SHARE ACQUISITION AGREEMENT
by and among the shareholders of
INTEGRATED SPACE SYSTEMS, INC.,
a California corporation
and
SPACEDEV, INC.,
a Colorado corporation
February 7, 1998
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SHARE ACQUISITION AGREEMENT
AGREEMENT made and entered into this 7th day of February, 1998 by and
among ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ("▇▇▇▇▇"), ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ("▇▇▇▇▇"), ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
("JAR"), ▇▇▇ ▇. ▇▇▇▇▇▇ ("▇▇▇▇▇▇"), ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇") and ▇▇▇▇▇▇▇ ▇.
▇▇▇▇ ("▇▇▇▇") (Smith, Brown, JAR, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ and ▇▇▇▇ are collectively
referred to as "ISS Shareholders" unless otherwise specifically identified) and
SpaceDev, Inc., a Colorado corporation ("SpaceDev").
RECITALS
WHEREAS, the ISS Shareholders own in the aggregate all of the issued
and outstanding shares of capital stock (the "ISS Shares") of Integrated Space
Systems, Inc., a California corporation ("ISS"); and
WHEREAS, the ISS Shareholders and SpaceDev have entered a letter of
intent dated as of December 3, 1997 (the "Letter of Intent") setting forth the
principal terms and conditions upon which the ISS Shareholders would exchange
and SpaceDev would acquire, directly or through a wholly owned subsidiary, the
ISS Shares in exchange for 2,000,000 shares of common stock of SpaceDev (the
"SpaceDev Shares"); and
WHEREAS, the ISS Shareholders and SpaceDev wish to enter into this
Agreement for purposes of setting forth the terms and conditions of the
agreement between them and to satisfy the requirement in the Letter of Intent of
a definitive acquisition agreement.
NOW, THEREFORE, the parties hereto each in consideration of the
representations, warranties, covenants and agreements of the other provided for
or contained herein do hereby agree as follows:
ARTICLE 1
DEFINITIONS/ACQUISITION/CLOSING
I.1 Definitions.
------------
For all purposes of this Agreement, except as otherwise
expressly provided unless the context otherwise requires,
(a) the terms defined in this Article 1 have the meaning
assigned to them in this Article 1 and include the plural as well as the
singular,
(b) all accounting terms not otherwise defined herein have the
meanings assigned under generally accepted accounting principals,
(c) all references in this Agreement to designated "Articles,"
"Sections" and other subdivisions are to the designated Articles, Sections and
other subdivisions of the body of this Agreement,
(d) pronouns of either gender or neuter shall include, as
appropriate, the other pronoun forms, and
(e) the words, "herein," "hereof" and "hereunder" and other
words of similar import as refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision.
As used in this Agreement and the Exhibits and Schedules delivered
pursuant to this Agreement, the following definitions shall apply.
"Action" means any action, complaint, petition, investigation, suit or
other proceeding, whether civil or criminal, in law or in equity, or before any
arbitrator or Governmental Entity.
"Agreement" means this Agreement by and among SpaceDev, ISS as amended
or supplemented together with all Exhibits and Schedules attached or
incorporated by reference.
"Approval" means any approval, authorization, consent, qualification or
registration, or any waiver of any of the foregoing, required to be obtained
from, or any notice, statement or other communication required to be filed with
or delivered to, any Governmental Entity or any other Person.
"Associate" of a Person means
(f) a corporation or organization of which such person is an
officer or partner or is, directly or indirectly, the beneficial owner of 10% of
more of any class of equity securities;
(g) any trust or other estate in which such person has a
substantial beneficial interest or as to which such person serves as trustee or
in a similar capacity; and
(h) any relative or spouse of such person or any relative of
such spouse.
"Auditors" means ▇▇▇▇▇▇▇▇▇ & Co. LLP, independent public accountants to
SpaceDev.
"ISS Shares" means all of the issued and outstanding shares of ISS.
"Business" means the business of ISS as currently conducted, and shall
be deemed to include, but not be limited to, any of the following incidents of
such business: income, cash flow, operations, condition (financial or other),
assets, properties, anticipated revenues, prospects, liabilities and personnel.
"Closing" means the consummation of the exchange of the ISS Shares
under this Agreement for the SpaceDev Shares.
"Closing Date" means the date of the Closing.
"Code" means the Internal Revenue Code of 1986, as amended.
"Contract" means any agreement, arrangement, bond, commitment,
franchise, indemnity, indenture, instrument, lease, license or understanding,
whether or not in writing.
"Disclosure Schedule" means the Disclosure Schedule dated the date
hereof and delivered by ISS and SpaceDev. The Sections of the Disclosure
Schedule shall be numbered to correspond to the applicable Section of this
Agreement and, together with all matters under such heading, shall be deemed to
qualify ONLY that section.
"Employee Plan" means any employee benefit plan, collective bargaining,
employment or severance agreement or other similar arrangement to which either
ISS or SpaceDev is a party or by which it is bound, legally or otherwise.
"Encumbrance" means any claim, charge, easement, encumbrance, lease,
covenant, security interest, lien, option, pledge, rights of others, or
restriction (whether on voting, sale, transfer, disposition or otherwise),
whether imposed by agreement, understanding, law, equity or otherwise, except
for any restrictions on transfer generally arising under any applicable federal
or state securities law.
"Equity Securities" means any capital stock or other equity interest or
any securities convertible into or exchangeable for capital stock or any other
rights, warrants or options to acquire any of the foregoing securities.
"GAAP" means generally accepted accounting principles in the United
States, as in effect from time to time.
"Governmental Entity" means any government or any agency, bureau,
board, commission, court, department, official, political subdivision, tribunal
or other instrumentality of any government, whether federal, state or local,
domestic or foreign.
"▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended, and the related regulations and published
interpretations.
"Hazardous Substance" means (but shall not be limited to) substances
that are defined or listed in, or otherwise classified pursuant to, any
applicable Laws as "hazardous substances," "hazardous materials," "hazardous
wastes" or "toxic substances," or any other formulation intended to define, list
or classify substances by reason of deleterious properties such as ignitibility,
corrosivity, reactivity, radioactivity, carcinogenicity, reproduction toxicity
or "EP toxicity," and petroleum and drilling fluids, produced waters and other
wastes associated with the exploration, development, or production of crude oil,
natural gas or geothermal energy.
"Indemnifiable Claim" means any Loss for or against which any party is
entitled to indemnification under this Agreement; "INDEMNIFIED PARTY" means the
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party entitled to indemnity hereunder; and "INDEMNIFYING PARTY" means the party
obligated to provide indemnification hereunder.
"Intangible Property" means any trade secret, secret process or other
confidential information or know-how and any and all Marks.
"IRS" means the Internal Revenue Service or any successor entity.
"Law" means any constitutional provision, statute or other law, rule,
regulation, or interpretation of any Governmental Entity and any Order.
"Loss" means any action, cost, damage, disbursement, expense,
liability, loss, deficiency, diminution in value, obligation, penalty or
settlement of any kind or nature, whether foreseeable or unforeseeable,
including but not limited to, interest or other carrying costs, penalties,
legal, accounting and other professional fees and expenses incurred in the
investigation, collection, prosecution and defense of claims and amounts paid in
settlement, that may be imposed on or otherwise incurred or suffered by the
specified person.
"▇▇▇▇" means any brand name, copyright, patent, service ▇▇▇▇,
trademark, trade name, and all registrations or applications for registration of
any of the foregoing.
"Material Adverse Effect" means any change in or effect on ISS or
SpaceDev that is materially adverse to the Business.
"Material Contract" means those Contracts listed on the Disclosure
Schedule as Material Contracts.
"Order" means any decree, injunction, judgment, order, ruling,
assessment or writ.
"Permit" means any license, permit, franchise, certificate of
authority, or order, or any waiver of the foregoing, required to be issued by
any Governmental Entity.
"Person" means an association, a corporation, an individual, a
partnership, a trust or other entity or organization, including a Governmental
Entity.
"SpaceDev Shares" means 2,000,000 shares of common stock of SpaceDev
being exchanged for the ISS Shares as set forth in paragraph 1.3, below.
"Subsidiary" means any Person in which ISS has a direct or indirect
equity or ownership interest in excess of 5%.
