limitation, the issuance of
the Shares and the Stockholders' ownership of the Shares.
SECTION 3.21. No Additional Agreements. The Company does not
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have any agreement or understanding with any Stockholders with
respect to the transactions contemplated by this Agreement other
than as specified in this Agreement.
SECTION 3.22. Investment Company. The Company is not, and is
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not an affiliate of, and immediately following the Closing will
not have become, an "investment company" within the meaning of
the Investment Company Act of 1940, as amended.
SECTION 3.23. Disclosure. The Company confirms that neither
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it nor any person acting on its behalf has provided any
Stockholder or its respective agents or counsel with any
information that the Company believes constitutes material, non-
public information except insofar as the existence and terms of
the proposed transactions hereunder may constitute such
information and except for information that will be disclosed by
the Parent under a current report on Form 8-K filed within four
business days after the Closing. The Company understands and
confirms that the Stockholders will rely on the foregoing
representations and covenants in effecting transactions in
securities of the Company. All disclosure provided to the
Stockholders regarding the Company, its business and the
transactions contemplated hereby, furnished by or on behalf of
the Company (including the Company's representations and
warranties set forth in this Agreement) are true and correct and
do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements
made therein, in light of the circumstances under which they were
made, not misleading.
SECTION 3.24. Information Supplied. None of the information
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supplied or to be supplied by the Company for inclusion or
incorporation by reference in the notice that is required to be
sent to the stockholders of the Parent pursuant to Rule 14f-1
(the "14f-1 Notice") promulgated under the Securities Exchange
Act of 1934 (the "Exchange Act") will, at the date it is first
mailed to the Parent's stockholders, contain any untrue statement
of a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made,
not misleading.
SECTION 3.25. Absence of Certain Changes or Events. Except
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as disclosed in the Company Financial Statements, from December
31, 2006 to the date of this Agreement, the Company has conducted
its business only in the ordinary course, and during such period
there has not been:
(a) any change in the assets, liabilities, financial
condition or operating results of the Company, except
changes in the ordinary course of business that have not
caused, in the aggregate, a Company Material Adverse
Effect;
(b) any damage, destruction or loss, whether or not
covered by insurance, that would have a Company Material
Adverse Effect;
(c) any waiver or compromise by the Company of a
valuable right or of a material debt owed to it;
(d) any satisfaction or discharge of any lien, claim,
or encumbrance or payment of any obligation by the Company,
except in the ordinary course of business and the
satisfaction or discharge of which would not have a Company
Material Adverse Effect;
(e) any material change to a material Contract by which
the Company or any of its assets is bound or subject;
(f) any mortgage, pledge, transfer of a security
interest in, or lien, created by the Company, with respect
to any of its material properties or assets, except liens
for taxes not yet due or payable and liens that arise in
the ordinary course of business and do not materially
impair the Company's ownership or use of such property or
assets;
(g) any loans or guarantees made by the Company to or
for the benefit of its employees, officers or directors, or
any members of their immediate families, other than travel
advances and other advances made in the ordinary course of
its business;
(h) any alteration of the Company's method of
accounting or the identity of its auditors;
(i) any declaration or payment of dividend or
distribution of cash or other property to Stockholders or
any purchase, redemption or agreements to purchase or
redeem any shares of Company Stock;
(j) any issuance of equity securities to any officer,
director or affiliate, except pursuant to existing Company
stock option plans; or
(k) any arrangement or commitment by the Company to do
any of the things described in this Section 3.25.
------------
SECTION 3.26. No Undisclosed Events, Liabilities,
------------------------------------------
Developments or Circumstances. No event, liability, development
------------------------------
or circumstance has occurred or exists, or is contemplated to
occur with respect to the Company, its business, properties,
prospects, operations or financial condition, that would be
required to be disclosed by the Company under applicable
securities laws on a registration statement on Form S-1 filed
with the SEC relating to an issuance and sale by the Company of
its Common Stock and which has not been publicly announced.
SECTION 3.27. Foreign Corrupt Practices. Neither the
---------------------------
Company, nor, to the Company's knowledge, any director, officer,
agent, employee or other person acting on behalf of the Company
or any of its subsidiaries has, in the course of its actions for,
or on behalf of, the Company (i) used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful
expenses relating to political activity; (ii) made any direct or
indirect unlawful payment to any foreign or domestic government
official or employee from corporate funds; (iii) violated or is
in violation of any provision of the U.S. Foreign Corrupt
Practices Act of 1977, as amended; or (iv) made any unlawful
bribe, rebate, payoff, influence payment, kickback or other
unlawful payment to any foreign or domestic government official
or employee.
ARTICLE IV
Representations and Warranties of the Parent
--------------------------------------------
The Parent represents and warrants to each of the
Stockholders and the Company that, except as set forth in the
reports, schedules, forms, statements and other documents filed
by Parent with the SEC and publicly available prior to the date
of the Agreement (the "Filed Parent SEC Documents"):1
--------------------------
SECTION 4.01. Organization, Standing and Power. Parent is
--------------------------------
duly incorporated, validly existing and in good standing under
the laws of the Cayman Islands and has full corporate power and
authority and possesses all governmental franchises, licenses,
permits, authorizations and approvals necessary to enable it to
own, lease or otherwise hold its properties and assets and to
conduct its businesses as presently conducted, other than such
franchises, licenses, permits, authorizations and approvals the
lack of which, individually or in the aggregate, has not had and
would not reasonably be expected to have a material adverse
effect on Parent, a material adverse effect on the ability of
Parent to perform its obligations under this Agreement or on the
ability of Parent to consummate the Transactions (a "Parent
------
Material Adverse Effect"). Parent is duly qualified to do
-------------------------
business in each jurisdiction where the nature of its business or
their ownership or leasing of its properties make such
qualification necessary and where the failure to so qualify would
reasonably be expected to have a Parent Material Adverse Effect.
Parent has delivered to the Company true and complete copies of
the Memorandum and Articles of Association of Parent, as amended
to the date of this Agreement (as so amended, the "Parent
------
Charter").
-------
SECTION 4.02. Subsidiaries; Equity Interests. Parent does
------------------------------
not own, directly or indirectly, any capital stock, membership
interest, partnership interest, joint venture interest or other
equity interest in any person.
