STOCK EXCHANGE AGREEMENT
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THIS STOCK EXCHANGE AGREEMENT (the "Agreement"), dated as of September 28,
1998, is by and among FIRST CAPITAL INTERNATIONAL, INC., a Delaware corporation
("FCII"), and each of the persons or entities whose names appear and who are
identified as stockholders on the signature page hereof (individually, a
"STOCKHOLDER" and collectively the "STOCKHOLDERS"), such persons or entities
being registered holders of capital stock of EIP Liisingu AS, an Estonian
corporation ("EIP").
R E C I T A L S
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WHEREAS, each Stockholder is the record and beneficial owner of the number
of shares of common stock, face value 10,000 EEK per share, of EIP indicated in
the table set forth as Exhibit A to this Agreement (which shares are hereinafter
collectively referred to as the "EIP Stock");
WHEREAS, FCII desires to acquire from the Stockholders, and the
Stockholders desire to convey to FCII, all of the issued and outstanding EIP
Stock owned by the Stockholders in exchange for shares of voting common stock,
$0.001 par value of FCII (the "FCII Stock"), all on the terms and conditions set
forth below;
NOW, THEREFORE, in consideration of the premises, the mutual covenants and
agreements and the respective representations and warranties herein contained in
this Agreement, and on the terms and subject to the conditions set forth in this
Agreement, the parties hereto, intending to be legally bound, hereby agree as
follows:
ARTICLE I
EXCHANGE OF SHARES
Section 1.1 EIP Stock. At the Closing (as defined below), each
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Stockholder shall transfer, convey and deliver to FCII the number of shares of
EIP Stock set forth opposite their name on Exhibit A hereto, and shall deliver
to FCII stock certificates representing the EIP Stock, duly endorsed to FCII or
accompanied by duly executed stock powers in form and substance satisfactory to
FCII.
Section 1.2 FCII Stock. At the Closing, in exchange for each share of
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EIP Stock transferred to FCII, FCII shall issue and deliver to each Stockholder
the number of shares of FCII Stock set forth opposite their name on Exhibit A
hereto. The transaction by which the transfer shall take place is referred to
in this Agreement as the "Exchange".
ARTICLE II
THE CLOSING
The Closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at 4:00 p.m. on September 28, 1998 (the "Closing
Date"), at the offices of FCII, ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
or at such other time and place as agreed upon among the parties hereto.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
Each of the Stockholders hereby severally represents and warrants to FCII
as follows:
Section 3.1 Ownership of the EIP Stock. The Stockholder owns,
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beneficially and of record, that number of shares of EIP Stock set forth
opposite the Stockholder's name on Exhibit A hereto; except for restrictions
imposed by national, federal and state securities laws, (i) such shares are
owned by such Stockholder free and clear of any liens, claims, equities,
charges, options, rights of first refusal, or encumbrances; (ii) the Stockholder
has the unrestricted right and power to transfer, convey and deliver full
ownership of such shares without the consent or agreement of any other person
and without any designation, declaration or filing with any governmental
authority; and, (iii) upon the transfer of such shares to FCII as contemplated
herein, FCII will receive good and valid title thereto, free and clear of any
liens, claims, equities, charges, options, rights of first refusal, encumbrances
or other restrictions.
Section 3.2 Organization. If the Stockholder is either a corporation,
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limited liability company or partnership, it represents and warrants that it is
duly organized, validly existing and in good standing under the laws of the
state or nation of its incorporation or formation, with full power and authority
and all necessary governmental and regulatory licenses, permits and
authorizations to carry on the businesses in which it is engaged, to own the
properties that it owns currently and will own at the Closing, and to perform
its obligations under this Agreement. If the Stockholder is a corporation,
limited liability company or partnership it is qualified as a foreign
corporation, foreign limited liability company or foreign partnership (which
ever the case may be) and is in good standing in each jurisdiction in which the
failure to qualify would have material adverse effect on the business,
properties or condition (financial or otherwise) of the corporate, limited
liability company or partnership Stockholder.
Section 3.3 Authorization. If the Stockholder is a person, then he or
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she is of the full age of majority, with full power, capacity and authority to
enter into this Agreement and perform the obligations contemplated hereby by and
for himself or herself and his or her spouse, if any. If the Stockholder is a
corporation, limited liability company or partnership, then all corporate,
limited liability company or partnership action on the part of the corporate,
limited liability company or partnership Shareholder necessary for the
authorization, execution, delivery and performance of this Agreement and the
transactions contemplated hereby has been taken or will be taken prior to the
Closing. All action on the part of the Stockholder necessary for the
authorization, execution, delivery and performance of this Agreement by the
Stockholder has been taken or will be taken prior to the Closing. This
Agreement constitutes a valid and binding obligation of the Stockholder,
enforceable against the Stockholder in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, and other laws of general application
relating to or affecting creditors' rights and to general equitable principles.
