Exhibit 2.1
EXECUTION VERSION
SHARE EXCHANGE AGREEMENT
THIS SHARE EXCHANGE AGREEMENT (the "AGREEMENT") made this 5th day of March,
2010 by and among, Seaospa, Inc., formerly known as Seapra Inc., a Nevada
corporation ("PUBCO") and those certain stockholders of Pubco listed on the
Pubco Stockholders' Signature Page that is attached hereto (the "PUBCO
STOCKHOLDERS"), on the one hand, and Thwapr, Inc., a Delaware corporation (the
"COMPANY") and those certain stockholders of the Company listed on the Company
Stockholders' Signature Page that is attached hereto (the "SELLING
STOCKHOLDERS"), on the other hand.
BACKGROUND:
A. The respective Boards of Directors of Pubco and the Company have
determined that an acquisition of the Company's outstanding shares by Pubco
through a voluntary share exchange with the Selling Stockholders (the
"EXCHANGE"), upon the terms and subject to the conditions set forth in this
Agreement, would be fair and in the best interests of their respective
stockholders, and such boards of directors have approved such Exchange, pursuant
to which shares of capital stock of the Company issued and outstanding
immediately prior to the Effective Time (as defined in Section 1.04) and all
securities convertible or exchangeable into capital stock of the Company,
including warrants to acquire shares capital stock of the Company (the "COMPANY
WARRANTS") (collectively, the "SHARES") will be exchanged (including by
reservation for future issuances) for the right to receive no less than
142,576,508 shares of common stock of Pubco (the "EXCHANGE SHARES") and warrants
to acquire no less than 12,171,363 shares of common stock of Pubco (the
"EXCHANGE WARRANTS"), as such Exchange Shares and Exchange Warrants may be
adjusted as required by any Interim Financing (as defined in Section 3.03)
undertaken by the Company prior to the Closing Date (as defined in Section
1.03).
B. At the Closing, the Selling Stockholders' aggregate ownership interest
in Pubco shall represent no less than ninety percent (90%) of the issued and
outstanding shares of Pubco.
C. Pubco, the Pubco Stockholders, the Company, and the Selling Stockholders
desire to make certain representations, warranties, covenants and agreements in
connection with the Exchange and also to prescribe various conditions to the
Exchange.
D. For federal income tax purposes, the parties intend that the Exchange
shall qualify as reorganization under the provisions of Section 368(a)(1)(B) of
the Internal Revenue Code of 1986, as amended (the "CODE").
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties agree as
follows:
ARTICLE I
THE EXCHANGE
1.01 SHARE EXCHANGE. Upon the terms and subject to the conditions set forth
in this Agreement, and in accordance with the Nevada Revised Statutes ("NEVADA
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STATUTES") and Delaware General Corporation Law ("DGCL"), at the Closing (as
hereinafter defined), the parties shall do the following:
(a) The Selling Stockholders will each sell, convey, assign, and transfer
the Shares to Pubco by each delivering to Pubco a stock certificate issued in
the name of Pubco evidencing the respective Selling Stockholder's Shares (the
"SHARES CERTIFICATE"). The Shares transferred to Pubco at the Closing shall
constitute 100% of the issued and outstanding equity interests of the Company.
(b) As consideration for its acquisition of the Shares, Pubco shall issue
the Exchange Shares to the Selling Stockholders by delivering a share
certificate to each Selling Stockholder registered in the name of each Selling
Stockholder evidencing that Selling Stockholder's respective Exchange Shares
(the "EXCHANGE SHARES Certificates"). The Exchange Shares issued shall be
delivered to each Selling Stockholder in the amounts set forth on Appendix A
hereto, subject to adjustments, without the necessity of obtaining the further
consent of Pubco or the Pubco Stockholders, as may be required by any Interim
Financing (as defined in Section 3.03) undertaken by the Company prior to the
Closing Date (as defined in Section 1.03), and, in the aggregate, shall equal no
less than ninety percent (90%) of the outstanding shares of Pubco's common stock
at the time of Closing.
(c) The Exchange Warrants shall be allocated in the amounts set forth on
Appendix A hereto, subject to adjustments, without the necessity of obtaining
the further consent of Pubco or the Pubco Stockholders, as may be required by
any Interim Financing (as defined in Section 3.03) undertaken by the Company
prior to the Closing Date (as defined in Section 1.03). Each Company Warrant to
acquire one share of Company common stock shall automatically be converted into
an Exchange Warrant for the right to acquire one share of Pubco common stock.
For each Company Warrant to acquire one share of Company Series A preferred
stock ("COMPANY PREFERRED WARRANT") that is surrendered to the Company for
cancellation, Pubco shall issue an Exchange Warrant for the right to acquire
nine shares of Pubco common stock under substantially equivalent terms and
conditions as the Company Preferred Warrants provided for the acquisition of
shares of Company capital stock prior to the Exchange.
(d) For federal income tax purposes, the Exchange is intended to constitute
a "reorganization" within the meaning of Section 368 of the Code, and the
parties shall report the transactions contemplated by the this Agreement
consistent with such intent and shall take no position in any Tax filing or
legal proceeding inconsistent therewith. The parties to this Agreement hereby
adopt this Agreement as a "plan of reorganization" within the meaning of
Sections 1.368-2(g) and 1.368-3(a) of the United States Treasury Regulations.
None of Pubco, the Pubco Stockholders, the Company or the Selling Stockholders
has taken or failed to take, and after the Effective Time, Pubco or the Pubco
Stockholders shall not take or fail to take, any action which reasonably could
be expected to cause the Exchange to fail to qualify as a "reorganization"
within the meaning of Section 368(a) of the Code.
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1.02 EFFECT OF THE EXCHANGE. The Exchange shall have the effects set forth
in the applicable provisions of the Nevada Statutes.
1.03 CLOSING. Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to Article
VI and subject to the satisfaction or waiver of the conditions set forth in
Article V, the closing of the Exchange (the "CLOSING") will take place at 10:00
a.m. U.S. Pacific Standard Time on the business day upon satisfaction of the
conditions set forth in Article V (or as soon as practicable thereafter
following satisfaction or waiver of the conditions set forth in Article V) (the
"CLOSING DATE"), at the offices of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, LLP, ▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, unless another date, time or place is agreed to in
writing by the parties hereto.
1.04 EFFECTIVE TIME OF EXCHANGE. As soon as practicable following the
satisfaction or waiver of the conditions set forth in Article V, the parties
shall make all filings or recordings required under Nevada Statutes and DGCL.
The Exchange shall become effective at such time as is permissible in accordance
with Nevada Statutes and DGCL (the time the Exchange becomes effective being the
"EFFECTIVE TIME"). Pubco and the Company shall use reasonable efforts to have
the Closing Date and the Effective Time to be the same day.
1.05 DIRECTORS AND OFFICERS. On the Closing Date, Pubco shall cause the
appointment of the individuals as set forth on Schedule 1.05 to be directors and
officers of Pubco and the concurrent resignation of all current officers and
directors of Pubco as set forth on Schedule 1.05.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.01 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as set forth in
the disclosure schedule delivered by the Company to Pubco at the time of
execution of this Agreement (the "COMPANY DISCLOSURE SCHEDULE"), the Company
represents and warrants to Pubco and the Pubco Stockholders as follows:
(a) Organization, Standing and Corporate Power. The Company is duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has the requisite corporate power and authority and all government
licenses, authorizations, permits, consents and approvals required to own, lease
and operate its properties and carry on its business as now being conducted. The
Company is duly qualified or licensed to do business and is in good standing in
each jurisdiction in which the nature of its business or the ownership or
leasing of its properties makes such qualification or licensing necessary, other
than in such jurisdictions where the failure to be so qualified or licensed
(individually or in the aggregate) would not have a material adverse effect (as
defined in Section 9.02).
(b) Subsidiaries. The Company does not own directly or indirectly, any
equity or other ownership interest in any company, corporation, partnership,
joint venture or otherwise.
(c) Capital Structure of the Company. As of the date of this Agreement, the
number of shares and type of all authorized, issued and outstanding capital
stock of the Company, and all shares of capital stock reserved for issuance
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under the Company's various option and incentive plans is specified on Schedule
2.01(c). Except as set forth in Schedule 2.01(c), no shares of capital stock or
other equity securities of the Company are issued, reserved for issuance or
outstanding. All outstanding shares of capital stock of the Company are owned by
the Selling Stockholders and are duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights. There are no outstanding
bonds, debentures, notes or other indebtedness or other securities of the
Company having the right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matters. Except as set forth in
Schedule 2.01(c), there are no outstanding securities, options, warrants, calls,
rights, commitments, agreements, arrangements or undertakings of any kind to
which the Company is a party or by which it is bound obligating the Company to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock or other equity or voting securities of the Company or
obligating the Company to issue, grant, extend or enter into any such security,
option, warrant, call, right, commitment, agreement, arrangement or undertaking.
There are no outstanding contractual obligations, commitments, understandings or
arrangements of the Company to repurchase, redeem or otherwise acquire or make
any payment in respect of any shares of capital stock of the Company. There are
no agreements or arrangements pursuant to which the Company is or could be
required to register shares of Company Common Stock or other securities under
the Securities Act of 1933, as amended and the rules and regulations promulgated
thereunder (the "SECURITIES ACT") or other agreements or arrangements with or
among any security holders of the Company with respect to securities of the
Company.
(d) Corporate Authority; Noncontravention. The Company has all requisite
corporate and other power and authority to enter into this Agreement and to
consummate the transactions contemplated by this Agreement. The execution and
delivery of this Agreement by the Company and the consummation by the Company of
the transactions contemplated hereby have been (or at Closing will have been)
duly authorized by all necessary corporate action on the part of the Company.