SECTION 4.03. Capital Structure. The authorized share
------------------
capital of Parent consists of 100,000,000 Ordinary Shares,
$0.00320375 par value per share, and 25,000,000 Preference
Shares, $0.00320375 par value. As of the date hereof (i)
9,742,000 shares of Parent Ordinary Shares are issued and
outstanding, (ii) no shares of Preference Shares are outstanding
and (iii) no shares of Parent Ordinary Shares or Preference
Shares are held by Parent in its treasury. Except as set forth
above, no ordinary shares or other voting securities of Parent
were issued, reserved for issuance or outstanding. All
outstanding ordinary shares of Parent are, and all such shares
that may be issued prior to the date hereof will be when issued,
duly authorized, validly issued, fully paid and nonassessable and
not subject to or issued in violation of any purchase option,
call option, right of first refusal, preemptive right,
subscription right or any similar right under any provision of
the Laws of the Cayman Islands, the Parent Charter or any
Contract to which Parent is a party or otherwise bound. There are
not any bonds, debentures, notes or other indebtedness of Parent
having the right to vote (or convertible into, or exchangeable
for, securities having the right to vote) on any matters on which
holders of Parent Ordinary Shares may vote ("Voting Parent
--------------
Debt"). Except as set forth above, as of the date of this
----
Agreement, there are not any options, warrants, rights,
convertible or exchangeable securities, "phantom" share rights,
share appreciation rights, stock-based performance units,
commitments, Contracts, arrangements or undertakings of any kind
to which Parent is a party or by which it is bound (i) obligating
Parent to issue, deliver or sell, or cause to be issued,
delivered or sold, additional ordinary shares or other equity
interests in, or any security convertible or exercisable for or
exchangeable into any shares of or other equity interest in,
Parent or any Voting Parent Debt, (ii) obligating Parent to
issue, grant, extend or enter into any such option, warrant,
call, right, security, commitment, Contract, arrangement or
undertaking or (iii) that give any person the right to receive
any economic benefit or right similar to or derived from the
economic benefits and rights occurring to holders of the share
capital of the Parent. As of the date of this Agreement, there
are not any outstanding contractual obligations of Parent to
repurchase, redeem or otherwise acquire any ordinary shares of
the Parent. Except as set forth in Schedule 4.03, the Parent is
-------------
not a party to any agreement granting any securityholder of the
Parent the right to cause the Parent to register ordinary shares
or other securities of the Parent held by such securityholder
under the Securities Act.
SECTION 4.04. Authority; Execution and Delivery;
-----------------------------------------
Enforceability. The execution and delivery by the Parent of this
--------------
Agreement and the consummation by the Parent of the Transactions
have been duly authorized and approved by the Board of Directors
of the Parent and no other corporate proceedings on the part of
the Parent are necessary to authorize this Agreement and the
Transactions. This Agreement constitutes a legal, valid and
binding obligation of the Parent, enforceable against the Parent
in accordance with the terms hereof.
SECTION 4.05. No Conflicts; Consents.
----------------------
(a) The execution and delivery by Parent of this
Agreement, does not, and the consummation of Transactions and
compliance with the terms hereof and thereof will not, conflict
with, or result in any violation of or default (with or without
notice or lapse of time, or both) under, or give rise to a right
of termination, cancellation or acceleration of any obligation or
to loss of a material benefit under, or to increased, additional,
accelerated or guaranteed rights or entitlements of any person
under, or result in the creation of any Lien upon any of the
properties or assets of Parent under, any provision of (i) Parent
Charter, (ii) any material Contract to which Parent is a party or
by which any of its properties or assets is bound or (iii)
subject to the filings and other matters referred to in Section
-------
4.05(b), any material Judgment or material Law applicable to
-------
Parent or its properties or assets, other than, in the case of
clauses (ii) and (iii) above, any such items that, individually
or in the aggregate, have not had and would not reasonably be
expected to have a Parent Material Adverse Effect.
(b) No Consent of, or registration, declaration or
filing with, or permit from, any Governmental Entity is required
to be obtained or made by or with respect to Parent in connection
with the execution, delivery and performance of this Agreement or
the consummation of the Transactions, other than the (A) filing
with the SEC of a 14f-1 Notice and (B) filing with the SEC of
reports under Sections 13 and 16 of the Exchange Act, and (C)
filings under state "blue sky" laws, as may be required in
connection with this Agreement and the Transactions.
SECTION 4.06. SEC Documents; Undisclosed Liabilities.
--------------------------------------
(a) Parent has filed all reports, schedules, forms,
statements and other documents required to be filed by Parent
with the SEC since December 31, 2006, pursuant to Sections 13(a),
14 (a) and 15(d) of the Exchange Act (the "Parent SEC
------------
Documents").
---------
(b) As of its respective filing date, each Parent SEC
Document complied in all material respects with the requirements
of the Exchange Act and the rules and regulations of the SEC
promulgated thereunder applicable to such Parent SEC Document,
and did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
Except to the extent that information contained in any Parent SEC
Document has been revised or superseded by a later filed Parent
SEC Document, none of the Parent SEC Documents contains any
untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances
under which they were made, not misleading. The financial
statements of Parent included in the Parent SEC Documents comply
as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC
with respect thereto, have been prepared in accordance with the
U.S. generally accepted accounting principals ("GAAP") (except,
----
in the case of unaudited statements, as permitted by the rules
and regulations of the SEC) applied on a consistent basis during
the periods involved (except as may be indicated in the notes
thereto) and fairly present the consolidated financial position
of Parent and its consolidated subsidiaries as of the dates
thereof and the consolidated results of their operations and cash
flows for the periods shown (subject, in the case of unaudited
statements, to normal year-end audit adjustments).
(c) Except as set forth in the Filed Parent SEC
Documents, Parent has no liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) required by
GAAP to be set forth on a balance sheet of Parent or in the notes
thereto.
(d) Since the date of the latest audited financial
statements included within the SEC Reports, except as
specifically disclosed in the Filed Parent SEC Documents, the
Parent has not changed its auditors and the Parent does not have
pending before the SEC any request for confidential treatment of
information.
SECTION 4.07. Information Supplied. None of the information
--------------------
supplied or to be supplied by Parent for inclusion or
incorporation by reference in the 14f-1 Notice will, at the date
it is first mailed to the Parent's shareholders, contain any
untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which
they are made, not misleading.
