RECORDED October 5 2000 2:30PM
IN BOOK 246 OF PHOTO PAGE 429
▇▇▇▇▇▇▇▇ ▇ 110MPSCUN, WESTON COUNTY CLERK
ASSIGNMENT OF WORKING INTEREST
------------------------------
IN OIL AND GAS LEASE(S)
-----------------------
***
KNOW ALL PERSONS BY THESE PRESENTS THAT:
Rising Phoenix Development Group, LTD., a British Columbia
corporation, Canada, hereinafter referred to as the "Assignor", for valuable
consideration in hand paid, receipt and sufficiency whereof being hereby
acknowledged, does hereby sell, assign, convey, transfer and set over to 2U
▇▇▇▇▇▇.▇▇▇ Inc., a Delaware corporation, U.S.A., whose mailing address is
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇.▇., ▇▇▇ ▇▇▇, hereinafter
referred to as the "Assignee", any and all of the Assignor's working interest
and attendant net revenue interest which it now owns or might own in the
following-described oil and gas lease(s) and lands:
1. An oil and gas lease dated January 10, 1981, wherein ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, ▇. ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ were the lessors, and
Exoil Services, Inc. was the lessee, recorded in Book 87 of Photos
at Page 189 on February 4, 1981 in the Offices of the County Clerk
for Weston County, Wyoming; as amended and ratified on June 22,
1982, which amendment and ratification was recorded in Book 103
of Photos at Page 344, in the Offices of the County Clerk for Weston
County, Wyoming; which lease was further ratified on January 4,
1984, which ratification was recorded in Book 122 of Photos at Page
261 in the Offices of the County Clerk for V4eston County, Wyoming;
and which lease was further amended and ratified in March of 1986,
which amendment and ratification was recorded in Book 158 of
Photos at Page 61 in the Offices of the County Clerk for Weston
County, Wyoming; covering the following-described lands situate in
Weston County, Wyoming, to-wit:
Township 44 North. Range 60 West. 6th P.M.
------------------------------------------
Section 6: SW 1/4, NE 1/4, E 1/2NW 1/4, W 1/2 SE 1/4
Section 7: W 1/2, W 1/2E 1/2
Section 18: W1/2
Section 19: W 1/2W1/2, NE 1/4NW 1/4
Section 30: W 1/2 NW 1/4
Township 44 North. Range 61 West. 6th P.M.
------------------------------------------
Section 1: SE 1/4
Section 11: SE 1/4, E 1/4 NE 1/4, S 1/2 SW 1/4
Section 12: All
Section 13: All
Section 14: All
Section 22: E 1/2
Section 23: N 1/2, SE 1/4, E 1/2 SW 1/4
Section 24: All
Section 25: W 1/2, NE 1/4, NW 1/4 SE 1/4
Section 26: E 1/2 NE 1/4, NE 1/4 SE 1/4
Section 27: W 1/2 E 1/2
E-1
2. Any and all other oil and gas leases, including all
amendments, ratifications, renewals and extensions
thereof, insofar as same cover the following-described
lands situate in Weston County, Wyoming, towit:
Township 44 North, Range 60 West. 6th P.M.
------------------------------------------
Section 6: SW 1/4, NE 1/4, E 1/2 NW 1/4,
W 1/2 SE 1/4
Section 7: W 1/2, W 1/2 E 1/2
Section 18: W 1/2
Section 19: W 1/2 W 1/2, NE 1/4 NW 1/4
Section 30: W 1/2 NW 1/4
Township 44 North. Range 61 West. 6th P.M.
------------------------------------------
Section 1: SE 1/4
Section 11: SE 1/4, E 1/2 NE 1/4, S 1/2 SW 1/4
Section 12: All
Section 13: All
Section 14: All
Section 22: E 1/2
Section 23: N 1/2, SE 1/4, E 1/2 SW 1/4
Section 24: All
Section 25: W 1/2, NE 1/4, NW 1/4 SE 1/4
Section 26: E 1/2 NE 1/4, NE 1/4 SE 1/4
Section 27: W 1/2 E 1/2
SUBJECT to all of the terms and conditions set forth hereinafter to which by
acceptance and execution of this Assignment the Assignee specifically
agrees. The above-described oil and gas lease(s) are hereinafter referred to
as the "Lease(s)", and the land covered by the Lease(s) is hereinafter
referred to as the "Leasehold Lands".
TERMS AND CONDITIONS OF THE ASSIGNMENT:
---------------------------------------
1. Assignor does not warrant the validity of the Lease(s) nor its
titles to any part or portion of the working interest and/or net revenue
interest in the Lease(s).
2. Assignee accepts this Assignment without any representations,
guarantees or warranties, express or implied, being made by the Assignor as
to the condition of the Leasehold Lands or any oil or gas well located
thereon, or as to the condition of any property associated with the
Leasehold Lands or any oil or gas well located thereon.
3. Assignee accepts this Assignment without any representations,
guarantees or warranties, express or implied, being made by the Assignor as
to the quantity or quality of the oil or gas which may be produced by any
oil or gas well located on the Leasehold Lands.
4. Assignee accepts this Assignment subject to any and all
terms, conditions, covenants, restrictions, reservations, royalties and
overriding royalties, and encumbrances
E-2
contained in the Lease(s) and in any instrument in the chain of title of
the Lease(s) and this Assignment, whether of record or not. Further, by
acceptance of this Assignment, the Assignee hereby agrees to assume and
perform each and every duty and obligation of the Assignor under the
Lease(s) and under all other instruments in the chain of title of the
Lease(s) and this Assignment, whether of record or not, and to save and
hold the Assignor harmless from any and all liability or damages which
might arise out of the Assignee's failure to so perform. The Assignee
specifically acknowledges that it is aware of the terms and conditions
contained in the subject Lease(s) and all amendments, ratifications,
renewals and extensions thereof.
5. This Assignment is subject to the following covenants,
restrictions and reservations, which shall be construed as covenants
running with the Leasehold Lands and shall be binding upon and inure to the
benefit of the Assignor and the Assignee, and their respective successors
and assigns:
a. Assignee acknowledges that the Leasehold Lands have been used for
oil and gas drilling and producing operations, related oil field
operations and possibly for the storage and disposal of waste
materials and hazardous substances and that physical changes in the
Leasehold Lands may have occurred as a result of such uses. Also the
Leasehold Lands may contain buried pipelines and other equipment,
the locations of which cannot now be determined. Assignee
understands that the Assignor does not have the requisite
information to determine the exact nature or condition of the
Leasehold Lands nor the effect any such uses have had on the
physical condition of the Leasehold Lands.
b. Assignee acknowledges that it has entered into this Assignment on
the basis of its own investigation of the physical condition of the
Leasehold Lands including subsurface condition and that the
Leasehold Lands have been used in the manner and for the purposes
set forth above and that physical changes to the Leasehold Lands may
have occurred as a result of such use. Assignee is acquiring the
Leasehold Lands in an "as is" condition and assumes the risk that
adverse physical conditions, including, but not limited to, the
presence of unknown abandoned oil and gas ▇▇▇▇▇, water ▇▇▇▇▇ and
sumps may not have been revealed by the Assignee's investigation.
Assignee hereby agrees to assume full legal responsibility for all
of such conditions, known or unknown.
c. Assignee shall comply with all applicable laws, ordinances, rules
and regulations regarding the operation and abandonment of the
Leasehold Lands, and shall promptly obtain all permits required by
public authorities in connection with the Leasehold Lands.
d. Assignee shall assume full responsibility for all ▇▇▇▇▇, the
casing and all other personal property used on or in connection
therewith on and after the date hereof and shall indemnify, defend
and hold harmless the Assignor and its directors, officers,
contractors, agents, employees or representatives from and against
any loss, liability, claim, demand, fine, expense, cost (including
attorney's fees and expenses) or cause of action thereafter arising
with respect thereto,
E-3
including, but not limited to, plugging and abandonment of existing
▇▇▇▇▇, the restoration of the surface of the Leasehold Lands and the
removal of or failure to remove any sumps, foundations, structures
or equipment therefrom.
e. Assignor reserves the right to enter the Leasehold Lands at any
time during the life of the Lease(s) assigned hereby in order to
conduct remedial environmental work if the Assignor, in its sole
discretion, determines that such work is necessary to reduce or
avoid any alleged future environmental liability of the Assignor;
however, such action shall not be construed as an admission of
liability nor lessen the Assignor's indemnity of the Assignee.
f. Assignee assumes full responsibility for, and agrees to
indemnify, defend, and hold harmless the Assignor from and against
any loss, liability, claim, damage, fine, expense, cost (including
attorney's fees and expenses) or cause of action caused by or
arising out of the violation of any federal, state or local laws,
rules or regulations applicable to any waste material or any
hazardous substances in or upon the Leasehold Lands, or the release
or threatened release of any waste material or any hazardous
substances from the Leasehold Lands into the atmosphere or into or
upon any land or any water course or body of water, including ground
water, whether or not attributable to the Assignor's activities, or
to the activities of the Assignor's officers, employees or agents,
or to the activities of third parties (regardless of whether or not
the Assignor was or is aware of such activities) prior to, during or
after the period of the Assignor's ownership of the interests
assigned hereunder.
This Assignment shall bind and inure to the benefit of the Assignor and
the Assignee and their respective successors and assigns.
IN WITNESS WHEREOF, the Assignor and the Assignee execute this
Assignment to be effective as of the 3rd day of October, 2000.
ASSIGNOR: ASSIGNEE:
RISING PHOENIX DEVELOPMENT 2U ▇▇▇▇▇▇.▇▇▇ INC.
GROUP, LTD.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇▇▇
------------------------- ------------------------
(Sign) (Sign)
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ Sha
------------------------- ------------------------
(Print Name) (Print Name)
President President
------------------------- ------------------------
(Print Table) (Print Table)
E-4
RECORDED
---------------------
INDEXED
---------------------
ABSTRACTED
---------------------
STATE OF WYOMING
COUNTY OF WESTON
Office Of Register of Deeds
I certify the within Instrument was filed for record the 5 day of
(unintelligible) 2000 at 2:30 o'clock PM and recorded in book 246 of photo on
page 429 of the records of said county,
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------------------
County Clerk / Register of Deeds
------------------------------------------------
Deputy
Fee $ 25.00
E-5
ASSET PURCHASE AND SALE AGREEMENT
By and Among
2U ▇▇▇▇▇▇.▇▇▇, Inc.
a Delaware corporation,
and
ASDAR Group,
a Nevada corporation.
THIS ASSET PURCHASE AND SALE AGREEMENT ("Agreement") is made and entered into in
duplicate this ____ day of August, 2000, by and among 2U ▇▇▇▇▇▇.▇▇▇, Inc., a
Delaware corporation ("Seller"), and ASDAR Group, a Nevada corporation
("Purchaser"), and provides for the Purchaser to acquire all of the business
assets of the Seller as provided for in the ASSET PURCHASE AND SALE AGREEMENT by
and between Power Direct, Inc. a Delaware corporation (Seller's predecessor
Company), and Rising Phoenix Development Group Ltd., a British Columbia
corporation, hereinafter referred to as RPDI Asset Purchase Agreement subject to
the liabilities assumed pursuant to the provisions of this Agreement by the
Purchaser and no other liabilities, on the terms and subject to the conditions
specified in this Agreement.
RECITALS
A. The Purchaser desires to acquire, on the terms and subject to the
conditions specified in this Agreement, the business of the Seller insofar as
the same is conducted by the use of the Acquired Assets (as that term is defined
the provisions of Section 1.1 of this Agreement).
B. The Seller believes that it is in the best interests of the Seller,
and, therefore, it desires, to sell the Acquired Assets to the Purchaser, on the
terms and subject to the conditions specified in this Agreement.
NOW, THEREFORE, IN CONSIDERATION OF THE RECITALS SPECIFIED ABOVE THAT SHALL BE
DEEMED TO BE A SUBSTANTIVE PART OF THIS AGREEMENT, AND THE MUTUAL COVENANTS,
PROMISES, UNDERTAKINGS, AGREEMENTS, REPRESENTATIONS AND WARRANTIES SPECIFIED IN
THIS AGREEMENT AND OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND
SUFFICIENCY OF WHICH ARE HEREBY ACKNOWLEDGED, WITH THE INTENT TO BE OBLIGATED
LEGALLY AND EQUITABLY, THE PARTIES DO HEREBY COVENANT, PROMISE, AGREE, REPRESENT
AND WARRANT AS FOLLOWS:
E-6
ARTICLE I
DEFINITIONS
As used in this Agreement, the capitalized terms specified in this
Agreement shall have the meanings and definitions specified and indicated by the
provisions of this Article I, unless a different and common meaning of such a
term is clearly indicated by the context, and variants and derivatives of the
those terms shall have correlative meanings. To the extent that certain of the
definitions specified in this Article I suggest, indicate, or express agreements
between or among parties to this Agreement, or contain representations or
warranties or covenants of a party, the parties agree to the same, by execution
of this Agreement. Agreements, representations, warranties and covenants
specified in any part or provision of this Agreement shall for all purposes of
this Agreement be treated in the same manner as other such agreements,
representations, warranties and covenants specified elsewhere in this Agreement,
and the article, section or paragraph of this Agreement within which such an
agreement, representation, warranty, or covenant appears shall have no separate
meaning or effect on the same.
1.1 "Acquired Assets" The assets of the Seller being acquired by the
Purchaser pursuant to the provisions of this Agreement, as specified on Schedule
2.1 of this Agreement, and all other assets of that the Seller acquired pursuant
to the RPDI Asset Purchase Agreement, whether tangible or intangible, including
contractual, warranty and other rights, the use or value of which will come
within the Control (as that term is defined by the provisions of Section 1.15 of
this Agreement) by the Purchaser when the Transaction (as that term is defined
by the provisions of Section 1.36 of this Agreement) is consummated.
1.2 "Acquired Business" The business conducted by the Seller in which
the Seller utilized the Acquired Assets, as described on Schedule 2.1 to this
Agreement.