Section 3.4 Pending Claims. There is no claim, suit, action or
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proceeding, whether judicial, administrative or otherwise, pending or, to the
best of the Stockholder's knowledge, threatened that would preclude or restrict
the transfer to FCII of the EIP Stock owned by the Stockholder or the
performance of this Agreement by the Stockholder.
Section 3.5 No Default. The execution, delivery and performance of
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this Agreement by the Stockholder does not and will not constitute a violation
or default under or conflict with any contract, agreement, understanding or
commitment to which such Stockholder is a party or by which such Stockholder is
bound.
Section 3.6 Acquisition of Stock for Investment. The Stockholder
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understands that the issuance of FCII Stock will not have been registered under
the Securities Act of 1933, as amended (the "Act"), or any national or state
securities acts, and, accordingly, are restricted securities, and that he/she
represents and warrants to FCII that his/her present intention is to receive and
hold the FCII Stock for investment only and not with a view to the distribution
or resale thereof.
Additionally, the Stockholder understands that any sale by the Stockholder
of any of the FCII Stock received under this Agreement will, under current law,
require either (a) the registration of the FCII Stock under the Act and
applicable national or state securities acts; (b) compliance with Rule 144 of
the Act; or (c) the availability of an exemption from the registration
requirements of the Act and applicable national or state securities acts. The
Stockholder understands that FCII has not undertaken and does not presently
intend to file a Registration Statement to register the FCII Stock to be issued
to the Stockholder. The Stockholder hereby agrees to execute, deliver, furnish
or otherwise provide to FCII an opinion of counsel reasonably acceptable to FCII
prior to any subsequent transfer of the FCII Stock, that such transfer will not
violate the registration requirements of the federal or national or state
securities acts. The Stockholder further agrees to execute, deliver, furnish or
otherwise provide to FCII any documents or instruments as may be reasonably
necessary or desirable in order to evidence and record the FCII Stock acquired
hereby.
To assist in implementing the above provisions, the Stockholder hereby
consents to the placement of the legend, or a substantially similar legend, set
forth below, on all certificates representing ownership of the FCII Stock
acquired hereby until the FCII Stock has been sold, transferred, or otherwise
disposed of, pursuant to the requirements hereof. The legend shall read
substantially as follows:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY APPLICABLE STATE SECURITIES ACTS. THESE SECURITIES MUST BE
ACQUIRED FOR INVESTMENT, ARE RESTRICTED AS TO TRANSFERABILITY, AND MAY NOT BE
SOLD, HYPOTHECATED, OR OTHERWISE TRANSFERRED WITHOUT COMPLIANCE WITH THE
REGISTRATION AND QUALIFICATION PROVISIONS OF APPLICABLE FEDERAL AND STATE
SECURITIES LAWS OR APPLICABLE EXEMPTIONS THEREFROM."
In addition, each Stockholder consents to FCII placing a "stop transfer
notation" in its corporate records concerning the transfer of the FCII Stock
acquired by each Stockholder.
Section 3.7 Subscription Agreement. The Stockholder hereby
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acknowledges, as a condition to the consummation of the transactions
contemplated hereby, that he/she will, simultaneously with the execution of this
Agreement execute a Subscription Agreement containing additional representations
and warranties relating to the issuance of the FCII Stock to the Stockholder.
Section 3.8 Stockholder Access to Information. The Stockholder hereby
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confirms and represents that he/she: (a) has been afforded the opportunity to
ask questions of and receive answers from representatives of FCII concerning the
business and financial condition, properties, operations and prospects of FCII
and has asked such questions as he/she desires to ask and all such questions
have been answered to the full satisfaction of the Stockholder; (b) has such
knowledge and experience in financial and business matters so as to be capable
of evaluating the relative merits and risks of the transactions contemplated
hereby; (c) has had an opportunity to engage and is represented by an attorney
of his/her choice; (d) has had an opportunity to negotiate the terms and
conditions of this Agreement; (e) has been given adequate time to evaluate the
merits and risks of the transactions contemplated hereby; and (f) has been
provided with and given an opportunity to review all current information about
FCII.
Section 3.9 Disclosure. To the best of the Stockholder's knowledge, no
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representation or warranty of the Stockholder contained in this Agreement
(including the exhibits and schedules hereto) contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements contained herein or therein, in light of the circumstances under
which they were made, not misleading.