SECTION 4.08. Absence of Certain Changes or Events. Except
------------------------------------
as disclosed in the Filed Parent SEC Documents, from the date of
the most recent audited financial statements included in the
Filed Parent SEC Documents to the date of this Agreement, Parent
has conducted its business only in the ordinary course, and
during such period there has not been:
(a) any change in the assets, liabilities, financial
condition or operating results of the Parent from that reflected
in the Parent SEC Documents, except changes in the ordinary
course of business that have not caused, in the aggregate, a
Parent Material Adverse Effect;
(b) any damage, destruction or loss, whether or not
covered by insurance, that would have a Parent Material Adverse
Effect;
(c) any waiver or compromise by the Parent of a
valuable right or of a material debt owed to it;
(d) any satisfaction or discharge of any lien, claim,
or encumbrance or payment of any obligation by the Parent, except
in the ordinary course of business and the satisfaction or
discharge of which would not have a Parent Material Adverse
Effect;
(e) any material change to a material Contract by which
the Parent or any of its assets is bound or subject;
(f) any material change in any compensation arrangement
or agreement with any employee, officer, director or shareholder;
(g) any resignation or termination of employment of any
officer of the Parent;
(h) any mortgage, pledge, transfer of a security
interest in, or lien, created by the Parent, with respect to any
of its material properties or assets, except liens for taxes not
yet due or payable and liens that arise in the ordinary course of
business and do not materially impair the Parent's ownership or
use of such property or assets;
(i) any loans or guarantees made by the Parent to or
for the benefit of its employees, officers or directors, or any
members of their immediate families, other than travel advances
and other advances made in the ordinary course of its business;
(j) any declaration, setting aside or payment or other
distribution in respect of any of the Parent's share capital, or
any direct or indirect redemption, purchase, or other acquisition
of any of such share capital by the Parent;
(k) any alteration of the Parent's method of accounting
or the identity of its auditors;
(l) any issuance of equity securities to any officer,
director or affiliate, except pursuant to existing Parent stock
option plans; or
(m) any arrangement or commitment by the Parent to do
any of the things described in this Section 4.08.
SECTION 4.09. Taxes.
-----
(a) Parent has timely filed, or has caused to be timely
filed on its behalf, all Tax Returns required to be filed by it,
and all such Tax Returns are true, complete and accurate, except
to the extent any failure to file or any inaccuracies in any
filed Tax Returns, individually or in the aggregate, have not had
and would not reasonably be expected to have a Parent Material
Adverse Effect. All Taxes shown to be due on such Tax Returns, or
otherwise owed, has been timely paid, except to the extent that
any failure to pay, individually or in the aggregate, has not had
and would not reasonably be expected to have a Parent Material
Adverse Effect.
(b) The most recent financial statements contained in
the Filed Parent SEC Documents reflect an adequate reserve for
all Taxes payable by Parent (in addition to any reserve for
deferred Taxes to reflect timing differences between book and Tax
items) for all Taxable periods and portions thereof through the
date of such financial statements. No deficiency with respect to
any Taxes has been proposed, asserted or assessed against Parent,
and no requests for waivers of the time to assess any such Taxes
are pending, except to the extent any such deficiency or request
for waiver, individually or in the aggregate, has not had and
would not reasonably be expected to have a Parent Material
Adverse Effect.
(c) There are no Liens for Taxes (other than for
current Taxes not yet due and payable) on the assets of Parent.
Parent is not bound by any agreement with respect to Taxes.
SECTION 4.10. Absence of Changes in Benefit Plans. From the
-----------------------------------
date of the most recent audited financial statements included in
the Filed Parent SEC Documents to the date of this Agreement,
there has not been any adoption or amendment in any material
respect by Parent of any collective bargaining agreement or any
bonus, pension, profit sharing, deferred compensation, incentive
compensation, share ownership, share purchase, stock option,
phantom shares, retirement, vacation, severance, disability,
death benefit, hospitalization, medical or other plan,
arrangement or understanding (whether or not legally binding)
providing benefits to any current or former employee, officer or
director of Parent (collectively, "Parent Benefit Plans"). As of
--------------------
the date of this Agreement there are not any employment,
consulting, indemnification, severance or termination agreements
or arrangements between the Parent and any current or former
employee, officer or director of the Parent, nor does the Parent
have any general severance plan or policy.
SECTION 4.11. ERISA Compliance; Excess Parachute Payments.
--------------------------------------------
The Parent does not, and since its inception never has,
maintained, or contributed to any "employee pension benefit
plans" (as defined in Section 3(2) of ERISA), "employee welfare
benefit plans" (as defined in Section 3(1) of ERISA) or any other
Parent Benefit Plan for the benefit of any current or former
employees, consultants, officers or directors of Parent.
SECTION 4.12. Litigation. Except as disclosed in the Filed
----------
Parent SEC Documents or in the Parent Disclosure Letter, there is
no Action which (i) adversely affects or challenges the legality,
validity or enforceability of any of this Agreement or the Shares
or (ii) could, if there were an unfavorable decision,
individually or in the aggregate, have or reasonably be expected
to result in a Parent Material Adverse Effect. There has not
been, and to the knowledge of the Parent, there is not pending
any investigation by the SEC involving the Parent or any current
or former director or officer of the Parent (in his or her
capacity as such). The SEC has not issued any stop order or other
order suspending the effectiveness of any registration statement
filed by the Parent under the Exchange Act or the Securities Act.
Neither the Parent nor any subsidiary, nor any director or
officer thereof (in his or her capacity as such), is or has been
the subject of any Action involving a claim or violation of or
liability under federal or state securities laws or a claim of
breach of fiduciary duty.
SECTION 4.13. Compliance with Applicable Laws. Except as
--------------------------------
disclosed in the Filed Parent SEC Documents or in the Parent
Disclosure Letter, Parent is in compliance with all applicable
Laws, including those relating to occupational health and safety
and the environment, except for instances of noncompliance that,
individually and in the aggregate, have not had and would not
reasonably be expected to have a Parent Material Adverse Effect.