This Agreement has been duly executed and when delivered by the Company shall
constitute a valid and binding obligation of the Company, enforceable against
the Company and its stockholders, as applicable, in accordance with its terms,
except as such enforcement may be limited by bankruptcy, insolvency or other
similar laws affecting the enforcement of creditors' rights generally or by
general principles of equity. The execution and delivery of this Agreement do
not, and the consummation of the transactions contemplated by this Agreement and
compliance with the provisions hereof will not, conflict with, or result in any
breach or violation of, or default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, cancellation or
acceleration of or "put" right with respect to any obligation or to a loss of a
material benefit under, or result in the creation of any lien upon any of the
properties or assets of the Company under, (i) the certificate or articles of
incorporation, bylaws or other organizational or charter documents of the
Company, (ii) any loan or credit agreement, note, bond, mortgage, indenture,
lease or other agreement, instrument, permit, concession, franchise or license
applicable to the Company, its properties or assets, or (iii) subject to the
governmental filings and other matters referred to in the following sentence,
any judgment, order, decree, statute, law, ordinance, rule, regulation or
arbitration award applicable to the Company, its properties or assets, other
than, in the case of clauses (ii) and (iii), any such conflicts, breaches,
violations, defaults, rights, losses or liens that individually or in the
aggregate could not have a material adverse effect with respect to the Company
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or could not prevent, hinder or materially delay the ability of the Company to
consummate the transactions contemplated by this Agreement.
(e) Governmental Authorization. No consent, approval, order or
authorization of, or registration, declaration or filing with, or notice to, any
United States court, administrative agency or commission, or other federal,
state or local government or other governmental authority, agency, domestic or
foreign (a "GOVERNMENTAL ENTITY"), is required by or with respect to the Company
in connection with the execution and delivery of this Agreement by the Company
or the consummation by the Company of the transactions contemplated hereby,
except, with respect to this Agreement, any filings under the DGCL, the
Securities Act or Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder (the "EXCHANGE ACT").
(f) Financial Statements.
(i) Pubco has received a copy of the audited consolidated financial
statements of the Company for the fiscal years ended December 31, 2008 and 2007
and unaudited consolidated financial statements of the Company for the period
ended September 30, 2009 (collectively, the "COMPANY FINANCIAL STATEMENTS"). The
Company Financial Statements fairly present the financial condition of the
Company at the dates indicated and its results of operations and cash flows for
the periods then ended and, except as indicated therein, reflect all claims
against, debts and liabilities of the Company, fixed or contingent, and of
whatever nature.
(ii) Since September 30, 2009 (the "COMPANY BALANCE SHEET DATE"), there has
been no material adverse change in the assets or liabilities, or in the business
or condition, financial or otherwise, or in the results of operations or
prospects, of the Company, whether as a result of any legislative or regulatory
change, revocation of any license or rights to do business, fire, explosion,
accident, casualty, labor trouble, flood, drought, riot, storm, condemnation,
act of God, public force or otherwise and no material adverse change in the
assets or liabilities, or in the business or condition, financial or otherwise,
or in the results of operation or prospects, of the Company except in the
ordinary course of business.
(iii) Since the Company Balance Sheet Date, the Company has not suffered
any damage, destruction or loss of physical property (whether or not covered by
insurance) affecting its condition (financial or otherwise) or operations
(present or prospective), nor has the Company, except as disclosed in writing to
Pubco, issued, sold or otherwise disposed of, or agreed to issue, sell or
otherwise dispose of, any capital stock or any other security of the Company and
has not granted or agreed to grant any option, warrant or other right to
subscribe for or to purchase any capital stock or any other security of the
Company or has incurred or agreed to incur any indebtedness for borrowed money.
(g) Absence of Certain Changes or Events. Except for any Interim Financings
(as defined in Section 3.03) or otherwise as set forth on Schedule 2.01(g),
since the Company Balance Sheet Date, the Company has conducted its business
only in the ordinary course consistent with past practice, and there is not and
has not been any:
(i) material adverse change with respect to the Company;
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(ii) event which, if it had taken place following the execution of this
Agreement, would not have been permitted by Section 3.01 without prior consent
of Pubco;
(iii) condition, event or occurrence which could reasonably be expected to
prevent, hinder or materially delay the ability of the Company to consummate the
transactions contemplated by this Agreement;
(iv) incurrence, assumption or guarantee by the Company of any indebtedness
for borrowed money other than in the ordinary course and in amounts and on terms
consistent with past practices or as disclosed to Pubco in writing;
(v) creation or other incurrence by the Company of any lien on any asset
other than in the ordinary course consistent with past practices;
(vi) transaction or commitment made, or any contract or agreement entered
into, by the Company relating to its assets or business (including the
acquisition or disposition of any assets) or any relinquishment by the Company
of any contract or other right, in either case, material to the Company, other
than transactions and commitments in the ordinary course consistent with past
practices and those contemplated by this Agreement;
(vii) labor dispute, other than routine, individual grievances, or, to the
knowledge of the Company, any activity or proceeding by a labor union or
representative thereof to organize any employees of the Company or any lockouts,
strikes, slowdowns, work stoppages or threats by or with respect to such
employees;
(viii) payment, prepayment or discharge of liability other than in the
ordinary course of business or any failure to pay any liability when due;
(ix) write-offs or write-downs of any assets of the Company;
(x) creation, termination or amendment of, or waiver of any right under,
any material contract of the Company;
(xi) damage, destruction or loss having, or reasonably expected to have, a
material adverse effect on the Company;
(xii) other condition, event or occurrence which individually or in the
aggregate could reasonably be expected to have a material adverse effect or give
rise to a material adverse change with respect to the Company; or
(xiii) agreement or commitment to do any of the foregoing.
(h) Certain Fees. Except as set forth on Schedule 2.01(h), no brokerage or
finder's fees or commissions are or will be payable by the Company to any
broker, financial advisor or consultant, finder, placement agent, investment
banker, bank or other person with respect to the transactions contemplated by
this Agreement.
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(i) Litigation; Labor Matters; Compliance with Laws(i) There is no suit,
action or proceeding or investigation pending or, to the knowledge of the
Company, threatened against or affecting the Company or any basis for any such
suit, action, proceeding or investigation that, individually or in the
aggregate, could reasonably be expected to have a material adverse effect with
respect to the Company or prevent, hinder or materially delay the ability of the
Company to consummate the transactions contemplated by this Agreement, nor is
there any judgment, decree, injunction, rule or order of any Governmental Entity
or arbitrator outstanding against the Company having, or which, insofar as
reasonably could be foreseen by the Company, in the future could have, any such
effect.
(ii) The Company is not a party to, or bound by, any collective bargaining
agreement, contract or other agreement or understanding with a labor union or
labor organization, nor is it the subject of any proceeding asserting that it
has committed an unfair labor practice or seeking to compel it to bargain with
any labor organization as to wages or conditions of employment nor is there any
strike, work stoppage or other labor dispute involving it pending or, to its
knowledge, threatened, any of which could have a material adverse effect with
respect to Company.
(iii) The conduct of the business of the Company complies with all
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees or
arbitration awards applicable thereto.
(j) Benefit Plans. The Company is not a party to any Benefit Plan under
which the Company currently has an obligation to provide benefits to any current
or former employee, officer or director of the Company. As used herein, "BENEFIT
PLAN" shall mean any employee benefit plan, program, or arrangement of any kind,
including any defined benefit or defined contribution plan, stock ownership
plan, executive compensation program or arrangement, bonus plan, incentive
compensation plan or arrangement, profit sharing plan or arrangement, deferred
compensation plan, agreement or arrangement, supplemental retirement plan or
arrangement, vacation pay, sickness, disability, or death benefit plan (whether
provided through insurance, on a funded or unfunded basis, or otherwise),
medical or life insurance plan providing benefits to employees, retirees, or
former employees or any of their dependents, survivors, or beneficiaries,
employee stock option or stock purchase plan, severance pay, termination, salary
continuation, or employee assistance plan.
(k) Tax Returns and Tax Payments.
(i) The Company has timely filed with the appropriate taxing authorities
all Tax Returns required to be filed by it (taking into account all applicable
extensions). All such Tax Returns are true, correct and complete in all
respects. All Taxes due and owing by the Company has been paid (whether or not
shown on any Tax Return and whether or not any Tax Return was required). The
Company is not currently the beneficiary of any extension of time within which
to file any Tax Return or pay any Tax. No claim has ever been made in writing or
otherwise addressed to the Company by a taxing authority in a jurisdiction where
the Company does not file Tax Returns that it is or may be subject to taxation
by that jurisdiction. The unpaid Taxes of the Company did not, as of the Company
Balance Sheet Date, exceed the reserve for Tax liability (excluding any reserve
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for deferred Taxes established to reflect timing differences between book and
Tax income) set forth on the face of the financial statements (rather than in
any notes thereto). Since the Company Balance Sheet Date, neither the Company
nor any of its subsidiaries has incurred any liability for Taxes outside the
ordinary course of business consistent with past custom and practice. As of the
Closing Date, the unpaid Taxes of the Company and its subsidiaries will not
exceed the reserve for Tax liability (excluding any reserve for deferred Taxes
established to reflect timing differences between book and Tax income) set forth
on the books and records of the Company.
(ii) No material claim for unpaid Taxes has been made or become a lien
against the property of the Company or is being asserted against the Company, no
audit of any Tax Return of the Company is being conducted by a tax authority,
and no extension of the statute of limitations on the assessment of any Taxes
has been granted by the Company and is currently in effect. The Company has
withheld and paid all Taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, independent contractor,
creditor, stockholder or other third party.
(iii) As used herein, "TAXES" shall mean all taxes of any kind, including,
without limitation, those on or measured by or referred to as income, gross
receipts, sales, use, ad valorem, franchise, profits, license, withholding,
payroll, employment, excise, severance, stamp, occupation, premium value added,
property or windfall profits taxes, customs, duties or similar fees, assessments
or charges of any kind whatsoever, together with any interest and any penalties,
additions to tax or additional amounts imposed by any governmental authority,
domestic or foreign. As used herein, "TAX RETURN" shall mean any return, report
or statement required to be filed with any governmental authority with respect
to Taxes.