Section 3.10 Indemnification by Stockholder The Stockholder recognizes
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that the Exchange being conducted with FCII is based, to a material degree, upon
the representations and warranties of Stockholder as set forth and contained
herein and the Stockholder hereby agrees to indemnify and hold harmless FCII
against all damages, costs, or expenses (including reasonable attorney's fees)
arising as a result of any breach of representation or warranty or omission made
herein by the Stockholder.
If any action is brought against FCII in respect of which indemnity may be
sought against the Stockholder pursuant to the foregoing paragraph, FCII shall
promptly notify the Stockholder in writing of the institution of such action
(but the omission to so notify the Stockholder shall not relieve it from any
liability that it may have to FCII except to the extent the Stockholder is
materially prejudiced or otherwise forfeit substantive rights or defenses by
reason of such failure), and the Stockholder shall assume the defense of such
action, including the employment of counsel to be chosen by the Stockholder to
be reasonably satisfactory to FCII, and payment of expenses. FCII shall have
the right to employ the Stockholder's or their own counsel in any such case, but
the fees and expenses of such counsel shall be at FCII expense, unless the
employment of such counsel shall have been authorized in writing by the
Stockholder in connection with the defense of such action, or the Stockholder
shall not have employed counsel to take charge of the defense of such action, or
counsel employed by the Stockholder shall not be diligently defending such
action, or FCII shall have reasonably concluded that there may be defenses
available to it which are different from or additional to those available to the
Stockholder, or that representation of FCII by the same counsel would be
inappropriate under applicable standards of professional conduct due to actual
or potential differing interests between them (in which case the Stockholder
shall not have the right to direct the defense of such action on behalf of
FCII), in any of which event such fees and expenses shall be borne by the
Stockholder. Anything in this paragraph to the contrary notwithstanding, the
Stockholder shall not be liable for any settlement of, or any expenses incurred
with respect to, any such claim or action effected without the Stockholder's
written consent, which consent shall not be unreasonably withheld. The
Stockholder shall not, without the prior written consent of FCII effect any
settlement of any proceeding in respect of which FCII is a party and indemnity
has been sought hereunder unless such settlement includes an unconditional
release of FCII from all liability on claims that are the subject matter of such
proceeding.
Section 3.11 Organization and Capitalization. EIP is a corporation
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duly organized, validly existing and in good standing under the laws of the
nation of Estonia, with full power and authority and all necessary governmental
and regulatory licenses, permits and authorizations to carry on the businesses
in which it is engaged, to own the properties that it owns currently and will
own at the Closing. EIP is qualified as a foreign corporation and is in good
standing in each jurisdiction in which the failure to qualify would have a
material adverse effect on the business, properties or condition (financial or
otherwise) of EIP. EIP does not have any subsidiaries or any other investments
or ownership interest in any corporation, partnership, joint venture or other
business enterprise, except as set forth in Schedule 3.11. The authorized
capital stock of EIP consists of 40 shares of common stock, 10,000 EEK par
value, of which 40 shares are validly issued and outstanding. All of such
issued and outstanding shares of EIP Stock have been duly authorized and validly
issued and are fully paid and non-assessable. None of the shares were issued in
violation of any preemptive rights. Except as set forth in Schedule 3.11, there
are no existing warrants, options, rights of first refusal, conversion rights,
calls, commitments or other agreements of any character pursuant to which EIP is
or may become obligated to issue any of its stock or securities. EIP has no
obligation to repurchase, reacquire or redeem any of its outstanding capital
stock.
Section 3.12 Subsidiaries. Schedule 3.12 sets forth a complete and
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accurate list of all Subsidiaries of EIP, showing (as to each such Subsidiary)
the date of its incorporation and the jurisdiction of its incorporation. All of
the outstanding capital stock of, or other ownership interests in, each
Subsidiary is owned by EIP, directly or indirectly, free and clear of any lien
or any other limitation or limitation or restriction (including restrictions on
the right to vote). All outstanding shares of the capital stock of each
Subsidiary have been duly authorized and validly issued and are fully paid and
non-assessable and are free of any preemptive rights. There are no outstanding
securities of any Subsidiary convertible into or evidencing the right to
purchase or subscribe for any shares of capital stock of any Subsidiary, there
are no outstanding or authorized options, warrants, calls, subscriptions,
rights, commitments or any other agreements of any character obligating any
Subsidiary to issue any shares of its capital stock or any securities
convertible into or evidencing the right to purchase or subscribe for any shares
of such stock, and there are no agreements or understandings with respect to the
voting, sale, transfer or registration of any shares of capital stock of any
Subsidiary.