Except as set forth in the Filed Parent SEC Documents or in the
Parent Disclosure Letter, Parent has not received any written
communication during the past two years from a Governmental
Entity that alleges that Parent is not in compliance in any
material respect with any applicable Law. The Parent is in
compliance with all effective requirements of the Xxxxxxxx-Xxxxx
Act of 2002, as amended, and the rules and regulations
thereunder, that are applicable to it, except where such
noncompliance could not have or reasonably be expected to result
in a Parent Material Adverse Effect. This Section 4.13 does not
------------
relate to matters with respect to Taxes, which are the subject of
Section 4.09.
------------
SECTION 4.14. Contracts. Except as disclosed in the Parent
---------
Filed SEC Documents, there are no Contracts that are material to
the business, properties, assets, condition (financial or
otherwise), results of operations or prospects of the Parent
taken as a whole. Parent is not in violation of or in default
under (nor does there exist any condition which upon the passage
of time or the giving of notice would cause such a violation of
or default under) any Contract to which it is a party or by which
it or any of its properties or assets is bound, except for
violations or defaults that would not, individually or in the
aggregate, reasonably be expected to result in a Parent Material
Adverse Effect.
SECTION 4.15. Title to Properties. Parent owns no real
--------------------
property. Parent has good, valid leasehold interests in, all of
its properties and assets used in the conduct of its businesses.
All such assets and properties, are free and clear of all Liens
other than Liens that, in the aggregate, do not and will not
materially interfere with the ability of the Parent to conduct
business as currently conducted. Parent has complied in all
material respects with the terms of all material leases to which
it is a party and under which it is in occupancy, and all such
leases are in full force and effect. Parent enjoys peaceful and
undisturbed possession under all such material leases.
SECTION 4.17. Labor Matters. There are no collective
--------------
bargaining or other labor union agreements to which the Parent is
a party or by which it is bound. No material labor dispute exists
or, to the knowledge of the Parent, is imminent with respect to
any of the employees of the Parent.
SECTION 4.19. Transactions With Affiliates and Employees.
--------------------------------------------
Except as set forth in the Filed Parent SEC Documents, none of
the officers or directors of the Parent and, to the knowledge of
the Parent, none of the employees of the Parent is presently a
party to any transaction with the Parent (other than for services
as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of
services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from
any officer, director or such employee or, to the knowledge of
the Parent, any entity in which any officer, director, or any
such employee has a substantial interest or is an officer,
director, trustee or partner.
SECTION 4.20. Internal Accounting Controls. The Parent
------------------------------
maintains a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed
in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain asset
accountability, (iii) access to assets is permitted only in
accordance with management's general or specific authorization,
and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate
action is taken with respect to any differences. The Parent has
established disclosure controls and procedures for the Parent and
designed such disclosure controls and procedures to ensure that
material information relating to the Parent is made known to the
officers by others within those entities. The Parent's officers
have evaluated the effectiveness of the Parent's controls and
procedures. Since December 31, 2006, there have been no
significant changes in the Parent's internal controls or, to the
Parent's knowledge, in other factors that could significantly
affect the Parent's internal controls.
SECTION 4.23. No Additional Agreements. The Parent does not
------------------------
have any agreement or understanding with the shareholders with
respect to the transactions contemplated by this Agreement other
than as specified in this Agreement.
SECTION 4.24. Investment Company. The Parent is not, and is
------------------
not an affiliate of, and immediately following the Closing will
not have become, an "investment company" within the meaning of
the Investment Company Act of 1940, as amended.
SECTION 4.25. Disclosure. The Parent confirms that neither
----------
it nor any person acting on its behalf has provided any
Stockholder or its respective agents or counsel with any
information that the Parent believes constitutes material, non-
public information except insofar as the existence and terms of
the proposed transactions hereunder may constitute such
information and except for information that will be disclosed by
the Parent under a current report on Form 8-K filed within one
business days after the Closing. The Parent understands and
confirms that the Stockholders will rely on the foregoing
representations and covenants in effecting transactions in
securities of the Parent. All disclosure provided to the
Stockholders regarding the Parent, its business and the
transactions contemplated hereby, furnished by or on behalf of
the Parent (including the Parent's representations and warranties
set forth in this Agreement) are true and correct and do not
contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were
made, not misleading.
SECTION 4.26. Certain Registration Matters. Except as
------------------------------
specified in the Filed Parent SEC Documents, the Parent has not
granted or agreed to grant to any person any rights (including
"piggy-back" registration rights) to have any securities of the
Parent registered with the SEC or any other governmental
authority that have not been satisfied.
SECTION 4.28. No Undisclosed Events, Liabilities,
-----------------------------------------
Developments or Circumstances. No event, liability, development
------------------------------
or circumstance has occurred or exists, or is contemplated to
occur with respect to the Parent, its subsidiaries or their
respective business, properties, prospects, operations or
financial condition, that would be required to be disclosed by
the Parent under applicable securities laws on a registration
statement on Form S-1 filed with the SEC relating to an issuance
and sale by the Parent of its Common Stock and which has not been
publicly announced.
SECTION 4.29. Foreign Corrupt Practices. Neither the Parent,
-------------------------
nor any of its subsidiaries, nor, to the Parent's knowledge, any
director, officer, agent, employee or other person acting on
behalf of the Parent or any of its subsidiaries has, in the
course of its actions for, or on behalf of, the Parent (i) used
any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expenses relating to political
activity; (ii) made any direct or indirect unlawful payment to
any foreign or domestic government official or employee from
corporate funds; (iii) violated or is in violation of any
provision of the U.S. Foreign Corrupt Practices Act of 1977, as
amended; or (iv) made any unlawful bribe, rebate, payoff,
influence payment, kickback or other unlawful payment to any
foreign or domestic government official or employee.
ARTICLE V
Deliveries
----------
SECTION 5.01. Deliveries of the Stockholders.
------------------------------
(a) Concurrently herewith each Stockholder is
delivering to the Parent this Agreement executed by the
Stockholder.
(b) At or prior to the Closing, each Stockholder
shall deliver to the Parent:
(i) certificates representing its Company Stock;
and
(ii) duly executed stock powers for transfer by
the Shareholder of its share capital to the Parent.
SECTION 5.02. Deliveries of the Parent.
