Exhibit 4.2
ASSET PURCHASE AND SHARE ISSUANCE AGREEMENT
by and among
NEW WORLD BATTERIES INC.
("Acquiror")
a British Columbia Canadian Corporation
and
▇▇▇▇▇▇▇ FOOD GROUP INC.
("Target")
a Delaware US Corporation
effective September 26, 2006
THIS AGREEMENT is made and entered into by and among Acquiror with its
principal place of business located at ▇▇▇▇▇-▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ (e-mail: ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇@▇▇▇▇.▇▇▇, fax:
▇▇▇-▇▇▇-▇▇▇▇)("Acquiror"); and Target with its principal place of business at
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (e-mail:
▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, fax: ▇▇▇-▇▇▇-▇▇▇▇) ("Target").
Premises
A. This Agreement provides for (i) the acquisition by Acquiror by transfer
to a wholly owned subsidiary thereof to be formed for such purpose (the "Sub")
of certain of the Assets of Target as more particularly set forth in the "Target
Asset Schedule" as attached to and made a part hereof, whereby such of Target's
assets and the business of Target as presently situated which utilizes such
assets shall effectively become the assets and business of Acquiror through
ownership of Sub, and in connection therewith (ii) the issuance of an amount of
shares (the "Acquiror Common Shares") equal to ninety nine and one half (99.5%)
percent of the fully diluted outstanding shares of Common Stock of Acquiror, and
Preferred Stock ("Acquiror Preferred Shares") including terms as further set
forth in this Agreement (Acquiror Common Shares and Acquiror Preferred Shares
together referred to a "Acquiror Shares"), to Target, its designated assignees
and/or as Target shall otherwise direct, to be further distributed, if at all,
as Target shall choose, this Agreement not being conditioned on any further
distribution of such securities.
B. Management of Target and Acquiror have determined, subject to the terms
and conditions set forth in this Agreement, that the transaction contemplated
hereby is desirable and in the best interests of their stockholders,
respectively. This Agreement is being entered into for the purpose of setting
forth the terms and conditions of the proposed acquisition.
Agreement
NOW, THEREFORE, on the stated premises and for and in consideration of and
compliance with the mutual covenants and agreements hereinafter set forth and
the mutual benefits to the parties to be derived here from, it is hereby agreed
as follows:
ARTICLE I. REPRESENTATIONS, COVENANTS AND WARRANTIES OF ACQUIROR
As an inducement to and to obtain the reliance of Target, Acquiror
represents and warrants as follows:
Section 1.1. Organization. Acquiror is a corporation duly organized,
validly existing, and in good standing under the laws of British Columbia and
Canada as applicable and has the corporate power and is duly authorized,
qualified, franchised and licensed under all applicable laws, regulations,
ordinances and orders of public authorities as applicable in all jurisdictions
wherein Acquiror exists and/or is registered, owns assets and/or operates,
including both United States and Canada, to own all of its properties and assets
and to carry on its business in all material respects as it is now being
conducted, including qualification to do business as a foreign corporation in
the jurisdiction in which the character and location of the assets owned by it
or the nature of the business transacted by it requires qualification. Complete
and correct copies of the articles of incorporation, bylaws and amendments
thereto as in effect on the date hereof for Acquiror shall be presented to
Target for their review. The execution and delivery of this Agreement does not
and the consummation of the transactions contemplated by this Agreement in
accordance with the terms hereof will not violate any provision of Acquiror's
articles of incorporation or bylaws. Acquiror has full power, authority and
legal right and has taken all action required by all applicable law, its
articles of incorporation, its bylaws or otherwise to authorize the execution
and delivery of this Agreement.
Section 1.2. Capitalization. The authorized capitalization of Acquiror
consists of four classes (Class A, B, C, and D) of common stock authorized in an
unlimited amount for issuance, with Class A and C being without par value and
Class B and D with $.01 par value, of which total stock 8,575,173 shares of
Class A Common Stock is the only stock issued and outstanding at the date of
this Agreement, and there are presently no Preferred Shares. Acquiror is
presently a 1934 US Securities Exchange Act as amended ("Exchange Act")
reporting company registered pursuant to Section 12(g) of such Act and filing as
a Foreign Private Issuer as such term is defined for application of such Act and
the US Securities Act of 1933 as amended ("Securities Act") , and has filed all
necessary reports, quarterly, annual and special with the Securities and
Exchange Commission of the United States and as is required under applicable
Canadian law, on a timely basis as required.
All issued and outstanding shares are and the Acquiror Shares, when issued
will be,legally issued, fully paid and non-assessable and not issued in
violation of the preemptive or other rights of any person and there are no
restrictions or preconditions thereon other than applicable US Securities and
Exchange Commission registration exemption requirements for the issuance of
additional securities of Acqurior as contemplated and provided for in this
Agreement. None of the Acquiror's securities are or have ever been listed on or
traded on any established trading market and there has never been any trading
market created for any of the securities of Acquiror. Acquiror has warrants or
options authorized or issued only as stated in its latest SEC reports on Form
20-F, and no debt convertible into any of Acquiror's securities. Acquiror has
filed with the US Securities and Exchange Commission both an annual report and a
registration of its securities both on Form 20-F both of which filings are the
latest filings by Acquiror with the SEC and all information therein is correct
without material change as of the date of this Agreement.
Section 1.3. Subsidiaries. Acquiror has no subsidiaries but is aware that
consummation of the Transactions provided for in this Agreement require the
formation of Sub as referenced at the outset and in the Preambles to this
Agreement, except as may otherwise be advised by Target in writing.
Section 1.4. Tax Matters: Books and Records.
(a) The books and records, financial and others, of Acquiror as provided to
Target in furtherance of this Agreement are in all material respects complete
and correct and have been maintained in accordance with good business accounting
practices and information regarding the financial status of the Acquiror as set
forth therein and the financial status of Acquiror in general is auditable
compatible with US GAAP requirements; and
(b) Acquiror has no liabilities with respect to the payment of any country,
federal, state, county, or local taxes (including any deficiencies, interest or
penalties).
(c) Acquiror currently has no outstanding liabilities.
Section 1.5. Litigation and Proceedings. There are no actions, suits,
proceedings or investigations pending or threatened by or against or affecting
Acquiror or its properties, at law or in equity, before any court or other
governmental agency or instrumentality, domestic or foreign or before any
arbitrator of any kind that would have a material adverse affect on the
business, operations, financial condition or income of Acquiror and/or material
enough to be required to be disclosed in any regulatory filings. Acquiror is not
in default with respect to any judgment, order, writ, injunction, decree, award,
rule or regulation of any court, arbitrator or governmental agency or
instrumentality or of any circumstances which, after reasonable investigation,
would result in the discovery of such a default.
Section 1.6. Material Contract Defaults. Acquiror is not in default in any
material respect under the terms of any outstanding contract, agreement, lease
or other commitment which is material to the business, operations, properties,
assets or condition of Acquiror, and there is no event of default in any
material respect under any such contract, agreement, lease or other commitment
in respect of which Acquiror has not taken adequate steps to prevent such a
default from occurring.
Section 1.7. Information. The information concerning Acquiror as set forth
in this Agreement and in the attached Schedules and in all latest SEC reporting
currently on file is complete and accurate in all material respects and does not
contain any untrue statement of a material fact or omit to state a material fact
required to make the statements made in light of the circumstances under which
they were made, not misleading. Acquiror's filings with the SEC are current
complete and accurate in all material respects and do not contain any untrue
statement of a material fact or omit to state a material fact required to make
the statements made in light of the circumstances under which they were made,
not misleading.
Section 1.8. Title and Related Matters. Acquiror has good and marketable
title to and is the sole and exclusive owner of all of its properties,
inventory, interest in properties and assets, real and personal and such are
only as disclosed in its latest, as of December 31, 2005, SEC reports on Form
20-F, and such assets are free and clear of all liens, pledges, charges or
encumbrances which, because Acquiror's business is presently limited in scope of
operations, may be transferred without adversely affecting the balance of the
Acquiror's existence and operation. Acquiror owns and has authority to own its
assets (including at present any after acquired property) free and clear of any
liens, claims, encumbrances, royalty interests or other restrictions or
limitations of any nature whatsoever, including all procedures, techniques,
marketing plans, business plans, methods of management or other information
utilized in connection with Acquiror's business and other assets. No third party
has any right to, and Acquiror has not received any notice of infringement of or
conflict with asserted rights of others with respect to any product, technology,
data, trade secrets, know-how, proprietary techniques, trademarks, service
marks, trade names or copyrights which, singly and in the aggregate, if the
subject of an unfavorable decision ruling or finding, would have a materially
adverse affect on the business, operations, financial condition and/or income of
Acquiror or any material portion of its properties, assets and/or rights,
including after acquired property.