"Tax" means any foreign, federal, state, county or local income, sales
and use, excise, franchise, real and personal property, transfer, gross receipt,
capital stock, production, business and occupation, disability, employment,
payroll, severance or withholding tax or charge imposed by any Governmental
Entity, any interest and penalties (civil or criminal) related thereto or to the
nonpayment thereof, and any Loss in connection with the determination,
settlement or litigation of any Tax liability.
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"Tax Return" means a report, return or other information required to be
supplied to a Governmental Entity with respect to Taxes.
1.2 Transfer of ISS Shares by the ISS Shareholders.
-----------------------------------------------
Subject to the terms and conditions of this Agreement, each of
the ISS Shareholders who has executed this Agreement agrees to transfer and
convey that number of ISS Shares set forth next to his name below and to deliver
the certificates evidencing such ISS Shares to SpaceDev at the Closing. The
certificates will be properly endorsed for transfer to or accompanied by a duly
executed stock power in favor of SpaceDev or its nominee as SpaceDev may have
directed prior to the Closing Date and otherwise in a form acceptable for
transfer on the books of ISS.
1.3 Acquisition of the ISS Shares by SpaceDev.
------------------------------------------
Subject to the terms and conditions of this Agreement,
SpaceDev agrees to acquire the ISS Shares from the ISS Shareholders and in
exchange therefor to issue, convey, transfer and deliver the SpaceDev Shares to
the ISS Shareholders.
1.4 The Closing.
------------
The Closing will take place at ▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, on February 7, 1998 at 2:00 p.m. or on
such other date which SpaceDev and the ISS shareholders may mutually choose.
1.5 Tax Free Exchange
-----------------
It is the intent of the parties this transaction will
constitute a tax free exchange under Internal Revenue Code ' 368(b).
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF ISS SHAREHOLDERS
Except as otherwise indicated on the Disclosure Schedule, each of ISS
Shareholders represents, warrants and agrees as follows:
2.1 Organization and Related Matters.
---------------------------------
ISS is a corporation duly organized, validly existing and in
good standing under the laws of California. ISS has no Subsidiaries. ISS has all
necessary corporate power and authority to own its properties and assets and to
carry on the Business as now conducted. There are no jurisdictions outside of
California where the character or the location of the assets owned or leased by
ISS or the nature of the Business requires licensing or qualification. True,
correct and complete copies of the charter documents of ISS as in effect on the
date hereof have been delivered to SpaceDev.
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2.2 ISS Shares.
-----------
The ISS Shareholders own the outstanding shares of capital
stock of ISS beneficially and of record, free and clear of any and all liens,
covenants, conditions, rights or other Encumbrances. At the Closing, SpaceDev
will acquire good and marketable title to and complete ownership of the ISS
Shares, free of any and all covenants, conditions, or other Encumbrances. The
authorized capital stock of ISS consists of 1,000,000 shares of common stock, of
which 72,000 shares are issued and outstanding. There are no outstanding
contracts or other rights to subscribe for or purchase, or Contracts or other
obligations to issue or grant any rights to acquire, any Equity Securities of
ISS, or to restructure or recapitalize ISS. There are no outstanding Contracts
of ISS to repurchase, redeem or otherwise acquire any Equity Securities of ISS.
All shares of capital stock of ISS are duly authorized, validly issued and
outstanding and are fully paid and nonassessable and were issued in conformity
with applicable laws. There are no preemptive rights in respect of any Equity
Securities of ISS, except for such rights held by the ISS Shareholders which
rights shall terminate upon the consummation of the acquisition by SpaceDev of
the ISS Shares under this Agreement. Any Equity Securities of ISS which were
issued and reacquired by ISS were so reacquired (and, if reissued, so reissued)
in compliance with all applicable Laws, and ISS has no outstanding obligation or
liability with respect thereto.
2.3 Financial Statements; Changes; Contingencies.
---------------------------------------------
1. UNAUDITED INTERIM FINANCIAL STATEMENTS. The ISS
Shareholders have delivered to SpaceDev a balance sheet for ISS at December 31,
1997 and the related statements of income for the 12 months then ended. All such
interim financial statements have been prepared in accordance with GAAP
consistently applied during the periods covered (except as disclosed therein),
the statements of income present fairly the results of operations of ISS for the
respective periods covered, and the balance sheets present fairly the financial
condition of ISS as of their respective dates, except that such financial
statements may omit footnote disclosures required by GAAP to the extent the
content thereof would not materially differ in nature or amount from those
disclosures reported in the most recent audited period, and year-end adjustments
to the extent not material. Notwithstanding the foregoing, all such financial
statements reflect all adjustments (which consist only of normal recurring
adjustments not material in amount) necessary for a fair presentation.
2. NO MATERIAL ADVERSE CHANGES. Since December 31, 1997,
whether or not in the ordinary course of business, there has not been, occurred
or arisen:
a. any change in or event affecting ISS, the Business or
the ISS Shares that has had or may reasonably be expected to
have a Material Adverse Effect.
b. any agreement (other than a Material Contract listed on
the Disclosure Schedule), condition, action or omission which
would be proscribed by (or require consent under) Section 4.3
had it existed, occurred or arisen after the date of this
Agreement,
c. any strike or other labor dispute, or
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d. any casualty, loss, damage or destruction whether
or not covered by insurance) or any material property of ISS.
3. NO OTHER LIABILITIES OR CONTINGENCIES. ISS does not have
any liabilities of any nature, whether accrued, absolute, contingent or
otherwise, and whether due or to become due, probable of assertion or not, that,
in accordance with GAAP applied on a consistent basis, should have been but were
not reflected or disclosed in the financial statements (including the notes
thereto) referred to in subsections (a) and (b) above, except liabilities which
were incurred after December 31, 1997, in the ordinary course of business which
do not exceed $10,000 exclusive of current payroll and payroll taxes for the
payroll period ending immediately prior to closing.
2.4 Tax and Other Returns and Reports.
----------------------------------
ISS has filed, or will, on or before the Closing Date, file
all Tax Returns required to be filed by it on or before the Closing Date.
Adequate provision has been made in the books and records of ISS and in the
financial statements referred to in Section 2.3 above or delivered to SpaceDev,
for all Taxes relating to operations through, or property owned on or before,
the date of the most recent of such financial statements. No liability for Taxes
has arisen since such date other than in the ordinary course of ISS's business.
All required Tax Returns including amendments to date, have been prepared in
good faith without negligence or willful misrepresentation and are complete and
accurate in all material respects. No Governmental Entity has, during the past
three years, examined or is in the process of examining any Tax Returns of ISS.
No Governmental Entity has proposed (tentatively or definitively), asserted or
assessed or, to the best knowledge of ISS, threatened to propose or assert, any
deficiency, assessment or claim for Taxes and there would be no basis for any
such delinquency, assessment or claim. The ISS Shareholders have advised
SpaceDev that ISS has elected to be taxed as an "S Corporation" under section
1362 of the Code and under section 23801 of the Revenue and Taxation Code of
California.
2.5 Material Contracts.
-------------------
ISS has duly performed all its obligations under each Material
Contract to the extent that such obligations to perform have accrued; and no
material breach or default, alleged material breach or default, or event which
would (with the passage of time, notice or both) constitute a material breach or
default thereunder by ISS or, to the best knowledge of ISS, by any other party
or obligor with respect thereto, has occurred or as a result of this Agreement
or performance will occur. Consummation of the transactions contemplated by this
Agreement will not (and will not give any Person a right to) terminate or modify
any rights of, or accelerate or augment any obligation of, ISS under any
Material Contract.
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2.6 Tangible Property.
------------------
(a) ISS owns no real property. There is no pending or
threatened action that would materially interfere with the quiet enjoyment of
any leasehold by ISS.
(b) ISS owns or leases all tangible personal property that is
material to the Business free of Encumbrances except for Encumbrances consisting
of liens for Taxes not yet due.
(c) All material leasehold properties held by ISS, as lessee,
are held under valid, binding and enforceable leases, subject only to such
exceptions as are not, individually or in the aggregate, material to the
Business. All material tangible properties of ISS are in a good state of
maintenance and repair (except for ordinary wear and tear) and are adequate for
the Business.
2.7 Intangible Property.
--------------------
ISS owns or licenses Intangible Property, required for use in
connection with the Business.