------------------------
(a) Concurrently herewith, the Parent is delivering:
(i) to each Shareholder and to the Company, a copy
of this Agreement executed by Parent;
(ii) to the Company, a certificate from the Parent,
signed by its Secretary or Assistant Secretary certifying that
the attached copies of the Parent Charter, and resolutions of the
Board of Directors of the Parent approving the Agreement and the
Transactions, are all true, complete and correct and remain in
full force and effect;
(b) At or prior to the Closing, the Parent shall
deliver:
(i) to the Company, a letter of resignation of
Xxxxxx Xxxxxxx from all offices he holds with the Parent
effective upon the Closing and from his position as a director of
the Parent that will become effective upon the 10th day following
the mailing by the Parent to its shareholders the 14f-1 Notice;
(ii) to the Company, evidence of the election of
Xxxxx XxXxxx, as a director and as Executive Chairman of the
Parent effective upon the Closing; and
(iii) to the Company, such pay-off letters and
releases relating to liabilities as the Company shall request and
such pay-off letters and releases shall be in form and substance
satisfactory to the Company.
(c) At or within 5 business days following the
Closing, the Parent shall deliver:
(i) to each Stockholder, certificates representing
the new shares of Parent Ordinary Shares issued to such
Stockholder as set forth on Exhibit A.
---------
SECTION 5.03. Deliveries of the Company.
-------------------------
(a) Concurrently herewith, the Company is
delivering to the Parent:
(i) this Agreement executed by Company; and
(ii) a certificate from the Company, signed by its
authorized officer certifying that the attached copies of the
Company Constituent Instruments and resolutions of the Board of
Directors of the Company approving the Agreement and the
Transactions are all true, complete and correct and remain in
full force and effect.
(b) At or prior to the Closing, the Company shall
deliver:
(i) To the Parent, a form of Current Report on
Form 8-K, which is substantially in the form to be filed, which
includes the financial statements and pro forma financial
statements required by the Form 8-K for a reverse merger - shell
transaction, together with a signed audit report of the
independent accountants for the Company.
ARTICLE VI
Conditions to Closing
---------------------
SECTION 6.01. Stockholder and Company Conditions Precedent.
---------------------------------------------
The obligations of the Stockholders and the Company to enter into
and complete the Closing is subject, at the option of the
Stockholders and the Company, to the fulfillment on or prior to
the Closing Date of the following conditions.
(a) Representations and Covenants. The
-----------------------------------
representations and warranties of the Parent contained in this
Agreement shall be true in all material respects on and as of the
Closing Date with the same force and effect as though made on and
as of the Closing Date. The Parent shall have performed and
complied in all material respects with all covenants and
agreements required by this Agreement to be performed or complied
with by the Parent on or prior to the Closing Date. The Parent
shall have delivered to the Stockholders and the Company, a
certificate, dated the Closing Date, to the foregoing effect.
(b) Litigation. No action, suit or proceeding
----------
shall have been instituted before any court or governmental or
regulatory body or instituted or threatened by any governmental
or regulatory body to restrain, modify or prevent the carrying
out of the Transactions or to seek damages or a discovery order
in connection with such Transactions, or which has or may have,
in the reasonable opinion of the Company or any Stockholders, a
materially adverse effect on the assets, properties, business,
operations or condition (financial or otherwise) of the Parent or
the Company.
(c) No Material Adverse Change. There shall not
---------------------------
have been any occurrence, event, incident, action, failure to
act, or transaction since December 31, 2006 which has had or is
reasonably likely to cause a Parent Material Adverse Effect.
(d) Post-Closing Capitalization. At, and
-----------------------------
immediately after, the Closing, the authorized capitalization,
and the number of issued and outstanding shares of the share
capital of the Company and the Parent, on a fully-diluted basis,
as indicated on a schedule to be delivered by the Parties at or
prior to the Closing, shall be acceptable to the Stockholders in
their sole and absolute discretion.
(e) SEC Reports. The Parent shall have filed all
------------
reports and other documents required to be filed by Parent under
the U.S. federal securities laws through the Closing Date.
(f) Deliveries. The deliveries specified in
----------
Section 5.02 shall have been made by the Parent.
(i) Satisfactory Completion of Due Diligence. The
----------------------------------------
Company and the Shareholders shall have completed their legal,
accounting and business due diligence of the Parent and the
results thereof shall be satisfactory to the Company and the
Shareholders in their sole and absolute discretion.
(j) Delivery of Audit Report and Financial
---------------------------------------------
Statements. The Company shall have completed the Company
----------
Financial Statements and shall have received an audit report from
an independent audit firm that is registered with the Public
Company Accounting Oversight Board relating to the fiscal years
ended December 2006.
(k) Completion of Financing. The Financing (as
-------------------------
defined in Section 7.12 below) shall have been completed or shall
------------
be completed simultaneously with the Closing.
(m) Agreement as to Exchange Ratio. The Company
-------------------------------
and the Stockholders shall have agreed with the Parent regarding
the exchange ratio of shares of Parent Ordinary Shares for Shares
of Company Stock and each of the Parties shall have mutually
agreed on the completion of Exhibit A hereto.
SECTION 6.02. Parent Conditions Precedent. The obligations
---------------------------
of the Parent to enter into and complete the Closing is subject,
at the option of the Parent, to the fulfillment on or prior to
the Closing Date of the following conditions, any one or more of
which may be waived by the Parent in writing.
(a) Representations and Covenants. The
-----------------------------------
representations and warranties of the Stockholders and the
Company contained in this Agreement shall be true in all material
respects on and as of the Closing Date with the same force and
effect as though made on and as of the Closing Date. The
Stockholders and the Company shall have performed and complied in
all material respects with all covenants and agreements required
by this Agreement to be performed or complied with by the
Stockholders and the Company on or prior to the Closing Date. The
Company shall have delivered to the Parent, if requested, a
certificate, dated the Closing Date, to the foregoing effect.
(b) Litigation. No action, suit or proceeding
----------
shall have been instituted before any court or governmental or
regulatory body or instituted or threatened by any governmental
or regulatory body to restrain, modify or prevent the carrying
out of the Transactions or to seek damages or a discovery order
in connection with such Transactions, or which has or may have,
in the reasonable opinion of the Parent, a materially adverse
effect on the assets, properties, business, operations or
condition (financial or otherwise) of the Parent.