(l) Environmental Matters. The Company is in compliance with all
Environmental Laws in all material respects. The Company has not received any
written notice regarding any violation of any Environmental Laws, including any
investigatory, remedial or corrective obligations. The Company holds all permits
and authorizations required under applicable Environmental Laws, unless the
failure to hold such permits and authorizations would not have a material
adverse effect on the Company, and is in compliance with all terms, conditions
and provisions of all such permits and authorizations in all material respects.
No releases of Hazardous Materials have occurred at, from, in, to, on or under
any real property currently or formerly owned, operated or leased by the Company
or any predecessor thereof and no Hazardous Materials are present in, on, about
or migrating to or from any such property which could result in any liability to
the Company. The Company has not transported or arranged for the treatment,
storage, handling, disposal, or transportation of any Hazardous Material to any
off-site location which could result in any liability to the Company. The
Company has no liability, absolute or contingent, under any Environmental Law
that if enforced or collected would have a material adverse effect on the
Company. There are no past, pending or threatened claims under Environmental
Laws against the Company and Company is not aware of any facts or circumstances
that could reasonably be expected to result in a liability or claim against the
Company pursuant to Environmental Laws. "ENVIRONMENTAL LAWS" means all
applicable foreign, federal, state and local statutes, rules, regulations,
ordinances, orders, decrees and common law relating in any manner to
contamination, pollution or protection of human health or the environment, and
similar state laws. "HAZARDOUS MATERIAL" means any toxic, radioactive, corrosive
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or otherwise hazardous substance, including petroleum, its derivatives,
by-products and other hydrocarbons, or any substance having any constituent
elements displaying any of the foregoing characteristics, which in any event is
regulated under any Environmental Law.
(m) Material Contract Defaults. The Company is not, or has not received any
notice or has any knowledge that any other party is, in default in any respect
under any Material Contract; and there has not occurred any event that with the
lapse of time or the giving of notice or both would constitute such a material
default. For purposes of this Agreement, a "MATERIAL CONTRACT" means any
contract, agreement or commitment that is effective as of the Closing Date to
which the Company is a party (i) with expected receipts or expenditures in
excess of $50,000, (ii) requiring the Company to indemnify any person, (iii)
granting exclusive rights to any party, (iv) evidencing indebtedness for
borrowed or loaned money in excess of $50,000 or more, including guarantees of
such indebtedness, or (v) which, if breached by the Company in such a manner
would (A) permit any other party to cancel or terminate the same (with or
without notice of passage of time) or (B) provide a basis for any other party to
claim money damages (either individually or in the aggregate with all other such
claims under that contract) from the Company or (C) give rise to a right of
acceleration of any material obligation or loss of any material benefit under
any such contract, agreement or commitment.
(n) Accounts Receivable. All of the accounts receivable of the Company that
are reflected on the Company Financial Statements or the accounting records of
the Company as of the Closing (collectively, the "ACCOUNTS RECEIVABLE")
represent or will represent valid obligations arising from sales actually made
or services actually performed in the ordinary course of business and are not
subject to any defenses, counterclaims, or rights of set off other than those
arising in the ordinary course of business and for which adequate reserves have
been established. The Accounts Receivable are fully collectible to the extent
not reserved for on the balance sheet on which they are shown.
(o) Properties. The Company has valid land use rights for all real property
that is material to its business and good, clear and marketable title to all the
tangible properties and tangible assets reflected in the latest balance sheet as
being owned by the Company or acquired after the date thereof which are,
individually or in the aggregate, material to the Company's business (except
properties sold or otherwise disposed of since the date thereof in the ordinary
course of business), free and clear of all material liens, encumbrances, claims,
security interest, options and restrictions of any nature whatsoever. Any real
property and facilities held under lease by the Company is held by it under
valid, subsisting and enforceable leases of which the Company is in compliance,
except as could not, individually or in the aggregate, have or reasonably be
expected to result in a material adverse effect.
(p) Intellectual Property(i) As used in this Agreement, the term
"TRADEMARKS" means trademarks, service marks, trade names, internet domain
names, designs, slogans, and general intangibles of like nature; the term "TRADE
SECRETS" means technology; trade secrets and other confidential information,
know-how, proprietary processes, formulae, algorithms, models, and
methodologies; the term "INTELLECTUAL PROPERTY" means patents, copyrights,
Trademarks, applications for any of the foregoing, and Trade Secrets; the term
"COMPANY LICENSE AGREEMENTS" means any license agreements granting any right to
use or practice any rights under any Intellectual Property (except for such
agreements for off-the-shelf products that are generally available for less than
$25,000), and any written settlements relating to any Intellectual Property, to
which the Company is a party or otherwise bound; and the term "SOFTWARE" means
any and all computer programs, including any and all software implementations of
algorithms, models and methodologies, whether in source code or object code.
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(ii) The Company owns or has valid rights to use the Trademarks, trade
names, domain names, copyrights, patents, logos, licenses and computer software
programs (including, without limitation, the source codes thereto) that are
necessary for the conduct of its respective businesses as now being conducted.
To the knowledge of the Company, none of the Company's Intellectual Property or
Company License Agreements infringe upon the rights of any third party that may
give rise to a cause of action or claim against the Company or its successors.
(q) Board Recommendation. The Board of Directors of the Company has
unanimously determined that the terms of the Exchange are fair to and in the
best interests of the stockholders of the Company and recommended that the
Company's stockholders approve the Exchange.
(r) Undisclosed Liabilities. The Company has no liabilities or obligations
of any nature (whether fixed or unfixed, secured or unsecured, known or unknown
and whether absolute, accrued, contingent, or otherwise) except for liabilities
or obligations reflected or reserved against in the Company Financial Statements
incurred in the ordinary course of business or such liabilities or obligations
disclosed in Schedule 2.01(g).
(s) Full Disclosure. All of the representations and warranties made by the
Company in this Agreement, and all statements set forth in the certificates
delivered by the Company at the Closing pursuant to this Agreement, are true,
correct and complete in all material respects and do not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make such representations, warranties or statements, in light of the
circumstances under which they were made, misleading. The copies of all
documents furnished by the Company pursuant to the terms of this Agreement are
complete and accurate copies of the original documents. The schedules,
certificates, and any and all other statements and information, whether
furnished in written or electronic form, to Pubco or its representatives by or
on behalf of any of the Company or its affiliates in connection with the
negotiation of this Agreement and the transactions contemplated hereby do not
contain any material misstatement of fact or omit to state a material fact or
any fact necessary to make the statements contained therein not misleading.
2.02 REPRESENTATIONS AND WARRANTIES OF PUBCO AND THE PUBCO STOCKHOLDERS.
Except as set forth in the disclosure schedule delivered by Pubco and the Pubco
Stockholders to the Company at the time of execution of this Agreement (the
"PUBCO DISCLOSURE SCHEDULE"), Pubco and the Pubco Stockholders, jointly and
severally, represent and warrant to the Company and the Selling Stockholders as
follows:
(a) Organization, Standing and Corporate Power. Pubco is duly organized,
validly existing and in good standing under the laws of the State of Nevada, as
is applicable, and has the requisite corporate power and authority and all
government licenses, authorizations, permits, consents and approvals required to
own, lease and operate its properties and carry on its business as now being
conducted. Pubco is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to be so qualified
or licensed (individually or in the aggregate) would not have a material adverse
effect with respect to Pubco. Shares of common stock of Pubco, par value $0.0001
("PUBCO COMMON STOCK"), trade on the OTC Bulletin Board under the symbol "SOPA."
(b) Subsidiaries. Pubco does not own directly or indirectly, any equity or
other ownership interest in any company, corporation, partnership, joint venture
or otherwise.
(c) Capital Structure of Pubco. As of the date of this Agreement, the
authorized capital stock of Pubco consists of 100,000,000 shares of Pubco Common
Stock, $0.0001 par value, of which 4,869,918 shares of Pubco Common Stock are
issued and outstanding and 50,000,000 shares of Pubco Preferred Stock, $0.0001
par value, of which no shares of Pubco Preferred Stock are issued and
outstanding, and no shares of Pubco stock are issuable upon the exercise of
outstanding warrants, convertible notes, options and otherwise. Except as set
10
forth above, no shares of capital stock or other equity securities of Pubco are
issued, reserved for issuance or outstanding. All outstanding shares of capital
stock of Pubco are, and all shares which may be issued pursuant to this
Agreement will be, when issued, duly authorized, validly issued, fully paid and
nonassessable, not subject to preemptive rights, and issued in compliance with
all applicable state and federal laws concerning the issuance of securities.
Except as set forth above, there are no outstanding bonds, debentures, notes or
other indebtedness or other securities of Pubco having the right to vote (or
convertible into, or exchangeable for, securities having the right to vote).
Except as set forth above, there are no outstanding securities, options,
warrants, calls, rights, commitments, agreements, arrangements or undertakings
of any kind to which Pubco is a party or by which any of them is bound
obligating Pubco to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of capital stock or other equity securities of Pubco or
obligating Pubco to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of capital stock or other equity securities of Pubco or
obligating Pubco to issue, grant, extend or enter into any such security,
option, warrant, call, right, commitment, agreement, arrangement or undertaking.
There are no outstanding contractual obligations, commitments, understandings or
arrangements of Pubco or any of its subsidiaries to repurchase, redeem or
otherwise acquire or make any payment in respect of any shares of capital stock
of Pubco or any of its subsidiaries. There are no agreements or arrangements
pursuant to which Pubco is or could be required to register shares of Pubco
Common Stock or other securities under the Securities Act or other agreements or
arrangements with or among any security holders of Pubco with respect to
securities of Pubco.