Section 1.9. Contracts On the closing date:
(a) There are no material contracts, agreements franchises, license
agreements, or other commitments to which Acquiror is a party or by which it or
any of its properties are bound except for the assignment of patents as
discussed in its as of 12/31/05 Form 20-F annual report filing, which patent
assignment is cancelable within the discretion of Acquiror without any adverse
affect on Acquiror's existence and/or remaining operations:
(b) Acquiror is not a party to any contract, agreement, commitment or
instrument or subject to any charter or other corporate restriction or any
judgment, order, writ, injunction, decree or award which materially and
adversely affects, or in the future may (as far as Acquiror can now foresee)
materially and adversely affect, the business, operations, properties, assets or
conditions of Acquiror; and
(c) Acquiror s not a party to any material oral or written: (i) contract
for the employment of any officer or employee; (ii) profit sharing, bonus,
deferred compensation, stock option, severance pay, pension benefit or
retirement plan, agreement or arrangement covered by Title IV of the Employee
Retirement Income Security Act, as amended or otherwise except for that stated
option plan disclosed in Acquiror's as of 12/31/05 annual SEC report on Form
20-F which stock option entitlements, if any, are cancelable by the recipient;
(iii) agreement, contract or indenture relating to the borrowing of money; (iv)
guaranty of any obligation for the borrowing of money or otherwise, (v)
employment, consulting or other similar contract (vi) collective bargaining
agreement; and (vii) contract, agreement or other commitment to disburse any of
its assets to any third party including but not limited to its shareholders,
officers and directors.
Section 1.10. Compliance With Laws and Regulations. To the best of
Acquiror's knowledge and belief, Acquiror has complied with all applicable
statutes and regulations of any applicable national, federal, state, province,
or other governmental entity or agency thereof in the US, Canada and/or any
other applicable jurisdiction, except to the extent that noncompliance would not
materially and adversely affect the existence, business, operations, properties,
assets or condition of Acquiror and of its securities or would not result in
Acquiror incurring material liability.
Section 1.11. Approval of Agreement. The directors of Acquiror have
authorized the execution and delivery of the Agreement and have approved the
transactions contemplated hereby.
Section 1.12. Material Transactions or Affiliations. There are no material
contracts or agreements of arrangement between Acquiror and any person who was
at the time of such contract, agreement or arrangement or still is an officer,
director or person owning of record, or known to beneficially own five percent
(5%) or more of the issued and outstanding Common Shares of Acquiror, and which
agreement, contract and/or arrangement is to be performed in whole or in part
after the date hereof. Acquiror has no commitment, whether written or oral, to
lend any funds to, borrow any money from or enter into material transactions
with any such affiliated person.
Section 1.13. No Conflict With Other Instruments. The execution of this
Agreement and the consummation of the transactions contemplated by this
Agreement will not result in the breach of any term or provision of, or
constitute an event of default under, any material indenture, mortgage, deed of
trust or other material contract, agreement or instrument to which Acquiror is a
party or to which any of its properties or operations are subject.
Section 1.14. Governmental Authorizations. Acquiror has all licenses,
franchises, permits or other governmental authorizations legally required to
enable it to conduct its business in all material respects as conducted on the
date hereof. Except for compliance with federal and state securities and
corporation laws , no authorization, approval, consent or order of, or
registration, declaration or filing with, any court or other governmental body
is required in connection with the execution and delivery by Acquiror of this
Agreement and the consummation of the transactions contemplated hereby.
Section 1.15. Exchange Act Registration. As of the date hereof, (a) the
Acquiror's Common Stock is registered under Section 12(g) of the Exchange Act,
and (b) Acquiror is in full compliance with all reporting requirements of the
Exchange Act.
Section 1.16. SEC Documents and Financial Statements. Acquiror has filed on
a timely basis all documents required to be filed by it with the SEC since its
inception (all such documents are referred to as the "Acquiror SEC Documents").
Complete and correct copies of the Acquiror SEC Documents are on file on the SEC
▇▇▇▇▇ system and have been made available to Target. As of their respective
dates, or if amended as of the date of the last such amendment, the Acquiror SEC
Documents comply in all material respects with the requirements of the
Securities Act and the Exchange Act, as the case may be, and none of the
Acquiror SEC Documents when filed and as of the date thereof contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Complete and accurate
copies of the audited consolidated balance sheet, consolidated statements of
operations, consolidated statements of stockholders' equity and consolidated
statements of cash flows (together with any supplementary information thereto
referenced to herein as "The Acquiror Financial Statements") of Acquiror are to
be provided to Target. The Acquiror Financial Statements do and will when
presented fairly present, in all material respects, the consolidated financial
position of Acquiror, as of and for the respective dates thereof, and the
consolidated results of its operations and its consolidated cash flows for the
respective periods then ended (subject, in the case of any Acquiror interim
financial information, to normal year-end audit adjustments and to any other
adjustments described therein) in conformity with GAAP during the periods
involved (except as may be indicated therein or in the notes thereto) and since
the date thereof Acquiror has not made any change in the accounting practices or
policies applied in the preparation of its financial statements, except as may
be required by GAAP. The current Form 20-F on file for the Acquiror in
compliance with the Exchange Act accurately describes the status of Acquiror,
its assets, its business, its commitments, its outstanding securities, and its
financial status.
Section 1.17. Filings. Acquiror covenants that it will prepare and file all
disclosure required by the Exchange Act in a timely manner as presented therein,
including but not limited to the filing of a Form 20-F (or such other form as
proscribed by such Act) within the time periods therein provided and with
provision of and having combined the audited financial statements of Acquiror
and Target and Sub as required to be presented in connection with the
Transaction made the subject of this Agreement and consummation of same.
Section 1.18. Employment Matters. Acquiror (i) is in compliance with all
applicable foreign, federal, state and local laws, rules and regulations
respecting employment, employment practices, terms and conditions of employment
and wages and hours, in each case, with respect to Employees; (ii) has withheld
and reported all amounts required by law or by agreement to be withheld and
reported with respect wages, salaries and other payments to Employees; (iii) is
not liable for any arrears of wages or any taxes or any penalty for failure to
comply with any of the foregoing; and (iv) is not liable for any payment to any
trust or other fund governed by or maintained by or on behalf of any
governmental authority, with respect to unemployment compensation benefits,
social security or other benefits or obligations for Employees. There are no
pending or, to the knowledge of the Company or the Founders, threatened or
reasonably anticipated claims or actions against the Company under any worker's
compensation policy or long-term disability policy. There are no employment
contract and/or commitments by Acquiror for employment which will survive
Closing.
Section 1.19. No Interference or Conflict. To the knowledge of the
Acquiror, no shareholder, officer, employee or consultant of Acquiror is
obligated under any contract or agreement or subject to any judgment, decree or
order of any court or administrative agency, that would interfere with efforts
to promote the interests of the Acquiror, Sub and/or Target or that would
interfere with the Acquiror, Sub and/or Target's business. Neither the execution
nor delivery of this Agreement, nor the carrying on the Acquiror's business as
presently conducted or presently proposed to be conducted nor any activity of
such officers, directors, employees or consultants in connection with the
carrying on of the Acquiror's business as presently conducted or presently
proposed to be conducted by the Acquiror, will, to the Acquiror's knowledge,
conflict with or result in a breach of the terms, conditions or provisions of,
or constitute a default under, any contract or agreement under which any of such
officers, directors, employees or consultants is so bound.
ARTICLE II. REPRESENTATIONS, COVENANTS AND WARRANTIES OF TARGET
As an inducement to, and to obtain the reliance of Acquiror, Target
represents and warrants to the best of its knowledge and using its best efforts
as follows:
Section 2.1. Organization. Target is a corporation duly organized, validly
existing and in good standing under the laws of Delaware and has the corporate
power and is duly authorized, qualified, franchised and licensed under all
applicable laws, regulations, ordinances and orders of public authorities to own
all of its properties and assets and to carry on its business in all material
respects as it is now being conducted, including qualification to do business as
a foreign entity in the country or states in which the character and location of
the assets owned by it or the nature of the business transacted by it requires
qualification. Included in the attached Schedules are complete and correct
copies of the articles of incorporation, bylaws and amendments thereto as in
effect on the date hereof. The execution and delivery of this Agreement does not
and the consummation of the transactions contemplated by this Agreement in
accordance with the terms hereof will not, violate any provision of Target's
certificate of incorporation or bylaws. Target has full power, authority and
legal right and has taken all action required by law, its articles of
incorporation, bylaws or otherwise to authorize the execution and delivery of
this Agreement.
Section 2.2. Subsidiaries. Target has the subsidiaries as stated in its
Subsidiary Schedule the transfer of which is made the subject of this Agreement,
the stock interests in which subsidiaries are freely transferable as are
included as part of the Transfer Assets.