1.3 "Acquired Facilities" All office space, warehouses, stores, plants,
production facilities, manufacturing facilities, fixtures, furniture, office
equipment, computer equipment, common areas, storage facilities, rights of way,
driveways, and improvements owned or leased by the Seller or otherwise used by
the Seller in connection with the operation of its business or leased or
subleased by the Seller to other person or Entities, but only to the extent that
the same consist of Acquired Assets.
1.4 "Affiliate" When used with respect to a person, an "Affiliate" of
that person is a person controlling, controlled by, or under common control with
that person.
1.5 "Agreement" This Asset Purchase and Sale Agreement, including all
of its schedules and exhibits and all other documents specifically referred to
in this Agreement that have been or are to be delivered by a party to this
Agreement to another such party in connection with the Transaction or this
Agreement, and including, but not limited to, all duly and validly adopted
amendments, modifications, and supplements to or of this Agreement and such
schedules, exhibits and other documents.
E-7
1.6 "Assumed Liabilities" The Liabilities (as that term is defined by
the provisions of Section 1.22 of this Agreement) of the Seller being assumed by
the Purchaser pursuant to the provisions of this Agreement, as specifically
identified in Schedule 2.1 to this Agreement, and no other Liabilities of the
Seller or the Acquired Business.
1.7 "Audited Financial Statements" The balance sheet, income statement,
statement of stockholders' equity, and statement of cash flows or, in each
instance, equivalent statements of the respective, subject corporation as
commonly provided to such corporation's shareholders, as at December 31, 1999,
and for the three (3) years then ended, as reported on by Auditors.
1.8 "Auditors" Independent certified public accountants
currently retained for the purpose of auditing financial statements
of the respective, particular person.
1.9 "Business Day" Any day that is not a Saturday, Sunday or day on
which banks in Wilmington, Delaware are authorized to close.
1.10 "Closing" The completion and consummation of the
Transaction, to occur as contemplated in Article II of this Agreement.
1.11 "Closing Date" The date on which the Closing actually occurs,
which shall be no later than September 20, 2000, unless otherwise agreed by the
parties, but shall not in any event be prior to satisfaction or waiver of the
conditions to Closing specified in Article VII of this Agreement.
1.12 "Closing Time" The time at which the Closing actually occurs. All
events that are to occur at the Closing Time shall, for all purposes, be deemed
to occur simultaneously, except to the extent, if at all, that a specific order
of occurrence is otherwise described.
1.13 "Code" The Internal Revenue Code of 1986, as amended and in
effect on the date the parties sign this Agreement.
1.14 "Consideration" Five million (5,000,000) shares of $.0001 par
value common stock of the Purchaser to be issued by the Purchaser to the Seller
at the Closing ("Subject Shares").
1.15 "Control" Generally, the power to direct the management or
affairs of an Entity.
1.16 "Dollars" of the symbol "$" refers to and shall mean the currency
of the United States of America, unless otherwise specified.
1.17 "Entity" A corporation, trust, association, municipality,
partnership, sole proprietorship, joint venture, or other form of organization
formed for the conduct of a business, whether active or passive.
1.18 "ERISA" The Employee Retirement Income Security Act of 1974, as
amended and in effect at the time of execution of this Agreement.
E-8
1.19 "GAAP" Generally Accepted Accounting Principles as applied
consistently in the United States of America, as in effect on the date of any
statement, report or determination that purports to be, or is required to be,
prepared or made in accordance with GAAP. All references in this Agreement to
financial statements prepared in accordance with GAAP shall mean in accordance
with GAAP consistently applied throughout the periods to which reference is
made.
1.20 "Inventories" The stock of raw materials, work-in-process and
finished goods, including, but not limited to, finished goods purchased for
resale, held by the Seller for manufacturing, assembly, processing, finishing,
sale, or resale to others from time to time in the ordinary course of the
business of the Seller, in the form in which such inventories then are held or
after manufacturing, assembling, finishing, processing, incorporating with other
goods or items, refining, or similar processes.
1.21 "IRS" The United States Internal Revenue Service.
1.22 "Liabilities" At any time ("Determination Time"), the obligations
of a person or Entity, whether known or unknown, contingent or absolute,
recorded on its books or not, resulting in any way from facts, events,
agreements, obligations or occurrences that existed, occurred or transpired at a
prior time, or resulted from the passage of time to the Determination Time, but
not including obligations accruing or payable after the Determination Time to
the extent (but only to the extent) that such obligations (a) result from
previously existing agreements for services, benefits, or other considerations
and (b) accrue or become payable with respect to services, benefits, or other
considerations received by the person or Entity after the Determination Time.
1.23 "Multiemployer Plan" A "multiemployer plan," as defined in Section
3(37) of ERISA or Section 414(f) of the Code, or, in either case, successor
provisions to such provisions adopted by amendments to ERISA or the Code, as the
case may be, and including, in each case, other provisions of ERISA, of the
Code, or of other law, and regulations adopted pursuant to ERISA, or the Code,
or such other law, modifying, amending, interpreting, or otherwise affecting the
application of such provisions, either in general or as applied to the nature or
circumstances of a particular Entity that is a party to, or is affected by, or
is involved in, the Transaction and with respect to which Entity the use of the
term in this Agreement, or in the particular provision in this Agreement, is
relevant.
1.24 "Payables" Liabilities of a person or Entity resulting from the
borrowing of money or the incurring of obligations for merchandise or goods
purchased.
1.25 "Pension Plan" A "pension plan" or "employee pension benefit
plan," as defined in Section 3(2) of ERISA or successor provisions to such
provision adopted by amendments to ERISA and including other provisions of
ERISA; or of other law, and regulations adopted pursuant to ERISA or such other
law, modifying, amending, interpreting, or otherwise affecting the application
of such provision, either in general or as applied to the nature or
circumstances of a particular Entity that is a party to, or is affected by, or
is involved in, the Transaction and with respect to which Entity the use of the
term in this Agreement, or in the particular provision in this Agreement, is
relevant.
E-9
1.26 "Projections" The projections of economic results of the Seller,
prepared quarterly through June 30, 2000, and delivered to the Purchaser
pursuant to the terms of this Agreement. The Projections include projected
financial results for the business operations of the Seller. The Purchaser
acknowledges that projections of future economic performance are necessarily
unreliable and subject to the occurrence or nonoccurrence of a variety of
events, but the Seller represents and warrants that the Projections have been
prepared on the basis of assumptions that are, in the judgment of the Seller,
reasonable in all respects and are not, to the knowledge of the Seller, contrary
in any material respect to fact or to events that have occurred or are presently
in existence.
1.27 "Proprietary Information" For example, but without any limitation,
any and all marketing and sales data, plans and strategies, financial
projections, customer lists, prospective customer lists, promotional ideas, data
concerning services, designs, methods, inventions, improvements, discoveries,
designs whether or not patentable, "know-how", training and sales techniques and
any other information of a similar nature.
1.28 "Proprietary Rights" Trade secrets, copyrights, patents,
trademarks, service marks, customer lists, and all similar types of intangible
property developed, created or owned by the person claiming ownership,
proprietary or similar, or used by such person in connection with such person's
business, whether or not the same are entitled to legal protection.
1.29 "Purchaser" ASDAR Group, a Nevada corporation, which, pursuant
to the provisions of this Agreement, is purchasing the Acquired Assets.
1.30 "Receivables" Accounts receivable, notes receivable, and other
obligations presented as assets on the books, records and financial statements
of an Entity or a person, in accordance with GAAP, indicating moneys owed, due
and payable to that Entity or person on whose financial statements such
receivables are presented.
1.31 "SEC" The Securities and Exchange Commission.
1.32 "Securities Act" The Securities Act of 1933, as amended to the
date as of which any reference thereto is relevant pursuant to this Agreement,
including any substitute or replacement statute adopted in place or lieu
thereof.
1.33 "Seller" 2U ▇▇▇▇▇▇.▇▇▇, Inc., a Delaware corporation, which,
pursuant to the provisions of this Agreement, is selling the Acquired Assets.
1.34 "Seller Balance Sheet" The most recent balance sheet included
in the Audited Financial Statements of the Seller.
E-10
1.35 "Subsidiary" or "Subsidiaries" With respect to any Entity, another
Entity of which fifty percent (50%) or more of the effective voting power, or
the effective power to elect a majority of the board of directors or similar
governing body, or fifty percent (50%) or more of the true equity interest, is
owned by such first Entity, directly or indirectly.
1.36 "Transaction" The sale of the Acquired Assets, subject to the
Assumed Liabilities, for the consideration as contemplated by, and on the terms
and subject to the conditions of, this Agreement.
1.37 "Unaudited Financial Statements" The balance sheet, income
statement, statement of stockholders' equity and statement of cash flows or
equivalent statements of the respective, subject Entity or person, as commonly
prepared, as at October 31, 1999, with comparable statements for the similar
period of the prior fiscal year.
1.38 "Welfare Plan" A "welfare plan" or an "employee welfare benefit
plan," as defined in Section 3(1) of ERISA or successor provisions to such
provision adopted by amendments to ERISA and including other provisions of ERISA
or of other law, and regulations adopted pursuant to ERISA or such other law,
modifying, amending, interpreting, or otherwise affecting the application of
such provision, either in general or as applied to the nature or circumstances
of a particular Entity that is a party to, or is affected by, or is involved in,
the Transaction and with respect to which Entity the use of the term in this
Agreement, or in the particular provision in this Agreement, is relevant.
ARTICLE II
THE TRANSACTION
2.1 The Transaction. On the Closing Date, and at the Closing Time, on,
and in all instances subject to, each of the terms, conditions, provisions and
limitations specified in this Agreement, the Seller shall sell, transfer,
convey, assign, deliver and set over to the Purchaser, by instruments
satisfactory in form and substance to the Purchaser, and the Purchaser shall
acquire from the Seller, the Acquired Assets, subject to the Assumed
Liabilities, and only those Liabilities and no others, in exchange for the
Consideration. The assets specified on Schedule 2.1 to this Agreement, the
provisions of which, by this reference, are made a part of this Agreement as
though specified completely and specifically at length in this Section 2.1, are
all the assets reasonably necessary for the conduct of the Acquired Business in
the ordinary course and in the same manner as that in which such business has
been conducted in the immediate past, including, but not limited to, all
Proprietary Rights of the Seller so used in the ordinary conduct of the Acquired
Business and all contract, warranty, and other intangible rights relating to or
resulting from such Acquired Business. Neither the Purchaser nor any of its
Affiliates is assuming, becoming liable for, agreeing to discharge or in any
manner becoming in any way responsible for, any of the Liabilities of the
Seller, other than those Liabilities expressly specified on Schedule 2.1 and
accepted by the Purchaser pursuant to this Section 2.1.
E-11
2.2 Delivery of Consideration. Pursuant this Transaction, the Purchaser
shall deliver or cause to be delivered on the Closing Date the certificate
evidencing and representing the Subject Shares.
2.3 Closing. The Closing of the Transaction shall occur at the
offices of ASDAR Group, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇.▇., at 10:00 A.M., or at such other place as the Purchaser and the Seller
may agree, on the Closing Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Seller as follows:
3.1 Organization and Qualification. The Purchaser is a corporation duly
organized, validly existing and in good standing pursuant to the laws of its
jurisdiction of incorporation and has the requisite corporate power and
authority to conduct its business as that business is now being conducted. The
Purchaser is duly qualified as a foreign corporation to do business, and is in
good standing, in each jurisdiction where the character of the properties owned
or leased by it, or the nature of its activities, is such that qualification as
a foreign corporation in that jurisdiction is required by law.
3.2 Authority Relative to This Agreement. The Purchaser has the
requisite corporate power and authority to carry out its obligations specified
by the provisions of this Agreement. The execution and delivery of this
Agreement and the consummation of the Transaction have been duly authorized and
approved by the requisite corporate authority of the Purchaser and no other
corporate proceedings on the part of the Purchaser are necessary to approve and
adopt this Agreement or to approve the consummation of the Transaction,
including the issuance and delivery of the Subject Shares. The Purchaser has,
and any officer, director or representative executing this Agreement for and on
behalf of the Purchaser has, the legal capacity and authority to enter into and
deliver this Agreement. This Agreement is a valid and legally binding obligation
of the Purchaser and is enforceable completely against the Purchaser in
accordance with its terms, except as such enforceability may be limited by
general principles of equity, bankruptcy, insolvency, moratorium and similar
laws relating to creditors' rights generally, and subject to approval of any and
all governmental regulatory agencies and authorities having jurisdiction of the
relationship between the parties contemplated by the provisions of this
Agreement and the Transaction.
3.3 Absence of Breach; No Consents. The execution, delivery and
performance of this Agreement, and the performance by the Purchaser of its
obligations specified by the provisions of this Agreement (except for compliance
with any regulatory or licensing laws applicable to the business of the
Purchaser, all of which, to the extent applicable to the Purchaser (and to the
extent within its Control), will be satisfied in all material respects prior to
the Closing) do not (i) conflict with, and will not result in a breach of, any
of the provisions of the Certificate of Incorporation or Bylaws of the
Purchaser; (ii) contravene any law, rule or regulation of any state or
commonwealth, the United States, (except for compliance with regulatory or
licensing laws, all of which, to the extent applicable to the Purchaser (and to
the extent within the Control of the Purchaser), will be satisfied in all
material respects prior to the Closing), or any applicable foreign jurisdiction,
or contravene any order, writ, judgment, injunction, decree, determination, or
award affecting or obligating the Purchaser, in such a manner as to provide a
basis for enjoining or otherwise preventing consummation of the Transaction;
E-12
(iii) conflict with or result in a material breach of or default pursuant to any
material indenture or loan or credit agreement or any other material agreement
or instrument to which the Purchaser is a party, in such a manner as to provide
a basis for enjoining or otherwise preventing consummation of the Transaction;
or (iv) require the authorization, consent, approval or license of any third
party of such a nature that the failure to obtain the same would provide a basis
for enjoining or otherwise preventing consummation of the Transaction.
3.4 Brokers. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with this Agreement
or the Transaction or any related transaction based upon any agreements, written
or oral, made by or on behalf of Purchaser or any of its Subsidiaries except as
stated in Exhibit B.