(d) Corporate Authority; Noncontravention. Pubco and the Pubco Stockholders
have all requisite corporate and other power and authority to enter into this
Agreement and to consummate the transactions contemplated by this Agreement. The
execution and delivery of this Agreement by Pubco and the consummation by Pubco
of the transactions contemplated hereby have been (or at Closing will have been)
duly authorized by all necessary corporate action on the part of Pubco. This
Agreement has been duly executed and when delivered by Pubco and the Pubco
Stockholders, shall constitute a valid and binding obligation of Pubco and the
Pubco Stockholders, enforceable against Pubco and the Pubco Stockholders in
accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency or other similar laws affecting the enforcement of
creditors' rights generally or by general principles of equity. The execution
and delivery of this Agreement do not, and the consummation of the transactions
contemplated by this Agreement and compliance with the provisions hereof will
not, conflict with, or result in any breach or violation of, or default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of or "put" right with respect to any
obligation or to loss of a material benefit under, or result in the creation of
any lien upon any of the properties or assets of Pubco under, (i) its articles
of incorporation, bylaws, or other charter documents of Pubco (ii) any loan or
credit agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license applicable to Pubco, its
properties or assets, or (iii) subject to the governmental filings and other
matters referred to in the following sentence, any judgment, order, decree,
statute, law, ordinance, rule, regulation or arbitration award applicable to
Pubco, its properties or assets, other than, in the case of clauses (ii) and
(iii), any such conflicts, breaches, violations, defaults, rights, losses or
liens that individually or in the aggregate could not have a material adverse
11
effect with respect to Pubco or could not prevent, hinder or materially delay
the ability of Pubco to consummate the transactions contemplated by this
Agreement.
(e) Government Authorization. No consent, approval, order or authorization
of, or registration, declaration or filing with, or notice to, any Governmental
Entity, is required by or with respect to Pubco or the Pubco Stockholders in
connection with the execution and delivery of this Agreement by Pubco and the
Pubco Stockholders, or the consummation by Pubco and the Pubco Stockholders of
the transactions contemplated hereby, except, with respect to this Agreement,
any filings under the Nevada Statutes, the Securities Act or the Exchange Act.
(f) SEC Documents; Undisclosed Liabilities; Financial Statements(i) Pubco
has timely filed all reports, schedules, forms, statements and other documents
as required by the Securities and Exchange Commission (the "SEC") and Pubco has
delivered or made available to the Company all reports, schedules, forms,
statements and other documents filed with the SEC (collectively, and in each
case including all exhibits and schedules thereto and documents incorporated by
reference therein, the "PUBCO SEC DOCUMENTS"). As of their respective dates, the
Pubco SEC Documents complied in all material respects with the requirements of
the Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to such Pubco SEC
Documents, and none of the Pubco SEC Documents (including any and all
consolidated financial statements included therein) as of such date contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Except to the extent revised or superseded by a subsequent filing
with the SEC (a copy of which has been provided to the Company prior to the date
of this Agreement), none of the Pubco SEC Documents, to the knowledge of the
Pubco's management, contains any untrue statement of a material fact or omits to
state any material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The consolidated
financial statements of Pubco included in such Pubco SEC Documents comply as to
form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with U.S. generally accepted accounting principles
(except, in the case of unaudited consolidated quarterly statements, as
permitted by Form 10-Q of the SEC) applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto) and fairly
present the consolidated financial position of Pubco and its consolidated
subsidiaries as of the dates thereof and the consolidated results of operations
and changes in cash flows for the periods then ended (subject, in the case of
unaudited quarterly statements, to normal year-end audit adjustments as
determined by Pubco's independent accountants). Except as set forth in the Pubco
SEC Documents, at the date of the most recent audited financial statements of
Pubco included in the Pubco SEC Documents, Pubco has not incurred any
liabilities or obligations of any nature (whether accrued, absolute, contingent
or otherwise) which, individually or in the aggregate, could reasonably be
expected to have a material adverse effect with respect to Pubco.
(ii) Except as disclosed in the Pubco SEC Documents or as set forth in this
Agreement, since December 31, 2009 (the "PUBCO BALANCE SHEET DATE"), there has
been no material adverse change in the assets or liabilities, or in the business
or condition, financial or otherwise, or in the results of operations or
prospects, of Pubco, whether as a result of any legislative or regulatory
12
change, revocation of any license or rights to do business, fire, explosion,
accident, casualty, labor trouble, flood, drought, riot, storm, condemnation,
act of God, public force or otherwise and no material adverse change in the
assets or liabilities, or in the business or condition, financial or otherwise,
or in the results of operation or prospects, of Pubco except in the ordinary
course of business.
(iii) Except as disclosed in the Pubco SEC Documents or as set forth in
this Agreement, since the Pubco Balance Sheet Date, Pubco has not suffered any
damage, destruction or loss of physical property (whether or not covered by
insurance) affecting its condition (financial or otherwise) or operations
(present or prospective), nor has Pubco, except as disclosed in writing to the
Company, issued, sold or otherwise disposed of, or agreed to issue, sell or
otherwise dispose of, any capital stock or any other security of Pubco and has
not granted or agreed to grant any option, warrant or other right to subscribe
for or to purchase any capital stock or any other security of Pubco or has
incurred or agreed to incur any indebtedness for borrowed money.
(g) Absence of Certain Changes or Events. Except as disclosed in the Pubco
SEC Documents or as set forth on Schedule 2.02(g), since the Pubco Balance Sheet
Date, Pubco has conducted its business only in the ordinary course consistent
with past practice in light of its current business circumstances, and there is
not and has not been any:
(i) material adverse change with respect to Pubco;
(ii) event which, if it had taken place following the execution of this
Agreement, would not have been permitted by Section 3.01 without prior consent
of the Company;
(iii) condition, event or occurrence which could reasonably be expected to
prevent, hinder or materially delay the ability of Pubco to consummate the
transactions contemplated by this Agreement;
(iv) incurrence, assumption or guarantee by Pubco of any indebtedness for
borrowed money other than in the ordinary course and in amounts and on terms
consistent with past practices or as disclosed to the Company in writing;
(v) creation or other incurrence by Pubco of any lien on any asset other
than in the ordinary course consistent with past practices;
(vi) transaction or commitment made, or any contract or agreement entered
into, by Pubco relating to its assets or business (including the acquisition or
disposition of any assets) or any relinquishment by Pubco of any contract or
other right, in either case, material to Pubco, other than transactions and
commitments in the ordinary course consistent with past practices and those
contemplated by this Agreement;
(vii) labor dispute, other than routine, individual grievances, or, to the
knowledge of Pubco, any activity or proceeding by a labor union or
representative thereof to organize any employees of Pubco or any lockouts,
strikes, slowdowns, work stoppages or threats by or with respect to such
employees;
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(viii) payment, prepayment or discharge of liability other than in the
ordinary course of business or any failure to pay any liability when due;
(ix) write-offs or write-downs of any assets of Pubco;
(x) creation, termination or amendment of, or waiver of any right under,
any material contract of Pubco;
(xi) damage, destruction or loss having, or reasonably expected to have, a
material adverse effect on Pubco;
(xii) other condition, event or occurrence which individually or in the
aggregate could reasonably be expected to have a material adverse effect or give
rise to a material adverse change with respect to Pubco; or
(xiii) agreement or commitment to do any of the foregoing.
(h) Certain Fees. Except as set forth on Schedule 2.02(h), no brokerage or
finder's fees or commissions are or will be payable by Pubco to any broker,
financial advisor or consultant, finder, placement agent, investment banker,
bank or other person with respect to the transactions contemplated by this
Agreement.
(i) Litigation; Labor Matters; Compliance with Laws(i) There is no suit,
action or proceeding or investigation pending or, to the knowledge of Pubco,
threatened against or affecting Pubco or any basis for any such suit, action,
proceeding or investigation that, individually or in the aggregate, could
reasonably be expected to have a material adverse effect with respect to Pubco
or prevent, hinder or materially delay the ability of Pubco to consummate the
transactions contemplated by this Agreement, nor is there any judgment, decree,
injunction, rule or order of any Governmental Entity or arbitrator outstanding
against Pubco having, or which, insofar as reasonably could be foreseen by
Pubco, in the future could have, any such effect.
(ii) Pubco is not a party to, or bound by, any collective bargaining
agreement, contract or other agreement or understanding with a labor union or
labor organization, nor is it the subject of any proceeding asserting that it
has committed an unfair labor practice or seeking to compel it to bargain with
any labor organization as to wages or conditions of employment nor is there any
strike, work stoppage or other labor dispute involving it pending or, to its
knowledge, threatened, any of which could have a material adverse effect with
respect to Pubco.
(iii) The conduct of the business of Pubco complies with all statutes,
laws, regulations, ordinances, rules, judgments, orders, decrees or arbitration
awards applicable thereto.
(j) Benefit Plans. Pubco is not a party to any Benefit Plan under which
Pubco currently has an obligation to provide benefits to any current or former
employee, officer or director of Pubco.
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(k) Certain Employee Payments. Pubco is not a party to any employment
agreement which could result in the payment to any current, former or future
director or employee of Pubco of any money or other property or rights or
accelerate or provide any other rights or benefits to any such employee or
director as a result of the transactions contemplated by this Agreement, whether
or not (i) such payment, acceleration or provision would constitute a "parachute
payment" (within the meaning of Section 280G of the Code), or (ii) some other
subsequent action or event would be required to cause such payment, acceleration
or provision to be triggered.
(l) Tax Returns and Tax Payments(i) Pubco has timely filed with the
appropriate taxing authorities all Tax Returns required to be filed by it
(taking into account all applicable extensions). All such Tax Returns are true,
correct and complete in all respects. All Taxes due and owing by Pubco has been
paid (whether or not shown on any Tax Return and whether or not any Tax Return
was required). Pubco is not currently the beneficiary of any extension of time
within which to file any Tax Return or pay any Tax. No claim has ever been made
in writing or otherwise addressed to Pubco by a taxing authority in a
jurisdiction where Pubco does not file Tax Returns that it is or may be subject
to taxation by that jurisdiction. The unpaid Taxes of Pubco did not, as of the
Pubco Balance Sheet Date, exceed the reserve for Tax liability (excluding any
reserve for deferred Taxes established to reflect timing differences between
book and Tax income) set forth on the face of the financial statements (rather
than in any notes thereto). Since the Pubco Balance Sheet Date, neither the
Company nor any of its subsidiaries has incurred any liability for Taxes outside
the ordinary course of business consistent with past custom and practice. As of
the Closing Date, the unpaid Taxes of Pubco and its subsidiaries will not exceed
the reserve for Tax liability (excluding any reserve for deferred Taxes
established to reflect timing differences between book and Tax income) set forth
on the books and records of Pubco.