Section 3.13 Financial Information. EIP has delivered to FCII the
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audited balance sheet of EIP as of December 31, 1997, together with the related
statements of income, changes in shareholder's equity and cash flow for the
years then ended, including the related notes, all certified by Price
Waterhouse, certified public accountants. In addition, EIP has delivered to
FCII its interim unaudited financial statements as for the three month periods
ending March 31, 1998. Such Financial Statements, including the related notes,
are in accordance with the books and records of EIP and fairly present the
financial position of EIP and the results of operations and changes in financial
position of EIP as of the dates and for the periods indicated, in each case in
conformity with generally accepted accounting principles applied on a consistent
basis. Except as, and to the extent reflected or reserved against in the
Financial Statements, EIP, as of the date of the Financial Statements, has no
material liability or obligation of any nature, whether absolute, accrued,
continued or otherwise, not fully reflected or reserved against in the Financial
Statements. As of the Closing Date, there will not have been any adverse change
in the financial condition or other operations, business, properties or assets
of EIP other than liabilities incurred in the ordinary course of business in
which, in the aggregate, are not in excess of $50,000 from that reflected in the
latest Financial Statements of EIP furnished to FCII pursuant hereto.
Section 3.14 Litigation. Except as disclosed in Schedule 3.14, there
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are no actions, suits or proceedings, formal or informal, pending or, to the
best knowledge of the Stockholder's, threatened against EIP, nor is EIP subject
to any order, judgment or decree, except in all cases, whether known or unknown,
for matters which, in the aggregate, would not result in a loss to EIP in excess
of $50,000.
Section 3.15 Taxes. Except as disclosed in Schedule 3.15, EIP has
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filed all federal tax returns and reports due or required to be filed, and has
paid all taxes, interest payments and penalties, if any, required to be paid
with respect thereto. EIP has made adequate provision for the payment of all
taxes accruable for all periods ending on or before the Closing Date to any
taxing authority and is not delinquent in the payment of any material tax or
governmental charge of any nature.
Section 3.16 Compliance with Laws. Except as set forth in Schedule
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3.16, EIP is, and at all times prior to the date hereof has been, to the best of
the Stockholder's knowledge, in compliance with all statutes, orders, rules, and
regulations applicable to it or to the ownership of its assets or the operation
of its business, except for failures to be in compliance that would not have a
material adverse effect on the business, properties, condition (financial or
otherwise) or prospects of EIP, and EIP has no basis to expect to receive, and
has not received, any order or notice of any such violation or claim of
violation of any such statute, order, rule, ordinance or regulation.
Section 3.17 Books and Records. The books of account, minute books,
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stock record books and other records of EIP, all of which have been made
available to FCII, are accurate and complete in all material respects and have
been maintained in accordance with sound business practices.
Section 3.18 Title to Properties; Encumbrances. EIP has good title to
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all of its properties and assets, real and personal, tangible and intangible,
that are material to the condition (financial or otherwise), business,
operations or prospects of EIP, free and clear of all mortgages, claims, liens,
security interests, charges, leases, encumbrances and other restrictions of any
kind and nature, except (i) as specifically disclosed in Schedule 3.18, (ii) as
disclosed in the financial statements of EIP, (iii) statutory liens not yet
delinquent, and (iv) such liens consisting of zoning or planning restrictions,
imperfections of title, easements, pledges, charges and encumbrances, if any, as
do not materially detract from the value or materially interfere with the
present use of the property or assets subject thereto or affected thereby.
Section 3.19 Disclosure. To the best of the Stockholder's knowledge,
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no representation or warranty of the Stockholder contained in this Agreement
(including the exhibits and schedules hereto) contains any untrue statement or
omits to state a material fact necessary in order to make the statements
contained herein or therein, in light of the circumstances under which they were
made, not misleading.
Section 3.20 Insurance . EIP and its Subsidiaries maintain adequate
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insurance with respect to their respective businesses and are in compliance with
all material requirements and provisions thereof.
Section 3.21 Material Agreements; Action . Except as set forth in
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Schedule 3.21, there are no material contracts, agreements, commitments,
understandings or proposed transactions, whether written or oral, to which EIP
or any of its Subsidiaries is a party or by which it is bound that involve or
relate to: (i) any of their respective officers, directors, stockholders or
partners or any Affiliate thereof; (ii) the sale of any of the assets of EIP or
any of its Subsidiaries other than in the ordinary course of business; (iii)
covenants of EIP or any of its Subsidiaries not to compete in any line of
business or with any person in any geographical area or covenants of any other
person not to compete with EIP or any of its Subsidiaries in any line of
business or in any geographical area; (iv) the acquisition by EIP or any of its
Subsidiaries of any operating business or the capital stock of any other Person;
(v) the borrowing of money or (vi) the expenditure of more than $50,000 in the
aggregate or the performance by EIP or any Subsidiary extending for a period
more than one year from the date hereof, other than in the ordinary course of
business. There have been made available to FCII and its representatives true
and complete copies of all such agreements. All such agreements are in full
force and effect. Neither the Company nor any of its Subsidiaries is in default
under any such agreements nor is any other party to any such agreements in
default thereunder in any respect.