3.5 Taxes. The Purchaser has properly filed or caused to be filed all
federal, state, local and foreign income and other tax returns, reports and
declarations that are required by applicable law to be filed by the Purchaser
and has paid, or made full and adequate provision for the payment of, all
federal, state, local and foreign income and other taxes properly due for the
periods for which such returns, reports and declarations are applicable.
3.6 Litigation. No investigation or review by any governmental agency
with respect to the Purchaser is pending or threatened (other than inspections
and reviews customarily made of businesses such similar to that the Purchaser),
nor has any governmental agency indicated to the Purchaser an intention to
conduct the same. There is no action, litigation matter or proceeding pending or
threatened against or affecting the Purchaser at law or in equity, or before any
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality.
3.7 Employees, Etc. There are no collective bargaining, bonus, profit
sharing, compensation, or other plans, agreements, trusts, funds, or
arrangements maintained by the Purchaser for the benefit of directors, officers
or employees of, and there are no employment, consulting, severance, or
indemnification arrangements, agreements, or understandings between the
Purchaser, on the one hand, and any current or former directors, officers or
other employees (or Affiliates thereof), on the other hand, except as disclosed
to the Seller in writing. The Purchaser is not, and following the Closing will
not be, obligated by any express or implied contract or agreement to employ,
directly or as consultant or otherwise, any person for any specific period of
time or until any specific age.
3.8 Compliance With Laws. The Purchaser is in compliance with all, and
has received no notice of any violation of any, laws or regulations applicable
to its operations, including, but not limited to, the laws and regulations
relevant to the use or utilization of premises, or with respect to which
compliance is a condition of engaging in any aspect of the business of the
Purchaser and the Purchaser has all permits, licenses, zoning rights and other
governmental authorizations necessary to conduct its business as presently
conducted.
E-13
3.9 Ownership of Assets. The Purchaser has good, marketable and
insurable title, or valid, effective and continuing leasehold rights in the case
of leased property, to all real property (as to which, in the case of owned
property, such title is fee simple) and all personal property owned or leased by
the Purchaser in such a manner as to create the appearance or reasonable
expectation that the same is owned or leased by the Purchaser; such ownership is
free and clear of all liens, claims, encumbrances and charges, except liens for
taxes not yet due and minor imperfections of title and encumbrances, if any,
which, singly and in the aggregate, are not substantial in amount and do not
materially detract from the value of the property subject thereto or materially
impair the use thereof; no other person or Entity has any ownership or similar
right in, or contractual or other right to acquire any such right in, any of
such assets. The Purchaser does not know of any potential action by any party,
governmental or other, and no proceedings with respect thereto have been
instituted of which the Purchaser has notice, that would materially affect the
Purchaser's ability to use and to utilize each of the Purchaser's assets. The
Purchaser has received no notices from any mortgagee regarding any of its leased
properties.
3.10 Proprietary Rights. The Purchaser possesses full and complete
ownership of, or adequate and enforceable long-term licenses or other rights to
use (without payment), all of the Purchaser's Proprietary Rights; the Purchaser
has not received any notice of conflict which asserts the rights of others with
respect thereto; and the Purchaser has in all material respects performed all of
the obligations required to be performed by the Purchaser, and is not in default
in any material respect, pursuant to any agreement relating to any such
Proprietary Right.
3.11 Subsidiaries. All of the Subsidiaries of Purchaser, direct or
indirect, have been identified by the Purchaser to the Seller, and the
Purchaser has no other Subsidiaries.
3.12 Trade Names. The Purchaser has not utilized any fictitious
business names or similar names in the conduct of the Purchaser's business or
in the utilization of the Purchaser's assets.
3.13 Employee Benefit Plans. The Purchaser does not maintain or
contribute to any Pension Plan or any Welfare Plan, nor is the Purchaser
presently, nor has the Purchaser been within the last six (6) years, a
participating employer in any Multiemployer Plan, affecting, in any case,
employees of the Purchaser.
3.14 Accounts Receivable. All accounts receivable of the Purchaser
represent transactions in the ordinary course of business and are current and
collectible.
3.15 Accounts Payable. The accounts payable of the Purchaser at the
time of the Closing will be all amounts owed by the Purchaser in respect of
trade accounts due and other Payables of the Purchaser.
E-14
3.16 Labor Matters. There are no activities or controversies,
including, but not limited to, any labor organizing activities, election
petitions or proceedings, proceedings preparatory thereto, unfair labor practice
complaints, labor strikes, disputes, slowdowns, or work stoppages, pending or,
to the best of the knowledge of the Purchaser, threatened, affecting employees
of the Purchaser.
3.17 Insurance. The Purchaser has insurance policies in full force and
effect insuring the assets of the Purchaser and such insurance policies provide
for coverages which are usual and customary in the business of the Purchaser as
to amount and scope, and are adequate to protect the assets of the Purchaser
against any reasonably foreseeable risk of loss, including business
interruption. The Purchaser has not within the past three (3) years received any
notice of cancellation of any insurance agreement affecting the assets of the
Purchaser.
3.18 Full Disclosure. The documents, certificates and other writings
furnished or to be furnished by or on behalf of the Purchaser to the Seller
pursuant to the provisions of this Agreement, taken together in the aggregate,
do not and will not contain any untrue statement of a material fact, or omit to
specify any material fact necessary to make the information specified therein,
considering the circumstances pursuant to which such information was specified
not misleading.
3.19 Capitalization; the Subject Stock; Related Matters. The authorized
capital stock of the Purchaser consists of Fifty Million (50,000,000) shares of
$.0001 par value common stock. As of the date of this Agreement, there are Four
Million Twenty Six Thousand Nine Hundred and Ninety Nine (4,026,999) shares of
such common stock issued and outstanding. The Subject Shares, when issued, will
be duly, legally and validly issued and will be non-assessable.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents and warrants to the Purchaser as follows:
4.1 Organization and Qualification. The Seller is a corporation duly
organized, validly existing and in good standing pursuant to the laws of its
jurisdiction of incorporation and has the requisite corporate power and
authority to conduct its business as that business is now being conducted. The
Seller is duly qualified as a foreign corporation to do business, and is in good
standing, in each jurisdiction where the character of the properties owned or
leased by it, or the nature of its activities, is such that qualification as a
foreign corporation in that jurisdiction is required by law.
4.2 Authority Relative to This Agreement. The Seller has the requisite
corporate power and authority to carry out its obligations specified by the
provisions of this Agreement. The execution and delivery of this Agreement and
the consummation of the Transaction have been duly authorized and approved by
the requisite corporate authority of the Seller and no other corporate
proceedings on the part of the Seller are necessary to approve and adopt this
Agreement or to approve the consummation of the Transaction, including the sale
and delivery of the Acquired Business and each of the Acquired Assets, except
for shareholder approval specified elsewhere in this Agreement.
E-15
The Seller has, and any officer, director or representative executing this
Agreement for and on behalf of the Seller has, the legal capacity and authority
to enter into and deliver this Agreement. This Agreement is a valid and legally
binding obligation of the Seller and is enforceable completely against the
Seller in accordance with its terms, except as such enforceability may be
limited by general principles of equity, bankruptcy, insolvency, moratorium and
similar laws relating to creditors' rights generally, and subject to approval of
any and all governmental regulatory agencies and authorities having jurisdiction
of the relationship between the parties contemplated by the provisions of this
Agreement and the Transaction.
4.3 Absence of Breach; No Consents. The execution, delivery and
performance of this Agreement, and the performance by the Seller of its
obligations specified by the provisions of this Agreement, do not (i) contravene
any law, ordinance, rule or regulation of any State or Commonwealth or political
subdivision of the United States, except for and compliance with regulatory or
licensing laws all of which, to the extent applicable to the Seller (and to the
extent within the Control of the Seller), will be satisfied in all material
respects prior to the Closing), or of any applicable foreign jurisdiction, or
contravene any order, writ, judgment, injunction, decree determination, or award
of any court or other authority having jurisdiction, or cause the suspension or
revocation of any authorization, consent, approval, or license, presently in
effect, which affects or obligates the Seller or all or any part of the Acquired
Business or any of the Acquired Assets or any material properties of the
Acquired Business, except in any such event when such contravention will not
have a material adverse effect on the business, condition (financial or
otherwise), operations or prospects of the Acquired Business or any of the
Acquired Assets and will not have a material adverse effect on the validity of
this Agreement or on the validity of the consummation the Transaction; (ii)
conflict with or result in a material breach of or default under any material
indenture or loan or credit agreement or any other material agreement or
instrument to which the Seller or any of part of the Acquired Business is a
party or by which any of the material properties of the Acquired Business may be
affected or obligated; (iii) require the authorization, consent, approval, or
license of any third party; or (iv) provide justification for the loss or
suspension of any permits, licenses, or other authorizations used in the
Acquired Business.
4.4 Brokers. No broker, finder or investment banker is entitled to any
brokerage, finder's, or other fee or commission in connection with this
Agreement or the Transaction or any related transaction based upon any
agreements, written or oral, made by or on behalf of Seller or any of its
Subsidiaries. The Seller does not have any obligation to pay finder's or
broker's fees or commissions in connection with the exercise of options to renew
or extend real estate leases to which the Seller is a party.
4.5 Financial Statements. On or before the Closing, the Seller will
deliver or cause to be delivered to the Purchaser the following:
1. Audited Financial Statements;
2. Unaudited Financial Statements;
3. All documents of the Seller filed with the SEC within the
four (4) years preceding the date of execution of this
Agreement; and
4. The Projections.
E-16
All of the historical financial statements contained in such documents
were prepared from the books and records of the Seller. The Audited Financial
Statements were prepared in accordance with GAAP, and fairly and accurately
present the financial situation and condition of the Seller as at the dates and
for the periods indicated. Without limiting the foregoing, at the date of the
Seller Balance Sheet, the Seller owned each of the assets specified on the
Seller Balance Sheet, and the valuation of such assets in the Seller Balance
Sheet is not more than their fair saleable value (on an item-by-item basis) at
that date; and the Seller had no Liabilities, other than those specified in the
Seller Balance Sheet, nor any Liabilities in amounts in excess of the amounts
included for them in the Seller Balance Sheet. The Unaudited Financial
Statements were prepared in a manner consistent with the basis of presentation
used in the Audited Financial Statements, and fairly present the financial
situation and condition of the Seller as at and for the periods indicated,
subject to normal year-end adjustments, none of which will be material. The
Projections reasonably anticipate the results of operations that the Seller
expects it will achieve, absent the occurrence of extraordinary events or
unusual conditions of which the Seller is not presently on notice. From the date
of this Agreement through the Closing Date the Seller will continue to prepare
financial statements on the same basis that it has done so in the past, will
promptly deliver the same to the Purchaser, and the foregoing representations
will be applicable to each financial statement so prepared and delivered.
4.6 No Undisclosed Liabilities. The Seller has no Liabilities which are
not adequately presented or reserved against on the Seller Balance Sheet, except
Liabilities incurred since the date of the Seller Balance Sheet in the ordinary
course of business and consistent with past practice. Without limiting the
foregoing, (a) there are no unpaid leasehold improvements at any of the Acquired
Facilities or locations for which the Seller is or will be responsible and (b)
there are no deferred rents due to lessors at or with respect to any of such
Acquired Facilities or locations.
4.7 No Material Adverse Change, Etc. Since the date of the Seller
Balance Sheet, other than as contemplated or caused by this Agreement, there has
not been (i) any material adverse change in the business, condition (financial
or otherwise), operations, or prospects of the Seller; (ii) any damage,
destruction, or loss, whether covered by insurance or not, having a material
adverse effect on the business, condition (financial or otherwise), operations
or prospects of the Seller; (iii) any entry into or termination of any material
commitment, contract, agreement or transaction (including, but not limited to,
any material borrowing or capital expenditure or sale or other disposition of
any material asset or assets) of or involving the Seller, other than this
Agreement and agreements executed in the ordinary course of business; (iv) any
redemption, repurchase or other acquisition for value of its capital stock by
the Seller, or any issuance of capital stock of the Seller or of securities
convertible into or rights to acquire any such capital stock or any dividend or
distribution declared, set aside or paid on capital stock of the Seller;
E-17
(v) any transfer of or right granted pursuant to any material lease, license,
agreement, patent, trademark, trade name or copyright of the Seller; (vi) any
sale or other disposition of any asset of the Seller, or any mortgage, pledge or
imposition of any lien or other encumbrance on any asset of the Seller, other
than in the ordinary course of business, or any agreement relating to any of the
foregoing; or (vii) any default or breach by the Seller in any material respect
pursuant to any contract, license or permit. Since the date of the Seller
Balance Sheet, the Seller has conducted its business only in the ordinary and
usual course, and, without limiting the foregoing, no changes have been made in
(i) executive compensation amounts, (ii) the manner in which other employees of
the Seller are compensated, (iii) supplemental benefits provided to any such
executives or other employees, or (d) inventory amounts in relation to sales
amounts, except, in any such event, in the ordinary course of business and, in
any event, without material adverse effect on the business, condition (financial
or otherwise), operations or prospects of the Seller.
4.8 Taxes. The Seller has properly filed or caused to be filed all
federal. state, local and foreign income and other tax returns, reports and
declarations that are required by applicable law to be filed by the Seller and
that relate to or in any way affect the Acquired Business or the Acquired Assets
and has paid, or made full and adequate provision for the payment of, all
federal, state, local and foreign income and other taxes properly due for the
periods for which such returns, reports and declarations are applicable.
4.9 Litigation. No investigation or review by any governmental agency
with respect to the Acquired Business or any of the Acquired Assets or the use
thereof is pending or threatened (other than inspections and reviews customarily
made of businesses such as the Acquired Business), nor has any governmental
agency indicated to the Seller an intention to conduct the same. There is no
action, litigation matter or proceeding pending or threatened against or
affecting the Acquired Business or the Acquired Assets at law or in equity, or
before any federal, state, municipal, or other governmental department,
commission, board, bureau, agency or instrumentality.