(ii) No material claim for unpaid Taxes has been made or become a lien
against the property of Pubco or is being asserted against Pubco, no audit of
any Tax Return of Pubco is being conducted by a tax authority, and no extension
of the statute of limitations on the assessment of any Taxes has been granted by
Pubco and is currently in effect. Pubco has withheld and paid all Taxes required
to have been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder or other third party.
(m) Environmental Matters. Pubco is in compliance with all Environmental
Laws in all material respects. Pubco holds all permits and authorizations
required under applicable Environmental Laws, unless the failure to hold such
permits and authorizations would not have a material adverse effect on Pubco,
and is compliance with all terms, conditions and provisions of all such permits
and authorizations in all material respects. No releases of Hazardous Materials
have occurred at, from, in, to, on or under any real property currently or
formerly owned, operated or leased by Pubco or any predecessor thereof and no
Hazardous Materials are present in, on, about or migrating to or from any such
property which could result in any liability to Pubco. Pubco has not transported
or arranged for the treatment, storage, handling, disposal, or transportation of
any Hazardous Material to any off-site location which could result in any
liability to Pubco. Pubco has no liability, absolute or contingent, under any
Environmental Law that if enforced or collected would have a material adverse
effect on Pubco. There are no past, pending or threatened claims under
Environmental Laws against Pubco and Pubco is not aware of any facts or
circumstances that could reasonably be expected to result in a liability or
claim against Pubco pursuant to Environmental Laws.
(n) Material Contract Defaults. Pubco is not, or has not, received any
notice or has any knowledge that any other party is, in default in any respect
under any Pubco Material Contract; and there has not occurred any event that
with the lapse of time or the giving of notice or both would constitute such a
material default. For purposes of this Agreement, a "PUBCO MATERIAL CONTRACT"
means any contract, agreement or commitment that is effective as of the Closing
Date to which Pubco is a party (i) with expected receipts or expenditures in
excess of $50,000, (ii) requiring Pubco to indemnify any person, (iii) granting
exclusive rights to any party, (iv) evidencing indebtedness for borrowed or
15
loaned money in excess of $50,000 or more, including guarantees of such
indebtedness, or (v) which, if breached by Pubco in such a manner would (A)
permit any other party to cancel or terminate the same (with or without notice
of passage of time) or (B) provide a basis for any other party to claim money
damages (either individually or in the aggregate with all other such claims
under that contract) from Pubco or (C) give rise to a right of acceleration of
any material obligation or loss of any material benefit under any such contract,
agreement or commitment.
(o) Accounts Receivable. All of the accounts receivable of Pubco that are
reflected in the Pubco SEC Documents or the accounting records of Pubco as of
the Closing (collectively, the "PUBCO ACCOUNTS RECEIVABLE") represent or will
represent valid obligations arising from sales actually made or services
actually performed in the ordinary course of business and are not subject to any
defenses, counterclaims, or rights of set off other than those arising in the
ordinary course of business and for which adequate reserves have been
established. The Pubco Accounts Receivable are fully collectible to the extent
not reserved for on the balance sheet on which they are shown.
(p) Properties. Pubco has valid land use rights for all real property that
is material to its business and good, clear and marketable title to all the
tangible properties and tangible assets reflected in the latest balance sheet as
being owned by Pubco or acquired after the date thereof which are, individually
or in the aggregate, material to Pubco's business (except properties sold or
otherwise disposed of since the date thereof in the ordinary course of
business), free and clear of all material liens, encumbrances, claims, security
interest, options and restrictions of any nature whatsoever. Any real property
and facilities held under lease by Pubco are held by them under valid,
subsisting and enforceable leases of which Pubco is in compliance, except as
could not, individually or in the aggregate, have or reasonably be expected to
result in a material adverse effect.
(q) Intellectual Property. Pubco owns or has valid rights to use the
Trademarks, trade names, domain names, copyrights, patents, logos, licenses and
computer software programs (including, without limitation, the source codes
thereto) that are necessary for the conduct of its business as now being
conducted. All of Pubco's licenses to use Software programs are current and have
been paid for the appropriate number of users. To the knowledge of Pubco, none
of Pubco's Intellectual Property or Pubco License Agreements infringe upon the
rights of any third party that may give rise to a cause of action or claim
against Pubco or its successors.
(r) Board Determination. The Board of Directors of Pubco has unanimously
determined that the terms of the Exchange are fair to and in the best interests
of Pubco and its stockholders.
(s) Required Pubco Share Issuance Approval. Pubco represents that the
issuance of the Exchange Shares and Exchange Warrants to the Selling
Stockholders will be in compliance with the Nevada Statutes and the Bylaws of
Pubco.
(t) Compliance With Anti-Corruption Laws. Neither Pubco nor to the
knowledge of Pubco, any director, officer, agent, employee or other person
acting on behalf of Pubco or any of its subsidiaries has, in the course of its
actions for, or on behalf of, Pubco (i) used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expenses relating
to political activity; (ii) made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds; (iii)
violated or is in violation of any applicable U.S. laws; or (iv) made any
unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful
payment to any foreign or domestic government official or employee.
(u) OFAC. Neither Pubco, nor to the knowledge of Pubco, any director,
officer, agent, employee, affiliate or person acting on behalf of Pubco, is
currently subject to any U.S. sanctions administered by the Office of Foreign
Assets Control of the U.S. Treasury Department.
16
(v) Undisclosed Liabilities. Pubco has no liabilities or obligations of any
nature (whether fixed or unfixed, secured or unsecured, known or unknown and
whether absolute, accrued, contingent, or otherwise) except for liabilities or
obligations reflected or reserved against in the Pubco SEC Documents incurred in
the ordinary course of business.
(w) Money Laundering Laws. The operations of Pubco are and have been
conducted at all times in compliance with Money Laundering Laws and no action,
suit or proceeding by or before any court or governmental agency, authority or
body or any arbitrator involving Pubco with respect to the Money Laundering Laws
is pending or, to the best knowledge of Pubco, threatened.
(x) Full Disclosure. All of the representations and warranties made by
Pubco and the Pubco Stockholders in this Agreement, and all statements set forth
in the certificates delivered by Pubco and the Pubco Stockholders at the Closing
pursuant to this Agreement, are true, correct and complete in all material
respects and do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make such representations,
warranties or statements, in light of the circumstances under which they were
made, misleading. The copies of all documents furnished by Pubco and the Pubco
Stockholders pursuant to the terms of this Agreement are complete and accurate
copies of the original documents. The schedules, certificates, and any and all
other statements and information, whether furnished in written or electronic
form, to the Company or its representatives by or on behalf of Pubco and the
Publco Stockholders in connection with the negotiation of this Agreement and the
transactions contemplated hereby do not contain any material misstatement of
fact or omit to state a material fact or any fact necessary to make the
statements contained therein not misleading.
2.03 REPRESENTATIONS AND WARRANTIES OF SELLING STOCKHOLDERS. Each Selling
Stockholder, jointly and severally, represents and warrants to Pubco as follows:
(a) Ownership of Stock. Selling Stockholders collectively own all of the
issued and outstanding shares of capital stock of the Company, free and clear of
all liens, claims, rights, charges, encumbrances, and security interests of
whatsoever nature or type.
(b) Power of Sellers to Execute Agreement. Such Selling Stockholder has the
full right, power, and authority to execute, deliver, and perform this
Agreement, and this Agreement is the legal binding obligation of such Selling
Stockholder and is enforceable against such Selling Stockholder in accordance
with its terms, except that (i) such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium, or other similar laws now or hereafter
in effect relating to creditors' rights, and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefore may be brought.
(c) Agreement Not in Breach of Other Instruments Affecting Selling
Stockholder. The execution and delivery of this Agreement, the consummation of
the transactions hereby contemplated, and the fulfillment of the terms hereof
will not result in the breach of any term or provisions of, or constitute a
default under, or conflict with, or cause the acceleration of any obligation
under any agreement or other instrument of any description to which any Selling
Stockholder is a party or by which any Selling Stockholder is bound, or any
judgment, decree, order, or award of any court, governmental body, or arbitrator
or any applicable law, rule, or regulation.
(d) Accuracy of Statements. Neither this Agreement nor any statement, list,
certificate, or any other agreement executed in connection with this Agreement
or other information furnished or to be furnished by Selling Stockholder to
Pubco in connection with this Agreement or any of the transactions contemplated
hereby contains or will contain an untrue statement of a material fact or omits
or will omit to state a material fact necessary to make the statements contained
herein or therein, in light of circumstances in which they are made, not
misleading.
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ARTICLE III
COVENANTS RELATING TO CONDUCT OF BUSINESS PRIOR TO EXCHANGE
3.01 CONDUCT OF THE COMPANY AND PUBCO. From the date of this Agreement and
until the Effective Time, or until the prior termination of this Agreement, the
Company and Pubco shall not, unless mutually agreed to in writing:
(a) engage in any transaction, except in the normal and ordinary course of
business, or create or suffer to exist any lien or other encumbrance upon any of
their respective assets or which will not be discharged in full prior to the
Effective Time;
(b) sell, assign or otherwise transfer any of their assets, or cancel or
compromise any debts or claims relating to their assets, other than for fair
value, in the ordinary course of business, and consistent with past practice;
(c) fail to use reasonable efforts to preserve intact their present
business organizations, keep available the services of their employees and
preserve its material relationships with customers, suppliers, licensors,
licensees, distributors and others, to the end that its good will and ongoing
business not be impaired prior to the Effective Time;
(d) except for matters related to complaints by former employees related to
wages, suffer or permit any material adverse change to occur with respect to the
Company and Pubco or their business or assets; or
(e) make any material change with respect to their business in accounting
or bookkeeping methods, principles or practices, except as required by GAAP.