Section 3.22 Employee Benefit Plans . EIP is not a party to any
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employee benefit plan.
Section 3.23 No Pending Transactions . Except for the transactions
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contemplated by this Agreement, neither EIP nor any Subsidiary is a party to or
bound by or the subject of any agreement, undertaking, commitment or discussions
or negotiations with any person that could result in (i) the sale, merger,
consolidation or recapitalization of EIP or any Subsidiary, (ii) the sale of
all or substantially all of the assets of EIP or any Subsidiary, or (iii) a
change of control of more than five percent of the outstanding capital stock of
EIP or any Subsidiary.
Section 3.24 No Undisclosed Liabilities . To the best of the
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Stockholder's knowledge, neither EIP nor or any Subsidiary has any obligation or
liability (contingent or otherwise) that would be required to be reflected in
the financial statements of the Company in accordance with Estonian Accounting
Law except as reflected in EIP's Balance Sheet.
ARTICLE IV
LIMITATION OF LIABILITY OF CERTAIN PERSONS
Section 33N of the Texas Securities Act, which applies to this Offering,
limits the liability of certain persons in connection with actions or series of
actions under Section 33 of the Texas Securities Act. Specifically, Section 33N
limits the liability of an attorney, an accountant, a consultant, or the firm of
the attorney, accountant, or consultant (collectively, the "Person") to an
amount equal to three times the fee paid by the Company or other seller to the
Person for the services related to the offer of securities, unless a court finds
the Person engaged in intentional wrong doing in providing the services.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF FCII
FCII hereby represents and warrant to the Stockholders as follows:
Section 5.1 Organization and Capitalization. FCII is a corporation
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duly organized, validly existing and in good standing under the laws of the
State of Delaware, with full power and authority and all necessary governmental
and regulatory licenses, permits and authorizations to carry on the businesses
in which it is engaged, to own the properties that it owns currently and will
own at the Closing, and to perform its obligations under this Agreement. FCII
is qualified as a foreign corporation and is in good standing in each
jurisdiction in which the failure to qualify would have a material adverse
effect on the business, properties or condition (financial or otherwise) of
FCII. FCII does not have any subsidiaries or any other investments or ownership
interest in any corporation, partnership, joint venture or other business
enterprise, except as set forth in Schedule 5.1. Immediately prior to the
Closing Date the authorized capital stock of FCII consists of (i) 100,000,000
shares of common stock, $.001 par value of which 12,651,142 shares are validly
issued and outstanding, and of which FCII contemplates issuing 9,600,000 shares
in unrelated private transactions. All of such issued and outstanding shares of
FCII Stock have been and all of the shares of FCII Stock to be issued hereby
will be, at the Closing, duly authorized and validly issued and are and will be
at the Closing fully paid and non-assessable. None of the shares that were
issued and none of the shares to be issued hereby will be in violation of any
preemptive rights. FCII has no obligation to repurchase, reacquire or redeem
any of its outstanding capital stock. FCII also contemplates issuing options to
purchase up to 4,630,000 shares in unrelated transactions. These options expire
August 24, 2001 and are exercisable at prices ranging from $.005 to $.01 per
share.
Section 5.2 Subsidiaries. Schedule 5.2 sets forth a complete and
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accurate list of all Subsidiaries of FCII, showing (as to each such Subsidiary)
the date of its incorporation and the jurisdiction of its incorporation. All of
the outstanding capital stock of, or other ownership interests in, each
Subsidiary is owned by FCII, directly or indirectly, free and clear of any lien
or any other limitation or limitation or restriction (including restrictions on
the right to vote). All outstanding shares of the capital stock of any
Subsidiary have been duly authorized and validly issued and are fully paid and
non-assessable and are free of any preemptive rights. There are no outstanding
securities of any Subsidiary convertible into or evidencing the right to
purchase or subscribe for any shares of capital stock of any Subsidiary, there
are no outstanding or authorized options, warrants, calls, subscriptions,
rights, commitments or any other agreements of any character obligating any
Subsidiary to issue any shares of its capital stock or any securities
convertible into or evidencing the right to purchase or subscribe for any shares
of such stock, and there are no agreements or understandings with respect to the
voting, sale, transfer or registration of any shares of capital stock of any
Subsidiary.