4.10 Employees, Etc. There are no collective bargaining, bonus, profit
sharing, compensation or other plans, agreements, trusts, funds or arrangements
maintained by the Seller, and there are no employment, consulting, severance or
indemnification arrangements, agreements, or understandings between the Seller,
on the one hand, and any current or former employees of the Seller (or
Affiliates thereof), on the other hand. The Seller is not, and following the
Closing will not be, obligated by any express or implied contract or agreement
to employ, directly, or as a consultant or otherwise, any person for any
specific period of time or until any specific age.
4.11 Compliance With Laws. The Acquired Business and each of the
Acquired Assets is in compliance with all, and has received no notice of any
violation of any, laws or regulations applicable to the operations of the
Acquired Business, including, but not limited to, the laws and regulations
relevant to the use or utilization of premises, or with respect to which
compliance is a condition of engaging in any aspect of the business of the
Acquired Business or utilizing any of the Acquired Assets, and the Acquired
Business has all permits, licenses, zoning rights and other governmental
authorizations necessary to conduct the Acquired Business as presently
conducted. All such permits, licenses, zoning rights and other governmental
authorizations will, as a part and consequence of the Transaction, be
transferred to the Purchaser at the Closing.
E-18
4.12 Ownership of Assets. The Seller has good, marketable and insurable
title, or valid, effective and continuing leasehold rights in the case of leased
property, to all real property (as to which, in the case of owned property, such
title is fee simple) and all personal property owned or leased by the Seller and
comprising any part of the Acquired Assets or the Acquired Business, or used by
it in the conduct of the Acquired Business in such a manner as to create the
appearance or reasonable expectation that the same is owned or leased by the
Seller; such ownership is free and clear of all liens, claims, encumbrances and
charges, except liens for taxes not yet due and minor imperfections of title and
encumbrances, if any, which, singly and in the aggregate, are not substantial in
amount and do not materially detract from the value of the property subject
thereto or materially impair the use thereof; no other person or Entity has any
ownership or similar right in, or contractual or other right to acquire any such
right in, any of such assets; and such ownership will be conveyed to the
Purchaser at the Closing pursuant to the Transaction. The Seller does not know
of any potential action by any party, governmental or other, and no proceedings
with respect thereto have been instituted of which the Seller has notice, that
would materially affect the Purchaser's ability to use and to utilize each of
such assets in the business of the Acquired Business. The Seller has received no
notices from any mortgagee regarding any leased properties of the Acquired
Business or the leasehold interest in which comprises any part of the Acquired
Assets.
4.13 Proprietary Rights. The Seller possesses full and complete
ownership of, or adequate and enforceable long-term licenses or other rights to
use (without payment), all Proprietary Rights used in the Acquired Business or
utilized in conjunction with the Acquired Assets, and all such ownership,
license or other rights shall be conveyed to the Purchaser at the Closing
pursuant to the Transaction; the Seller has not received any notice of conflict
which asserts the rights of any other person or Entity with respect thereto; and
the Seller has in all material respects performed all of the obligations
required to be performed by the Seller, and is not in default in any material
respect, pursuant to any agreement relating to any such Proprietary Right.
4.14 Trade Names. The Seller has not utilized any trade name,
fictitious business name, or other similar name to conduct any part of the
Acquired Business or to utilize any of the Acquired Assets during the ten (10)
years preceding the date of this Agreement.
4.15 Employee Benefit Plans. The Seller does not maintain or contribute
to any Pension Plan or Welfare Plan, nor is the Seller presently, nor has the
Seller been within the last six (6) years, a participating employer in any
Multiemployer Plan, affecting, in any case, employees of the Acquired Business
or employees of the Seller.
4.16 Facilities. The Acquired Facilities are (as to physical plant and
structure) structurally sound and none of the Acquired Facilities, nor any of
the vehicles or other equipment used by the Seller in connection with the
Acquired Business, has any material defects and all of them are in all material
respects in good operating condition and repair and are adequate for the uses to
which they are being put; none of such Acquired Facilities, vehicles or other
equipment is in need of maintenance or repairs except for ordinary, routine
maintenance and repairs which are not material in nature or cost. The Seller is
not in breach, violation or default of any lease affecting the Acquired Business
or the Acquired Assets with respect to, or as a result of, which the other party
(whether lessor, lessee, sublessor, or sublessee) thereto has the right to
terminate the same, and the Seller has not received notice of any claim or
assertion that the Seller is or may be in any such breach, violation or default.
E-19
4.17 Accounts Receivable. All accounts receivable of the Seller,
whether or not specified on the Seller Balance Sheet, represent transactions in
the ordinary course of business, and are current and collectible net of any
reserves specified on the Seller Balance Sheet (which reserves are adequate and
were calculated consistent with past practice).
4.18 Inventories. All Inventories of the Seller are of a quality and
quantity usable and salable in the ordinary course of business, except for
obsolete items and items of below-standard quality, all of which, in the
aggregate, are immaterial in amount. Items included in such Inventories are
carried on the books of the Seller at the lower of cost or market and, in any
event, at not greater than their net realizable value, on an item by item basis,
after appropriate deduction for costs of completion, marketing costs,
transportation expenses and allocation of overhead.
4.19 Contracts. The Schedule 4.19 to this Agreement specifies all
contracts, agreements, or understandings, whether express or implied, written or
verbal, to which the Seller is a party. Schedule 4.19 to this Agreement also
specifies a brief summary of each such contract, agreement or understanding
identified therein. Without in any respect limiting the foregoing, Schedule 4.19
to this Agreement specifies a description of all leases of properties by the
Seller, including all amendments, supplements, extensions and modification
thereof, identifying, inter alia, the date each such document was executed and
its effective period. The Seller is not a party to any executory contract to
sell or transfer any part of any leasehold interest of the Seller. True and
accurate copies of all leases, and of all amendments, supplements, extensions,
modifications thereof, have heretofore been delivered to the Purchaser by the
Seller.
4.20 Accounts Payable. The accounts payable specified on the Seller
Balance Sheet do, and those specified in the most recent balance sheet included
in the Unaudited Financial Statements do, and those specified on the books and
records of the Seller at the time of the Closing will, specify all amounts owed
by the Seller in respect of trade accounts due and other Payables, and the
actual Liabilities of the Seller in respect of such obligations was not, and
will not be, on any of such dates, in excess of the amounts so specified on the
balance sheets or the books and records of the Seller, as the case may be.
4.21 Labor Matters. There are no activities or controversies,
including, but not limited to, any labor organizing activities, election
petitions or proceedings, proceedings preparatory thereto, unfair labor practice
complaints, labor strikes, disputes, slowdowns, or work stoppages, pending or,
to the best of the knowledge of the Seller, threatened, affecting employees of
the Seller.
4.22 Insurance. The Seller has insurance policies in full force and
effect insuring the Acquired Assets and the Acquired Business, and such
insurance policies provide for coverages which are usual and customary in the
business of the Acquired Business as to amount and scope, and are adequate to
protect the Acquired Business and the Acquired Assets against any reasonably
foreseeable risk of loss, including business interruption. The Seller has not
within the past three (3) years received any notice of cancellation of any
insurance agreement affecting the Acquired Assets or the Acquired Business.
E-20
4.23 Title to and Utilization of Real Properties. The Seller owns fee,
simple, insured title to all real property included in the Acquired Assets and
has the unfettered right to use the same, and is not aware of any claim, notice
or threat to the effect that the Seller's right to own and use such property is
subject in any way to any challenge, claim, assertion of rights, proceeding
toward condemnation or confiscation, in whole or in part, or is otherwise
subject to challenge. Each parcel of real property the ownership of, or
leasehold interest in, which is included among the Acquired Assets is free of
any and all hazardous wastes, toxic substances, or other types of contamination
or matters of environmental concern, and the Seller is not subject to any
liability resulting from or related to any such wastes, substances, contaminants
or matters of environmental concern in connection with any such property. The
Seller has, in conjunction with acquiring ownership of, or any leasehold
interest in, each parcel of real property the ownership of, or leasehold
interest in, which is included among the Acquired Assets, (i) caused an audit
and examination to be made as to the existence of any hazardous wastes, toxic
substances or other types of contamination or matters of environmental concern
affecting each such property, which examination indicated that such property was
free of any such wastes, substances, contaminants or other matters of
environmental concern, and the Seller has delivered a copy of the report of such
audit and examination to the Purchaser; and (ii) obtained an appropriate policy
of title insurance insuring the interest of the Seller in such property, which
insurance policy was not subject to any exceptions not reasonably acceptable in
the ordinary course of business, and a copy of which has been delivered to the
Purchaser.
4.24 Full Disclosure. The documents, certificates, and other writings
furnished or to be furnished by or on behalf of the Seller to the Purchaser
pursuant to the provisions of this Agreement, taken together in the aggregate,
do not and will not contain any untrue statement of a material fact, or omit to
specify any material fact necessary to make the information specified,
considering the circumstances pursuant to which such information was specified,
not misleading.
4.25 Actions Since Seller Balance Sheet Date. Since the date of the
Seller Balance Sheet, the Seller has taken no actions that would be prohibited
pursuant to the provisions of this Agreement (without the prior consent of the
Purchaser) after the date of this Agreement.
4.26 The Seller's Acquisition Intention. Seller represents and confirms
to the Purchaser that it (i) is an "accredited investor" within the meaning of
Rule 501(a) pursuant to the Securities Act or, if not such an accredited
investor, has, alone or together with a purchaser representative within the
meaning of Rule 501(h) pursuant to the Securities Act, such knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risks of an investment in the Purchaser's securities; (ii) is aware
of the limits on resale of the Subject Shares imposed because of the nature of
the Transaction (Rule 144); and (iii) is receiving the Subject Shares without
registration pursuant to the Securities Act, in reliance on that exemption from
registration and prospectus delivery requirements of the Securities Act
specified by Regulation S promulgated pursuant to the Securities Act for
investment, and without any intent to sale, resale, or otherwise distribute the
Subject Shares in any manner that is in violation of the Securities Act. The
certificates representing the Subject Shares, when delivered to the Seller at
the Closing, may have appropriate orders restricting transfer placed against
them on the records of the transfer agent for such securities, and may have
placed upon them the following legend:
E-21
THE SUBJECT SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933. THE SUBJECT SHARES HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SHARES UNDER THE
SECURITIES ACT OF 1933, OR A PRIOR OPINION OF COUNSEL, SATISFACTORY TO THE
ISSUER, THAT REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.
Seller shall not transfer or attempt any transfer of any the Subject
Shares without first complying with the substance of that legend, and
satisfaction of the Purchaser may, if the Purchaser so requests, depend in part
upon an opinion of counsel acceptable in form and substance to the Purchaser, a
no-action letter of the SEC, or equivalent evidence. Seller acknowledges,
without limitation, that the foregoing agreement and representation shall apply
to the Subject Shares issued to Seller.
ARTICLE V
COVENANTS OF THE PURCHASER
5.1 Affirmative Covenants. From the date of this Agreement through the
Closing Date, the Purchaser will take every action reasonably required of the
Purchaser in order to satisfy the conditions to Closing set forth in this
Agreement and otherwise to ensure the prompt and expedient consummation of the
Transaction, substantially as contemplated by this Agreement and will exert all
reasonable efforts to cause the Transaction to be consummated; provided,
however, in all instances that the representations and warranties of the Seller
in this Agreement are and remain true and accurate and that the covenants and
agreements of the Seller in this Agreement are honored and that the conditions
to the obligations of the Purchaser set forth in this Agreement are not
incapable of satisfaction.
5.2 Cooperation. The Purchaser shall cooperate with the Seller and its
counsel, accountants and agents in every way in closing and consummating the
Transaction and in delivering all documents and instruments deemed reasonably
necessary or useful by counsel to the Seller.
E-22
5.3 Expenses. Whether or not the Transaction is consummated, all costs
and expenses incurred by the Purchaser in connection with this Agreement and the
Transaction shall be paid by the Purchaser.
5.4 Publicity. Prior to the Closing any written news releases by the
Purchaser pertaining to this Agreement or the Transaction shall be submitted to
the Seller for review and approval prior to release by the Purchaser, and shall
be released only in a form approved by the Seller; provided, however, that (i)
such approval shall not be unreasonably withheld, and (ii) such review and
approval shall not be required of releases by the Purchaser, if prior review and
approval would prevent the timely and accurate dissemination of such press
release as required to comply, in the judgment of counsel, with any applicable
law, rule or policy.
5.5 Access and Information. The Purchaser shall provide to the Seller
and to the Seller's accountants, counsel, and other representatives reasonable
access during normal business hours throughout the period prior to the Closing
to all of the Purchaser's properties, books, contracts, commitments, records
(including, but not limited to, tax returns) and personnel relating to the
Purchaser and, during such period, the Purchaser shall furnish promptly to the
Seller (i) all written communications relating to the business of the Purchaser,
(ii) internal monthly financial statements of the Purchaser when and as
available, and (iii) all other information relating to the business of the
Purchaser, as the Seller may reasonably request, but no investigation pursuant
to this Section 5.5 shall affect any representations or warranties of the
Purchaser or the conditions to the obligations of the Seller to consummate the
Transaction. In the event of the termination of this Agreement, the Seller will,
and will cause its representatives to, deliver to the Purchaser or, upon
Purchaser's request, destroy all documents, work papers and other material, and
all copies thereof, obtained by the Seller or on the Seller's behalf from the
Purchaser as a result of this Agreement or in connection with this Agreement or
the Transaction, whether so obtained before or after the execution of this
Agreement, and will hold in confidence all confidential information that has
been designated as such by the Purchaser in writing or by appropriate and
obvious notation and will not use any such confidential information, except in
connection with the Transaction, until such time as such information is
otherwise publicly available. Seller and its representatives shall assert their
rights pursuant to this Section 5.5 in such manner as to minimize interference
with the business of the Purchaser.