2.8 Authorization; No Conflicts.
----------------------------
The execution, delivery and performance of this Agreement and
or related agreements by ISS has been duly and validly authorized by the Board
of Directors of ISS and by all other necessary corporate action on the part of
ISS and by the ISS Shareholders. ISS and the ISS Shareholders have the full
capacity, right, power and authority to enter into this Agreement and any
related agreements to which they are parties. The execution, delivery and
performance of this Agreement by the ISS Shareholders and the execution,
delivery and performance of any related agreements or contemplated transactions
by the ISS Shareholders or ISS will not violate, or constitute a breach or
default (whether upon lapse of time and/or the occurrence of any act or event or
otherwise) under, the charter documents or by-laws of ISS or any Material
Contract, result in the imposition of any Encumbrance against any asset or
properties of ISS, or violate any Law. No Permits and Approvals are required to
be obtained by the ISS Shareholders to consummate the transactions contemplated
by this Agreement. The execution and delivery of this Agreement by the ISS
Shareholders and the performance of this Agreement and any related or
contemplated transactions by the ISS Shareholders or ISS will not, to the
knowledge of ISS, require filing or registration with, or the issuance of any
Permit by, any other third party or Governmental Entity. The consummation of the
transactions contemplated by this Agreement does not, to the knowledge of ISS
require any filings under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act.
2.9 Legal Proceedings.
------------------
There is no Order or Action pending, or threatened, against or
affecting ISS or any of its properties or assets that individually or when
aggregated with one or more other Orders or Actions has or might reasonably be
expected to have a Material Adverse Effect, or adversely affect the ability of
ISS or the ISS Shareholders to perform this Agreement or any aspect of the
transactions contemplated by this Agreement. There is no matter as to which any
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of the ISS Shareholders or ISS has received any notice, claim or assertion, or
which otherwise has been threatened against or affecting any director, officer,
employee, agent or representative of ISS or any other Person, in connection with
which any such Person has or may reasonably be expected to have any right to be
indemnified by ISS.
2.10 Minute Books.
-------------
The minute books of ISS accurately reflect all actions and
proceedings taken to date by its shareholders, board of directors and
committees, and such minute books contain true and complete copies of the
charter documents of ISS and all related amendments. The stock record books of
ISS reflect accurately all transactions in its capital stock of all classes.
2.11 Accounting Records; Internal Controls.
--------------------------------------
(a) ACCOUNTING RECORDS. ISS has records that accurately and
validly reflect its transactions, and accounting controls sufficient to insure
that such transactions are (i) executed in accordance with management's general
or specific authorization and (ii) recorded in conformity with GAAP so as to
maintain accountability for assets.
(b) DATA PROCESSING; ACCESS. Such records, to the extent they
contain important information that is not easily and readily available
elsewhere, have been duplicated, and such duplicates are stored safely and
securely pursuant to procedures and techniques utilized by companies of
comparable size in similar lines of business.
2.11 Insurance.
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[Intentionally left blank]
2.13 Permits.
--------
ISS each holds all material Permits that are required by any
Governmental Entity to permit them or either of them to conduct its business as
now conducted, and all such permits are valid and in full force and effect and
will remain so upon consummation of the transactions contemplated by this
Agreement. To the best knowledge of the ISS Shareholders, no suspension,
cancellation or termination of any of such Permits is threatened or imminent.
2.14 Compliance with Law.
--------------------
(a) ISS is organized and has conducted its businesses in
accordance with applicable Laws in all material respects, and the forms,
procedures and practices of ISS are in compliance with all such Laws, to the
extent applicable, in all material respects.
(b) The use and operation of the assets of ISS are in
compliance in all material respects with all applicable Laws and there is no
material violation of any of such Laws.
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2.15 Employee Benefits.
------------------
Except as set forth on the Disclosure Schedule, there are no
employee benefit plans or other employee benefits accruing for the benefit of
any employee of ISS.
2.16 Certain Interests; Dividends.
-----------------------------
Neither ISS, nor any officer or director of ISS, nor any
Associate of ISS has any material interest in any property used in or pertaining
to the Business; no such Person is indebted or otherwise obligated to ISS; and
ISS is not indebted or otherwise obligated to any such Person, except for
amounts due under normal arrangements applicable to all employees generally as
to salary or reimbursement of ordinary business expenses not unusual in amount
or significance. The consummation of the transactions contemplated by this
Agreement will not (either alone, or upon the occurrence of any act or event, or
with the lapse of time, or both) result in any benefit or payment (severance or
other) arising or becoming due from ISS or the successor or assign thereof to
any Person. Except as expressly permitted by this Agreement, there has been no
dividend or other distribution of assets or securities whether consisting of
money, property or any other thing of value, declared, issued or paid to or for
the benefit of the ISS Shareholders subsequent to the date of the most recent
financial statements described in Section 2.3. ISS has paid no special bonuses
to any officer, director or employee.
2.17 No Brokers, Finders or Financial Advisors.
------------------------------------------
No agent, broker, finder or investment or commercial banker,
or other Person or firm engaged by or acting on behalf of ISS or any of its
respective Affiliates in connection with the negotiation, execution or
performance of this Agreement or the transactions contemplated by this
Agreement, is or will be entitled to any brokerage or finder's or similar fee or
other commission as a result of this Agreement or such transactions.
2.18 Environmental Compliance.
-------------------------
ISS has not generated, used, transported, treated, stored,
released or disposed of, or has suffered or permitted anyone else to generate,
use, transport, treat, store, release or dispose of any Hazardous Substance in
violation of any Laws. There has not been any generation, use, transportation,
treatment, storage, release or disposal of any Hazardous substance in connection
with the conduct of the Business of ISS or the use of any property or facility
of ISS or to the knowledge of ISS any nearby or adjacent properties or
facilities, which has created or might reasonably be expected to create any
liability under any Laws or which would require reporting to or notification of
any Governmental Entity. No asbestos or polychlorinated biphenyl or underground
storage tank is contained in or located at any facility of ISS.
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2.19 Accuracy of Information.
------------------------
The statements, representations and warranties contained in
the Disclosure Schedule are true, and all lists contained therein are complete
and correct. None of the information expressly required by this Agreement to be
supplied by or on behalf of ISS to SpaceDev, or contained in this Agreement, the
Disclosure Schedule or the documents listed in the Disclosure Schedule, did
contain or will contain, at the respective times such information is or was
delivered and as of the Closing Date, any untrue statement of a material fact or
will omit to state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading. If any of such information at any time
subsequent to delivery and prior to Closing become untrue or misleading, in any
material respect, ISS and the ISS Shareholders will promptly notify SpaceDev in
writing of such fact and the reason for such change.
2.20 Investment Representation.
--------------------------
The SpaceDev Shares are restricted securities within the
meaning of the United States federal securities laws, and the ISS Shareholders
are acquiring the SpaceDev Shares for their own account for investment purposes
only and not with a view to or for sale in connection with the distribution
thereof. The certificates evidencing the SpaceDev Shares shall bear a legend
substantially as follows:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR ANY STATE OR
SECURITIES LAWS AND NEITHER THESE SECURITIES NOR ANY INTEREST THEREIN
MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT OR SUCH LAWS OR AN EXEMPTION FROM REGISTRATION UNDER THE
ACT AND SUCH LAWS WHICH, IN THE OPINION OF COUNSEL SATISFACTORY TO THE
ISSUER, IS AVAILABLE."
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SPACEDEV
SpaceDev represents, warrants and agrees as follows:
3.1 Organization and Related Matters.
---------------------------------
SpaceDev is a corporation duly organized, validly existing and
in good standing under the laws of the State of Colorado. SpaceDev has all
necessary corporate power and authority to carry on its business as now being
conducted. SpaceDev has the necessary corporate power and authority to execute,
deliver and perform this Agreement and any related agreements to which it is a
party.
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3.2 Authorization.
--------------
The execution, delivery and performance of this Agreement and
any related agreements, by SpaceDev has been duly and validly authorized by the
Board of Directors of SpaceDev and by all other necessary corporate action on
the part of SpaceDev. This Agreement constitutes the legal, valid and binding
obligation of SpaceDev, enforceable against SpaceDev in accordance with its
respective terms except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws and equitable
principles relating to or limiting creditors' rights generally.