Section 5.3 Authorization. All corporate action on the part of FCII
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necessary for the authorization, execution, delivery and performance of this
Agreement by FCII has been taken or will be taken prior to the Closing. FCII
has the requisite corporate power and authority to execute, deliver and perform
this Agreement. This Agreement has been duly executed and delivered by FCII,
and constitutes a valid and binding obligation of FCII, enforceable against FCII
in accordance with its terms, subject to bankruptcy, insolvency, reorganization,
and other laws of general application relating to or affecting creditors' rights
and to general equitable principles.
Section 5.4 Litigation. Except as set forth in Schedule 5.4, there are
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no claims, actions, suits or proceedings, formal or informal, pending or, to the
best knowledge of FCII, threatened against FCII, nor is FCII subject to any
order, judgment or decree, except in either case for matters which, in the
aggregate, would not result in a loss to FCII in excess of $100,000.
Section 5.5 Taxes. FCII has filed all federal, state or local tax
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returns and reports due or required to be filed and has paid all taxes, interest
payments and penalties, if any, required to be paid with respect thereto, and
has made adequate provision for the payment of all taxes accruable for all
periods ending on or before the Closing Date to any taxing authority and is not
delinquent in the payment of any material tax or governmental charge of any
nature.
Section 5.6 Financial Information. FCII has delivered to the
----------------------
Stockholders the audited balance sheet of FCII as of December 31, 1997, together
with the related statements of income, changes in shareholders' equity and cash
flow for the years then ended, including the related notes, all certified by
▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P., certified public accountants (the "Financial
Statements"). Such Financial Statements, including the related notes, are in
accordance with the books and records of FCII and fairly present the financial
position of FCII and the results of operations and changes in financial position
of FCII as of the dates and for the periods indicated, in each case in
conformity with generally accepted accounting principles applied on a consistent
basis. Except as, and to the extent reflected or reserved against in the
Financial Statements, FCII as of the date of the financial statements has no
material liability or obligation of any nature, whether absolute, accrued,
continued or otherwise, not fully reflected or reserved against in the Financial
Statements. As of the Closing Date, there will not have been any adverse change
in the financial condition or other operations, business, properties or assets
of FCII in excess of $100,000 from that reflected in the latest financial
statements of FCII furnished to the Stockholders pursuant hereto.
Section 5.7 Compliance with Laws. Except as set forth in Schedule 5.7,
--------------------
FCII is, and at all times prior to the date hereof has been, to the best of its
knowledge, in compliance with all statutes, orders, rules, ordinances and
regulations applicable to it or to the ownership of its assets or the operation
of its businesses, except for failures to be in compliance that would not have a
material adverse effect on the business, properties, condition (financial or
otherwise) or prospects of FCII and FCII has no basis to expect, nor has
received, any order or notice of any such violation or claim of violation of any
such statute, order, rule, ordinance or regulation.
Section 5.8 Title to Properties; Encumbrances. FCII has good and
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marketable title to all of its properties and assets, real and personal,
tangible and intangible, that are material to the condition (financial or
otherwise), business, operations or prospects of FCII, free and clear of all
mortgages, claims, liens, security interests, charges, leases, encumbrances and
other restrictions of any kind and nature, except (i) as specifically disclosed
in Schedule 5.8, (ii) as disclosed in the Financial Statements of FCII, (iii)
statutory liens not yet delinquent, and (iv) such liens consisting of zoning or
planning restrictions, imperfections of title, easements, pledges, charges and
encumbrances, if any, as do not materially detract from the value or materially
interfere with the present use of the property or assets subject thereto or
affected thereby.
Section 5.9 Disclosure. Except as set forth in Schedule 5.9, to the
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best of FCII knowledge, no representation or warranty of FCII contained in this
Agreement (including the exhibits and schedules hereto) contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein or therein, in light of the
circumstances under which they were made, not misleading.
Section 5.10 No Default. The execution, delivery and performance of
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this Agreement by FCII does not and will not constitute a violation or default
under or conflict with any contract, agreement, understanding or commitment to
which it is a party or by which it is bound or the Certificate of Incorporation
or By-Laws of FCII or any statute, regulation, law, ordinance, judgment, decree,
writ, injunction, order or ruling of any government entity.
Section 5.11 Pending Claims. There is no claim, suit, action or
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proceeding, whether judicial, administrative or otherwise, pending or, to the
best of FCII's knowledge, threatened that would preclude or restrict the
transfer to the Stockholders of the FCII Stock or the performance of this
Agreement by FCII.
Section 5.12 Insurance . FCII and its Subsidiaries maintain adequate
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insurance with respect to their respective businesses and are in compliance with
all material requirements and provisions thereof.
Section 5.13 Employee Benefit Plans . FCII is not a party to any
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employee benefit plan.