(c) No Material Adverse Change. There shall not
---------------------------
have been any occurrence, event, incident, action, failure to
act, or transaction since December 31, 2006 which has had or is
reasonably likely to cause a Company Material Adverse Effect.
(d) Deliveries. The deliveries specified in
----------
Section 5.01 and Section 5.03 shall have been made by the
Stockholders and the Company, respectively.
(e) Audited Financial Statements and Form 10
----------------------------------------------
Disclosure. The Company shall have provided the Parent and the
----------
Stockholders with reasonable assurances that the Parent will be
able to comply with its obligation to file a current report on
Form 8-K within one (1) business days following the Closing
containing the requisite audited consolidated financial
statements of the Company and the requisite Form 10-type
disclosure regarding the Company.
(f) Post-Closing Capitalization. At, and
-----------------------------
immediately after, the Closing, the authorized capitalization,
and the number of issued and outstanding shares of the Company
and the Parent, on a fully-diluted basis, as indicated on a
schedule to be delivered by the Parties at or prior to the
Closing, shall be acceptable to the Parent in its sole and
absolute discretion.
(g) Satisfactory Completion of Due Diligence. The
----------------------------------------
Parent shall have completed its legal, accounting and business
due diligence of the Company and the Stockholders and the results
thereof shall be satisfactory to the Parent in its sole and
absolute discretion.
(h) Delivery of Audit Report and Financial
---------------------------------------------
Statements. The Company shall have completed the Company
----------
Financial Statements and shall have received an audit report from
an independent audit firm that is registered with the Public
Company Accounting Oversight Board relating to the fiscal years
ended December 31, 2006 and December 31, 2005. The form and
substance of the Financial Statements shall be satisfactory to
the Parent in its sole and absolute discretion.
(i) Completion of Financing. The Financing (as
-----------------------
defined in Section 7.12 below) shall have been completed or shall
be completed simultaneously with the Closing.
(j) Delivery of Panama Counsel Legal Opinion. The
----------------------------------------
Parent shall have received an opinion from the Company's legal
counsel in the Republic of Panama that is satisfactory to the
Parent and the investors investing in the Financing.
(k) Agreement as to Exchange Ratio. The Company
-------------------------------
and the Stockholders shall have agreed with the Parent regarding
the exchange ratio of shares of Parent Ordinary Shares for Shares
of Company Stock and each of the Parties shall have mutually
agreed on the completion of Exhibit A hereto.
(l) Registration Rights Agreement. The Company
-------------------------------
shall have entered into a registration rights agreement with such
parties as indicated by the Parent and the form and substance of
such registration rights agreement shall be reasonably
satisfactory to the Parent.
ARTICLE VII
Covenants
---------
SECTION 7.07. Filing of 8-K and Press Release. Parent shall
-------------------------------
file, within one business day of the Closing Date, a current
report on Form 8-K and attach as exhibits all relevant agreements
with the SEC disclosing the terms of this Agreement and other
requisite disclosure regarding the Transactions and including the
requisite audited consolidated financial statements of the
Company and the requisite Form 10 disclosure regarding the
Company. In addition, the Parent shall issue a press release
prior to 9:30 a.m. (New York Time) on the business day following
the Closing Date, announcing the closing of the transaction.
SECTION 7.01. Preparation of the 14f-1 Notice; Blue Sky Laws
----------------------------------------------
(a) As soon as possible following the Closing and in
any event, within two business days thereafter, the Company and
Parent shall prepare and file with the SEC the 14f-1 Notice in
connection with the consummation of this Agreement. The Parent
shall cause the 14f-1 Notice to be mailed to the Parent's
shareholders as promptly as practicable thereafter.
(b) Parent shall take any action (other than qualifying
to do business in any jurisdiction in which it is not now so
qualified) required to be taken under any applicable state
securities laws in connection with the issuance of Parent
Ordinary Shares in connection with this Agreement.
SECTION 7.02. Public Announcements. Parent and the Company
--------------------
will consult with each other before issuing, and provide each
other the opportunity to review and comment upon, any press
release or other public statements with respect to the Agreement
and the Transactions and shall not issue any such press release
or make any such public statement prior to such consultation,
except as may be required by applicable Law, court process or by
obligations pursuant to any listing agreement with any national
securities exchange.
SECTION 7.03. Fees and Expenses. All fees and expenses
------------------
incurred in connection with this Agreement shall be paid by the
Party incurring such fees or expenses, whether or not this
Agreement is consummated.
SECTION 7.04. Continued Efforts. Each Party shall use
------------------
commercially reasonable efforts to (a) take all action reasonably
necessary to consummate the Transactions, and (b) take such steps
and do such acts as may be necessary to keep all of its
representations and warranties true and correct as of the Closing
Date with the same effect as if the same had been made, and this
Agreement had been dated, as of the Closing Date.
SECTION 7.05. Conduct of Business. During the period from
-------------------
the date hereof through the Closing Date, Parent and the Company
shall carry on their respective businesses in the ordinary and
usual course consistent with past practice.
SECTION 7.06. Exclusivity. The Parent shall not (i) solicit,
-----------
initiate, or encourage the submission of any proposal or offer
from any person relating to the acquisition of any shares or
other voting securities of the Parent, or any assets of the
Parent (including any acquisition structured as a merger,
consolidation, share exchange or other business combination),
(ii) participate in any discussions or negotiations regarding,
furnish any information with respect to, assist or participate
in, or facilitate in any other manner any effort or attempt by
any person to do or seek any of the foregoing, or (iii) take any
other action that is inconsistent with the Transactions and that
has the effect of avoiding the Closing contemplated hereby. The
Parent shall notify the Company immediately if any person makes
any proposal, offer, inquiry, or contact with respect to any of
the foregoing.
SECTION 7.08. Furnishing of Information. As long as any
-------------------------
Stockholder owns the Shares, the Parent covenants to timely file
(or obtain extensions in respect thereof and file within the
applicable grace period) all reports required to be filed by the
Parent after the date hereof pursuant to the Exchange Act. As
long as any Stockholder owns Shares, if the Parent is not
required to file reports pursuant to such laws, it will prepare
and furnish to the Stockholders and make publicly available in
accordance with Rule 144(c) promulgated by the SEC pursuant to
the Securities Act, such information as is required for the
Stockholder to sell the Shares under Rule 144. The Parent further
covenants that it will take such further action as any holder of
Shares may reasonably request, all to the extent required from
time to time to enable such person to sell the Shares without
registration under the Securities Act within the limitation of
the exemptions provided by Rule 144.