Section 2.3. Tax Matters; Books & Records
(a) The books and records, financial and others, of Target as are being
made available for review by Acquiror regarding the assets being transferred as
made the subject of this Agreement are in all material respects complete and
correct and have been maintained in accordance with good business accounting
practices; and
(b) Target has no liabilities with respect to the payment of any country,
federal, state, county, local or other taxes (including any deficiencies,
interest or penalties) the existence of which may adversely affect the value of
or transferability of the Assets Transfer.
(c) Target shall remain responsible for all debts incurred prior to the
closing which are not made the subject of any liabilities being assumed in the
transfer made the subject of this Agreement.
Section 2.4. Information. The information concerning Target as set forth in
this Agreement and in the attached Schedules is complete and accurate in all
material respects and does not contain any untrue statement of a material fact
or omit to state a material fact required to make the statements made, in light
of the circumstances under which they were made, not misleading.
Section 2.5. Title and Related Matters. Target has good and marketable
title to and is the sole and exclusive owner of all of its properties,
inventory, interests in properties and assets, real and personal available for
transfer as made the subject of this Agreement (collectively, the "Transfer
Assets") free and clear of all liens, pledges, charges or encumbrances except as
are also being transferred as provided in this Agreement and except as otherwise
stated in appropriate Schedules attached hereto. Except as set forth in the
Schedules attached hereto, Target owns the Transfer Assets free and clear of any
liens, claims, encumbrances, royalty interests or other restrictions or
limitations of any nature whatsoever and shall include as part of the Transfer
Assets all associated procedures, techniques, marketing plans, business plans,
methods of management or other information related to such assets as utilized in
connection with Target's business. Except as set forth in the attached
Schedules, no third party has any right to, and Target has not received any
notice of infringement of or conflict with asserted rights of others with
respect to any product, technology, data, trade secrets, know-how, proprietary
techniques, trademarks, service marks, trade names or copyrights which, singly
or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would have a materially adverse affect on the nature and existence of
the Transfer Assets and related business, operations, financial conditions or
income of Target.
Section 2.6. Litigation and Proceedings. There are no actions, suits or
proceedings pending or threatened by or against or affecting Target, at law or
in equity, before any court or other governmental agency or instrumentality,
domestic or foreign or before any arbitrator of any kind that would have a
material adverse effect on the nature and existence of the Transfer Assets and
related business, operations, financial condition, income or business prospects
of Target. Target does not have any knowledge of any default on its part with
respect to any judgment, order, writ, injunction, decree, award, rule or
regulation of any court, arbitrator or governmental agency or instrumentality.
Section 2.7. Contracts. On the Closing Date:
(a) There are no material contracts, agreements, franchises, license
agreements, or other commitments to which Target is a party or by which it or
any of its properties are bound which will be in default if the Transfer Assets
are transferred or which will prohibit, restrict or otherwise adversely affect
transfer thereof, if the transfer is completed as provided in this Agreement;
and
(b) Target is not a party to any contract, agreement, commitment or
instrument or subject to any charter or other corporate restriction or any
judgment, order, writ, injunction, decree or award which materially and
adversely affects, or in the future may (as far as Target can now foresee)
materially and adversely affect, the nature and existence of the Transfer Assets
and related business, operations, properties, assets or conditions of Target
other than the liabilities secured thereby as listed in the Target Asset
Schedule attached to and made a part of this Agreement.
Section 2.8. No Conflict With Other Instruments. The execution of this
Agreement and the consummation of the transactions contemplated by this
Agreement will not result in the breach of any term or provision of, or
constitute an event of default under, any material indenture, mortgage, deed of
trust or other material contract, agreement or instrument to which Target is a
party or to which any of its properties or operations are subject provided the
transfer is made in the manner provided for in this Agreement.
Section 2.9. Material Contract Defaults. To the best of Target's knowledge
and belief, it is not in default in any material respect under the terms of any
outstanding contract, agreement, lease or other commitment which is material to
the business, operations, properties, assets or condition of Target as is being
transferred as part of the Transfer Assets, and there is no event of default in
any material respect under any such contract, agreement, lease or other
commitment in respect of which Target has not taken adequate steps to prevent
such a default from occurring.
Section 2.10. Governmental Authorizations. To the best of Target's
knowledge, Target has all licenses, franchises, permits and other governmental
authorizations that are legally required to enable it to conduct its business
operations in all material respects as conducted on the date hereof utilizing
the Transfer Assets. Except for compliance with federal and state securities or
corporation laws, no authorization, approval, consent or order of, or
registration, declaration or filing with any court or other governmental body is
required in connection with the execution and delivery by Target of this
Agreement and the transactions contemplated hereby.
Section 2.11. Compliance With Laws and Regulations. To the best of Target's
knowledge and belief, Target has complied with all applicable statutes and
regulations of any federal, state or other governmental entity or agency
thereof, except to the extent that noncompliance would not materially and
adversely affect the business, operations, properties, assets or condition of
Target affiliated with the Transfer Assets or would not result in Target's
incurring any material liability affecting such assets.
Section 2.12. Filings. Target covenants that it will assist Acquiror in the
preparation of all filings required by the Securities Exchange Act in a timely
manner, including but not limited to the filing of a Form 8K (6K or 20-F) within
the time periods provided under the Exchange Act after the execution of this
Agreement and the delivery of the audited financial statements for Target and
Acquiror and the combining thereof sufficient to meet all applicable Exchange
Act reporting criteria.
Section 2.13. Investment Intent. Target is entering into this Agreement for
its own account and not with a view to any distribution of the Acquiror Shares
acquired by it, and it has no present arrangement to sell any of its Acquiror
Shares to or through any Person, provided that this representation shall not be
construed as an undertaking to hold any Acquiror Shares for any minimum or other
specific term, and Target reserves the right to dispose of its Acquiror Shares
at any time in accordance with applicable law.
Section 2.14. Access to Information. Target has received or had access to
all documents, records and other information pertaining to its investment in the
Acquiror Shares that it has requested, including documents filed by Acquiror
under the Exchange Act, and has been given the opportunity to meet or have
telephonic discussions with the Acquiror representatives, to ask questions of
them, to receive answers concerning the terms and conditions of this investment
and to obtain information that Acquiror possesses or can acquire without
unreasonable effort or expense that is necessary to verify the accuracy of the
information provided.
Section 2.15. Manner of Sale. At no time was Target presented with or
solicited by or through any leaflet, public promotional meeting, television
advertisement or any other form of general solicitation or advertising relating
to Acquiror or any investment in the Acquiror Shares.
ARTICLE III.
ASSET TRANSFER , AND STOCK ISSUANCE PROCEDURE AND OTHER CONSIDERATION
Section 3.1. At or prior to Closing Target at its expense and on behalf of
Acquiror shall form a wholly owned subsidiary of Acquiror (the "Sub") into which
Sub at Closing Target, conditioned upon fulfillment by Acquiror of its covenants
made and reliance upon Acquiror's representations made in this Agreement, shall
transfer, by execution of appropriate ▇▇▇▇ of Sale and/or other legally
recognized document sufficient to evidence such transfer and reasonably
acceptable to Acquiror and/or counsel for Acquiror, all of its Transfer Assets
free and clear of all lien interests thereon and other liabilities not
specifically included within the Schedules to or otherwise within the
Agreement.. The Sub, shall be formed as a Delaware domiciled Chapter C
corporation with officers and directors, registered address and agent, and
further entity and business structure, as shall be decided upon and advised
and/or otherwise directed by Target in its sole discretion.
Section 3.2. Issuance of Acquiror Shares. In exchange for transfer by
Target of all of the Transfer Assets to Sub tendered pursuant to Section 3.1 and
Additional Cash Consideration as referenced and provided in Section 3.3 and
fulfillment by Target of its other covenants and reliant upon the truthfulness
of Target representations made in this Agreement, Acquiror shall issue to Target
and/or as Target shall direct, with no contractual restriction on further
distribution by and/or on behalf of Target, a total of Acquiror common shares
(the "Acquiror Common Shares") to be equal to ninety nine and one half (99.5%)
percent of the fully diluted shares of Acquiror after such issuance to be
outstanding, (all outstanding options, warrants, and convertible debt, if any,
of Acquiror shall to the extent not exercised prior to Closing be canceled), and
preferred stock ("Acquiror Preferred Shares") including terms as further set
forth in this Agreement which preferred stock shall be established prior to
Closing (although not to be issued until Closing) (Acquiror Common Shares and
Acquiror Preferred Shares together referred to as "Acquiror Shares"). Part of
the Acquiror Common Shares to be issued as provided herein shall be directly
issued to Finders as entitlement under present Finders' agreements as referenced
and defined hereinafter. Acquiror shall also agree to convert any Target debt
instruments presently convertible into stock of Target into stock of Acquiror of
similar class as that of the Acquiror Shares to the extent and otherwise as
requested by Target, which conversion if and when such shall occur may increase
the amount of the Acquiror Shares and further dilute holdings to remain in the
hands of current Acquiror shareholders. This asset transfer transaction shall be
conditioned upon waiver and/or other cancellation of all outstanding Acquiror
options, warrants and conversion rights of all outstanding debts and other
instruments under which Acquiror stock of all classes and series may be issued,
except as may specifically be authorized by Target in writing prior to Closing
on the asset transfer Transaction. Such Acquiror Shares are and will be
recognized as restricted in accordance with Rule 144 of the Securities Act of
1933.