Section 5.14 No Pending Transactions . Except for the transactions
-------------------------
contemplated by this Agreement, neither FCII nor any Subsidiary is a party to or
bound by or the subject of any agreement, undertaking, commitment or discussions
or negotiations with any person that could result in (i) the sale, merger,
consolidation or recapitalization of FCII or any Subsidiary, (ii) the sale of
all or substantially all of the assets of FCII or any Subsidiary, or (iii) a
change of control of more than five percent of the outstanding capital stock of
FCII or any Subsidiary.
Section 5.15 No Undisclosed Liabilities. To the best of its
----------------------------
knowledge, neither FCII nor or any Subsidiary has any obligation or liability
(contingent or otherwise) that would be required to be reflected in the
financial statements of the Company in accordance with GAAP except as reflected
in FCII Balance Sheet.
Section 5.16 Indemnification by FCII. FCII recognizes that the Exchange
-----------------------
being conducted with the Stockholders is based, to a material degree, upon the
representations and warranties of FCII as set forth and contained herein and
FCII hereby agrees to indemnify and hold harmless the Stockholders against all
damages, costs, or expenses (including reasonable attorney's fees) arising as a
result of any breach of representation or warranty or omission made herein by
FCII.
If any action is brought against FCII, the Stockholders (collectively the
"Indemnified Parties") in respect of which indemnity may be sought against FCII
pursuant to the foregoing paragraph, the Indemnified Parties shall promptly
notify FCII in writing of the institution of such action (but the omission to so
notify FCII shall not relieve it from any liability that it may have to such
Indemnified Parties except to the extent FCII is materially prejudiced or
otherwise forfeits substantive rights or defenses by reason of such failure),
and FCII shall assume the defense of such action, including the employment of
counsel to be chosen by FCII to be reasonably satisfactory to the Indemnified
Parties, and payment of expenses. The Indemnified Parties shall have the right
to employ FCII or their own counsel in any such case, but the fees and expenses
of such counsel shall be at the Indemnified Party's expense, unless the
employment of such counsel shall have been authorized in writing by FCII in
connection with the defense of such action, or FCII shall not have employed
counsel to take charge of the defense of such action, or counsel employed by
FCII shall not be diligently defending such action, or the Indemnified Parties
shall have reasonably concluded that there may be defenses available to it which
are different from or additional to those available to FCII, or that
representation of such Indemnified Party and FCII by the same counsel would be
inappropriate under applicable standards of professional conduct due to actual
or potential differing interests between them (in which case FCII shall not have
the right to direct the defense of such action on behalf of the Indemnified
Parties), in any of which event such fees and expenses shall been borne by FCII.
Anything in this paragraph to the contrary notwithstanding, FCII shall not be
liable for any settlement of, or any expenses incurred with respect to, any such
claim or action effected without FCII written consent, which consent shall not
be unreasonably withheld. FCII shall not, without the prior written consent of
the Indemnified Parties effect any settlement of any proceeding in respect of
which any Indemnified Parties is a party and indemnity has been sought hereunder
unless such settlement includes an unconditional release of such Indemnified
Parties from all liability on claims that are the subject matter of such
proceeding.
ARTICLE VI
CLOSING; DELIVERY
Section 6.1(a) Closing Documents of the Stockholders. The obligations
-------------------------------------
of FCII to effect the transactions contemplated hereby are subject to the
delivery by the Stockholders at Closing of each of the following documents:
(i) The Stockholders shall have delivered certificates evidencing their
EIP Common Stock duly endorsed for transfer by the Stockholders to FCII as
contemplated by this Agreement, in form and substance satisfactory to counsel
for FCII.
(ii) The Stockholders shall have executed and delivered to FCII the
Subscription Agreement as contemplated by Section 3.7 hereof.
Section 6.1(b) Closing Documents of FCII. The obligations of the
----------------------------
Stockholders to effect the transactions contemplated hereby are subject to each
of the following conditions:
(i) FCII shall have delivered either (i) certificates evidencing FCII
Common Stock, duly executed for issuance by FCII to the Stockholders as
contemplated by this Agreement or (ii) letter of instructions from a duly
authorized officer of FCII to OTC Stock Transfer, Inc. (FCII's transfer agent),
instructing the transfer agent to duly issue stock certificates evidencing the
shares of Common Stock of FCII to the Stockholders, all as contemplated by this
Agreement, in form and substance satisfactory to counsel for the Stockholders.
Section 6.1 (c) Conditions to the Obligations of FCII and the
----------------------------------------------------
Stockholders. The obligations of FCII and the Stockholders to effect the
-------------
transactions contemplated hereby are further subject to the following condition:
(i) The Board of Directors of FCII shall have approved and authorized
the transactions contemplated herein.