3.3 No Conflicts.
-------------
The execution, delivery and performance of this Agreement and
any related agreements by SpaceDev will not violate the provisions of, or
constitute a breach or default whether upon lapse of time and/or the occurrence
of any act or event or otherwise under (a) the charter documents of SpaceDev,
(b) any Law to which SpaceDev is subject or (c) any Contract to which SpaceDev
is a party that is material to the financial condition, results of operations or
conduct of the business of SpaceDev. The execution and delivery of this
Agreement by SpaceDev and the performance of this Agreement and any related or
contemplated transaction by SpaceDev will not require filing or registration
with, or the issuance of any Permit by, any other third party or Governmental
Entity. The transactions contemplated by this Agreement do not to the knowledge
of SpaceDev require any filings under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act.
3.4 No Brokers, Finders or Financial Advisors.
------------------------------------------
No agent, broker, finder or investment or commercial banker,
or other Person or firm engaged by or acting on behalf of SpaceDev in connection
with the negotiation, execution or performance of this Agreement or the
transactions contemplated by this Agreement, is or will be entitled to any
broker's or finder's or similar fees or other commissions as a result to this
Agreement or such transactions.
3.5 Accuracy of Information.
------------------------
The statements, representations and warranties contained in
the Disclosure Schedule are true, and all lists contained therein are complete
and correct. None of the information expressly required by this Agreement to be
supplied by or on behalf of SpaceDev to ISS, or the ISS Shareholders, or
contained in this Agreement, the Disclosure Schedule or the documents listed in
the Disclosure Schedule, did contain or will contain, at the respective times
such information is or was delivered and as of the Closing Date, any untrue
statement of a material fact or will omit to state any material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading. If any of such
information at any time subsequent to delivery and prior to Closing become
untrue or misleading, in any material respect, SpaceDev will promptly notify ISS
in writing of such fact and the reason for such change.
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3.6 Investment Representation.
--------------------------
SpaceDev is acquiring the ISS Shares from the ISS Shareholders
for SpaceDev's own account, for investment purposes only and not with a view to
or for sale in connection with the distribution thereof.
3.7 Financial Statements; Changes; Contingencies.
---------------------------------------------
(a) FINANCIAL STATEMENTS. SpaceDev has or will deliver to the
ISS Shareholders balance sheets for SpaceDev as of October 31, 1997, and the
related statements of loss and deficit for the periods then ended. All such
financial statements have been prepared in conformity with GAAP applied on a
consistent basis (except for changes, if any, disclosed therein). Such
statements of loss and deficit present fairly the results of operations and cash
flows of SpaceDev for the respective periods covered, and the balance sheets
present fairly the financial condition of SpaceDev as of their respective dates.
SpaceDev has made available to the ISS Shareholders copies of each management
letter or other letter delivered to SpaceDev, by the Auditors in connection with
such financial statements or relating to any review by the Auditors of the
internal controls of SpaceDev, and has made available for inspection all reports
and working papers produced or developed by the Auditors or management in
connection with their examination of such financial statements, as well as all
such reports and working papers for prior periods for which any tax liability of
SpaceDev has not been finally determined or barred by applicable statutes of
limitation. Since October 31, 1997, there has been no change in any of the
significant accounting policies, practices or procedures of SpaceDev.
(b) NO MATERIAL ADVERSE CHANGES. Except as set forth at end of
this paragraph 3.7(b), whether or not in the ordinary course of business, there
has not been, occurred or arisen:
i. any change in or event affecting SpaceDev or the
Business that has had or may reasonably be expected to have a
Material Adverse Effect.
ii. any agreement, condition, action or omission
which would be proscribed by (or require consent under)
Section 5.1 had it existed, occurred or arisen after the date
of this Agreement,
iii. any strike or other labor dispute, or
iv. any casualty, loss, damage or destruction
(whether or not covered by insurance) or any material property of
SpaceDev.
(c) NO OTHER LIABILITIES OR CONTINGENCIES. To the best of
SpaceDev's knowledge, SpaceDev does not have any liabilities of any nature,
whether accrued, absolute, contingent or otherwise, and whether due or to become
due, probable of assertion or not, that, in accordance with GAAP applied on a
consistent basis, should have been but were not reflected or disclosed in the
financial statements (including the notes thereto) referred to in subsections
(a) and (b) above, except liabilities which were incurred after October 31,
1997, in the ordinary course of business or disclosed in the Disclosure
Schedule.
-13-
3.8 Tax and Other Returns and Reports.
----------------------------------
SpaceDev has timely filed or will file, on or before the
Closing Date, all Tax Returns required to be filed by it on or before the
Closing Date and has paid all Taxes due for all periods ending on or before
December 31, 1997, which Taxes are required to be paid by it on or before the
Closing Date. Adequate provision has been made in the books and records of
SpaceDev and in the financial statements referred to in Section 3.7 above or
delivered to the ISS Shareholders, for all Taxes relating to operations through,
or property owned on or before, the date of the most recent of such financial
statements. No liability for Taxes has arisen since such date other than in the
ordinary course of SpaceDev's business. All required Tax Returns including
amendments to date, have been prepared in good faith without negligence or
willful misrepresentation and are complete and accurate in all material
respects. No Governmental Entity has, during the past two years, examined or is
in the process of examining any Tax Returns of SpaceDev. No Governmental Entity
has proposed (tentatively or definitively), asserted or assessed or, to the best
knowledge of SpaceDev, threatened to propose or assert, any deficiency,
assessment or claim for Taxes and there would be no basis for any such
delinquency, assessment or claim.
3.9 Material Contracts.
-------------------
Each Material Contract of SpaceDev is to the knowledge of
SpaceDev valid and subsisting; SpaceDev has duly performed all its obligations
thereunder to the extent that such obligations to perform have accrued; and no
material breach or default, alleged material breach or default, or event which
would (with the passage of time, notice or both) constitute a material breach or
default thereunder by SpaceDev or, to the best knowledge of SpaceDev, by any
other party or obligor with respect thereto, has occurred or as a result of this
Agreement or performance will occur. Consummation of the transactions
contemplated by this Agreement will not (and will not give any Person a right
to) terminate or modify any rights of, or accelerate or augment any obligation
of SpaceDev under any Material Contract.
3.10 Legal Proceedings.
------------------
There is no Order or Action pending, or, to the best knowledge
of SpaceDev, threatened, against or affecting SpaceDev or any of its properties
or assets that individually or when aggregated with one or more other Orders or
Actions has or might reasonably be expected to have a Material Adverse Effect,
or adversely affect SpaceDev's ability to perform this Agreement or any aspect
of the transactions contemplated by this Agreement. There is no matter as to
which SpaceDev has received any notice, claim or assertion, or, to the best
knowledge of SpaceDev, which otherwise has been threatened against or affecting
any director, officer, employee, agent or representative of SpaceDev or any
other Person, in connection with which any such Person has or may reasonably be
expected to have any right to be indemnified by SpaceDev.
-14-
3.11 Minute Books.
-------------
The minute books of SpaceDev accurately reflect, or as of the
Closing Date will reflect, all actions and proceedings taken to date by its
shareholders, board of directors and committees, and such minute books contain
true and complete copies of the charter documents of SpaceDev and all related
amendments. To the knowledge of SpaceDev the stock record books of SpaceDev
reflect accurately all transactions in its capital stock of all classes.
3.12 Accounting Records; Internal Controls.
--------------------------------------
(a) ACCOUNTING RECORDS. SpaceDev has records that accurately
and validly reflect its transactions, and accounting controls sufficient to
insure that such transactions are (i) executed in accordance with management's
general or specific authorization and (ii) recorded in conformity with GAAP so
as to maintain accountability for assets.
(b) DATA PROCESSING; ACCESS. Such records, to the extent they
contain important information that is not easily and readily available
elsewhere, have been duplicated, and such duplicates are stored safely and
securely pursuant to procedures and techniques utilized by companies of
comparable size in similar lines of business.