Section 3.3. Additional Cash Consideration (including Deposit) (Dependant
in Market Listing). Target shall make available for transfer to Acquiror or as
otherwise instructed in writing by a majority of Acquiror's current
Shareholders, $250,000 US (the "Cash Consideration"), payable if and when
Acquiror shall have achieved a US formal securities market listing ("Market
Listing") as hereinafter provided as a condition to consummation of the
transactions made the subject of this Agreement, which shall be considered
achieved upon approval of the submitted Form 15C2-11 for a securities quotation
by the NASD or similar regulatory agency which shall provide for a market maker
to effect a quotation in the securities of Acquiror so that such securities may
be bought or sold in the public marketplace via the "pink sheets" or NASD
Bulletin Board trading system, or other trading exchange agreeable to Target.
$10,000 of such funds shall be placed on deposit (the "Deposit") with
Independent Counsel ▇▇▇▇ ▇. ▇▇▇▇, Esq ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ whose charge therefore shall be paid by Acquiror promptly upon full
execution of this Agreement and such Deposit shall be forfeited to Acquiror if
such Market Listing is not achieved within 120 days of the effective date of
this Agreement, as such time period may be extended by written Agreement of
Target and Acquiror, provided that such lack of timely Market Listing is not
caused by Acquiror and/or any of its affiliates by inefficient cooperation or
otherwise, and/or caused by reasonable determination by Target that sufficient
information is not present and/or cannot be gathered and processed sufficient to
create the Market Listing within the time period provided, in either of which
instance this Agreement may be canceled by Target and in the latter instance
(inability to generate sufficient information for the Market Listing) this
Agreement can be cancelled by either Target or Acquiror. The following events
and time frames are the necessary steps to obtaining a Market Listing (The
Market Listing Goals):
Event Time Frame to Achieve
following Effective Date
1. Effective date of this Agreement 0
2. Form 8-K reporting the Agreement 4
3. Broker-Dealer to file Form 2-11 Identified 10
4. Preparation and Submission of 2-11 and supporting documentation 30
5. Trading Symbol/Listing issued by NASD 120
It is contemplated by Acquiror to utilize the Cash Consideration together
with the balance of any pre-closing cash assets it maintains after expenses to
return capital to its current Shareholders and to such extent Target recognizes
that current cash assets of Acquiror may be disbursed and not be available for
use and/or reporting post-closing and Target hereby waives any entitlement
thereto, but the disbursement and/or other treatment of such Acquiror
pre-closing cash assets in any particular fashion is not made a condition of
this Agreement. It is also recognized by Target that the current patent
assignment assets of Acquiror are also not expected to continue in authority for
use by Acquiror after Closing and such patent rights are not expected therefore
to be assets of Acquiror post Closing but rather the business of Acquiror
post-closing is contemplated to be that as to which the Target Transfer Assets
are currently related, which business is to continue to be operated by Acquiror
either directly or through Sub and/or other controlled subsidiaries. This change
of business perspective is hereby confirmed by Acquiror to be a focus of the
reasoning behind the asset acquisition sought and provided for by way of this
Agreement and thereby Acquiror shall not necessarily be considered as a "Shell
Company" for purposes of existing and reporting as a public entity in accord
with the Exchange Act and/or other applicable securites regulations.
Section 3.4. Other Additional Consideration. Upon the Closing Date, subject
to cancellation as to Acquiror if and when this Agreement may be terminated as
provided herein, Acquiror shall acknowledge, and/or accept assignment of, and
assume with Target and abide by the then current RJP attorney retainer, and
Gallaro consultant contracts as recited in that certain Confidentiality
Affidavit, Non Disclosure and Finders Fee Agreement with such persons as finders
(the "Finders") dated 7/25/06 including the condition of issuance of the stock
of Acquiror to such persons as therein provided, which stock shall be part and
parcel all the 99.5% stock interest in Acquiror to be issued to and/or for the
benefit of Target as provided in this Agreement, and in addition thereto
assumption of such other services contracts as shall be sought assignment by
Target and listed on a Schedule of Assumed Liabilities included with and made a
part of this Agreement. Acquiror shall, upon closing of the transaction provided
for in this Agreement, allow for securities conversion under rights given in all
Target contracts as shall be specifically listed in the appropriate schedule to
this Agreement or otherwise requested by Target in writing to be convertible
into Acquiror restricted common stock (recognizing that issuance on such
conversion may cause further dilution to outstanding stock in Acquiror) and
allow for and facilitate registration of such securities as shall be the
obligation of Target under the terms of such convertible instruments as well as
allowing lien interest in all stock owned by Acquiror in Sub to current Target
creditors having priority lien entitlement in the Target Transfer Assets as
advised by and subject to decision solely in the discretion of Target as to the
identity of to what creditors such provisions shall apply.
Section 3.5. Events Prior to Closing. Upon execution hereof or as soon
thereafter as practical, management of Acquiror and Target shall execute,
acknowledge and deliver (or shall cause to be executed, acknowledged and
delivered) any and all certificates, opinions, financial statements, schedules,
agreements, resolutions, rulings or other instruments required by this Agreement
to be so delivered and/or reasonably necessary to facilitate the transaction
provided for in this Agreement, together with such other items as may be
reasonably requested by the parties hereto and their respective legal counsel in
order to effectuate or evidence the transactions contemplated hereby, subject
only to the conditions to Closing referenced herein.
Section 3.6. Closing. The closing ("Closing") of the transactions
contemplated by this Agreement shall be on or sooner than 120 days from the
effective date hereof ("Closing Date") which Closing shall be considered
complete upon the Acquiror (as consolidated for reporting purposes with Sub)
Class A common stock being listed for trading on a formal US Stock Exchange
and/or over-the-counter market reasonably satisfactory to Target (the "Market
Listing").
Section 3.7. Termination.
(a) This Agreement may be terminated by the board of directors or majority
interest of Shareholders of either Acquiror or Target, respectively, on at least
30 days advance written notice (the "Notice Period") at any time after the
Closing Date if the Market Listing has not been evidenced to exist and does not
transpire during such Notice Period, and Closing may be cancelled before the
Closing Date if:
(i) there shall be any action or proceeding before any court or any
governmental body which shall seek to restrain, prohibit or invalidate the
transactions contemplated by this Agreement and which, in the judgment of either
such board of directors, made in good faith and based on the advice of its legal
counsel, makes it inadvisable to proceed with the asset transfer and Acquiror
stock issuance contemplated by this Agreement where the matter is not or cannot
be promptly stayed and prohibits or materially restricts the transactions
contemplated by this Agreement from being processed and it is reasonably
unlikely that closing by the Closing Date will transpire because of the
existence of and inability to timely eliminate such prohibitions and/or
restrictions; or
(ii) any of the transactions contemplated hereby are disapproved by any
regulatory authority whose approval is required to consummate such transactions.
In the event of termination pursuant to this paragraph (a) of this Section
3.7, no obligation, right, or liability shall arise hereunder and each party
shall bear all of the expenses incurred by it in connection with the
negotiation, drafting and execution of this Agreement and the transactions
herein contemplated.
(b) This Agreement may be terminated at any time prior to the Closing Date
by action of the board of directors of Acquiror if Target shall fail to comply
in any material respect with any of its covenants or agreements contained in
this Agreement or if any of the representations or warranties of Target
contained herein shall be inaccurate in any material respect, which
noncompliance or inaccuracy is not cured after 30 days written notice thereof is
given to Target by Acquiror. If this Agreement is terminated pursuant to this
paragraph (b) of this Section 3.7, this Agreement shall be of no further force
or effect and no obligation, right or liability shall arise hereunder.
(c) This Agreement may be terminated at any time prior to the Closing Date
by action of the board of directors of Target if Acquiror shall fail to comply
in any material respect with any of its covenants or agreements contained in
this Agreement or if any of the representations or warranties of Acquiror
contained herein shall be inaccurate in any material respect, which
noncompliance or inaccuracy is not cured after 30 days written notice thereof is
given to Acquiror. If this Agreement is terminated pursuant to this paragraph
(c) of this Section 3.7, this Agreement shall be of no further force or effect
and no obligation, right or liability shall arise hereunder and the Deposit
shall be returned to Target.