E-23
5.6 Conduct of Business Pending the Transaction. Prior to the
consummation of the Transaction or the termination of this Agreement pursuant to
its terms, unless the Seller shall otherwise consent in writing, which consent
shall not be unreasonably withheld or delayed, and except as otherwise
contemplated by this Agreement, the Purchaser will comply with each of the
following:
(1) The business of the Purchaser will be conducted only in the
ordinary and usual course, the Purchaser shall keep intact the
business organization and goodwill of the Purchaser's
business, keep available the services of the employees of the
Purchaser and maintain good relationships with suppliers,
lenders, creditors, distributors, employees, customers and
others having business or financial relationships with the
Purchaser, and the Purchaser shall immediately notify the
Seller of any event or occurrence or emergency material to,
and not in the ordinary and usual course of business of, the
Purchaser;
(2) The Purchaser shall not create, incur or assume any long-term
or short-term indebtedness for money borrowed or make any
capital expenditures or commitment for capital expenditures,
affecting the business of the Purchaser;
(3) The Purchaser shall not (a) adopt, enter into, or amend any
bonus, profit sharing, compensation, stock option, warrant,
pension, retirement, deferred compensation, employment,
severance, termination, or other employee benefit plan,
agreement, trust fund, or arrangement for the benefit or
welfare of any employees of the Purchaser or (b) agree to any
material (in relation to historical compensation) increase in
the compensation payable or to become payable to, or any
increase in the contractual term of employment of, any such
employee;
(4) The Purchaser shall not sell, lease, mortgage, encumber,
or otherwise dispose of or grant any interest in any of
its assets;
(5) The Purchaser shall not enter into, or terminate, any material
contract, agreement, commitment, or understanding
relating to or affecting the business of the Purchaser;
(6) The Purchaser shall not enter into any agreement, commitment,
or understanding, whether in writing or otherwise, with
respect to any of the matters referred to in subparagraphs (1)
through (5) above;
(7) The Purchaser will continue properly and promptly to file when
due all federal, state, local, foreign and other tax returns,
reports and declarations required to be filed by the
Purchaser, and will pay, or make full and adequate provision
for the payment of, all taxes and governmental charges due
from or payable by the Purchaser;
(8) The Purchaser will comply with all laws and regulations
applicable to the operations of the Purchaser;
E-24
(9) The Purchaser shall not issue or agree to issue any additional
shares of, or rights of any kind to acquire any shares of, the
Purchaser's capital stock of any class, or enter into any
contract, agreement, commitment, or arrangement with respect
to any of the foregoing, except as provided in Exhibit "B";
and
(10) The Purchaser will maintain in full force and effect insurance
coverage relating to the Purchaser's business of a type and
amount customary in the business of the Purchaser (but not
less than that presently in effect).
5.7 Updating of Exhibits. The Purchaser shall notify the Seller of any
changes, additions or events which may cause any change in or addition or events
to any schedules or exhibits delivered by the Purchaser pursuant to this
Agreement, promptly after the occurrence of the same and at the Closing by the
delivery of updates of all schedules and exhibits. No notification made pursuant
to this section shall be deemed to cure any breach of any representation or
warranty made in this Agreement, unless the Seller specifically agrees thereto
in writing nor shall any such notification be considered to constitute or be a
waiver by the Seller of any condition set forth in this Agreement.
5.8 Issuance and delivery of the Subject Shares. On the Closing, the
Purchaser shall issue and deliver or caused to be issued and delivered to the
Seller a certificate evidencing Five Million (5,000,000) shares of the
Purchaser's $.0001 par value common stock, which certificate shall specify
appropriate legend regarding the restricted nature of those shares.
ARTICLE VI
COVENANTS OF THE SELLER
6.1 Affirmative Covenants. From the date of this Agreement through the
Closing Date, the Seller will take every action reasonably required of the
Seller to satisfy the conditions to closing set forth in this Agreement and
otherwise to ensure the prompt and expedient consummation of the Transaction
substantially as contemplated hereby and will exert all reasonable efforts to
cause the Transaction to be consummated; provided, however, in all instances
that the representations and warranties of the Purchaser in this Agreement are
and remain true and accurate and that the covenants and agreements of the
Purchaser in this Agreement are correct and that the conditions to the
obligations of the Seller set forth in this Agreement are not incapable of
satisfaction.
6.2 Name. The Seller agrees that following consummation of the
Transaction, neither the Seller nor any Entity the Seller Controls or Affiliate
of the Seller shall make any attempt to make any use of any name pursuant to
which the Seller has conducted the Acquired Business, or authorize any other
person or Entity to do so, without the consent of the Purchaser.
6.3 Access and Information. The Seller shall provide to the Purchaser
and to the Purchaser's accountants, counsel and other representatives reasonable
access during normal business hours throughout the period prior to the Closing
to all of its properties, books, contracts, commitments, records (including, but
not limited to, tax returns) and personnel relating to the Acquired Assets or
the Acquired Business and, during such period, the Seller shall furnish promptly
to the Purchaser (i) all written communications relating to the Acquired Assets
or the Acquired Business, (ii) internal monthly financial statements of the
Acquired Business when and as available, and (iii) all other information
relating to the Acquired Assets or the Acquired Business as the Purchaser may
reasonably request, but no investigation pursuant to this Section 6.3 shall
affect any representations or warranties of the Seller, or the conditions to the
obligations of the Purchaser to consummate the Transaction. In the event of the
termination of this Agreement, the Purchaser will, and will cause the
Purchaser's representatives to, deliver to the Seller or, upon Seller's request,
destroy all documents, work papers, and other material, and all copies thereof,
obtained by the Purchaser or on the Purchaser's behalf from the Seller as a
result of this Agreement or in connection with this Agreement or the
Transaction, whether so obtained before or after the execution of this
Agreement, and will hold in confidence all confidential information that has
been designated as such by the Seller in writing or by appropriate and obvious
notation, and will not use any such confidential information except in
connection with the Transaction, until such time as such information is
otherwise publicly available. Purchaser and its representatives shall assert
their rights pursuant to this Section 6.3 in such manner as to minimize
interference with the business of the Seller.
E-25
6.4 No Solicitation. The Seller and those acting on behalf of the
Seller will not, and the Seller will use its best efforts to cause its
employees, agents, and representatives (including any investment banker) not,
directly or indirectly, to solicit, encourage, or initiate any discussions with,
or negotiate or otherwise deal with, or provide any information to, any person
or Entity other than the Purchaser and its officers, employees, and agents,
relating to the Acquired Assets or the Acquired Business. The Seller will notify
the Purchaser immediately upon receipt of any inquiry, offer or proposal
relating to any of the foregoing. None of the foregoing shall prohibit providing
information to others in a manner in keeping with the ordinary conduct of the
Seller's business, or providing information to government authorities.
6.5 Conduct of Business Pending the Transaction. The Seller covenants
and agrees with the Purchaser that, prior to the consummation of the Transaction
or the termination of this Agreement pursuant to its terms, unless the Purchaser
shall otherwise consent in writing, which consent shall not be unreasonably
withheld or delayed, and except as otherwise contemplated by this Agreement, the
Seller will comply with each of the following:
(1) The Acquired Business, and the other businesses of the Seller
that relate to, use or affect the Acquired Assets, if any,
will be conducted only in the ordinary and usual course, the
Seller shall keep intact the business organization and
goodwill of the Acquired Business, keep available the services
of the employees of the Seller and maintain good relationships
with suppliers, lenders, creditors, distributors, employees,
customers and others having business or financial
relationships with the Acquired Business, and the Seller shall
immediately notify the Purchaser of any event or occurrence or
emergency material to, and not in the ordinary and usual
course of business of, the Acquired Business or affecting any
material part of the Acquired Assets;
(2) The Seller shall not create, incur or assume any long-term or
short-term indebtedness for money borrowed or make any capital
expenditures or commitment for capital expenditures, affecting
the Acquired Business or any of the Acquired Assets, except in
the ordinary course of business and consistent with past
practice;
(3) The Seller shall not (a) adopt, enter into, or amend any
bonus, profit sharing, compensation, stock option, warrant,
pension, retirement, deferred compensation, employment,
severance, termination, or other employee benefit plan,
agreement, trust fund, or arrangement for the benefit or
welfare of any employees of the Seller, or (b) agree to any
material (in relation to historical compensation) increase in
the compensation payable or to become payable to, or any
increase in the contractual term of employment of, any such
employee;
E-26
(4) The Seller shall not sell, lease, mortgage, encumber, or
otherwise dispose of or grant any interest in any of the
Acquired Assets except for sales, encumbrances and other
dispositions or grants in the ordinary course of business of
the Acquired Business and consistent with past practice and
except for liens for taxes not yet due or liens or
encumbrances that are not material in amount or effect and do
not impair the use of the property, or as specifically
provided for or permitted in this Agreement;
(5) The Seller shall not enter into, or terminate, any material
contract, agreement, commitment, or understanding relating to
or affecting the Acquired Assets or the Acquired Business;
(6) The Seller shall not enter into any agreement, commitment, or
understanding, whether in writing or otherwise, with respect
to any of the matters referred to in subparagraphs (1) through
(5) above;
(7) The Seller will continue properly and promptly to file when
due all federal, state, local, foreign and other tax returns,
reports and declarations required to be filed by it relating
to the Acquired Assets or the Acquired Business, and will pay,
or make full and adequate provision for the payment of, all
taxes and governmental charges due from or payable by the
Seller relating to the Acquired Assets or the Acquired
Business;
(8) The Seller will comply with all laws and regulations
applicable to the operations of the Acquired Business and
the utilization of the Acquired Assets; and
(9) The Seller will maintain in full force and effect insurance
coverage relating to the Acquired Assets and the Acquired
Business of a type and amount customary in the business of the
Acquired Business (but not less than that presently in
effect).
6.6 Cooperation. The Seller will cooperate with the Purchaser and the
Purchaser's counsel, accountants and agents in every way in consummating and
closing the Transaction and in delivering all documents and instruments deemed
reasonably necessary or useful by the Purchaser.
E-27
6.7 Expenses. Whether or not the Transaction is consummated, all costs
and expenses incurred by the Seller in connection with this Agreement and the
Transaction shall be paid by the Seller.
6.8 Publicity. Prior to the Closing any written news releases by the
Seller relating to this Agreement or the Transaction shall be submitted to the
Purchaser for review and approval prior to release by the Seller, and shall be
released only in a form approved by the Purchaser.
6.9 Updating of Exhibits and Disclosure Documents. The Seller shall
notify the Purchaser of any changes, additions, or events which may cause any
change in or addition to any schedules or exhibits delivered by the Seller
pursuant to this Agreement promptly after the occurrence of the same and again
at the Closing by delivery of appropriate updates to all such schedules and
exhibits. No such notification made pursuant to this section shall be deemed to
cure any breach of any representation or warranty made in this Agreement, unless
the Purchaser specifically agrees thereto in writing nor shall any such
notification be considered to constitute or be a waiver by the Purchaser of any
condition set forth in this Agreement.
6.10 Payment of Unassumed Liabilities. The Seller agrees promptly to
pay when due, or otherwise to discharge, without cost or expense to the
Purchaser, each and every Liability of the Seller that is not specifically
assumed by the Purchaser pursuant to this Agreement, as described in Section 2.1
of this Agreement.
6.11 Continued Action Regarding Exemption. The Seller shall take any
and all additional action which is necessary or appropriate to maintain that
exemption from the registration and prospectus delivery requirements of the
Securities Act provided by Rule 144 promulgated pursuant to the Securities Act.
ARTICLE VII
CONDITIONS TO CLOSING
7.1 Conditions to Obligation of Purchaser. The obligation of the
Purchaser to effect and consummate the Transaction shall be subject to the
fulfillment at or prior to the Closing of the following conditions, unless the
Purchaser shall waive such fulfillment in writing:
(1) This Agreement and the Transaction shall have received all
approvals, consents, authorizations, and waivers from governmental and
other regulatory agencies and other third parties (including lenders,
holders of debt securities and lessors) required to consummate the
Transaction;
(2) There shall not be in effect a preliminary or permanent injunction
or other order by any federal or state court which prohibits the
consummation of the Transaction;
(3) The Seller shall have performed in all material respects each of
the Seller's agreements and obligations specified in this Agreement and
required to be performed on or prior to the Closing and shall have
complied with all material requirements, rules, and regulations of all
regulatory authorities having jurisdiction relating to the Transaction;
E-28
(4) No material adverse change shall, in the judgment of the Purchaser,
have taken place in the business condition (financial or otherwise),
operations, or prospects of the Acquired Business or the Acquired
Assets since the date of this Agreement other than those, if any, that
result from the changes permitted by this Agreement;
(5) The representations and warranties of the Seller set forth in this
Agreement shall be true in all material respects as of the date of this
Agreement and, except in such respects as, in the judgment of the
Purchaser, do not materially and adversely affect the business,
condition (financial or otherwise), operations, or prospects of the
Acquired Business or the Acquired Assets, as of the Closing, as if made
as of the Closing; and
(6) The Purchaser shall have received from the Seller an officers'
certificate, executed by the Chief Executive Officer and Chief
Financial Officer of the Seller (in their capacities as such), dated
the Closing Date, as to the satisfaction of the conditions in
Paragraphs (3), (4), and (5) of this section (to the best of their
knowledge).
7.2 Conditions to Obligation of the Seller. The obligation of the
Seller to effect the Transaction shall be subject to the fulfillment at or prior
to the Closing of the following conditions, unless the Seller shall waive such
fulfillment in writing:
(1) This Agreement and the Transaction shall have received all
approvals, consents, authorizations, and waivers from
governmental and other regulatory agencies and other third
parties (including lenders, holders of debt securities and
lessors required by law to consummate the Transaction;
(2) There shall not be in effect a preliminary or permanent
injunction or other order by any federal or state
authority which prohibits the consummation of the Transaction;
(3) The Purchaser shall have performed in all material respects
the Purchaser's agreements and obligations specified in this
Agreement required to be performed on or prior to the Closing;
(4) The representations and warranties of the Purchaser set forth
in this Agreement shall be true in all material respects as of
the date of this Agreement and, except in such respects as do
not materially and adversely affect the business of the
Purchaser, as of the Closing Date as if made as of the Closing
Date; and
(5) The Seller shall have received from the Purchaser an officers'
certificate, executed by the Chief Financial Officer and the
Chief Executive Officer of the Purchaser (in their capacities
as such), dated the Closing Date, as to the satisfaction of
the conditions of Paragraphs (3) and (4) of this section (to
the best of their knowledge).