3.02 DIRECTORSHIPS. On the Closing Date, Pubco shall have taken all action
to cause the persons as set forth on Schedule 1.05 to be appointed to Pubco's
board of directors and the concurrent resignation of all current directors of
Pubco.
3.03 INTERIM FINANCING. Notwithstanding the covenants contained in this
Article III, prior to the Exchange, the Company may undertake one or more equity
financing transactions providing for the sale of shares of the Company's common
stock in an aggregate amount not to exceed $5 million at a price per share of
not less than $1.25 ("INTERIM FINANCING").
3.04 COMPANY PREFERRED WARRANTS. Each Selling Stockholder who is also a
holder of Company Preferred Warrants covenants that, within 30 business days
following the Closing Date, such Selling Stockholder shall deliver to the
Company all original Company Preferred Warrants owned beneficially or of record
by such Selling Stockholder as of the Closing Date or, if such Selling
Stockholder has lost or misplaced such Company Preferred Warrants, an affidavit
of lost warrant in a form provided by the Company. The Company shall, within 30
business days following receipt of such Company Preferred Warrant, deliver to
such Selling Stockholder an Exchange Warrant, duly executed by an authorized
officer of the Company, for the right to acquire nine shares of Pubco common
stock for each right to acquire one share of Company Series A preferred stock
represented by the delivered Company Preferred Warrant. Notwithstanding failure
of a Selling Stockholder to deliver a Company Preferred Warrant, such Company
Preferred Warrants shall cease to be of any force or effect and shall not
entitle the holder to any rights, other than the right to exchange such Company
Preferred Warrant for an Exchange Warrant.
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ARTICLE IV
ADDITIONAL AGREEMENTS
4.01 ACCESS TO INFORMATION; CONFIDENTIALITY(a) The Company shall, and shall
cause its officers, employees, counsel, financial advisors and other
representatives to, afford to Pubco and its representatives reasonable access
during normal business hours during the period prior to the Effective Time to
its and to the Company's properties, books, contracts, commitments, personnel
and records and, during such period, the Company shall, and shall cause its
officers, employees and representatives to, furnish promptly to Pubco all
information concerning its business, properties, financial condition, operations
and personnel as such other party may from time to time reasonably request. For
the purposes of determining the accuracy of the representations and warranties
of Pubco set forth herein and compliance by Pubco of its obligations hereunder,
during the period prior to the Effective Time, Pubco shall provide the Company
and its representatives with reasonable access during normal business hours to
its properties, books, contracts, commitments, personnel and records as may be
necessary to enable the Company to confirm the accuracy of the representations
and warranties of Pubco set forth herein and compliance by Pubco of its
obligations hereunder, and, during such period, Pubco shall, and shall cause its
officers, employees and representatives to, furnish promptly to the Company upon
its request (i) a copy of each report, schedule, registration statement and
other document filed by it during such period pursuant to the requirements of
federal or state securities laws and (ii) all other information concerning its
business, properties, financial condition, operations and personnel as such
other party may from time to time reasonably request. Except as required by law,
each of the Company and Pubco will hold, and will cause its respective
directors, officers, employees, accountants, counsel, financial advisors and
other representatives and affiliates to hold, any nonpublic information in
confidence.
(b) No investigation pursuant to this Section 4.01 shall affect any
representations or warranties of the parties herein or the conditions to the
obligations of the parties hereto.
4.02 BEST EFFORTS. Upon the terms and subject to the conditions set forth
in this Agreement, each of the parties agrees to use its best efforts to take,
or cause to be taken, all actions, and to do, or cause to be done, and to assist
and cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Exchange and the other transactions contemplated by this
Agreement. Pubco and the Company shall mutually cooperate in order to facilitate
the achievement of the benefits reasonably anticipated from the Exchange.
4.03 PUBLIC ANNOUNCEMENTS. Pubco, on the one hand, and the Company, on the
other hand, will consult with each other before issuing, and provide each other
the opportunity to review and comment upon, any press release or other public
statements with respect to the transactions contemplated by this Agreement and
shall not issue any such press release or make any such public statement prior
to such consultation, except as may be required by applicable law or court
process. The parties agree that the initial press release or releases to be
issued with respect to the transactions contemplated by this Agreement shall be
mutually agreed upon prior to the issuance thereof.
19
4.04 EXPENSES. All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expenses.
4.05 DIRECTOR AND OFFICER APPOINTMENTS. As of the Effective Time, Pubco
shall have taken all action to cause the persons as set forth on Schedule 1.05
to be appointed Pubco's directors and officers.
4.06 NO SOLICITATION. Except as previously agreed to in writing by the
other party, neither the Company nor Pubco shall authorize or permit any of its
officers, directors, agents, representatives, or advisors to (a) solicit,
initiate or encourage or take any action to facilitate the submission of
inquiries, proposals or offers from any person relating to any matter concerning
any exchange, merger, consolidation, business combination, recapitalization or
similar transaction involving the Company or Pubco, respectively, other than the
transaction contemplated by this Agreement or any other transaction the
consummation of which would or could reasonably be expected to impede, interfere
with, prevent or delay the Exchange or which would or could be expected to
dilute the benefits to either the Company or Pubco of the transactions
contemplated hereby. The Company or Pubco will immediately cease and cause to be
terminated any existing activities, discussions and negotiations with any
parties conducted heretofore with respect to any of the foregoing.
4.07 POST-EXCHANGE CAPITALIZATION. Subject to adjustments as required by
any Interim Financing undertaken by the Company, at the Closing Date, the
authorized capital stock of Pubco shall consist of 300,000,000 shares of Pubco
Common Stock, of which 157,186,262 shares of Pubco Common Stock will be issued
and outstanding and 50,000,000 shares of Pubco Preferred Stock, of which no
shares will be issued and outstanding, subject to adjustments required by any
Interim Financing undertaken by the Company.
4.08 BOARD COMPOSITION. At the Closing Date, the Board of Directors of
Pubco shall consist of the following: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, and
▇▇▇▇▇ ▇▇▇▇.
ARTICLE V
CONDITIONS PRECEDENT
5.01 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE EXCHANGE. The
obligation of each party to effect the Exchange and otherwise consummate the
transactions contemplated by this Agreement is subject to the satisfaction, at
or prior to the Closing, of each of the following conditions:
(a) No Restraints. No temporary restraining order, preliminary or permanent
injunction or other order preventing the consummation of the Exchange shall have
been issued by any court of competent jurisdiction or any other Governmental
Entity having jurisdiction and shall remain in effect, and there shall not be
any applicable legal requirement enacted, adopted or deemed applicable to the
Exchange that makes consummation of the Exchange illegal.
20
(b) Governmental Approvals. All authorizations, consents, orders,
declarations or approvals of, or filings with, or terminations or expirations of
waiting periods imposed by, any Governmental Entity having jurisdiction which
the failure to obtain, make or occur would have a material adverse effect on
Pubco or the Company shall have been obtained, made or occurred.
(c) Company Stockholder Approval. The Selling Stockholders shall have
adopted and approved this Agreement and the Exchange in accordance with
applicable law.
(d) No Litigation. There shall not be pending or threatened any suit,
action or proceeding before any court, Governmental Entity or authority (i)
pertaining to the transactions contemplated by this Agreement or (ii) seeking to
prohibit or limit the ownership or operation by the Company, Pubco or any of its
subsidiaries, or to dispose of or hold separate any material portion of the
business or assets of the Company or Pubco.
(e) Audited Financial Statements. The Company shall have completed, and
Pubco shall have received from the Company, audited Company Financial Statements
and proforma financial statements as required to be filed by Pubco pursuant to
the Exchange Act.
5.02 CONDITIONS PRECEDENT TO OBLIGATIONS OF PUBCO. The obligation of Pubco
to effect the Exchange and otherwise consummate the transactions contemplated by
this Agreement are subject to the satisfaction, at or prior to the Closing, of
each of the following conditions:
(a) Representations, Warranties and Covenants. (i) The representations and
warranties of the Company in this Agreement shall be true and correct in all
material respects (except for such representations and warranties that are
qualified by their terms by a reference to materiality or material adverse
effect, which representations and warranties as so qualified shall be true and
correct in all respects) both when made and on and as of the Closing Date, and
(ii) the Company shall each have performed and complied in all material respects
with all covenants, obligations and conditions of this Agreement required to be
performed and complied with by it prior to the Effective Time.
(b) Consents. Pubco shall have received evidence, in form and substance
reasonably satisfactory to it, that such licenses, permits, consents, approvals,
authorizations, qualifications and orders of governmental authorities and other
third parties as necessary in connection with the transactions contemplated
hereby have been obtained.
(c) Officer's Certificate of the Company. Pubco shall have received a
certificate executed on behalf of the Company by an executive officer of the
Company, respectively, confirming that the conditions set forth in Sections
5.02(a) and 5.02(e) have been satisfied.
(d) Secretary's Certificate of the Company. Pubco shall have received a
certificate of the secretary of the Company, dated as of the Closing Date, in
form and substance reasonably satisfactory to Pubco, as to: (i) the certificate
of incorporation of the Company; (ii) the bylaws of the Company; and (iii) any
resolutions of the board of directors of the Company relating to this Agreement
and the transactions contemplated hereby.
21
(e) No Material Adverse Change. There shall not have occurred any change in
the business, condition (financial or otherwise), results of operations or
assets (including intangible assets) and properties of the Company that,
individually or in the aggregate, could reasonably be expected to have a
material adverse effect on the Company.
(f) Selling Stockholders Representation Letters. Each Selling Stockholder
shall have executed and delivered to Pubco a stockholder representation letter
in substantially the form attached hereto as Exhibit A, and Pubco shall be
reasonably satisfied that the issuance of Pubco Common Stock pursuant to the
Exchange is exempt from the registration requirements of the Securities Act.