In the event of termination pursuant to paragraph (b) and (c) of this
Section 3.7, the breaching party shall bear all of the expenses incurred by the
other party in connection with the negotiation, drafting and execution of this
Agreement and the transactions herein contemplated.
Section 3.8. Directors and Officers of Acquiror After Acquisition. On the
Closing Date, current members of Target's present Board of Directors shall be
placed as current members of the Board of Directors of Acquiror, or as otherwise
advised in writing by Target, and Acquiror may maintain one Board seat for one
year and until his successor shall be duly elected by shareholders of Acquiror
post-Closing or appointed by the remainder of the Board of Directors at that
time of Acquiror as applicable law and the Acquiror's by laws shall provide.
Each director shall hold office until his successor shall have been duly elected
and shall have qualified or until his earlier death, resignation or removal.
On Closing Target shall designate who shall be appointed and Acquiror shall
take such steps as adequate to establish such persons as Officers of Acquiror.
The Board of Directors of Sub shall mirror those of Target unless and only to
the extent Target shall otherwise designate in writing. The change in the
composition of the Board of Directors and Officers of Acquiror shall be
accomplished by all present persons acting in such capacities for and on behalf
of Acquiror resigning their official positions in writing in favor of such
substitutes, upon which resignation this Agreement and the transactions
contemplated hereby shall be conditioned.
ARTICLE IV. SPECIAL COVENANTS
Section 4.1. Access to Properties and Records. Sufficiently prior to
Closing as reasonable to allow for adequate review, Acquiror and Target will
each afford to the officers, Directors, legal counsel, market consultants and
other authorized representatives of the other full access to the properties,
books and records of each other, in order that each may have full opportunity to
make such reasonable investigation as it shall desire to make of the affairs of
the other and each will furnish the other with such additional financial and
operating data and other information as to the business and properties of each
other, as the other shall from time to time reasonably request in furtherance of
the transactions contemplated and provided for in this Agreement strictly for
use for such diligence purposes, denial to be allowed as to any information
reasonably deemed irrelevant thereto and all of which information shall be kept
and treated in confidence and not disclosed outside the persons conducting
and/or being consulted regarding such due diligence except as such disclosure
may be required by applicable regulation, the results of which due diligence
must satisfy the parties requesting such due diligence documents that the
accuracy of the representations made by the other parties in this Agreement are
not materially altered by presentation of the information in those due diligence
documents..
Section 4.2. Availability of Rule 144. Acquiror and Target shareholders
holding "restricted securities, " as that term is defined in Rule 144
promulgated pursuant to the Securities Act will remain as "restricted
securities" except as otherwise advised and requested by Target but Acquiror
shall be under no obligation to register any shares under the Securities Act, or
otherwise. The stockholders of Acquiror and Target holding restricted securities
of Acquiror and their respective heirs, administrators, personal
representatives, successors and assigns, are intended third party beneficiaries
of the provisions set forth herein. The covenants set forth in this Section 4.2
shall survive the Closing and the consummation of the transactions herein
contemplated.
Section 4.3. Special Covenants and Representations Regarding the Acquiror
Shares to be Issued in the Exchange. The consummation of this Agreement,
including the issuance of the Acquiror Shares to Target as contemplated hereby,
constitutes the offer and sale of securities under the Securities Act, and
applicable state statutes. Such transaction shall be consummated in reliance on
exemptions from the registration and prospectus delivery requirements of such
statutes which depend, inter alia, upon the circumstances under which the Target
acquires such securities and in that regard Target confirms that it is not
acquiring such securities with view to public distribution and without any
further transfer as may take place being registered or there being an exemption
for registration available and applicable to such further transfer.
Section 4.4. Third Party Consents. Acquiror and Target agree to cooperate
with each other in order to obtain any required third party consents to this
Agreement and the transactions herein contemplated.
Section 4.5. Actions Prior and Subsequent to Closing.
(a) From and after the date of this Agreement until the Closing Date,
except as permitted or contemplated by this Agreement, Acquiror and Target will
each use its best efforts to:
(i) maintain and keep its properties subject to this agreement in states of
good repair and condition as at present, except for depreciation due to ordinary
wear and tear and damage due to casualty;
(ii) maintain in full force and effect insurance comparable in amount and
in scope of coverage to that now maintained by it as and where applicable to
these properties;
(iii) perform in all material respects all of its obligations under
material contracts, leases and instruments relating to or affecting those
assets, properties and business as well as proper maintenance of corporate
existence and ;
(b) From and after the date of this Agreement until the Closing Date and
provided the Market Listing Goals have been met in a timely manner, Acquiror
will not, without the prior consent of Target:
(i) except as otherwise specifically set forth herein, make any change in
its articles of incorporation or bylaws;
(ii) declare or pay any dividend on its outstanding Common Shares, split or
otherwise change its capitalization, nor issue any other of its securities
except as provided herein;
(iii) enter into or amend any employment, severance or agreements or
arrangements with any directors or officers;
(iv) grant, confer or award any options, warrants, convertible rights or
other rights not existing on the date hereof to acquire any of its securities;
or
(v) purchase or redeem any Common Shares except as pursuant to Acquiror's
plan to achieve the pre-closing capitalization of its outstanding common shares
set forth is recapitalization plan as shall be approved by Target.
(vi) except as contemplated by this Agreement, Acquiror shall not make or
commit to make and expenditures or enter into commitment or transaction outside
the ordinary course and/or exceeding the amount of the Acquiror's current cash
assets in the aggregate; nor sell, license or transfer to any person or entity
any rights to any Acquiror assets including Intellectual Property or enter into
any agreement with respect to the Intellectual Property of any person or entity
or with respect to its Intellectual Property other than nonexclusive licenses
unless and only to the extent agreed to by Target with the understanding and
agreement that post-Closing such cash assets and Intellectual Property may and
shall be transferred as shall be advised by current management of Acquiror at
the date of this Agreement, there being no obligation that such assets be still
part of the Acquiror's assets post-Closing.
(vii) Commence or settle any litigation;
(viii) Acquire or agree to acquire by merging or consolidating with, or by
purchasing any assets or equity securities of, or by any other manner, any
business or any corporation, partnership, association or other business
organization or division thereof, or otherwise acquire or agree to acquire any
asset other than as are associated with Target and made the subject of this
Agreement, unless and only to the extent otherwise agreed by Target in writing
(ix) incur any indebtedness for borrowed money or guarantee any such
indebtedness or issue or sell any debt securities or guarantee any debt
securities of others and/or any such indebtedness or issue or sell any debt
securities or guarantee any debt securities of others and/or grant any loans to
others or purchase debt securities of others.
(x) No Solicitation. Unless and until the date of termination of this
Agreement the Acquiror will not (nor will the Acquiror permit any of its
officers, directors, controlling Shareholders, agents, representatives or
affiliates to) directly or indirectly, take any of the following actions with
any party other than Target and its designees: (a) solicit, encourage, initiate
or participate in any negotiations or discussions or enter into any agreement
with respect to, any offer or proposal to acquire all, substantially all or a
significant portion of the Acquiror's business, properties or technologies or
any portion of the Acquiror's capital stock (whether or not outstanding) whether
by merger, purchase of assets, tender offer or otherwise, or effect any such
transaction, (b) disclose any information not customarily disclosed to any
person concerning this agreement and the transaction contemplated as described
herein, the Acquiror's business, technologies or properties or afford to any
person or entity access to its properties, technologies, books or record or (c)
assist or cooperate with any person to make any proposal to purchase all or any
part of the Acquiror's capital stock or assets. In addition to the foregoing, if
the Acquiror receives, prior to the Closing Date or the termination of this
Agreement, any offer, proposal, or request relating to any of the above, the
Acquiror shall immediately notify Target thereof, including information as to
the identity of the offeror or the party making any such offer or proposal and
the specific terms of such offer or proposal, as the case may be, and such other
information related thereto as Target may reasonably request. The parties hereto
agree that irreparable damage would occur in the event that the provisions of
this Section 4.5 (b)(x) were not performed in accordance with their specific
terms or were otherwise breached. It is accordingly agreed by the parties that
Target shall be entitled to seek an injunction or injunctions to prevent
breaches of the provisions of this Section and to enforce specifically the terms
and provisions hereof in any court of the United States, Canada, or any State
and/or Province thereof having jurisdiction, this being in addition to any other
remedy to which Target may be entitled at law or in equity.