E-29
ARTICLE VIII
DOCUMENTS AND INSTRUMENTS TO BE DELIVERED AT CLOSING
8.1 The Purchaser to the Seller. On the Closing, the Purchaser
shall deliver or cause to be delivered the following instruments and documents
to the Seller:
(1) A certificate evidencing and representing Five Million
(5,000,000) shares of the Purchaser's $.0001 par value common
stock (the Subject Shares), which certificate shall specify
the appropriate legend regarding the restricted nature of
those Subject Shares; and
(2) The Officers' Certificate contemplated by the provisions of
Paragraph (5) of Section 7.2 of this Agreement.
8.2 The Seller to the Purchaser. On the Closing, the Seller
shall deliver or cause to be delivered the following
instruments and documents to the Purchaser:
(1) A Bill of Sale, executed by the President and the
Secretary of the Seller, pursuant to which title to the
Acquired Assets are transferred and vested in the Purchaser;
(2) All books, records, journals, disks, checks, minute books,
documents, memoranda and other instruments relating to the
business of the Seller which are necessary or appropriate to
enable the Purchaser to carry on and conduct the business and
affairs of the Acquired Business and to utilize the Acquired
Assets after the Closing; and
(3) The Officers' Certificate contemplated by the provisions of
Paragraph (6) of Section 7.1 of this Agreement.
ARTICLE IX
TERMINATION, AMENDMENT WAIVER
9.1 Termination. This Agreement and the Transaction may be
terminated at any time prior to the Closing:
(1) By mutual consent of the Purchaser and the Seller; or
(2) By either Purchaser or the Seller, upon written notice to the
other, if the conditions to such party's obligations to consummate the
Transaction, in the case of Purchaser, as specified in Section 7.1 of
this Agreement, or, in the case of the Seller, as provided in Section
7.2 of this Agreement, were not, or cannot reasonably be, satisfied on
or before September 20, 2000, unless the failure of condition is the
result of the material breach of this Agreement by the party seeking to
terminate this Agreement.
E-30
9.2 Amendment. This Agreement may be amended by the Purchaser and the
Seller by action taken at any time. This Agreement may not be amended, except
by an instrument in writing signed on behalf of the Purchaser and the Seller.
9.3 Waiver. At any time prior to the Closing, the Purchaser or the
Seller may (i) extend the time for the performance of any of the obligations or
other acts of the other party, (ii) waive any inaccuracies in the
representations and warranties specified in this Agreement or in any document
delivered pursuant to this Agreement, or (iii) waive compliance with any of the
agreements or conditions specified 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.
ARTICLE X
GENERAL PROVISIONS
10.1 Notices. Any notice, direction or instrument required or permitted
to be given pursuant to this Agreement shall be given in writing by (i)
telegram, facsimile transmission or similar method, if confirmed by mail as
herein provided, by mail; (ii) if mailed postage prepaid, by certified mail,
return receipt requested; or (iii) hand delivery to any party at the addresses
of the parties specified, below. If given by telegram or facsimile transmission
or similar method or by hand delivery, such notice, direction or instrument
shall be deemed to have been given or made on the day on which it was given, and
if mailed, shall be deemed to have been given or made on the second (2nd)
business day following the day after which it was mailed. Any party may, from
time to time by similar notice, give notice of any change of address, and in
such event, the address of such party shall be deemed to be changed accordingly.
The address, telephone number and facsimile transmission number for the notice
of each party are:
If to Purchaser: ASDAR Group
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
If to Seller: 2U ▇▇▇▇▇▇.▇▇▇, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
10.2 Indemnification. Seller shall save Purchaser harmless from and
against and shall indemnify Purchaser for any liability, loss, costs, expenses
or damages howsoever caused by reason of any injury (whether to body, property
or personal or business character or reputation) sustained by any person or to
property by reason of any act, neglect, default or omission of Seller or any of
Seller's agents, employees or other representatives, and Seller shall pay all
amounts to be paid or discharged in case of an action or any such damages or
injuries. If Purchaser is sued in any court for damages by reason of any of the
acts of Seller, Seller or such other party shall defend the resulting action (or
cause same to be defended) at Seller's expense and shall pay and discharge any
judgment that may be rendered in any such action; if Seller fails or neglects to
so defend in such action, Purchaser may defend such action and any expenses,
including reasonable attorneys' fees, which Purchaser may pay or incur in
defending such action and the amount of any judgment which Purchaser may be
required to pay shall be promptly reimbursed by Seller upon demand by Purchaser.
E-31
10.3 Recovery of Enforcement Costs. In the event either party shall
institute any action or proceeding to enforce any provision of this Agreement to
seek relief from any violation of this Agreement, or to otherwise obtain any
judgment or order relating to or arising from the subject matter of this
Agreement, the prevailing party shall be entitled to receive from the losing
party such prevailing party's actual attorneys' fees and costs incurred to
prosecute or defend such action or proceeding.
10.4 Assignment. Neither party shall have the right, without the
consent of the other party, to assign, transfer, sell, pledge, hypothecate,
delegate, or otherwise transfer, whether voluntarily, involuntarily or by
operation of law, any of such party's rights or obligations created by the
provisions of this Agreement, nor shall the parties' rights be subject to
encumbrance or the claim of creditors. Any such purported assignment, transfer,
or delegation shall be null and void.
10.5 Captions and Interpretations. Captions of the articles, sections
and paragraphs of this Agreement are for convenience and reference only, and the
works specified therein shall in no way be held to explain, modify, amplify or
aid in the interpretation, construction, or meaning of the provisions of this
Agreement. The language in all parts to this Agreement, in all cases, shall be
construed in accordance with the fair meaning of that language as if prepared by
all parties and not strictly for or against any party. Each party and counsel
for such party have reviewed this Agreement. The rule of construction, which
requires a court to resolve any ambiguities against the drafting party, shall
not apply in interpreting the provisions of this Agreement.
10.6 Entire Agreement. This Agreement and the exhibits to this
Agreement are the final written expression and the complete and exclusive
statement of all the agreements, conditions, promises, representations,
warranties and covenants between the parties with respect to the subject matter
of this Agreement, and this Agreement supersedes all prior or contemporaneous
agreements, negotiations, representations, warranties, covenants, understandings
and discussions by and between and among the parties, their respective
representatives, and any other person, with respect to the subject matter
specified in this Agreement. No provision of any exhibit or schedule to this
Agreement shall supersede or annul the terms and provisions of this Agreement,
unless the matter specified in such exhibit or schedule shall explicitly so
provide to the contrary, in the event of ambiguity in meaning or understanding
between the provisions of this Agreement proper and the appended exhibits or
schedules, the provisions of this Agreement shall prevail and control in all
instances.
10.7 Choice of Law. This Agreement shall be deemed to have been entered
into in the State of Delaware. All questions concerning the validity,
interpretation, or performance of any of the terms, conditions and provisions of
this Agreement or of any of the rights or obligations of the parties shall be
governed by, and resolved in accordance with, the laws of the State of Delaware
without regard to conflicts of law principles.
E-32
10.8 Number and Gender. Whenever the singular number is used in this
Agreement and, when required by the context, the same shall include the plural,
and vice versa; the masculine gender shall include the feminine and the neuter
genders, and vice versa.
10.9 Successors and Assigns. This Agreement and each of its provisions
shall obligate the heirs, executors, administrators, successors, and assigns of
each of the parties. Nothing specified in this article, however, shall be a
consent to the assignment or delegation by any party of such party's respective
rights and obligations created by the provisions of this Agreement.
10.10 Third Party Beneficiaries. Except as expressly specified by the
provisions of this Agreement, this Agreement shall not be construed to confer
upon or give to any person, other than the parties hereto, any right, remedy or
claim pursuant to, or by reason of, this Agreement or of any term or condition
of this Agreement.
10.11 Severability. In the event any part of this Agreement, for any
reason, is determined by a court of competent jurisdiction to be invalid, such
determination shall not affect the validity of any remaining portion of this
Agreement, which remaining portion shall remain in full force and effect as if
this Agreement had been executed with the invalid portion thereof eliminated. It
is hereby declared the intention of the parties that they would have executed
the remaining portion of this Agreement without including any such part, parts,
or portion which, for any reason, may be hereafter determined to be invalid.
10.12 Governmental Rules and Regulations. The transactions contemplated
by the provisions of this Agreement are and shall remain subject to any and all
present and future orders, rules and regulations of any duly constituted
authority having jurisdiction of that transaction.
10.13 Execution in Counterparts. This Agreement may be prepared in
multiple copies and forwarded to each of the parties for execution. All of the
signatures of the parties may be affixed to one copy or to separate copies of
this Agreement and when all such copies are received and signed by all the
parties, those copies shall constitute one agreement which is not otherwise
separable or divisible. Counsel for the Purchaser shall keep all of such signed
copies and shall conform one copy to show all of those signatures and the dates
thereof and shall mail a copy of such conformed copy to each of the parties
within thirty (30) days after the receipt by such counsel of the last signed
copy, and such counsel shall cause one such conformed copy to be filed in the
principal office of such counsel.
10.14 Reservation of Rights. The failure of any party at any time or
times hereafter to require strict performance by any other party of any of the
warranties, representations, covenants, terms, conditions and provisions
specified in this Agreement shall not waive, affect of diminish any right of
such party failing to require strict performance to demand strict compliance and
performance therewith and with respect to any other provisions, warranties,
terms, and conditions specified in this Agreement. Any waiver of any default
shall not waive or affect any other default, whether prior or subsequent
thereto, and whether the same or of a different type. None of the
representations, warranties, covenants, conditions, provisions and terms
specified in this Agreement shall be deemed to have been waived by any act or
knowledge of any party, its agents, trustees, officers, or employees and any
such waiver shall be made only by an instrument in writing, signed by the
waiving party and directed to any non-waiving party specifying such waiver, and
each party reserves such party's rights to insist upon strict compliance
herewith at all times.
E-33
10.15 Survival of Covenants, Representations and Warranties. All
covenants, representations, and warranties made by each party to this Agreement
shall be deemed made for the purpose of inducing the other party to enter into
and execute this Agreement. The representations, warranties, and covenants
specified in this Agreement shall survive the Closing and shall survive any
investigation by either party whether before or after the execution of this
Agreement. The covenants, representations, and warranties of the Seller and the
Purchaser are made only to and for the benefit of the other and shall not create
or vest rights in other persons.
10.16 Concurrent Remedies. No right or remedy specified in this
Agreement conferred on or reserved to the parties is exclusive of any other
right or remedy specified in this Agreement or by law or equity provided or
permitted; but each such right and remedy shall be cumulative of, and in
addition to, every other right and remedy specified in this Agreement or now or
hereafter existing at law or in equity or by statute or otherwise, and may be
enforced concurrently therewith or from time to time. The termination of this
Agreement for any reason whatsoever shall not prejudice any right or remedy
which any party may have, either at law, in equity, or pursuant to the
provisions of this Agreement.
10.17 Force Majeure. If any party is rendered unable, completely or
partially, by the occurrence of an event of "force majeure" (hereinafter
defined) to perform such party's obligations created by the provisions of this
Agreement, such party shall give to the other party prompt written notice of the
event of "force majeure" with reasonably complete particulars concerning such
event; thereupon, the obligations of the party giving such notice, so far as
those obligations are affected by the event of "force majeure," shall be
suspended during, but no longer than, the continuance of the event of "force
majeure." The party affected by such event of "force majeure" shall use all
reasonable diligence to resolve, eliminate and terminate the event of "force
majeure" as quickly as practicable. The requirement that an event of "force
majeure" shall be remedied with all reasonable dispatch as hereinabove
specified, shall not require the settlement of strikes, lockouts or other labor
difficulties by the party involved, contrary to such party's wishes, and the
resolution of any and all such difficulties shall be handled entirely within the
discretion of the party concerned. The term "force majeure" as used herein shall
be defined as and mean any act of God, strike, civil disturbance, lockout or
other industrial disturbance, act of the public enemy, war, blockage, public
riot, earthquake, tornado, hurricane, lightening, fire, epidemics, quarantine
restrictions, public demonstration, storm, flood, explosion, freight embargoes,
governmental action, governmental delay, restraint or inaction, unavailability
of equipment, default of a party's subcontractors or suppliers, and any other
cause or event, whether of the kind enumerated specifically herein, or
otherwise, which is not reasonably within the control of the party claiming such
suspension.
E-34
10.18 Consent to Agreement. By executing this Agreement, each party,
for itself represents such party has read or caused to be read this Agreement in
all particulars, and consents to the rights, conditions, duties and
responsibilities imposed upon such party as specified in this Agreement. Each
party represents, warrants and covenants that such party executes and delivers
this Agreement of its own free will and with no threat, undue influence, menace,
coercion or duress, whether economic or physical. Moreover, each party
represents, warrants, and covenants that such party executes this Agreement
acting on such party's own independent judgment.
10.19 Waiver and Modification. No modification, supplement or amendment
of this Agreement or of any covenant, representation, warranty, condition, or
limitation specified in this Agreement shall be valid unless the same is made in
writing and duly executed by both parties. No waiver of any covenant,
representation, warranty, condition, or limitation specified in this Agreement
shall be valid unless the same is made in writing and duly executed by the party
making the waiver. No waiver of any provision of this Agreement shall be deemed,
or shall constitute, a waiver of any other provision, whether or not similar,
nor shall any waiver constitute a continuing waiver.
10.20 Further Assurances. The parties shall from time to time sign and
deliver any further instruments and take any further actions as may be necessary
to effectuate the intent and purposes of this Agreement.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be signed in
duplicate on the date first written above by their respective officers thereunto
duly authorized.
SELLER: 2U ▇▇▇▇▇▇.▇▇▇, Inc., PURCHASER: ASDAR Group
a Delaware corporation a Nevada corporation
/s/ ▇▇▇▇ ▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
By: ____________________________ By: __________________________
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its: President Its: President
/s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ /s/ Jack Sha
By: ____________________________ By: __________________________
▇▇▇▇▇▇▇▇▇ Marehard ▇▇▇▇ Sha
Its: Secretary Its: Secretary
E-35
Exhibit B
Finder's Fee: 500,00 shares of ASDAR Group's $0.001 par value
common stock.