(g) Delivery of the Shares Certificate. Each Selling Stockholder shall have
delivered their respective Shares Certificate to Pubco on the Closing Date.
(h) Due Diligence Investigation. Pubco shall be reasonably satisfied with
the results of its due diligence investigation of the Company in its sole and
absolute discretion.
5.03 CONDITIONS PRECEDENT TO OBLIGATION OF THE COMPANY. The obligation of
the Company to effect the Exchange and otherwise consummate the transactions
contemplated by this Agreement is subject to the satisfaction, at or prior to
the Closing, of each of the following conditions:
(a) Representations, Warranties and Covenants. (i) The representations and
warranties of Pubco and the Pubco Stockholders in this Agreement shall be true
and correct in all material respects (except for such representations and
warranties that are qualified by their terms by a reference to materiality or
material adverse effect, which representations and warranties as so qualified
shall be true and correct in all respects) both when made and on and as of the
Closing Date, and (ii) Pubco and the Pubco Stockholders shall have performed and
complied in all material respects with all covenants, obligations and conditions
of this Agreement required to be performed and complied with by it prior to the
Effective Time.
(b) Consents. The Company shall have received evidence, in form and
substance reasonably satisfactory to it, that such licenses, permits, consents,
approvals, authorizations, qualifications and orders of governmental authorities
and other third parties as necessary in connection with the transactions
contemplated hereby have been obtained.
(c) Officer's Certificate of Pubco. The Company shall have received a
certificate executed on behalf of Pubco by an executive officer of Pubco,
confirming that the conditions set forth in Sections 5.03(a) and 5.03(e) have
been satisfied.
(d) Secretary's Certificate of Pubco. The Company shall have received a
certificate of the secretary of Pubco, dated as of the Closing Date, in form and
substance reasonably satisfactory to the Company, as to: (i) the articles of
incorporation of Pubco; (ii) the bylaws of Pubco; and (iii) any resolutions of
the board of directors of Pubco relating to this Agreement and the transactions
contemplated hereby.
22
(e) No Material Adverse Change. There shall not have occurred any change in
the business, condition (financial or otherwise), results of operations or
assets (including intangible assets) and properties of Pubco that, individually
or in the aggregate, could reasonably be expected to have a material adverse
effect on Pubco.
(f) Board Resolutions. The Company shall have received resolutions duly
adopted by Pubco's board of directors approving the execution, delivery and
performance of the Agreement and the transactions contemplated by the Agreement.
(g) Good Standing Certificate. The Company shall have received a
certificate of good standing for Pubco from its jurisdiction of incorporation,
dated not earlier than three (3) calendar days prior to the Closing Date.
(h) Stock Split. Pubco shall take all necessary steps to validly effect a
recapitalization whereby each share of Pubco common stock shall be exchanged for
three shares of Pubco common stock with the same rights, privileges and
obligations (the "STOCK SPLIT"). Subsequent to the Stock Split, the authorized
capital stock of Pubco shall consist of 300,000,000 shares of Pubco Common
Stock, of which 14,609,754 shares of Pubco Common Stock will be issued and
outstanding and 50,000,000 shares of Pubco Preferred Stock, of which no shares
will be issued and outstanding.
(i) Delivery of the Exchange Shares Certificate. The Selling Stockholders
shall have received their respective Exchange Shares Certificate on the Closing
Date.
(j) New Directors and Officers. Pubco shall deliver to the Company evidence
of appointment of those new directors and officers as further described in
Section 1.05, Section 3.02 and Section 4.05, respectively. Pubco shall have
delivered to each new director an executed indemnification agreement in
substantially the form attached hereto as Exhibit B. Pubco shall also have
delivered to the Company a letter of resignation executed by each Pubco officer
and director to be effective upon Closing Date and confirming that each has no
claim against Pubco in respect of any outstanding remuneration or fees of
whatever nature as of the Closing Date.
(k) Current Report. Pubco shall file a Form 8-K with the SEC within four
(4) business days of the Closing Date containing information about the Exchange
and pro forma financial statements of Pubco and the Company and audited
financial statements of the Company as required by Regulation S-K under the
Securities Act. Such Form 8-K shall be in form and substance acceptable to the
Company and its counsel prior to Closing.
(l) Due Diligence Investigation. The Company shall be reasonably satisfied
with the results of its due diligence investigation of Pubco in its sole and
absolute discretion.
ARTICLE VI
TERMINATION, AMENDMENT AND WAIVER
6.01 TERMINATION. This Agreement may be terminated and abandoned at any
time prior to the Effective Time of the Exchange:
23
(a) by mutual written consent of Pubco and the Company;
(b) by either Pubco or the Company if any Governmental Entity shall have
issued an order, decree or ruling or taken any other action permanently
enjoining, restraining or otherwise prohibiting the Exchange and such order,
decree, ruling or other action shall have become final and nonappealable;
(c) by either Pubco or the Company if the Exchange shall not have been
consummated on or before May 1, 2010 (other than as a result of the failure of
the party seeking to terminate this Agreement to perform its obligations under
this Agreement required to be performed at or prior to the Effective Time);
(d) by Pubco, if a material adverse change shall have occurred relative to
the Company (and not curable within thirty (30) days);
(e) by the Company if a material adverse change shall have occurred
relative to Pubco (and not curable within thirty (30) days);
(f) by Pubco, if the Company willfully fails to perform in any material
respect any of its material obligations under this Agreement; or
(g) by the Company, if Pubco willfully fails to perform in any material
respect any of its obligations under this Agreement.
6.02 EFFECT OF TERMINATION. In the event of termination of this Agreement
by either the Company or Pubco as provided in Section 6.01, this Agreement shall
forthwith become void and have no effect, without any liability or obligation on
the part of Pubco or the Company, other than the provisions of the last sentence
of Section 4.01(a) and this Section 6.02. Nothing contained in this Section
shall relieve any party for any breach of the representations, warranties,
covenants or agreements set forth in this Agreement.
6.03 AMENDMENT. This Agreement may not be amended except by an instrument
in writing signed on behalf of each of the parties upon approval by the party,
if such party is an individual, and upon approval of the Boards of Directors of
each of the parties that are corporate entities.
6.04 EXTENSION; WAIVER. Subject to Section 6.01(c), at any time prior to
the Effective Time, the parties may (a) extend the time for the performance of
any of the obligations or other acts of the other parties, (b) waive any
inaccuracies in the representations and warranties contained in this Agreement
or in any document delivered pursuant to this Agreement, or (c) waive compliance
with any of the agreements or conditions contained in this Agreement. Any
agreement on the part of a party to any such extension or waiver shall be valid
only if set forth in an instrument in writing signed on behalf of such party.
The failure of any party to this Agreement to assert any of its rights under
this Agreement or otherwise shall not constitute a waiver of such rights.
6.05 RETURN OF DOCUMENTS. In the event of termination of this Agreement for
any reason, Pubco and the Company will return to the other party all of the
other party's documents, work papers, and other materials (including copies)
24
relating to the transactions contemplated in this Agreement, whether obtained
before or after execution of this Agreement. Pubco and the Company will not use
any information so obtained from the other party for any purpose and will take
all reasonable steps to have such other party's information kept confidential.
ARTICLE VII
INDEMNIFICATION AND RELATED MATTERS
7.01 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties in this Agreement or in any instrument delivered pursuant to this
Agreement shall survive until twenty four (24) months after the Effective Time
(except for with respect to Taxes, which shall survive for the applicable
statute of limitations plus 90 days, and covenants that by their terms survive
for a longer period).
7.02 INDEMNIFICATION(a) Irrespective of any due diligence investigation
conducted by the Company with regard to the transactions contemplated hereby,
the Pubco Stockholders shall indemnify and hold the Selling Stockholders, the
Company and the Company's officers and directors (the "COMPANY REPRESENTATIVES")
harmless for, from and against any and all liabilities, obligations, damages,
losses, deficiencies, costs, penalties, interest and expenses (including, but
not limited to, any and all expenses whatsoever reasonably incurred in
investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever) (collectively, "LOSSES") to which Pubco,
the Selling Stockholders, the Company or any of the Company Representatives may
become subject resulting from or arising out: (1) of any breach of a
representation, warranty or covenant made by Pubco or the Pubco Stockholders as
set forth herein; or (2) any and all liabilities arising out of or in connection
with: (A) any of the assets of Pubco prior to the Closing; or (B) the operations
of Pubco prior to the Closing.
(b) The Company shall indemnify and hold the Pubco Stockholders harmless
for, from and against any and all Losses to which Pubco may become subject
resulting from or arising out of any breach of a representation, warranty or
covenant made by the Company as set forth herein.