(xi) Take, or agree in writing or otherwise to take, any of the actions
described in Sections 4.5 (b)(i) through (x) above, or any other action that
would prevent the Acquiror from performing or cause the Acquiror not to perform
its covenants made within this Agreement. Acquiror shall provide promptly after
execution of the Agreement, to Target, written acknowledgements and confirmation
by all officers, directors and controlling shareholders of Acquiror of the
representations and covenants of Acquiror made in this Agreement and the
transfer restrictions on the Acquiror's outstanding securities and confirmation
of the truthfulness thereof and their agreement to abide thereby, which
acknowledgement and agreement may be evidenced by their signing onto this
Agreement.
Section 4.6. Indemnification.
(a) Acquiror hereby agrees to indemnify Target, each of the officers,
agents and directors and current shareholders of Target as of the Closing Date
against any loss, liability, claim, damage or expense (including, but not
limited to, any and all expense whatsoever reasonably incurred in investigating,
preparing or defending against any litigation, commenced or threatened or any
claim whatsoever), to which it or they may become subject to or rising out of or
based on any inaccuracy appearing in or misrepresentation made in this
Agreement. The indemnification provided for in this paragraph shall survive the
Closing and consummation of the transactions contemplated hereby and termination
of this Agreement; and
(b) Target hereby agrees to indemnify Acquiror, each of the officers,
agents, directors and current shareholders of Acquiror as of the Closing Date
against any and all expense whatsoever reasonably incurred in investigating,
preparing or defending against any litigation, commenced or threatened or any
claim whatsoever), to which it or they may become subject arising out of or
based on any inaccuracy appearing in or misrepresentation made in this
Agreement. The indemnification provided for in this paragraph shall survive the
Closing and consummation of the transactions contemplated hereby and termination
of this Agreement.
Section 4.7. Tax Consequences. It is intended by the parties that, to the
extent applicable the Transaction shall constitute a reorganization within the
meaning of Section 368 of the IRS Tax Code and no action shall be taken with
respect to the Capital Stock, assets, liabilities, and/or otherwise of either
Acquiror and/or Target that could reasonably be expected to cause the
transactions made the subject of this Agreement to fail to qualify, as
applicable, as a "reorganization" with the meaning of Section 368 of the Code.
Section 4.8. Reasonable Efforts. Subject to the terms and conditions
provided in this Agreement, each of the parties hereto shall use commercially
reasonable efforts to take promptly, or cause to be taken, all actions, and to
do promptly, or cause to be done, all things necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
transactions contemplated and agreed hereby, to obtain all necessary waivers,
consents and approvals and to effect all necessary registrations and filings and
to remove any injunctions or other impediments or delays, legal or otherwise, in
order to consummate and make effective the transactions contemplated and agreed
by this Agreement for the purpose of securing to the parties hereto the benefits
contemplated by theAgreement
Section 4.9. Notification of Certain Matter; Financial Statements. The
party to which applicable shall give to each other party prompt notice of (i)
the occurrence or non-occurrence of any event, the occurrence or non-occurrence
of which is likely to cause any representation or warranty contained in this
Agreement to be untrue or inaccurate at or prior to the Closing Date and (ii)
any failure to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied hereunder in each case such that the conditions to
Closing would not be satisfied; provided, however, that the delivery of any
notice pursuant to this section shall not (x) limit or otherwise affect any
remedies available to the party receiving such notice or (y) act to prevent or
cure any misrepresentations, and/or breach of covenant
ARTICLE V. CONDITIONS PRECEDENT TO OBLIGATIONS OF TARGET
The obligations of Target under this Agreement are subject to the
satisfaction, at or before the Closing Date, of the following conditions:
Section 5.1. Accuracy of Representations. The representations and
warranties made by Acquiror in this Agreement were true when made and shall be
true at the Closing Date with the same force and effect as if such
representations and warranties were made at the Closing Date (except for changes
therein permitted by this Agreement), and Acquiror shall have performed or
compiled with all covenants and conditions required by this Agreement to be
performed or complied with by Acquiror prior to or at the Closing. Target shall
be furnished with a certificate, signed by a duly authorized officer of Acquiror
and dated the Closing Date, to the foregoing effect.
Section 5.2. Director Approval. The Board of Directors of Acquiror shall
have approved this Agreement and the transactions contemplated herein.
Section 5.3. Officer's Certificate. Target shall have been furnished with a
certificate dated the Closing Date and signed by a duly authorized officer of
Acquiror to the effect that: (a) the representations and warranties of Acquiror
set forth in the Agreement and in all Exhibits, Schedules and other documents
furnished in connection herewith are in all material respects true and correct
as if made on the Effective Date; (b) Acquiror has performed all covenants,
satisfied all conditions, and complied with all other terms and provisions of
this Agreement to be performed, satisfied or complied with by it as set forth in
this Agreement, including but not limited to timely making all applicable
regulatory filings; (c) since the Effective Date of this Agreement and other
than as previously disclosed to Target, Acquiror has not entered into any
material transaction other than transactions which are usual and in the ordinary
course if its business if any, as is then being conducted and has incurred no
liabilities; and (d) no litigation, proceeding, investigation or inquiry is
pending or, to the best knowledge of Acquiror, threatened, which might result in
an action to enjoin or prevent the consummation of the transactions contemplated
by this Agreement or by or against Acquiror which might result in any material
adverse change in any of the assets, properties, business, operations, general
existence and marketability of the securities of Acquiror.
Section 5.4. Shareholder Vote. The holders of the majority of the issued
and outstanding shares of Acquiror shall agree to vote in favor of this
Agreement.
Section 5.5. Amend to Articles of Incorporation and Capitalization.
Promptly after the Closing Date, Acquiror will amend its Articles of
Incorporation to change its corporate name, domicile, and capitalization in a
manner satisfactory to Target, which change in capitalization shall include
corporate authority to issue Preferred classes of stock including terms as
further set forth in Schedule attached to and made a part of this Agreement or
otherwise advised by Target (including the Acquiror Preferred Shares as provided
for in this Agreement), change in name shall be to ▇▇▇▇▇▇▇ Foods and/or
derivations thereof directed by Target, and change in domicile shall be to a
National Corporation with a registered address in Ontario, all subject to such
exceptions as are advised by Target, and toward such end Acquiror shall at or
prior to Closing execute an amendment to its Articles of Incorporation, and
obtain the requisite director and shareholder approval for such, in the form
acceptable to Target, which in principal part be as set forth as Schedule D
attached to and made a part of this Agreement..
Section 5.6. No Material Adverse Change. Prior to the Closing Date, there
shall not have occurred any material adverse change in the financial condition,
business or operations of nor shall any event have occurred which, with the
lapse of time or the giving of notice, may cause or create any material adverse
change in the financial condition, business or operations of Acquiror.
Section 5.7. Other Items. Target shall have received such further
documents, certificates or instruments relating to the transactions contemplated
hereby as Target may reasonably request.
Section 5.8. Target shall have received the approval by the Board of
Directors of Target by majority vote and vote of a majority of all of its stock
outstanding and specifically of any creditor of Target holding lien interest(s)
in any of the assets being transferred.
ARTICLE VI. CONDITIONS PRECEDENT TO OBLIGATIONS OF ACQUIROR
The obligations of Acquiror under this Agreement are subject to the
satisfaction, at or before the Closing date (unless otherwise indicated herein),
of the following conditions:
Section 6.1. Accuracy of Representations. The representations and
warranties made by Target in this Agreement were true when made and shall be
true as of the Closing Date (except for changes therein permitted by this
Agreement) with the same force and effect as if such representations and
warranties were made at and as of the Closing Date, and Target shall have
performed and complied with all covenants and conditions required by this
Agreement to be performed or complied with by Target prior to or at the Closing.
Acquiror shall have been furnished with a certificate, signed by a duly
authorized executive officer of Target and dated the Closing Date, to the
foregoing effect.
Section 6.2. Director Approval. The Board of Directors of Target shall have
approved this Agreement and the transactions contemplated herein.
Section 6.3. Officer's Certificate. Acquiror shall be furnished with a
certificate dated the Closing date and signed by a duly authorized officer of
Target to the effect that: (a) the representations and warranties of Target set
forth in the Agreement and in all Exhibits, Schedules and other documents
furnished in connection herewith are in all material respects true and correct
as if made on the Effective Date; and (b) Target had performed all covenants,
satisfied all conditions, and complied with all other terms and provisions of
the Agreement to be performed, satisfied or complied with by it as of the
Effective Date.
Section 6.4. No Material Adverse Change. Prior to the Closing Date, there
shall not have occurred any material adverse change in the financial condition,
business or operations of nor shall any event have occurred which, with the
lapse of time or the giving of notice, may cause or create any material adverse
change in the financial condition, business or operations of Target, to the
extent that such are associated with the Transfer Assets.