Finder's Fee For: ASSET PURCHASE AND SALE AGREEMENT
Signed By: 2U ▇▇▇▇▇▇.▇▇▇, Inc., a Delaware corporation, And
ASDAR Group, a Nevada corporation.
Stock Distribution: May ▇▇▇▇ ▇▇▇ 475,000 shares.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 25,000 shares.
ASDAR Group
a Nevada corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its: President
By: /s/ ▇▇▇▇ ▇▇▇
----------------------------------------
▇▇▇▇ ▇▇▇
Its: Secretary
E-36
ASSIGNMENT OF WORKING INTEREST
------------------------------
IN OIL AND GAS LEASE(S)
-----------------------
***
KNOW ALL PERSONS BY THESE PRESENTS THAT:
2U ▇▇▇▇▇▇.▇▇▇ Inc., a Delaware corporation, U.S.A., hereinafter referred
to as the "Assignor", for valuable consideration in hand paid, receipt and
sufficiency whereof being hereby acknowledged, does hereby sell, assign,
convey, transfer and set over to Asdar Group, a Nevada corporation,
U.S.A., whose mailing address is Suite ▇▇▇▇-▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇, hereinafter referred to as the
"Assignee", any and all of the Assignor's working interest and attendant net
revenue interest which it now owns or might own in the following-described
oil and gas lease(s) and lands:
1. An oil and gas lease dated January 10, 1981, wherein ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, ▇. ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ were the lessors, and
Exoil Services, Inc. was the lessee, recorded in Book 87 of Photos
at Page 189 on February 4, 1981 in the Offices of the County Clerk
for Weston County, Wyoming; as amended and ratified on June 22,
1982, which amendment and ratification was recorded in Book 103
of Photos at Page 344, in the Offices of the County Clerk for Weston
County, Wyoming; which lease was further ratified on January 4,
1984, which ratification was recorded in Book 122 of Photos at Page
261 in the Offices of the County Clerk for V4eston County, Wyoming;
and which lease was further amended and ratified in March of 1986,
which amendment and ratification was recorded in Book 158 of
Photos at Page 61 in the Offices of the County Clerk for Weston
County, Wyoming; covering the following-described lands situate in
Weston County, Wyoming, to-wit:
Township 44 North. Range 60 West. 6th P.M.
------------------------------------------
Section 6: SW 1/4, NE 1/4, E 1/2NW 1/4, W 1/2 SE 1/4
Section 7: W 1/2, W 1/2E 1/2
Section 18: W1/2
Section 19: W 1/2W1/2, NE 1/4NW 1/4
Section 30: W 1/2 NW 1/4
Township 44 North. Range 61 West. 6th P.M.
------------------------------------------
Section 1: SE 1/4
Section 11: SE 1/4, E 1/4 NE 1/4, S 1/2 SW 1/4
Section 12: All
Section 13: All
Section 14: All
Section 22: E 1/2
Section 23: N 1/2, SE 1/4, E 1/2 SW 1/4
Section 24: All
Section 25: W 1/2, NE 1/4, NW 1/4 SE 1/4
Section 26: E 1/2 NE 1/4, NE 1/4 SE 1/4
Section 27: W 1/2 E1/2
E-37
2. Any and all other oil and gas leases, including all
amendments, ratifications, renewals and extensions
thereof, insofar as same cover the following-described
lands situate in Weston County, Wyoming, towit:
Township 44 North, Range 60 West. 6th P.M.
------------------------------------------
Section 6: SW 1/4, NE 1/4, E 1/2 NW 1/4,
W 1/2 SE 1/4
Section 7: W 1/2, W 1/2 E 1/2
Section 18: W 1/2
Section 19: W 1/2 W 1/2, NE 1/4 NW 1/4
Section 30: W 1/2 NW 1/4
Township 44 North. Range 61 West. 6th P.M.
------------------------------------------
Section 1: SE 1/4
Section 11: SE 1/4, E 1/2 NE 1/4, S 1/2 SW 1/4
Section 12: All
Section 13: All
Section 14: All
Section 22: E 1/2
Section 23: N 1/2, SE 1/4, E 1/2 SW 1/4
Section 24: All
Section 25: W 1/2, NE 1/4, NW 1/4 SE 1/4
Section 26: E 1/2 NE 1/4, NE 1/4 SE 1/4
Section 27: W 1/2 E 1/2
SUBJECT to all of the terms and conditions set forth hereinafter to which by
acceptance and execution of this Assignment the Assignee specifically
agrees. The above-described oil and gas lease(s) are hereinafter referred to
as the "Lease(s)", and the land covered by the Lease(s) is hereinafter
referred to as the "Leasehold Lands".
TERMS AND CONDITIONS OF THE ASSIGNMENT:
---------------------------------------
1. Assignor does not warrant the validity of the Lease(s) nor its
titles to any part or portion of the working interest and/or net revenue
interest in the Lease(s).
2. Assignee accepts this Assignment without any representations,
guarantees or warranties, express or implied, being made by the Assignor as
to the condition of the Leasehold Lands or any oil or gas well located
thereon, or as to the condition of any property associated with the
Leasehold Lands or any oil or gas well located thereon.
3. Assignee accepts this Assignment without any representations,
guarantees or warranties, express or implied, being made by the Assignor as
to the quantity or quality of the oil or gas which may be produced by any
oil or gas well located on the Leasehold Lands.
4. Assignee accepts this Assignment subject to any and all
terms, conditions, covenants, restrictions, reservations, royalties and
overriding royalties, and encumbrances
E-38
contained in the Lease(s) and in any instrument in the chain of title of
the Lease(s) and this Assignment, whether of record or not. Further, by
acceptance of this Assignment, the Assignee hereby agrees to assume and
perform each and every duty and obligation of the Assignor under the
Lease(s) and under all other instruments in the chain of title of the
Lease(s) and this Assignment, whether of record or not, and to save and
hold the Assignor harmless from any and all liability or damages which
might arise out of the Assignee's failure to so perform. The Assignee
specifically acknowledges that it is aware of the terms and conditions
contained in the subject Lease(s) and all amendments, ratifications,
renewals and extensions thereof.
5. This Assignment is subject to the following covenants,
restrictions and reservations, which shall be construed as covenants
running with the Leasehold Lands and shall be binding upon and inure to the
benefit of the Assignor and the Assignee, and their respective successors
and assigns:
a. Assignee acknowledges that the Leasehold Lands have been used for
oil and gas drilling and producing operations, related oil field
operations and possibly for the storage and disposal of waste
materials and hazardous substances and that physical changes in the
Leasehold Lands may have occurred as a result of such uses. Also the
Leasehold Lands may contain buried pipelines and other equipment,
the locations of which cannot now be determined. Assignee
understands that the Assignor does not have the requisite
information to determine the exact nature or condition of the
Leasehold Lands nor the effect any such uses have had on the
physical condition of the Leasehold Lands.
b. Assignee acknowledges that it has entered into this Assignment on
the basis of its own investigation of the physical condition of the
Leasehold Lands including subsurface condition and that the
Leasehold Lands have been used in the manner and for the purposes
set forth above and that physical changes to the Leasehold Lands may
have occurred as a result of such use. Assignee is acquiring the
Leasehold Lands in an "as is" condition and assumes the risk that
adverse physical conditions, including, but not limited to, the
presence of unknown abandoned oil and gas ▇▇▇▇▇, water ▇▇▇▇▇ and
sumps may not have been revealed by the Assignee's investigation.
Assignee hereby agrees to assume full legal responsibility for all
of such conditions, known or unknown.
c. Assignee shall comply with all applicable laws, ordinances, rules
and regulations regarding the operation and abandonment of the
Leasehold Lands, and shall promptly obtain all permits required by
public authorities in connection with the Leasehold Lands.
d. Assignee shall assume full responsibility for all ▇▇▇▇▇, the
casing and all other personal property used on or in connection
therewith on and after the date hereof and shall indemnify, defend
and hold harmless the Assignor and its directors, officers,
contractors, agents, employees or representatives from and against
any loss, liability, claim, demand, fine, expense, cost (including
attorney's fees and expenses) or cause of action thereafter arising
with respect thereto,
E-39
including, but not limited to, plugging and abandonment of existing
▇▇▇▇▇, the restoration of the surface of the Leasehold Lands and the
removal of or failure to remove any sumps, foundations, structures
or equipment therefrom.
e. Assignor reserves the right to enter the Leasehold Lands at any
time during the life of the Lease(s) assigned hereby in order to
conduct remedial environmental work if the Assignor, in its sole
discretion, determines that such work is necessary to reduce or
avoid any alleged future environmental liability of the Assignor;
however, such action shall not be construed as an admission of
liability nor lessen the Assignor's indemnity of the Assignee.
f. Assignee assumes full responsibility for, and agrees to
indemnify, defend, and hold harmless the Assignor from and against
any loss, liability, claim, damage, fine, expense, cost (including
attorney's fees and expenses) or cause of action caused by or
arising out of the violation of any federal, state or local laws,
rules or regulations applicable to any waste material or any
hazardous substances in or upon the Leasehold Lands, or the release
or threatened release of any waste material or any hazardous
substances from the Leasehold Lands into the atmosphere or into or
upon any land or any water course or body of water, including ground
water, whether or not attributable to the Assignor's activities, or
to the activities of the Assignor's officers, employees or agents,
or to the activities of third parties (regardless of whether or not
the Assignor was or is aware of such activities) prior to, during or
after the period of the Assignor's ownership of the interests
assigned hereunder.
This Assignment shall bind and inure to the benefit of the Assignor and
the Assignee and their respective successors and assigns.
IN WITNESS WHEREOF, the Assignor and the Assignee execute this
Assignment to be effective as of the 13th day of October, 2000.
ASSIGNOR: ASSIGNEE:
2U ▇▇▇▇▇▇.▇▇▇ INC. ASDAR GROUP
GROUP, LTD.
By: /s/ ▇▇▇▇ ▇▇▇ By: /s/ ▇. ▇▇▇▇▇▇
------------------ -----------------------
(Sign) (Sign)
▇▇▇▇ Sha ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------ -----------------------
(Print Name) (Print Name)
President President
------------------ -----------------------
(Print Table) (Print Table)
E-40
PROVINCE OF BRITISH )
COLUMBIA ) ss.
CITY OF VANCOUVER )
The foregoing instrument was acknowledged before me by ▇▇▇▇ ▇▇▇,
President of 2U ▇▇▇▇▇▇.▇▇▇ Inc., this 13 day of October , 2000.
---- -------
WITNESS my hand and official seal.
/s/ (unitellitible)
------------------------
Notary Public in and for
the Province of British Columbia
My commission does not expire.
PROVINCE OF BRITISH )
COLUMBIA ) ss.
CITY OF VANCOUVER )
The foregoing instrument was acknowledged before me by ▇▇▇▇▇▇ ▇▇▇▇▇▇
President of Adsar Group, this 13th day of October, 2000 -------------
--------- ---- ------
WITNESS my hand and official seal.
/s/ (unintelligible)
------------------------
Notary Public in and for
the Province of British Columbia
My commission does not expire.
E-41
PETROLEUM, NATURAL GAS AND GENERAL RIGHTS CONVEYANCE
----------------------------------------------------
THIS AGREEMENT made as of the 30th day of November, 2000.
BETWEEN:
2U ▇▇▇▇▇▇.▇▇▇, INC.
("Vendor")
-and -
ALLSTAR ENERGY LIMITED
("Purchaser")
1. In this Agreement:
(a) "Assets" means the Petroleum and Natural Gas Rights, the
Tangibles and the Miscellaneous Interests;
(b) "Closing Date" means the hour of 10:00 a.m., Calgary time on
the 30th day of November, 2000;
(c) "Lands" means the lands set out in Schedule "A" hereto;
(d) "Leases" means collectively the various leases, reservations,
permits, licenses and other documents of title by virtue of
which the holder thereof is entitled to explore for, drill
for, recover, remove or dispose of Petroleum Substances
forming part of the Lands, including, without limitation, the
leases, reservations, permits, licenses and other documents of
title described in Schedule "A" hereto;
(e) "Leased Substances" means all Petroleum Substances, rights to
or in respect of which are granted, reserved or otherwise
conferred by or under the Leases (but only to the extent that
the Leases pertain to the Lands and to the zones and
formations set out in Schedule "A" under the heading
"Petroleum and Natural Gas Rights");
(f) "Material Contracts" means the agreement or agreements, if
any, set out in Schedule "A" under the heading "Material
Contracts";
(g) "Miscellaneous Interests" means, subject to any and all
limitations and exclusions provided for in this definition,
all property, assets, interests and rights pertaining to the
Petroleum and Natural Gas Rights and the Tangibles, or either
of
E-42
them, but only to the extent that such property, assets, interests and
rights pertain to the Petroleum and Natural Gas Rights and the
Tangibles, or either of them, including without limitation any and all
of the following:
(i) contracts and agreements relating to the Petroleum and Natural
Gas Rights and the Tangibles, or either of them, including
without limitation the Material Contracts, gas purchase
contracts, processing agreements, transportation agreements
and agreements for the construction, ownership and operation
of facilities;
(ii) fee simple rights to, and rights to enter upon, use or occupy,
the surface of any lands which are or may be used to gain
access to or otherwise use the Petroleum and Natural Gas
Rights and the Tangibles, or either of them, excluding any
such rights that pertain only to a well or ▇▇▇▇▇ other than
the ▇▇▇▇▇;
(iii) all records, books, documents, licenses, reports and data
which relate to the Petroleum and Natural Gas Rights and the
Tangibles, or either of them, excluding any of the foregoing
that pertain to seismic, geological or geophysical matters;
and
(iv) the ▇▇▇▇▇ (and no other ▇▇▇▇▇), including the wellbores and
any and all casing;
provided, however that unless otherwise agreed to in writing by the
parties, "Miscellaneous Interests" shall not include agreements,
documents or data to the extent that: (i) they pertain to the Vendor's
proprietary technology or interpretations, (ii) they are owned or
licensed by third parties with restrictions on their deliverability or
disclosure by the Vendor or any assignee or (iii) they are referred to
specifically as exclusions in Schedule "A" hereto;
(h) "Petroleum Substances" means any of crude oil, crude bitumen and
products derived therefrom, synthetic crude oil, petroleum, natural
gas, natural gas liquids, and any and all other substances related to
any of the foregoing, whether liquid, solid or gaseous, and whether
hydrocarbons or not, including without limitation sulphur;
(i) "Petroleum and Natural Gas Rights" means all rights to explore for,
drill for, produce, take, use, market and share in the production or
proceeds of, from, or measured or calculated by reference to the value
or quantity of, petroleum, natural gas and substances produced in
connection therewith, within, upon or under the Lands, (or on lands
with which the same have been pooled or unitized) including without
limitation the interests set out in Schedule "A" hereto;
(j) "Purchase Price" means the price and sum of $80,000.00;
E-43
(k) "Regulations" means all statutes, laws, rules, orders,
directives and regulations in effect from time to time and
made by governments or governmental agencies having
jurisdiction over the Assets or the parties;
(1) "Tangibles" means any and all tangible depreciable property
and assets which are located within or upon the Lands (or on
lands with which the same have been pooled or unitized) and
which are used or are intended to be used to produce, process,
gather, treat, measure, make marketable or inject the Leased
Substances or any of them or in connection with water
injection or removal operations that pertain to the Petroleum
and Natural Gas Rights, including without limitation any and
all gas plants, oil batteries, buildings, production
equipment, pipelines, pipeline connections, meters,
generators, motors, compressors, treaters, dehydrators,
scrubbers, separators, pumps, tanks, boilers and communication
equipment;
(m) "▇▇▇▇▇" means the ▇▇▇▇▇ set out in Schedule "A" under the
heading "▇▇▇▇▇" including without limitation, all producing,
shut-in, abandoned, water source, water disposal and water
injection ▇▇▇▇▇ on the Lands (or on lands with which the same
have been pooled or unitized).