3.13 CAPITAL STOCK. The authorized capital of SpaceDev consists of
25,000,000 common shares with a par value of $0.0001, of which a total of
1,755,000 shares have been issued and are outstanding as fully paid and
non-assessable and 10,000,000 shares of Preferred Stock, of which 82,450 shares
of Series B (convertible at any time into 8,245,000 shares of common stock of
SpaceDev) have been issued and are outstanding as fully paid and non-assessable,
except for options to issue: (i) up to 572,700 shares of common stock options
issuable to three consultants at an exercise price of $0.067 per share; and,
(ii) up to 2,500,000 shares of common stock to ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ at exercise
prices ranging from $1.00 to $3.50 per share. Upon the occurrence of certain
events, no person or company has any right, agreement or option, present or
future, contingent or absolute, or any right capable of becoming a right,
agreement, or option:
(a) to require SpaceDev to issue any share in its capital
or to convert any securities of SpaceDev or of any
other company into shares in its capital;
(b) for the issue or allotment of any of SpaceDev's
authorized but unissued shares; or
(c) to require SpaceDev to purchase, redeem or otherwise
acquire any of its issued and outstanding SpaceDev's
shares.
3.14 OTHER STOCK. SpaceDev does not beneficially own, directly or
indirectly, shares of any other corporate or any interest in a partnership,
joint venture or other business.
3.15 DIVIDENDS. SpaceDev has not declared or paid any dividends of any
kind nor declared or made any other distributions of any kind whatsoever
including, without limitation, by way of redemption or repurchase or reduction
of authorized capital.
-15-
3.16 WAIVER OF RIGHTS. SpaceDev has not waived or surrendered any right
of substantial value and has not made any gift of money or of any of its
property or assets.
3.17 Contracts.
----------
Except as set forth in the Disclosure Schedules there are no
management contracts or consulting contracts to which SpaceDev is a party or by
which it is bound, other than as provided for herein; no amount is payable or
has been agreed to be paid by SpaceDev to any person as remuneration, pension,
bonus, share of profits or other similar benefit, and no director, officer or
member, or former director, officer or member of SpaceDev, nor any associate or
affiliate or any such person, has any claims of any nature against, or is
indebted to, SpaceDev
3.18 Compliance with Law.
--------------------
(a) SpaceDev is organized and has conducted its businesses in
accordance with applicable Laws in all material respects, and the forms,
procedures and practices of SpaceDev are in compliance with all such Laws, to
the extent applicable, in all material respects.
(b) To the knowledge of SpaceDev the sale of any security
previously issued by SpaceDev is in compliance in all material respects with all
applicable Laws and there is no material violation of any of such Laws.
3. 19 Accuracy of Information.
------------------------
The statements, representations and warranties contained in
the Disclosure Schedules are true, and all lists contained therein are complete
and correct. None of the information expressly required by this Agreement to be
supplied by or on behalf of SpaceDev to ISS or the ISS Shareholders, or
contained in this Agreement, the Disclosure Schedule or the documents listed in
the Disclosure Schedule, did contain or will contain, at the respective times
such information is or was delivered and as of the Closing Date, any untrue
statement of a material fact or will omit to state any material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading. If any of such
information at any time subsequent to delivery and prior to Closing become
untrue or misleading, in any material respect, SpaceDev will promptly notify ISS
and the ISS Shareholders in writing of such fact and the reason for such change.
-16-
ARTICLE 4
COVENANTS WITH RESPECT TO CONDUCT
OF ISS PRIOR TO CLOSING
4.1 Access.
-------
ISS and the ISS Shareholders shall authorize and permit
SpaceDev and its representatives (which term shall be deemed to include its
independent accountants and counsel and representatives of prospective financing
institutions of SpaceDev) to have reasonable access during normal business
hours, upon reasonable notice and in such manner as will not unreasonably
interfere with the conduct of its business, to all of its properties, books,
records, operating instructions and procedures, Tax Returns and all other
information with respect to the Business as SpaceDev may from time to time
request, and to make copies of such books, records and other documents and to
discuss its business with such other Persons, including, without limitation, its
directors, officers, employees, accountants and counsel and its suppliers,
customers and creditors, as SpaceDev considers necessary or appropriate for the
purposes of familiarizing itself with the Business, obtaining any necessary
Approvals of or Permits for the transactions contemplated by this Agreement and
conducting an evaluation of the organization and Business of ISS.
4.2 Material Adverse Changes; Reports; Financial Statements.
--------------------------------------------------------
(a) ISS and the ISS Shareholders will promptly notify SpaceDev
of any event of which ISS, or any of them, obtains knowledge which has had or
might reasonably be expected to have a Material Adverse Effect or which if known
as of the date hereof would have been required to be disclosed to SpaceDev.
(b) ISS will furnish to SpaceDev (i) as soon as available, and
in any event within five days after it is prepared, any report by ISS for
submission to the board of directors of ISS or to the ISS Shareholders and the
working papers related thereto and other operating or financial reports
(including any projections and budgets) prepared for management and the working
papers related thereto, (ii) as soon as available, copies of all nonconfidential
portions of all reports, renewals, filings, certificates, statements and other
documents filed with any Governmental Entity, (iii) monthly and quarterly
(unaudited) balance sheets, statements of earnings and delinquency reports for
ISS, and (iv) such other reports as SpaceDev may reasonably request relating to
ISS. Each of the financial statements delivered pursuant to this Section 4.2(b)
shall be prepared in accordance with GAAP consistently applied during the
periods covered (except as disclosed therein), except that such financial
statements may omit footnote disclosures required by GAAP to the extent the
content thereof would not materially differ in nature or amount from those
disclosures reported in the most recent audited period and year end adjustments
to the extent not material. Each of the financial statements delivered pursuant
to this Section 4.2(b) shall be accompanied by a certificate of the chief
financial officer of ISS to the effect that such financial statement presents
fairly the financial condition and results of operations of ISS for the periods
-17-
covered and reflects all adjustments (which consist only of normal recurring
adjustments not material in amount) necessary for a fair presentation.
4.3 Conduct of Business.
--------------------
ISS shall not, without the prior consent in writing of
SpaceDev which may be withheld for any reason, (a) conduct the Business in any
manner except in the ordinary course consistent with past practices; or (b) pay
special bonuses to any officer, director or employee or declare and/or pay
dividends.
4.4 Notification of Certain Matters.
--------------------------------
ISS shall give prompt notice to SpaceDev, and SpaceDev shall
give prompt notice to ISS, of (i) the occurrence, or failure to occur, of any
event that would be likely to cause any representation or warranty contained in
this Agreement to be untrue or inaccurate in any material respect at any time
from the date of this Agreement to the Closing Date and (ii) any failure of
SpaceDev or ISS, as the case may be, to comply with or satisfy, in any material
respect, any covenant, condition or agreement to be complied with or satisfied
by it under this Agreement. Except as provided in Section 7.4, no such
notification shall affect the representations or warranties of the parties or
the conditions to their respective obligations hereunder.
4.5 Permits and Approvals.
----------------------
ISS and SpaceDev each agree to cooperate and use their best
efforts to obtain (and will immediately prepare all registrations, filings and
applications, requests and notices preliminary to) all Approvals and Permits
that may be necessary or which may be reasonably requested by SpaceDev to
consummate the transactions contemplated by this Agreement. To the extent that
the approval of a third party with respect to any Contract is required in
connection with the transactions contemplated by this Agreement, ISS and the ISS
Shareholders and SpaceDev shall each use best efforts to obtain such Approval
prior to the Closing Date.
ARTICLE 5
COVENANTS WITH RESPECT TO CONDUCT OF SPACEDEV
PRIOR TO CLOSING
5.1 SpaceDev will promptly disclose to the ISS Shareholders any change
in or effect on SpaceDev occurring after the date hereof which is material to
its business or financial position prior to the Closing. SpaceDev has advised
the ISS Shareholders that SpaceDev is currently seeking to obtain additional
capital through the sale of securities.
-18-
ARTICLE 6
CONDITIONS OF PURCHASE
6.1 General Conditions.
-------------------
The obligations of the parties to effect the Closing shall be
subject to the following conditions unless waived in writing by all parties:
(a) NO ORDERS; LEGAL PROCEEDINGS. No Law or Order shall have
been enacted, entered, issued, promulgated or enforced by any Governmental
Entity, nor shall any Action have been instituted and remain pending at what
would otherwise be the Closing Date, which prohibits or restricts or would (if
successful) prohibit or restrict the transactions contemplated by this Agreement
or (with respect to obligations of SpaceDev only) which would not permit the
Business as presently conducted to continue unimpaired following the Closing
Date. No Governmental Entity shall have notified any party to this Agreement
that consummation of the transactions contemplated by this Agreement would
constitute a violation of any Laws of any jurisdiction and that it intends to
commence proceedings to restrain or prohibit such transactions or force
divestiture or rescission, unless such Governmental Entity shall have withdrawn
such notice and abandoned any such proceedings prior to the time which otherwise
would have been the Closing Date.