ARTICLE VII. MISCELLANEOUS
Section 7.1. Brokers and Finders. Each party hereto hereby represents and
warrants that it is under no obligation, express or implied, to pay brokers or
finders in connection with the bringing of the parties together in the
negotiation, execution, or consummation of this Agreement except that Target is
obligated and does hereby reconfirm its obligation and the obligation of Target
as it may succeed to the interests of any other public entity, including
Acquiror, and Acquiror confirms an obligation post-Closing to abide by that
certain Confidentiality Affidavit, Non-Disclosure and Finders Fee Agreement
Target enterred with ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq. and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ dated 7/25/05 and
the post-Closing Legal services retainer and consulting agreement arrangement as
therein provided, which Finders shall be considered as beneficiaries of this
Agreement. The parties each agree to indemnify the other against any other claim
by any third person for any commission, brokerage or finder's fee or other
payment with respect to this Agreement or the transactions contemplated hereby
based on any alleged agreement or understanding between the indemnifying party
and such third person, whether express or implied from the actions of the
indemnifying party.
Section 7.2. Law, Forum and Jurisdiction. This Agreement shall be construed
and interpreted in accordance with the laws of the State of Delaware, United
States of America and all parties to agree to submit themselves to the personal
Jurisdiction of the Courts of such State and/or US Federal Court to decide upon
any questions and/or disputes regarding this Agreement and/or its subject matter
which any of the parties shall submit.
Section 7.3. Notices. Any notices or other communications required or
permitted hereunder shall be sufficiently given if personally delivered to or
sent by registered mail or certified mail, postage prepaid, or by prepaid
telegram or by telefax or e-mail of the addresses stated at the outset of this
Agreement or such other addresses as shall be furnished in writing by any party
in the manner for giving notices hereunder, and any such notice or communication
shall be deemed to have been given as of the date so delivered, mailed or
telegraphed.
Section 7.4. Attorneys' Fees. In the event that any party institutes any
action or suit to enforce this Agreement or to secure relief from any default
hereunder or breach hereof, the breaching party or parties shall reimburse the
non-breaching party or parties for all costs, including reasonable attorneys'
fees, incurred in connection therewith and in enforcing or collecting any
judgment rendered therein.
Section 7.5. Confidentiality. Each party hereto agrees with the other party
that, unless and until the transactions contemplated by this Agreement have been
consummated, they and their representatives will hold in strict confidence all
data and information obtained with respect to another party or any subsidiary
thereof from any representative, officer, director or employee, or from any
books or records or from personal inspection, of such other party, and shall not
use such data or information or disclose the same to others, except: (i) to the
extent such data is a matter of public knowledge or is required by law to be
published; and (ii) to the extent that such data or information must be used or
disclosed in order to consummate the transactions contemplated by this
Agreement.
Section 7.6. Schedules; Knowledge. Each party is presumed to have full
knowledge of all information set forth in the other party's schedules delivered
pursuant to this Agreement.
Section 7.7. Third Party Beneficiaries. This contract is solely between
Acquiror and Target and except as specifically provided, no director, officer,
stockholder, employee, agent, independent contractor or any other person or
entity shall be deemed to be a third party beneficiary of this Agreement except
as shall be specifically stated herein.
Section 7.8. Entire Agreement. This Agreement represents the entire
agreement between the parties relating to the subject matter hereof. This
Agreement alone fully and completely expresses the agreement of the parties
relating to the subject matter hereof. There are no other courses of dealing,
understanding, agreements, representations or warranties, written or oral,
except as set forth herein. This Agreement may not be amended or modified,
except by a written agreement signed by all parties hereto.
Section 7.9. Survival; Termination. The representations, warranties and
covenants of the respective parties shall survive the Closing Date and the
consummation of the transactions herein contemplated for 18 months.
Section 7.10. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of which taken
together shall be but a single instrument.
Section 7.11. Amendment or Waiver. Every right and remedy provided herein
shall be cumulative with every other right and remedy, whether conferred herein,
at law, or in equity, and may be enforced concurrently herewith, and no waiver
by any party of the performance of any obligation by the other shall be
construed as a waiver of the same or any other default then, theretofore, or
thereafter occurring or existing. At any time prior to the Closing Date, this
Agreement may be amended by a writing signed by all parties hereto, with respect
to any of the terms contained herein, and any term or condition of this
Agreement may be waived or the time for performance hereof may be extended by a
writing signed by the party or parties for whose benefit the provision is
intended.
Section 7.12. Expenses. Each party herein shall bear all of their
respective cost s and expenses incurred in connection with the negotiation of
this Agreement and in the consummation of the transactions provided for herein
and the preparation thereof.
Section 7.13. Headings; Context. The headings of the sections and
paragraphs contained in this Agreement are for convenience of reference only and
do not form a part hereof and in no way modify, interpret or construe the
meaning of this Agreement.
Section 7.14. Benefit. This Agreement shall be binding upon and shall inure
only to the benefit of the parties hereto, and their permitted assigns
hereunder. This Agreement shall not be assigned by any party without the prior
written consent of the other party.
Section 7.15. Public Announcements. Except as may be required by law,
neither party shall make any public announcement or filing with respect to the
transactions provided for herein without the prior consent of the other party
hereto.
Section 7.16. Severability. In the event that any particular provision or
provisions of this Agreement or the other agreements contained herein shall for
any reason hereafter be determined to be unenforceable, or in violation of any
law, governmental order or regulation, such unenforceability or violation shall
not affect the remaining provisions of such agreements, which shall continue in
full force and effect and be binding upon the respective parties hereto provided
the omitted terms do not materially change the obligations and capability of
performance by the parties and the objectives designed to be accomplished
thereby.
Section 7.17. Failure of Conditions; Termination. In the event of any of
the conditions specified in this Agreement shall not be fulfilled on or before
the Closing Date, either of the parties have the right either to proceed or,
upon prompt written notice to the other, to terminate and rescind this
Agreement. In such event, the party that has failed to fulfill the conditions
specified in this Agreement will liable for the other party's legal fees to the
extent such failure is willful or grossly negligent. The election to proceed
shall not affect the right of such electing party reasonably to require the
other party to continue to use its efforts to fulfill the unmet conditions.
Section 7.18. No Strict Construction. The language of this Agreement shall
be construed as a whole, according to its fair meaning and intendment, and not
strictly for or against either party hereto, regardless of who drafted or was
principally responsible for drafting the Agreement or terms or conditions hereof
and recognizing that all parties to this contract have been represented by legal
counsel the legal concept of ambiguities in the contract to be read against the
drafter is waived.
Section 7.19. Execution Knowing and Voluntary. In executing this Agreement,
the parties severally acknowledge and represent that each: (a) has fully and
carefully read and considered this Agreement; (b) has been or has had the
opportunity to be fully apprized by its attorneys of the legal effect and
meaning of this document and all terms and conditions hereof; (c) is executing
this Agreement voluntarily, free from any influence, coercion or duress of any
kind.
Section 7.20. Amendment. At any time after the Closing Date, this Agreement
may be amended by a writing signed by both parties, with respect to any of the
terms contained herein, and any term or condition of this Agreement may be
waived or the time for performance hereof may be extended by a writing signed by
the party or parties for whose benefit the provision is intended.
IN WITNESS WHEREOF, the corporate parties hereto have caused this Agreement
to be executed by their respective officers, hereunto duly authorized, and
entered into as of the date first above written.
TARGET: ▇▇▇▇▇▇▇ Food Group Inc.
By: /s/ ▇▇ ▇▇▇▇▇▇
-------------
Name/Title: ▇▇ ▇▇▇▇▇▇, Pres.
ATTEST:
ACQUIROR: New World Batteries Inc.
By: /S/ ▇▇▇ O'▇▇▇▇▇
---------------
Name/Title: ▇▇▇ ▇'▇▇▇▇▇, Pres.
ATTEST:
TARGET ASSET SCHEDULE
Assets to be Transferred to Acquiror at the Time of Closing
1) 200 common shares of Bayshore Foods Inc., being 100% of the issued and
outstanding common shares of Bayshore Foods Inc., an Ontario corporation.
2) 1,500 shares of common stock of ▇▇▇▇▇▇▇ Baking Mix Products Ltd., being 100%
of the issued and outstanding common stock of ▇▇▇▇▇▇▇ Baking Mix Products Ltd.,
a Michigan corporation.
3) All registered trademarks owned by the Target on the Closing Date.
4) Any other assets as may be advised by the Target.