7.03 NOTICE OF INDEMNIFICATION. Promptly after the receipt by any
indemnified party (the "INDEMNITEE") of notice of the commencement of any action
or proceeding against such Indemnitee, such Indemnitee shall, if a claim with
respect thereto is or may be made against any indemnifying party (the
"INDEMNIFYING PARTY") pursuant to this Article VII, give such Indemnifying Party
written notice of the commencement of such action or proceeding and give such
Indemnifying Party a copy of such claim and/or process and all legal pleadings
in connection therewith. The failure to give such notice shall not relieve any
Indemnifying Party of any of its indemnification obligations contained in this
Article VII, except where, and solely to the extent that, such failure actually
and materially prejudices the rights of such Indemnifying Party. Such
Indemnifying Party shall have, upon request within thirty (30) days after
receipt of such notice, but not in any event after the settlement or compromise
of such claim, the right to defend, at its own expense and by its own counsel
reasonably acceptable to the Indemnitee, any such matter involving the asserted
liability of the Indemnitee; provided, however, that if the Indemnitee
determines that there is a reasonable probability that a claim may materially
25
and adversely affect it, other than solely as a result of money payments
required to be reimbursed in full by such Indemnifying Party under this Article
VII or if a conflict of interest exists between Indemnitee and the Indemnifying
Party, the Indemnitee shall have the right to defend, compromise or settle such
claim or suit; and, provided, further, that such settlement or compromise shall
not, unless consented to in writing by such Indemnifying Party, which shall not
be unreasonably withheld, be conclusive as to the liability of such Indemnifying
Party to the Indemnitee. In any event, the Indemnitee, such Indemnifying Party
and its counsel shall cooperate in the defense against, or compromise of, any
such asserted liability, and in cases where the Indemnifying Party shall have
assumed the defense, the Indemnitee shall have the right to participate in the
defense of such asserted liability at the Indemnitee's own expense. In the event
that such Indemnifying Party shall decline to participate in or assume the
defense of such action, prior to paying or settling any claim against which such
Indemnifying Party is, or may be, obligated under this Article VII to indemnify
an Indemnitee, the Indemnitee shall first supply such Indemnifying Party with a
copy of a final court judgment or decree holding the Indemnitee liable on such
claim or, failing such judgment or decree, the terms and conditions of the
settlement or compromise of such claim. An Indemnitee's failure to supply such
final court judgment or decree or the terms and conditions of a settlement or
compromise to such Indemnifying Party shall not relieve such Indemnifying Party
of any of its indemnification obligations contained in this Article VII, except
where, and solely to the extent that, such failure actually and materially
prejudices the rights of such Indemnifying Party. If the Indemnifying Party is
defending the claim as set forth above, the Indemnifying Party shall have the
right to settle the claim only with the consent of the Indemnitee.
7.04 LIMITATIONS. Notwithstanding the foregoing, in no event will the
maximum aggregate liability of any party under this Article VII exceed
$5,000,000, except for acts of willful misconduct or fraudulent
misrepresentation or with respect to Taxes.
ARTICLE VIII
GENERAL PROVISIONS
8.01 NOTICES. Any and all notices and other communications hereunder shall
be in writing and shall be deemed duly given to the party to whom the same is so
delivered, sent or mailed at addresses and contact information set forth below
(or at such other address for a party as shall be specified by like notice.) Any
and all notices or other communications or deliveries required or permitted to
be provided hereunder shall be deemed given and effective on the earliest of:
(a) on the date of transmission, if such notice or communication is delivered
via facsimile at the facsimile number set forth on the signature pages attached
hereto prior to 5:30 p.m. (Pacific Standard Time) on a business day, (b) on the
next business day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number set forth on
the signature pages attached hereto on a day that is not a business day or later
than 5:30 p.m. (Pacific Standard Time) on any business day, (c) on the second
business day following the date of mailing, if sent by a nationally recognized
overnight courier service, or (d) if by personal delivery, upon actual receipt
by the party to whom such notice is required to be given.
26
If to Pubco:
Seaospa, Inc.
▇ ▇▇'▇▇▇▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇▇ #▇
▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Telephone No.: ▇ (▇▇▇) ▇▇▇-▇▇▇▇
All notices to the Pubco Stockholders shall be given at the addresses as
set forth on the Pubco Stockholders' Signature Page of this Agreement.
If to the Company:
Thwapr, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, LLP
Attention: ▇▇▇▇ ▇. ▇▇▇, Esq.
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
All Notices to the Selling Stockholders shall be given at the addresses as
set forth on the Company Stockholders' Signature Page of this Agreement.
8.02 DEFINITIONS. For purposes of this Agreement:
(a) an "affiliate" of any person means another person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first person;
(b) "material adverse change" or "material adverse effect" means, when used
in connection with the Company or Pubco, any change or effect that either
individually or in the aggregate with all other such changes or effects is
materially adverse to the business, assets, properties, condition (financial or
otherwise) or results of operations of such party and its subsidiaries taken as
a whole (after giving effect in the case of Pubco to the consummation of the
Exchange);
(c) "person" means an individual, corporation, partnership, joint venture,
association, trust, unincorporated organization or other entity; and (d) a
"subsidiary" of any person means another person, an amount of the voting
securities, other voting ownership or voting partnership interests of which is
27
sufficient to elect at least a majority of its board of Directors or other
governing body (or, if there are no such voting interests, fifty percent (50%)
or more of the equity interests of which) is owned directly or indirectly by
such first person.
8.03 INTERPRETATION. When a reference is made in this Agreement to a
Section, Exhibit or Schedule, such reference shall be to a Section of, or an
Exhibit or Schedule to, this Agreement unless otherwise indicated. The headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Whenever the words
"include", "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation".
8.04 ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This Agreement and the
other agreements referred to herein constitute the entire agreement, and
supersede all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter of this Agreement. This Agreement
is not intended to confer upon any person other than the parties any rights or
remedies.
8.05 GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Nevada, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
8.06 ASSIGNMENT. Neither this Agreement nor any of the rights, interests or
obligations under this Agreement shall be assigned, in whole or in part, by
operation of law or otherwise by any of the parties without the prior written
consent of the other parties. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of, and be enforceable by, the
parties and their respective successors and assigns.
8.07 ENFORCEMENT. The parties agree that irreparable damage would occur in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of Nevada, this being in addition to any other remedy to
which they are entitled at law or in equity. In addition, each of the parties
hereto (a) agrees that it will not attempt to deny or defeat such personal
jurisdiction or venue by motion or other request for leave from any such court,
and (b) agrees that it will not bring any action relating to this Agreement or
any of the transactions contemplated by this Agreement in any state court other
than such court.
8.08 SEVERABILITY. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
28
8.09 COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, any one of which need not contain the signatures of more than
one party, but all such counterparts taken together will constitute one and the
same Agreement. This Agreement, to the extent delivered by means of a facsimile
machine or electronic mail (any such delivery, an "ELECTRONIC DELIVERY"), shall
be treated in all manner and respects as an original agreement or instrument and
shall be considered to have the same binding legal effect as if it were the
original signed version thereof delivered in person. At the request of any party
hereto, each other party hereto shall re-execute original forms hereof and
deliver them in person to all other parties. No party hereto shall raise the use
of Electronic Delivery to deliver a signature or the fact that any signature or
agreement or instrument was transmitted or communicated through the use of
Electronic Delivery as a defense to the formation of a contract, and each such
party forever waives any such defense, except to the extent such defense related
to lack of authenticity.
8.10 ATTORNEYS FEES. In the event any suit or other legal proceeding is
brought for the enforcement of any of the provisions of this Agreement, the
parties hereto agree that the prevailing party or parties shall be entitled to
recover from the other party or parties upon final judgment on the merits
reasonable attorneys' fees, including attorneys' fees for any appeal, and costs
incurred in bringing such suit or proceeding.
8.11 CURRENCY. All references to currency in this Agreement shall refer to
the lawful currency of the United States of America.
[Signature Page Follows]
29
IN WITNESS WHEREOF, the undersigned have caused their duly authorized
officers to execute this Agreement as of the date first above written.
Seaospa, Inc.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
Thwapr, Inc.
By: /s/ ▇▇▇▇▇ ▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Chief Financial Officer
Signature Page to Share Exchange Agreement
30
SHARE EXCHANGE AGREEMENT
PUBCO STOCKHOLDERS' SIGNATURE PAGE
PUBCO STOCKHOLDERS:
Name Address Signature
---- ------- ---------
\
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇-▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇. /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
Dira 21 ----------------------------
Rehovot ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ 3-6 Ha `Hishtadrut St. /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
Kiryat Yam ----------------------------
▇▇▇▇▇ ▇▇▇▇▇▇
Pubco Stockholders' Signature Page to Share Exchange Agreement
SHARE EXCHANGE AGREEMENT
COMPANY STOCKHOLDERS' SIGNATURE PAGE
SELLING STOCKHOLDERS:
Name Address Signature
---- ------- ---------
SNK Capital Trust 2nd Floor, International By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
Bazaar, PO Box N-8198, -------------------------------------
Bay Street, Nassau, Bahamas Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇, Trustee Title: Trustee
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ c/o Thwapr, Inc. /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ----------------------------------------
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ c/o Thwapr, Inc. /s/ ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ----------------------------------------
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
M+A ▇▇▇▇▇▇▇▇▇, LLC c/o Thwapr, Inc. /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ----------------------------------------
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇. #▇▇▇ /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ----------------------------------------
Sunbreeze Holdings Ltd 2nd Floor, International Bazaar, By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
P.O. Box N-8198, Bay Street, -------------------------------------
Nassau, Bahamas Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Attn: Madln ▇▇▇▇▇▇, Director Title: Director
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, /s/ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
Surrey, B.C., Canada, V4N 5C7 ----------------------------------------
Sun City Cherries Ltd ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇▇, ▇▇▇ ▇▇▇ -------------------------------------
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇, President Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Director
Selling Stockholders' Signature Page to Share Exchange Agreement
Name Address Signature
---- ------- ---------
▇▇▇▇▇▇ Fruit House Ltd ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, By: /s/ Harbjahan ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇ -------------------------------------
Attn: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Name: Harbjahan ▇▇▇▇▇▇
President Title: President
▇▇▇▇▇▇ Development LTD 7488 Burnaby, By: /s/ ▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇
▇.▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇ -------------------------------------
Attn: ▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇, Name: ▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇
President Title:
▇▇▇▇▇ ▇▇▇▇▇▇ Burgh ▇▇▇▇▇ - ▇▇▇▇ ▇▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇, ▇▇▇ ▇▇▇ ----------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇ 7-168e Esplanade, /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇▇ ----------------------------------------
▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, /▇/ ▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇
▇.▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇ ----------------------------------------
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇-▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, /▇/ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇, ▇▇▇ ▇▇▇ ----------------------------------------
Nick Parente ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, /▇/ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇▇, ▇▇▇ ▇▇▇ ----------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, /▇/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇ ----------------------------------------
Selling Stockholders' Signature Page to Share Exchange Agreement
APPENDIX A
COMPANY STOCKHOLDER ALLOCATION
EXHIBIT A
FORM OF STOCKHOLDER REPRESENTATION LETTER
EXHIBIT B
FORM OF INDEMNIFICATION AGREEMENT