SECTION 7.09. Preparation of Disclosure Letters. The Parties
---------------------------------
acknowledge and agree that (i) neither the Company nor the Parent
has yet delivered the Company Disclosure Letter or the Parent
Disclosure Letter, respectively, and (ii) none of the Company,
the Stockholders nor the Parent has completed its respective due
diligence investigation of the Parent or the Company and the
Stockholders, respectively, nor has any of them been provided
with copies of, nor had an opportunity to review, the items to be
referred to on the Company Disclosure Letter or the Parent
Disclosure Letter. The Company and the Stockholders shall deliver
to the Parent the Company Disclosure Letter and the Parent shall
deliver to the Company and the Stockholders the Parent Disclosure
Letter, including copies of all agreements, and other documents
referred to thereon, in final form within at least 10 business
days prior to the Closing. The Parent, on the one hand, and the
Company and the Stockholders, on the other hand, shall have 10
business days following delivery of the Company Disclosure Letter
and the Parent Disclosure Letter, along with all related
agreements and other documents referred to thereon, respectively,
in which to terminate this Agreement if the Parent or the Company
and the Stockholders, as the case may be, object to any
information contained in such disclosure letters or the contents
of any such agreement or other document and the Parties cannot
agree on mutually satisfactory modifications thereto.
SECTION 7.10. Access. Each Party shall permit
------
representatives of each other Party to have full access to all
premises, properties, personnel, books, records (including Tax
records), contracts, and documents of or pertaining to such
Party.
SECTION 7.11. Preservation of Business. From the date of
------------------------
this Agreement until the Closing Date, each of the Company and
the Parent shall operate only in the ordinary and usual course of
business consistent with past practice (provided, however, that
Parent shall not issue any securities without the prior written
consent of the Company), and shall use reasonable commercial
efforts to (a) preserve intact its respective business
organization, (b) preserve the good will and advantageous
relationships with customers, suppliers, independent contractors,
employees and other Persons material to the operation of its
respective business, and (c) not permit any action or omission
which would cause any of its respective representations or
warranties contained herein to become inaccurate or any of its
respective covenants to be breached in any material respect.
SECTION 7.12. Financing. Parent shall use commercially
---------
reasonable efforts to raise at least $12 million in an equity
financing transaction on terms that are satisfactory to the
Company and the Stockholders (the " Financing "), which Financing
shall be consummated simultaneously with the Closing.
SECTION 7.13 Legal Opinion re: Transfers of Certain Parent
---------------------------------------------
Shares. Any legal opinion required to be rendered in connection
------
with any transfer of the Parent's shares held by La Pergola
Investments Limited, Fountainhead Investments, Inc., Gaha
Ventures, LLC, G4, LLC, Xxxxxxx Xxxxxx and Fountainhead Capital
Partners Limited (including but not limited to shares issuable on
the conversion of the Convertible Note) shall be rendered by
Xxxxxx X. X. Xxxxxx or his duly-appointed designee.
ARTICLE VIII
Miscellaneous
-------------
SECTION 8.01. Notices. All notices, requests, claims,
-------
demands and other communications under this Agreement shall be in
writing and shall be deemed given upon receipt by the Parties at
the following addresses (or at such other address for a Party as
shall be specified by like notice):
If to the Parent, to:
Six Diamond Resorts International
000 Xxxxxx Xxxxx 000
Xxxxxxx, XX 00000
If to the Company, to:
If to Stockholders at the addresses set forth in Exhibit A hereto.
---------
with a copy to:
SECTION 8.02. Amendments; Waivers; No Additional
-----------------------------------------
Consideration. No provision of this Agreement may be waived or
-------------
amended except in a written instrument signed by the Company,
Parent and the Stockholders holding a majority of the Shares. No
waiver of any default with respect to any provision, condition or
requirement of this Agreement shall be deemed to be a continuing
waiver in the future or a waiver of any subsequent default or a
waiver of any other provision, condition or requirement hereof,
nor shall any delay or omission of either Party to exercise any
right hereunder in any manner impair the exercise of any such
right. No consideration shall be offered or paid to any
Stockholder to amend or consent to a waiver or modification of
any provision of any transaction document unless the same
consideration is also offered to all Stockholders who then hold
Shares.
SECTION 8.03. Termination.
-----------
(a) Termination of Agreement. The Parties may terminate
------------------------
this Agreement as provided below:
(i) The Company, the Stockholders and the Parent may
terminate this Agreement by mutual written consent at any time
prior to the Closing;
(ii) The Parent may terminate this Agreement by
giving written notice to the Company and the Stockholders at any
time prior to the Closing (A) in the event the Company or any of
the Stockholders have breached any material representation,
warranty, or covenant contained in this Agreement in any material
respect, the Parent has notified the Company and/or the
Stockholders of the breach, and the breach has continued without
cure for a period of twenty days after the notice of breach, or
(B) if the Closing shall not have occurred on or before March
16, 2007 by reason of the failure of any condition precedent
under Section 6.02 hereof (unless the failure results primarily
from the Parent itself breaching any representation, warranty, or
covenant contained in this Agreement); and
(iii) The Company may terminate this Agreement by
giving written notice to the Parent at any time prior to the
Closing (A) in the event the Parent has breached any material
representation, warranty, or covenant contained in this Agreement
in any material respect, the Company has notified the Parent of
the breach, and the breach has continued without cure for a
period of twenty days after the notice of breach or (B) if the
Closing shall not have occurred on or before March 16, 2007, by
reason of the failure of any condition precedent under Section
6.01 hereof (unless the failure results primarily from the
Company or the Stockholders themselves breaching any
representation, warranty, or covenant contained in this
Agreement).
(b) Effect of Termination. If any Party terminates
----------------------
this Agreement pursuant to Section 8.03(a) above, all rights and
obligations of the Parties hereunder shall terminate without any
Liability of any Party to any other Party.