SCHEDULE OF ASSUMED LIABILITIES
1) Target's loans and security due to Laurus Master Fund Ltd. pursuant to:
a. Security and Purchase Agreement dated December 28, 2005 between
▇▇▇▇▇▇▇ Food Group Inc., Laurus Master Fund, Ltd., ▇▇▇▇▇▇▇ Foods
Limited, ▇▇▇▇▇▇▇ Baking Mix Products Ltd., Sweet Valley Food
Corporation and Bayshore Foods Inc.;
b. Secured Revolving Note dated December 28, 2005 in favor of Laurus
Master Fund, Ltd.;
c. Secured Convertible Note dated December 28, 2005 in favor of Laurus
Master Fund, Ltd.;
d. Secured Convertible Term Note dated December 28, 2005 in favor of
Laurus Master Fund, Ltd.;
e. Master Security Agreement dated December 28, 2005 in favor of Laurus
Master Fund, Ltd.;
f. Share Pledge Agreement dated December 28, 2005 between ▇▇▇▇▇▇▇ Food
Group Inc., MG Holdings Inc., Monaco (Canada) Inc., LF Acquisition
Corp., LF Brands Inc., and ▇▇▇▇▇▇▇ Baking Mix Products Inc.;
2) Option agreement dated December 28, 2005 in favor of Laurus Master Fund,
Ltd.
3) Common Stock Purchase Warrant agreement dated December 28, 2005 in favor of
Laurus Master Fund, Ltd.
4) Any other liabilities as shall be advised by Target.
SCHEDULE OF
PROPOSED VOTING POWERS, RIGHTS, DESIGNATIONS, PREFERENCES AND
QUALIFICATIONS OF CLASS A PREFERRED SHARES
All dollar amounts referred to in this Schedule are Canadian Dollars.
The Acquiror shall, on or before Closing, approve the following voting powers,
rights, designations, preferences and qualifications of a new class of preferred
shares:
1. Designation and Amount. There shall be a class of Preferred Shares
designated as "Class A Preferred Shares" and the number of shares constituting
such class of Preferred Shares shall be unlimited.
2. Par Value. Each Class A Preferred Share shall have no par value.
3. Rank. All Class A Preferred Shares shall rank prior, both as to payment
of dividends and as to distributions of assets upon liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary, to all of the
Corporation's now or hereafter issued common shares (the "Common Shares").
4. Dividends. The holders of Class A Preferred Shares shall be entitled to
receive, out of the net profits of the Corporation, dividends at the annual rate
of $0.045 per share per annum payable quarterly (calendar quarterly) by the 15th
day of the month following the quarterly period and accruing until paid starting
and assessed beginning the first full calendar quarter following issuance. The
amount of dividends payable shall be computed on the basis of a 360 day year of
four 90 day quarters. The Common Shares is entitled to all remaining profits
which the Board of Directors may determine to distribute to the holders of
Common Shares as dividends, subject to any future designations regarding the
remainder of the unissued Preferred Shares.
No dividends or other distributions, other than dividends payable solely in
Common Shares of the Corporation ranking junior as to dividends and as to
liquidation rights to the Class A Preferred Shares shall be declared, paid or
set apart for payment on any Common Shares unless and until all accrued and
unpaid dividends of Class A Preferred Shares shall have been paid and/or set
apart for payment.
Any reference to "distribution" contained in this Section 4 shall not be
deemed to include any distribution made in connection with any liquidation,
dissolution or winding up of the Corporation whether voluntary or involuntary.
5. Liquidation Preference. In the event of a liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary, the holders of
Class A Preferred Shares shall be entitled to receive out of the assets of the
Corporation, whether such assets are stated capital or surplus of any nature, an
amount equal to the dividends accumulated thereon to the date of final
distribution to such holders which have not prior thereto been paid without
interest, and a sum equal to $1.00 per share, before any payment shall be made
or any assets distributed to the holders of Common Shares, or any other class or
series of the Corporation's capital stock. All of the remaining net assets shall
belong to and be distributed among the holders of the Common Shares, subject to
any future designations regarding the remainder of the unissued Preferred
Shares. Neither a consolidation or merger of the Corporation with another
corporation nor a sale or transfer of all or part of the Corporation's assets
for cash, securities or other property will be considered a liquidation,
dissolution or winding up of The Corporation.
6. Redemption at Option of the Corporation. The Corporation is not entitled
to redeem the Class A Preferred Shares.
7. Retraction at the Option of the Holder. Each Class A Preferred Shares
shall be retractable, after seven (7) years, at the option of the holder thereof
at $1.00 per share plus, in each case, an amount in cash equal to all dividends
on the Class A Preferred Shares accrued and unpaid thereon, pro rata to the date
fixed for retraction (such sum being hereinafter referred to as the "Retraction
Price").
Not less than Thirty (30) days and not more than Sixty (60) days prior
to the retraction date notice by first class mail, postage prepaid, shall be
given to the Corporation. Each such notice of retraction shall specify the date
fixed for retraction and the Retraction Price. Payment will be made upon
presentation and surrender of the Class A Preferred Shares and that on and after
the retraction date, dividends will cease to accumulate on such shares.
Any notice which is mailed as herein provided shall be conclusively
presumed to have been duly given, whether or not the addressee receives such
notice; and failure to give such notice by mail, or any defect in such notice,
shall not affect the validity of the proceedings for the retraction of any other
Class A Preferred Shares. On or before the date fixed for retraction as stated
in such notice, each holder of the shares called for retraction shall surrender
the certificate evidencing such shares to the Corporation at the registered head
office of the Corporation and shall thereupon be entitled to receive payment of
the Retraction Price. If less than all the shares represented by any such
surrendered certificate are retracted, a new certificate shall be issued
representing the shares not retracted. If, on the date fixed for retraction,
funds necessary for the retraction shall be available therefor and shall have
been irrevocably paid to the holder, then, notwithstanding that the certificates
evidencing any shares so called for retraction shall not have been surrendered,
the dividends with respect to the shares so called shall cease to accrue after
the date fixed for retraction, the shares shall no longer be deemed outstanding,
the holders thereof shall cease to be stockholders, and all rights whatsoever
with respect to the shares so called for retraction (except the right of the
holders to receive the Retraction Price without interest upon surrender of their
certificates therefor) shall terminate.
Class A Preferred Shares shall not be subject to the operation of any
purchase, retirement or sinking fund.
7. Conversion. Class A Preferred Shares shall be convertible into Common
Shares, at the option of the holder thereof, on the basis of one Class A
Preferred Share to be converted into three Common Shares. The number of shares
into which each Class A Preferred Share shall be convertible shall be subject to
adjustment from time to time to the same extent as applicable to the Common
Stock into which it is convertible upon occurrence of events that also change
the status of such Common Stock, non-exclusive examples being reclassification,
stock splits, combinations and dividends, and the Corporation shall continuously
have reserved and available sufficient Common Stock into which all outstanding
Class A Preferred Shares may be converted. Upon any partial conversion of
outstanding Class A Preferred Shares, new certificates therefore as to the
balance not converted shall be issued upon surrender of the shares thereof to be
converted. Notice of Conversion shall be given to the Corporation at least three
days prior to the record date for such conversion.
8. Voting Rights.
a. General. Class A Preferred Shares shall have voting rights per share
(one vote per share) regarding any corporation business pari passu with that
applicable to Common Stock.
b. Class Voting Rights. In addition to voting rights provided above, so
long as the Class A Preferred Shares is outstanding, the Corporation shall not,
without the affirmative vote or consent of the holders of at least one half
(1/2) of all outstanding Class A Preferred Shares voting separately as a class,
amend, alter or repeal (by merger or otherwise) any provision of the Certificate
of Incorporation or the By-Laws of the Corporation, as amended, so as adversely
to affect the relative rights, preferences, qualifications, limitations or
restrictions of the Class A Preferred Shares.
9. Outstanding Shares. All Class A Preferred Shares issued shall be deemed
outstanding except (i) from the date fixed for retraction pursuant to Section 7
hereof, all Class A Preferred Shares that have been so called for retraction
under Section 7 hereof; and (ii) from the date of registration of transfer, all
Class A Preferred Shares held of record by the Corporation.
10. Preemptive Rights. The Class A Preferred Shares is not entitled to any
preemptive or subscription rights in respect of any securities of the
Corporation.
11. Severability of Provisions. Whenever possible, each provision hereof
shall be interpreted in a manner as to be effective and valid under applicable
law, but if any provision hereof is held to be prohibited by or invalid under
applicable law, such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating or otherwise adversely affecting
the remaining provisions hereof. If a court of competent jurisdiction should
determine that a provision hereof would be val1d or enforceable if a period of
time were extended or shortened or a particular percentage were increased or
decreased, then such court may make such change as shall be necessary to render
the provision in question effective and valid under applicable law.
12. Future Preferred Shares Issues. The Corporation may issue one or more
additional classes of Preferred Shares without the consent of the holders of
Class A Preferred Shares, provided, however, that the rights and preferences of
such subsequent classes of preferred shares as to liquidation, dividends,
voting, redemption, and registration rights shall not be superior to those of
the Class A Preferred Shares.
OR AS MAY OTHERWISE BE ADVISED BY TARGET PRE-CLOSING