(b) APPROVALS. To the extent required by applicable Law, all
Permits and Approvals required to be obtained from any Governmental Entity shall
have been received or obtained on or prior to the Closing Date.
(c) EMPLOYMENT AGREEMENTS. Effective as of the Closing ISS
shall have entered into employment agreements with each of the ISS Shareholders
executing this agreement.
6.2 Conditions to Obligations of SpaceDev.
--------------------------------------
The obligations of SpaceDev to effect the Closing shall be
subject to the following conditions except to the extent waived in writing by
SpaceDev:
(a) REPRESENTATIONS AND WARRANTIES AND COVENANTS OF THE ISS
SHAREHOLDERS. The representations and warranties of the ISS Shareholders herein
contained shall be true at the Closing Date with same effect as though made at
such time; the ISS Shareholders shall have performed all obligations and
complied with all covenants and conditions required by this Agreement to be
performed or complied with by it at or prior to the Closing Date; the ISS
Shareholders for themselves and ▇▇▇▇▇▇▇ ▇▇▇▇▇, as chief executive officer of
ISS, shall have delivered to SpaceDev a certificate in form and substance
satisfactory SpaceDev and dated the Closing Date, to the effect that, to the
best of his knowledge, the representations and warranties of ISS and the ISS
-19-
Shareholders herein contained shall be true at the Closing Date with the same
effect as though made at such time.
(b) NO MATERIAL ADVERSE EFFECT. There shall not have been any
Material Adverse Effect relating to ISS subsequent to December 31, 1997.
(c) CONSENTS. The ISS Shareholders shall have obtained and
provided to SpaceDev any required Approvals and Permits, each in form and
substance reasonably satisfactory to SpaceDev.
(d) NO RESIGNATION OF DIRECTORS. The Directors of ISS shall
not have submitted their resignations (in such capacity) in writing to ISS nor
orally indicated any intent to do so.
(e) DUE DILIGENCE. SpaceDev shall not, in the course of its
on-going business investigation, have discovered information not previously
disclosed by ISS or the ISS Shareholders, which SpaceDev reasonably believes has
or is likely to have a Material Adverse Effect or is materially inconsistent
with information disclosed to SpaceDev prior to the date hereof.
(f) DELIVERY OF SHARES. The delivery by the Shareholders of
ISS of all of the issued stock.
6.3 Conditions to Obligations of the ISS Shareholders.
--------------------------------------------------
The obligations of the ISS Shareholders to effect the Closing
shall be subject to the following conditions, except to the extent waived in
writing by the ISS Shareholders:
(a) REPRESENTATIONS AND WARRANTIES AND COVENANTS OF SPACEDEV.
The representations and warranties of SpaceDev herein contained shall be true at
the Closing Date with same effect as though made at such time; SpaceDev shall
have performed all obligations and complied with all covenants and conditions
required by this Agreement to be performed or complied with by it at or prior to
the Closing Date; SpaceDev shall have delivered to the ISS Shareholders a
certificate of SpaceDev, respectively, in form and substance satisfactory to the
ISS Shareholders and dated the Closing Date, to such effect; and SpaceDev shall
have delivered to the ISS Shareholders a certificate in form and substance
satisfactory to the ISS Shareholders and dated the Closing Date, to the effect
that, to the best of its knowledge, the representations and warranties of
SpaceDev herein contained shall be true at the Closing Date with the same effect
as though made at such time.
(b) NO MATERIAL ADVERSE EFFECT. There shall not have been any
Material Adverse Effect relating to SpaceDev subsequent to October 31, 1997.
(c) CONSENTS. SpaceDev shall have obtained and provided to the
ISS Shareholders any required Approvals and Permits, each in form and substance
reasonably satisfactory to the ISS Shareholders.
-20-
(d) DUE DILIGENCE. The ISS Shareholders shall not, in the
course of their on-going business investigation, have discovered information not
previously disclosed by SpaceDev which the ISS Shareholders reasonably believe
has or is likely to have a Material Adverse Effect or is materially inconsistent
with information disclosed to the ISS Shareholders prior to the date hereof..
ARTICLE 7
TERMINATION OF OBLIGATIONS; SURVIVAL
7.1 Termination of Agreement.
-------------------------
Anything herein to the contrary notwithstanding, this
Agreement and the transactions contemplated by this Agreement shall terminate if
the Closing does not occur on or before the close of business on February 18,
1998, unless extended by mutual consent in writing of SpaceDev and the ISS
Shareholders and otherwise may be terminated at any time before the Closing as
follows and in no other manner:
(a) MUTUAL CONSENT. By mutual consent in writing of SpaceDev
and the ISS Shareholders.
(b) CONDITIONS TO SPACEDEV'S PERFORMANCE NOT MET. By
SpaceDev's written notice to the ISS Shareholders if any event occurs or
conditions exists which would render impossible the satisfaction of one or more
conditions to the obligations of SpaceDev to consummate the transactions
contemplated by this Agreement as set forth in Section 6.1 or 6.2.
(c) CONDITIONS TO THE ISS SHAREHOLDERS' PERFORMANCE NOT MET.
By the ISS Shareholders' written notice to SpaceDev if any event occurs or
condition exists which would render impossible the satisfaction of one or more
conditions to the obligation of the ISS Shareholders to consummate the
transactions contemplated by this Agreement as set forth in Section 6.1 or 6.3.
(d) INACCURATE INFORMATION. By SpaceDev if any material
information expressly required by this Agreement or the Disclosure Schedule to
be delivered by or on behalf of ISS and the ISS Shareholders to SpaceDev is
inaccurate or incomplete in any material respect.
(e) MATERIAL BREACH. By SpaceDev or the ISS Shareholders if
there has been a material misrepresentation or other material breach by the
other party in its representations, warranties and covenants set forth herein;
provided, however, that if such breach is susceptible to cure, the breaching
party shall have five business days after receipt of notice from the other party
of its intention to terminate this Agreement if such breach continues in which
to cure such breach.
-21-
7.2 Effect of Termination.
----------------------
In the event that this Agreement shall be terminated pursuant
to Section 7.1, all further obligations of the parties under this Agreement
shall terminate without further liability of any party to another; provided that
the obligations of the parties contained in Article 8, Section 9.9 and Section
9.12 shall survive any such termination. A termination under Section 7.1 shall
not relieve any party of any liability for a breach of, or for any
misrepresentation under, this Agreement, or be deemed to constitute a waiver of
any available remedy (including specific performance if available) for any such
breach or misrepresentation.
7.3 Survival of Representations and Warranties.
-------------------------------------------
The representations and warranties contained in or made
pursuant to this Agreement shall survive the Closing and expire at the end of 18
full calendar months after the Closing, except that (i) the representations and
warranties contained in Section 2.1, 2.2, 2.8, 2.17, 3.1, 3.2 and 3.3 shall
survive the Closing and shall remain in full force and effect indefinitely, (ii)
the representations and warranties contained in Section 2.4 and 3.8 shall
continue through the expiration of the applicable statute of limitations as the
same may be extended (or, if a claim has been asserted prior to such expiration,
until 90 days after the date of its final resolution), and (iii) if a claim or
notice is given under Article 8 with respect to any representation or warranty
prior to the applicable expiration date, such representation or warranty shall
continue, with respect to the facts or circumstances giving rise to such claim,
indefinitely until such claim is finally resolved.
7.4 Effect of Closing Over Known Unsatisfied Conditions.
----------------------------------------------------
If, with actual knowledge of the failure of any condition or
breach of any representation and warranty, either SpaceDev or any of the ISS
Shareholders elects to proceed with the Closing, the condition that is
unsatisfied at the Closing Date shall be deemed to be waived and the electing
party shall so acknowledge by a writing delivered at the Closing; provided,
however, that the foregoing provision shall not limit any party's right not to
waive any condition or right to condition any waiver hereunder upon mutually
acceptable conditions. Such decision and writing shall constitute a waiver of
any liability for breach of or misrepresentation under this Agreement, but only
with respect to, and such waiver shall be limited to the extent of, the facts or
circumstances, actually known by the electing party, giving rise to or in
respect of such waived condition.