(ii) No action, suit or proceeding by or before any court or any
governmental or regulatory authority shall have been commenced or threatened,
and no investigation by any governmental or regulatory authority shall have been
commenced or threatened, seeking to restrain, prevent or challenge the
transactions contemplated hereby or seeking judgments against FCII or the
Stockholders.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Notices. All notices and other communications provided
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for herein shall be in writing and shall be deemed to have been duly given if
delivered personally or sent by registered or certified mail, return receipt
requested, postage prepaid, or overnight air courier guaranteeing next day
delivery:
(a) If to FCII:
▇▇. ▇▇▇▇ ▇▇▇▇▇, President
First Capital International, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
fax (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to the Stockholders, to:
The addresses listed on Exhibit A, attached hereto.
All notices and communications shall be deemed to have been duly given: at
the time delivered by hand, if personally delivered; three days after being
deposited in the mail, postage prepaid, sent certified mail, return receipt
requested, if mailed; and the next day after timely delivery to the courier, if
sent by overnight air courier guaranteeing next day delivery.
If a notice or communication is mailed in the manner provided above within
the time prescribed, it is duly given, whether or not the addressee receives it.
Section 7.2 Assignment. Neither this Agreement nor any of the rights,
----------
interests or obligations hereunder shall be assigned by any of the parties
without the prior written consent of the other parties, which consent will not
be unreasonably withheld. This Agreement will be binding upon, inure to the
benefit of and be enforceable by the parties and their respective heirs,
personal representatives, successors and assigns.
Section 7.3 Counterparts. This Agreement may be executed in any number
------------
of counterparts, which taken together shall constitute one and the same
instrument and each of which shall be considered an original for all purposes.
Section 7.4 Section Headings. The section headings contained in this
-----------------
Agreement are for convenient reference only and shall not in any way affect the
meaning or interpretation of this Agreement.
Section 7.5 Entire Agreement. This Agreement, the documents to be
-----------------
executed hereunder and the exhibits and schedules attached hereto constitute the
entire agreement among the parties hereto pertaining to the subject matter
hereof and supersede all prior agreements, understandings, negotiations and
discussions, whether oral or written, of the parties pertaining to the subject
matter hereof, and there are no warranties, representations or other agreements
among the parties in connection with the subject matter hereof except as
specifically set forth herein or in documents delivered pursuant hereto. No
supplement, amendment, alteration, modification, waiver or termination of this
Agreement shall be binding unless executed in writing by the parties hereto.
All of the exhibits and schedules referred to in this Agreement are hereby
incorporated into this Agreement by reference and constitute a part of this
Agreement.
Section 7.6 Validity. The invalidity or unenforceability of any
--------
provision of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, which shall remain in full force and
effect.
Section 7.7 Survival. The respective representations, warranties,
--------
covenants and agreements set forth in this Agreement shall survive the Closing
for a period of one year from the execution hereof.
Section 7.8 Public Announcements. The parties hereto agree that prior
--------------------
to making any public announcement or statement with respect to the transactions
contemplated by this Agreement, the party desiring to make such public
announcement or statement shall consult with the other parties hereto and
exercise their best efforts to (i) agree upon the text of a joint public
announcement or statement to be made by all of such parties or (ii) obtain
approval of the other parties hereto to the text of a public announcement or
statement to be made solely by the party desiring to make such public
announcement; provided, however, that if any party hereto is required by law to
make such public announcement or statement, then such announcement or statement
may be made without the approval of the other parties.
Section 7.9 Gender. All personal pronouns used in this Agreement shall
------
include the other genders, whether used in the masculine, feminine or neuter
gender, and the singular shall include the plural, and vice versa, whenever
appropriate.
Section 7.10 Choice of Law. This Agreement shall be governed by, and
--------------
construed in accordance with, the laws of the State of Texas, U.S.A. without
regard to principles of conflict of laws.
Section 7.11 Costs and Expenses. FCII and the Stockholders shall each
------------------
pay their own respective fees and disbursements incurred in connection with this
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed or caused this
Agreement to be executed effective as of the day and year first above written.
FIRST CAPITAL INTERNATIONAL, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇
-----------------------
▇▇▇▇ ▇▇▇▇▇, President
STOCKHOLDER:
Eurocapital Group Ltd.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
--------------
▇▇▇▇▇▇▇ ▇▇▇▇▇
STOCKHOLDER:
United Capital Group Limited
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
---------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Authorized Signatory
EXHIBIT A
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Shares of EIP to be Shares of FCII to be
Delivered to FCII Received from FCII
Stockholder at Closing at Closing
--------------------------------- ------------------- ----------------------
1. Eurocapital Group Ltd. 30 25,500,000
19 Peel Road
Douglas, Isle of Man U.K.
2. United Capital Group Ltd. 10 8,500,000
▇▇▇▇▇▇ ▇▇ & ▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