SECTION 8.04. Replacement of Securities. If any certificate
-------------------------
or instrument evidencing any Shares is mutilated, lost, stolen or
destroyed, the Parent shall issue or cause to be issued in
exchange and substitution for and upon cancellation thereof, or
in lieu of and substitution therefor, a new certificate or
instrument, but only upon receipt of evidence reasonably
satisfactory to the Parent of such loss, theft or destruction and
customary and reasonable indemnity, if requested. The applicants
for a new certificate or instrument under such circumstances
shall also pay any reasonable third-party costs associated with
the issuance of such replacement Shares. If a replacement
certificate or instrument evidencing any Shares is requested due
to a mutilation thereof, the Parent may require delivery of such
mutilated certificate or instrument as a condition precedent to
any issuance of a replacement.
SECTION 8.05. Remedies. In addition to being entitled to
--------
exercise all rights provided herein or granted by law, including
recovery of damages, each of the Stockholders, Parent and the
Company will be entitled to specific performance under this
Agreement. The Parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any
breach of obligations described in the foregoing sentence and
hereby agrees to waive in any action for specific performance of
any such obligation the defense that a remedy at law would be
adequate.
SECTION 8.06. Independent Nature of Stockholders'
-----------------------------------------
Obligations and Rights. The obligations of each Stockholder under
----------------------
this Agreement are several and not joint with the obligations of
any other Stockholder, and no Stockholder shall be responsible in
any way for the performance of the obligations of any other
Stockholder under this Agreement. The decision of each
Stockholder to acquire Shares pursuant to this Agreement has been
made by such Stockholder independently of any other Stockholder.
Nothing contained herein, and no action taken by any Stockholder
pursuant hereto, shall be deemed to constitute the Stockholders
as a partnership, an association, a joint venture or any other
kind of entity, or create a presumption that the Stockholders are
in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated herein. Each
Stockholder acknowledges that no other Stockholder has acted as
agent for such Stockholder in connection with making its
investment hereunder and that no Stockholder will be acting as
agent of such Stockholder in connection with monitoring its
investment in the Shares or enforcing its rights under this
Agreement. Each Stockholder shall be entitled to independently
protect and enforce its rights, including without limitation the
rights arising out of this Agreement, and it shall not be
necessary for any other Stockholder to be joined as an additional
party in any proceeding for such purpose. Each of the Company and
Parent acknowledge that each of the Stockholders has been
provided with this same Agreement for the purpose of closing a
transaction with multiple Stockholders and not because it was
required or requested to do so by any Stockholder.
SECTION 8.07. Limitation of Liability. Notwithstanding
-------------------------
anything herein to the contrary, each of the Parent and the
Company acknowledge and agree that the liability of a Stockholder
arising directly or indirectly, under any transaction document of
any and every nature whatsoever shall be satisfied solely out of
the assets of such Stockholder, and that no trustee, officer,
other investment vehicle or any other affiliate of such
Stockholder or any investor, shareholder or holder of shares of
beneficial interest of such Stockholder shall be personally
liable for any liabilities of such Stockholder.
SECTION 8.08. Interpretation. When a reference is made in
--------------
this Agreement to a Section, such reference shall be to a Section
of this Agreement unless otherwise indicated. Whenever the words
"include", "includes" or "including" are used in this Agreement,
they shall be deemed to be followed by the words "without
limitation".
SECTION 8.09. Severability. If any term or other provision
------------
of this Agreement is invalid, illegal or incapable of being
enforced by any rule or Law, or public policy, all other
conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal
substance of the Transactions contemplated hereby is not affected
in any manner materially adverse to any Party. Upon such
determination that any term or other provision is invalid,
illegal or incapable of being enforced, the Parties shall
negotiate in good faith to modify this Agreement so as to effect
the original intent of the Parties as closely as possible in an
acceptable manner to the end that Transactions contemplated
hereby are fulfilled to the extent possible.
SECTION 8.10. Counterparts; Facsimile Execution. This
-----------------------------------
Agreement may be executed in one or more counterparts, all of
which shall be considered one and the same agreement and shall
become effective when one or more counterparts have been signed
by each of the Parties and delivered to the other Parties.
Facsimile execution and delivery of this Agreement is legal,
valid and binding for all purposes.
SECTION 8.11. Entire Agreement; Third Party Beneficiaries.
--------------------------------------------
This Agreement, taken together with the Company Disclosure Letter
and the Parent Disclosure Letter, (a) constitute the entire
agreement, and supersede all prior agreements and understandings,
both written and oral, among the Parties with respect to the
Transactions and (b) are not intended to confer upon any person
other than the Parties any rights or remedies.
SECTION 8.12. Governing Law. This Agreement shall be
--------------
governed by, and construed in accordance with, the laws of the
State of New York, regardless of the laws that might otherwise
govern under applicable principles of conflicts of laws thereof,
except to the extent the laws of Nevada are mandatorily
applicable to the Transactions.
SECTION 8.13. Assignment. Neither this Agreement nor any of
----------
the rights, interests or obligations under this Agreement shall
be assigned, in whole or in part, by operation of law or
otherwise by any of the Parties without the prior written consent
of the other Parties. Any purported assignment without such
consent shall be void. Subject to the preceding sentences, this
Agreement will be binding upon, inure to the benefit of, and be
enforceable by, the Parties and their respective successors and
assigns.
[Signature Page Follows]
The Parties hereto have executed and delivered this Share
Exchange Agreement as of the date first above written.
The Parent:
SIX DIAMOND RESORTS INTERNATIONAL
By:
__________________________________
Name: Xxxxxx X. Xxxxxxxx
Title:
The Company:
SIX DIAMOND RESORTS INTERNATIONAL, S.A.
By:
__________________________________
Name: Xxxxx Xxxx
Title: Executive Chairman
[Stockholder Share Exchange Agreement Signature Pages Follow]
[Signature Page to Share Exchange Agreement]
The undersigned Stockholder hereby executes this Share Exchange
Agreement as of the date first above written.
For Individuals:
________________________________
________________________________
Print Name Above
Sign Name Above
[Signature Page to Share Exchange Agreement]
For Entities:
By:
_________________________
Name:
Title:
By:
_________________________
Name:
Title:
By:
____________________________
Name:
Title:
By:
_____________________________
Name:
Title:
[Signature Page to Share Exchange Agreement]