ARTICLE 8
INDEMNIFICATION
-22-
8.1 Obligations of SpaceDev.
------------------------
SpaceDev shall indemnify and hold harmless the ISS
Shareholders from and against any and all Losses of the ISS Shareholders,
directly or indirectly, as a result of, or based upon or arising from:
(a) any inaccuracy in or breach or nonperformance of any of
the representations, warranties, covenants or agreements made by SpaceDev in or
pursuant to this Agreement; or
(b) any other matter as to which SpaceDev in other provisions
of this Agreement has agreed to indemnify the ISS Shareholders.
8.2 Obligations of the ISS Shareholders.
------------------------------------
ISS shall indemnify and hold harmless SpaceDev, its officers,
directors, employees, affiliates, agents and assigns (collectively "SpaceDev
Persons") from and against any Losses of the SpaceDev Persons, directly or
indirectly, as a result of, or based upon or arising from, any inaccuracy in or
breach or nonperformance of any of the representations, warranties, covenants or
agreements made by the ISS Shareholders in or pursuant to this Agreement.
8.3 Procedure.
----------
(a) NOTICE. Any party seeking indemnification with respect to
any Loss shall give notice to the Indemnifying Party.
(b) DEFENSE. If any claim, demand or liability is asserted by
any third party against any Indemnified Party, the Indemnifying Party shall,
upon the written request of the Indemnified Party, defend any actions or
proceedings brought against the Indemnified Party in respect of matters embraced
by the indemnity, but the Indemnified Party shall have the right to conduct and
control the defense, compromise or settlement of any Indemnifiable Claim if the
Indemnified Party chooses to do so, on behalf of and for the account and risk of
the Indemnifying Party who shall be bound by the result so obtained to the
extent provided herein; provided, however, that the Indemnified Party shall not
settle or compromise any Indemnifiable Claim without the written consent of the
Indemnifying Party, which consent shall not be unreasonably withheld. If, after
a request to defend any action or proceeding, the Indemnifying Party neglects to
defend the Indemnified Party, a recovery against the latter suffered by it in
good faith, is conclusive in its favor against the Indemnifying Party; provided,
however, that, if the Indemnifying Party has not received reasonable notice of
the action or proceeding against the Indemnified Party, or is not allowed to
control its defense, judgment against the Indemnified Party is only presumptive
evidence against the Indemnifying Party. The parties shall cooperate in the
defense of all third party claims which may give rise to Indemnifiable Claims
hereunder. In connection with the defense of any claim, each party shall make
available to the party controlling such defense, any books, records or other
documents within its control that are reasonably requested in the course of such
defense.
-23-
(c) TAX ADJUSTMENTS. Any amount payable by the Indemnifying
Party to or on behalf of an Indemnified Party in respect of a Loss shall be
adjusted as follows:
(i) If such Indemnified Party is liable for any
additional Taxes as a result of the payment of amounts in
respect of an Indemnifiable Claim, the Indemnifying Party will
pay to the Indemnified Party in addition to such amounts in
respect of the Loss within 10 days after being notified by the
Indemnified Party of the payment of such liability (x) an
amount equal to such additional Taxes (the "Tax Reimbursement
Amount") plus (y) any additional amounts required to pay
additional Taxes imposed with respect to the Tax Reimbursement
Amount and with respect to amounts payable under this clause
(y), with the result that the Indemnified Party shall have
received from the Indemnifying Party, net of the payment of
Taxes, an amount equal to the Loss.
(ii) The Indemnified Party shall reimburse the
Indemnifying Party an amount equal to the net reduction in any
year in the liability for payment of Taxes (that are based
upon or measured by income) of the Indemnified Party or any
member of a consolidated or combined tax group of which the
Indemnified Party is, or was at any time, part, which
reduction has been actually realized with respect to any
period after the Closing Date and which reduction would not
have been realized but for the amounts paid (or any audit
adjustment or deficiency with respect thereto, if applicable)
in respect of a Loss, or amounts paid by the Indemnified Party
pursuant to this paragraph (a "net Tax Benefit"). The amount
of any Net Tax Benefit shall be paid not later than 15 days
after the date on which such Net Tax Benefit shall be
realized.
(d) INTEREST. Any amounts payable by the Indemnifying Part to
or on behalf of an Indemnified Party in respect of a Loss shall be paid together
with interest on such amount, from and including date of Loss to the date of
payment, at a rate equal to the Prime Rate; provided, however, that such
interest shall not be payable with respect to Losses which include an interest
factor.
8.4 Notice of Discovered Liabilities.
---------------------------------
The Parties hereto agree to notify each other of any
liabilities, claims or misrepresentations, breaches or other matters covered by
this Article 8 upon discovery or receipt of notice thereof whether before or
after Closing.
8.5 Not Exclusive Remedy.
---------------------
This Article 8 shall not be deemed to preclude or otherwise
limit in any way the exercise of any other rights or pursuit of other remedies
for the breach of this Agreement or with respect to any misrepresentation.
8.6 Limitations on Indemnification.
-------------------------------
-24-
No party shall be required to indemnify any other Person under
this Article 8 unless the Loss for which indemnity would otherwise be payable by
such party exceeds $5,000 individually or $5,000 in the aggregate, and in such
event, the Indemnifying Party shall be responsible for the full amount of any
Loss.
ARTICLE 9
GENERAL
9.1 Amendments; Waivers.
--------------------
This Agreement and any schedule or exhibit attached hereto may
be amended only by agreement in writing of all parties. No waiver of any
provision nor consent to any exception to the terms of this Agreement shall be
effective unless in writing and signed by the party to be bound and then only to
the specific purpose, extent and instance so provided.
9.2 Schedules; Exhibits; Integration.
---------------------------------
Each schedule and exhibit delivered pursuant to the terms of
this Agreement shall be in writing and shall constitute a part of this
Agreement, although schedules need not be attached to each copy of this
Agreement. This Agreement, together with such schedules and exhibits,
constitutes the entire agreement among the parties pertaining to the subject
matter hereof and supersedes all prior agreements and understandings of the
parties in connection therewith.
9.3 Best Efforts; Further Assurances.
---------------------------------
Except as otherwise expressly provided herein, each party will
use its best efforts to cause all conditions to its obligations hereunder to be
timely satisfied and to perform and fulfill all obligations on its part to be
performed and fulfilled under this Agreement, to the end that the transactions
contemplated by this Agreement shall be effected substantially in accordance
with its terms as soon as reasonably practicable. The parties shall cooperate
with each other in such actions and in securing requisite Approvals. Each party
shall execute and deliver both before and after the Closing such further
certificates, agreements and other documents and take such other actions as the
other party may reasonably request to consummate or implement the transactions
contemplated hereby or to evidence such events or matters.
9.4 Governing Law.
--------------
This Agreement and the legal relations between the parties
shall be governed by and construed in accordance with the laws of the State of
California applicable to contracts made and performed in such State without
regard to conflicts of law doctrines, except to the extent that certain matters
are preempted by federal law or governed by the law of the jurisdiction of
organization of the respective parties.
-25-
9.5 No Assignment.
--------------
Neither this Agreement nor any rights or obligations under it
are assignable except that SpaceDev may assign its rights, and delegate its
obligations, hereunder (including but not limited to its rights under Article 8)
to any wholly-owned subsidiary of SpaceDev.
9.6 Headings.
---------
The descriptive headings of the Articles, Sections and
subsections of this Agreement are for convenience only and do not constitute a
part of this Agreement.
9.7 Counterparts.
-------------
This Agreement any amendment hereto or any other agreement (or
document) delivered pursuant hereto may be executed in one or more counterparts
and by different parties in separate counterparts. All of such counterparts
shall constitute one and the same agreement (or other document) and shall become
effective (unless otherwise provided therein) when one or more counterparts have
been signed by each party and delivered to the other party.
9.8 Publicity and Reports.
----------------------
The ISS Shareholders and SpaceDev shall coordinate all
publicity relating to the transactions contemplated by this Agreement and no
party shall issue any press release, publicity statement or other public notice
relating to this Agreement, or the transactions contemplated by this Agreement,
without consulting with the other party except to the extent that a particular
action is required by applicable law or stock exchange or regulatory policy.
9.9 Confidentiality.
----------------
All information disclosed in writing by any party (or its
representatives) in connection with the transactions contemplated by this
Agreement to any other party (or its representatives) shall be kept confidential
by such other party and its representatives and shall not be used by any such
Persons other than as contemplated by this Agreement, except to the extent that
such information or disclosure (i) was known by the recipient when received,
(ii) is or hereafter becomes lawfully obtainable from other sources, (iii) is
necessary or appropriate to disclose to a Governmental Entity or stock exchange
having jurisdiction over the parties, or (iv) may otherwise be required by law.
If this Agreement is terminated in accordance with its terms, each party shall
use all reasonable efforts to return upon written request from the other party
all documents (and reproductions thereof) received by it or its representatives
from such other party (and, in the case of reproductions, all such reproductions
made by the receiving party) that include information not within the exceptions
contained in the first sentence of this Section 9.9, unless the recipients
provide assurances reasonably satisfactory to the requesting party that such
documents have been destroyed.
-26-
9.10 Parties in Interest.
--------------------
This Agreement shall be binding upon and inure to the benefit
of each party, and nothing in this Agreement, express or implied, is intended to
confer upon any other Person any rights or remedies of any nature whatsoever
under or by reason of this Agreement except for Sections 8.1 and 9.5 (which are
intended to be for the benefit of the Persons provided for therein and may be
enforced by such Persons). Nothing in this Agreement is intended to relieve or
discharge the obligation of any third person to any party to this Agreement.
9.11 Notices.
--------
Any notice or other communication hereunder must be given in
writing and (a) delivered in person, (b) transmitted by telex, telefax or other
telecommunications mechanism or (c) mailed by certified or registered mail,
postage prepaid, receipt request, as follows:
If to SpaceDev:
SpaceDev, Inc.
P.O. Box 2121
31557 Aspen ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Executive Officer
▇▇▇.▇▇▇.▇▇▇▇ - telephone
970.879.3226 - telecopier
With a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇.▇▇▇.▇▇▇▇ - telephone
310.552.3209 - telecopier
If to ISS and the ISS Shareholders:
c/o Integrated Space Systems, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇.▇▇▇.▇▇▇▇ - telephone
619.693.6932 - telecopier
-27-
With a copy to:
▇▇▇▇▇ ▇▇▇▇▇, Esq.
Popov, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇.▇▇▇.▇▇▇▇ - telephone ▇▇▇.▇▇▇.▇▇▇▇ - telecopier
or to such other address or to such other person as either party shall have last
designated by such notice to the other party. Each such notice or other
communication shall be effective (i) if given by telecommunication, when
transmitted to the applicable number so specified in (or pursuant to) this
Section 9.11 and an appropriate answerback is received, (ii) if given by mail,
three days after such communication is deposited in the mails with first class
postage prepaid, addressed as aforesaid or (iii) if given by any other means,
when actually received at such address.
9.12 Expenses.
---------
The ISS Shareholders and SpaceDev shall each pay their or its
own expenses incident to the negotiation, preparation and performance of this
Agreement and the transactions contemplated hereby, including but not limited to
the fees, expenses and disbursements of their respective advisors, accountants
and counsel.
9.13 Remedies; Waiver.
-----------------
All rights and remedies existing under this Agreement and any
related agreements or documents are cumulative to and not exclusive of, any
rights or remedies otherwise available. No failure on the part of any party to
exercise or delay in exercising any right hereunder shall be deemed a waiver
thereof, nor shall any single or partial exercise preclude any further or other
exercise of such or any other right.
9.14 Attorney Fees.
--------------
In the event of any Action for the breach of this Agreement or
misrepresentation by any party, the prevailing party shall be entitled to
reasonable attorney's fees, costs and expenses, including the costs of
arbitration, incurred in connection with such action.
9.15 Knowledge Convention.
---------------------
Whenever any statement herein or in any schedule, exhibit,
certificate or other documents delivered to any party pursuant to this Agreement
is made "to its knowledge" or "to its best knowledge" or words of similar intent
or effect of any party or its representative, such person shall make such
statement only after conducting a diligent investigation of the subject matter
-28-
that of, and each statement shall be deemed to include a representation that
such investigation has been conducted.
9.16 Representation by Counsel; Interpretation.
------------------------------------------
The ISS Shareholders and SpaceDev respectively acknowledge
that each party to this Agreement has been represented by counsel in connection
with this Agreement and the transactions contemplated by this Agreement.
Accordingly, any rule of Law, including but not limited to Section 1654 of the
California Civil Code, or any legal decision that would require interpretation
of any claimed ambiguities in this Agreement against the party that drafted it
has no application and is expressly waived. The provisions of this Agreement
shall be interpreted in a reasonable manner to effect the intent of SpaceDev and
the ISS Shareholders.
9.17 Severability.
-------------
If any provision of this Agreement is determined to be
invalid, illegal or unenforceable by any Governmental Entity, the remaining
provisions of this Agreement to the extent permitted by Law shall remain in full
force and effect provided that the economic and legal substance of the
transactions contemplated is not affected in any manner materially adverse to
any party.
9.18 Arbitration
-----------
Any controversy, dispute or claim arising out of the
interpretation, performance or breach of this agreement including disputes as to
the jurisdiction of the arbitrator, shall be resolved at the request of any
party hereto directed to the San Diego office of the Judicial Arbitration and
Mediation Service/Endispute ("JAMS/ENDISPUTE") by a binding arbitration
conducted by a single Arbitrator in San Diego County, California in accordance
with the California Code of Civil Procedure section 1280 et. seq. except as
modified by the terms of this Section. The arbitrator shall apply California
substantive law to the matter(s) which are the subject of the arbitration. The
arbitrator shall have the power to grant such legal and equitable remedies and
award such damages as may be granted or awarded by a Judge of the Superior Court
of the County of San Diego, California. The arbitrator shall prepare and provide
to the parties a written decision ("Decision") on all matter(s) which are the
subject of the arbitration, including factual findings and the reasons which
form the basis of the Decision of the arbitrator. The arbitrator shall not have
the power to commit errors of law or legal reasoning and the award may be
vacated or corrected pursuant to California Code of Civil Procedure sections
1286.2 or 1286.6 for any such error. The Decision shall have the effect and be
enforceable in the manner provided by the California Code of Civil Procedure.
Costs of the arbitration shall be borne as directed by the arbitrator. The
parties hereby agree that the Code of Civil Procedure Rules of Arbitration shall
be modified as follows:
(a) If the parties have not agreed to an Arbitrator within
thirty (30) days after Initiation of arbitration, then JAMS/ENDISPUTE shall
appoint a single neutral Arbitrator as soon thereafter as practical.
-29-
(b) The parties shall be permitted discovery, including
depositions, under the supervision and rules set by the Arbitrator; provided,
however, that discovery shall be completed within forty-five (45) days of
selection or appointment of the Arbitrator. The Arbitrator shall have power to
impose such sanctions as the Arbitrator deems appropriate for failure of a party
or counsel for a party to comply with discovery rules established by the
Arbitrator.
(c) A hearing before the Arbitrator shall be held no later
than ninety (90) days after Initiation of arbitration, unless a hearing is
waived by all parties.
(d) No later than ten (10) days from the date of closing of
the arbitration hearing, or, if an oral hearing has been waived, from the date
of transmitting final statements and proofs to the Arbitrator, the Arbitrator
shall render a written Decision.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by its duly authorized officers as of the day and year
first above written.
SpaceDev, Inc.,
a Colorado corporation
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------
▇▇▇▇▇ ▇▇▇▇▇▇, President
Integrated Space Systems, Inc.,
a California corporation
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
Integrated Space Systems, Inc. Shareholders signatures to follow:
-30-
Integrated Space Systems, Inc. Shareholders:
No. ISS
Shares Owned
--------------
12,000
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
12,000
▇▇▇ ▇. ▇▇▇▇▇▇
12,000
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
12,000
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
12,000
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
12,000
------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Total: 72,000
==============
* Each ISS Shareholder owns 1/6 of the total shares issued and outstanding.
-31-
DISCLOSURE SCHEDULE
2.15
NONE
-32-
DISCLOSURE SCHEDULE
3.17
NONE
-33-
DISCLOSURE SCHEDULE
3.7(c)
NONE
-34-
DISCLOSURE SCHEDULE
6.1(a)
NONE
-35-