2. (a) Vendor acknowledges that the Purchase Price has been
satisfied by Purchaser, through the assumption of a previously
incurred debt of Vendor to Liberty Oil & Gas Ltd. ("Liberty") and
a commitment by Purchaser to pay Liberty $72,500.00 on behalf of
Vendor, in addition to Purchaser tendering a certified cheque of
$7,500.00 to Vendor. In consideration for the Purchase Price, the
Vendor hereby sells, assigns, transfers, conveys and sets over to
Purchaser, and Purchaser hereby purchases from Vendor, all of the
right, title, estate and interest of Vendor in and to the Assets,
to have and to hold the same, together with all benefit and
advantage to be derived therefrom, absolutely, subject to the
terms of this Agreement.
(b) The Parties shall allocate the Purchase Price as follows:
Petroleum and Natural Gas Rights $63,999.00
Tangibles $16,000.00
Miscellaneous Interests $ 1.00
----------
Total $80,000.00
==========
(c) ▇▇▇▇▇▇▇▇▇ agrees to submit $1120.00 to Canada Customs and Revenue
Agency, representing the Goods and Services Tax payable in
respect of the transaction effected by this Agreement.
3. Vendor represents and warrants to Purchaser that:
(a) Vendor does not warrant its title to the Assets, but does warrant
that its interest in the Assets is free and clear of any and all
liens, mortgages, pledges, claims, options, rights of first
refusal, encumbrances, overriding royalties, net profits
E-44
interests or other burdens for which the Purchaser will
be responsible that were created by, through or under the
Vendor or of which the Vendor has knowledge,
except for the encumbrances listed in Schedule "A";
(b) no suit, action or other proceeding before any court or
governmental agency is pending against Vendor or, to the
knowledge, information and belief of Vendor, has been
threatened against Vendor or any third party, which might
result in impairment or loss of the interest of Vendor in and
to the Assets or which might otherwise adversely affect the
Assets;
(c) Vendor is not a non-resident within the meaning of Section 116
of the Income Tax Act (Canada) and the interest of Vendor in
and to the Assets does not constitute all or substantially all
of the property of Vendor.
(d) Vendor has not received any notice of default under the
Regulations or the Leases or any notice alleging its default
thereunder, which default remains outstanding or unsatisfied;
(e) to the Vendor's knowledge, there has been no act or omission
whereby it is, or would be, in default under the Regulations
or the Leases, which default would reasonably be expected to
have a material adverse effect on the aggregate value of the
Assets;
(f) any and all operations of Vendor, and to the knowledge,
information and belief of Vendor, any and all operations by
third parties, on or in respect of the Assets, have been
conducted in accordance with good oil and gas industry
practices and in material compliance with all applicable laws,
rules, regulations, orders and directions of governmental and
other competent authorities; and
(g) Vendor has not received and does not have knowledge of:
(i) any order or directive under the Regulations that
relates to abandonment and reclamation obligations,
environmental liabilities or environmental compliance
matters under the Regulations, if that order or
directive has not been complied with or otherwise
satisfied in all material respects by the Closing
Date;
(ii) any demand or notice issued under the Regulations for
the breach of any environmental, health or safety
laws applicable to the Assets, including, without
limitation, any Regulations respecting the release,
use, storage, treatment, transportation or
disposition of environmental contaminants, which
demand or notice remains outstanding on the Closing
Date;
(iii) any spill or release of hazardous substances on the
Lands (or on lands with which the same have been
pooled or unitized); or
(iv) any particular existing circumstance that it
reasonably believes to be material and a reportable
event under the Regulations.
E-45
No claim in respect of the foregoing representations and
warranties shall be made or be enforceable by Purchaser unless
written notice of such claim, with reasonable particulars,
is given by Purchaser to Vendor within a period of twelve (12)
months from the date hereof.
4. Vendor shall be liable to Purchaser for and shall, in addition,
indemnify Purchaser from and against, all losses, costs, claims,
damages, expenses and liabilities suffered, sustained, paid or
incurred by Purchaser which would not have been suffered,
sustained, paid or incurred had all of the representations and
warranties contained in Section 3 been accurate and truthful.
5. Purchaser shall be liable to Vendor for and shall, in addition,
indemnify Vendor from and against, all losses, costs, claims,
damages, expenses and liabilities suffered, sustained, paid or
incurred by Vendor which either: (i) arise out of any matter or
thing occurring or arising from and after the date hereof and
which relates to the Assets, including the timely performance of
all abandonment and reclamation obligations pertaining to the
Assets; or (ii) pertain to environmental damage or contamination
or other environmental problems pertaining to or caused by the
Assets or operations thereon or related thereto, however and by
whomsoever caused, and whether such environmental damage or
contamination or other environmental problems occur or arise in
whole or in part prior to, on or subsequent to the date hereof,
provided that Purchaser will still retain all rights it may have
as a result of a breach of a representation or warranty contained
in Section 3, whether such rights and remedies are pursuant to
this agreement, the common law, statute or otherwise, including
without limitation, the right to name Vendor as a third party to
any action commenced by any third party against Purchaser.
6. All benefits and obligations of any kind and nature relating to
the operation of the Assets conveyed pursuant to this Agreement,
excluding income taxes but otherwise including without limitation
maintenance, development, operating and capital costs, government
incentives, royalties and other burdens, and proceeds from the
sale of production, whether accruing, payable or paid and
received or receivable, shall be adjusted between the parties
hereto as of the Closing Date in accordance with generally
accepted accounting principles.
7. Each party hereto will, from time to time and at all times
hereafter upon request, without further consideration, do such
further acts and deliver all such further assurances, deeds and
documents as shall be reasonably required in order to fully
perform and carry out the terms of this Agreement.
8. This Agreement shall, in all respects, be subject to,
interpreted, construed and enforced in accordance with and under
the laws of the Province of Alberta and applicable laws of Canada
and shall, in all respects, be treated as a contract made in the
Province of Alberta. The Parties irrevocably attorn and submit to
the jurisdiction of the courts of the Province of Alberta and
courts of appeal therefrom in respect of all matters arising out
of or in connection with this Agreement.
E-46
9. The assignment and conveyance effected by this Agreement is made
with full right of substitution and subrogation of Purchaser in
and to all covenants, representations, warranties and indemnities
previously given or made by others in respect of the Assets or
any part or portion thereof. The covenants, representations,
warranties and indemnities contained in this Agreement shall be
deemed to be restated in any and all assignments, conveyances,
transfers and other documents conveying the interests of Vendor
in and to the Assets to Purchaser. There shall not be any merger
of any covenant, representation, warranty or indemnity in such
assignments, conveyances, transfers and other documents
notwithstanding any rule of law, equity or statute to the
contrary and such rules are hereby waived.
10. This Agreement shall be binding upon and shall enure to the
benefit of the parties and their respective heirs, executors,
administrators, trustees, receivers, successors and assigns.
2U ONLINE. M ........ ALLSTAR ENERGY LIMITED
per: ......... per:
per: ......... per:
E-47
THIS PAGE COMPRISES SCHEDULE "A" ATTACHED TO AND FORMING PART OF A
CONVEYANCE MADE AS OF THE DAY OF NOVEMBER, 2000 BETWEEN 2U
▇▇▇▇▇▇.▇▇▇ INC. AND ALLSTAR ENERGY LIMITED
-------------------------------------------------------------------
-------------------------- ---------------------- ----------------- ---------------------------- ----------------------
Petroleum and Vendor's
Natural Gas Interest
Lands Rights Encumbrances Leases
-------------------------- ---------------------- ----------------- ---------------------------- ----------------------
E 1/2 and Portions of PNG to Base of 37.8% Alberta Crown Royalty Crown PNG Lease
W 1/2 of Sec 20-53-7- Mannville Group No. 0599060292
W5M
-------------------------- ---------------------- ----------------- ---------------------------- ----------------------
W 1/2 of Sec 30-53-7- PNG to Base of 37.8% Alberta Crown Royalty Crown PNG Lease
W5M Mannville Grou No. 0599060293
-------------------------- ---------------------- ----------------- ---------------------------- ----------------------
Sec 19-53-7-W5M PNG to Base of 37.8% Alberta Crown Royalty Crown PNG Lease
Mannville Group No. 0599050281
-------------------------- ---------------------- ----------------- ---------------------------- ----------------------
▇▇▇▇▇
00/14-19-053-07W5/2
Material Contracts
Entwistle Area - Joint Acquisition, Exploration, Development and Operating
Agreement, dated July 1, 1999, between Vertizontal Energy Resources
Inc., Power Direct, -Inc., Jord-Ash Enterprises Ltd. and Liberty Oil and Gas
LTD.
E-48
ASSIGNMENT AND NOVATION AGREEMENT
---------------------------------
THIS AGREEMENT made effective the 30th day of November, 2000.
AMONG:
2U ▇▇▇▇▇▇.▇▇▇ Inc. (formerly Power Direct, Inc.), a body corporate having an
office in the City of Vancouver, in the Province of British Columbia (the
"Assignor ")
OF THE FIRST PART
- and -
Allstar Energy Limited, a body corporate having an office in
the Town of Kindersley, in the Province of Saskatchewan (the
"Assignee")
OF THE SECOND PART
- and -
The party or parties listed under the heading "Third Party" in
Schedule "A" hereto (collectively, if more than one, the
"Third Party")
OF THE THIRD PART
WHEREAS the Assignor and the Third Party are parties or
successors in interest to the parties to the agreement described under the
heading "Agreement" in Schedule "A" hereto, as the same may have been amended
from time to time to the date hereof, (the "Agreement");
AND WHEREAS by a Conveyance Agreement of November 30, 2000,
the Assignor has conveyed to the Assignee all of its right, title, estate and
interest in and to the petroleum and natural gas and related properties and
assets which are the subject of the Agreement;
AND WHEREAS the Assignor has agreed to assign to the Assignee
all of the Assignor's right, title, estate and interest in, to and under the
Agreement, with such assignment to be effective as of November 30, 2000 (the
"Effective Date");
AND WHEREAS the Third Party has agreed to consent to the
assignment herein provided, and to recognize and accept the Assignee as a party
to the Agreement in the place and stead of the Assignor;
NOW THEREFORE THIS AGREEMENT WITNESSETH THAT, in consideration
of the premises and of the respective covenants and agreements of the parties
hereinafter set forth, the parties hereto covenant and agree with one another as
follows:
E-49
1. The Assignor hereby assigns, transfers, conveys and sets over unto the
Assignee all of the Assignor's right, title, estate and interest in,
to and under the Agreement, to have and to hold the same unto the
Assignee for its sole use and benefit absolutely, effective from the
Effective Date.
2. The Assignee hereby accepts the assignment herein provided and
covenants and agrees with the Assignor and the Third Party that it
shall be bound by, observe and perform all of the covenants and
obligations accruing on the part of the Assignor under the Agreement
from and after the Effective Date.
3. The Third Party hereby:
(a) consents to the assignment herein provided, and expressly
waives any preferential rights of purchase which it might
have under the Agreement;
(b) covenants and agrees that effective from the Effective Date
the Assignee shall be entitled to hold and enforce all of the
rights, benefits and privileges of the Assignor under the
Agreement, and shall be entitled to perform all of the
covenants and obligations of the Assignor under the
Agreement; and
(c) releases, relieves and discharges the Assignor from all
covenants, obligations and liabilities accruing on its part
under the Agreement from and after the Effective Date;
provided, however, that nothing herein contained shall be construed as
releasing, relieving or discharging the Assignor from any covenants,
obligations or liabilities accruing on its part under the Agreement
prior to the Effective Date (other than any obligation to give the
Third Party prior notice of the assignment herein provided or of the
Assignor's agreement to dispose of its interest in the properties and
assets which are the subject of the Agreement), or as rendering the
Assignee liable for any such covenants, obligations or liabilities.
4. For the benefit of the Third Party only, the Assignee expressly
acknowledges that the Assignor shall be deemed to have been acting as
the trustee and fully authorized agent of the Assignee in all matters
relating to the Agreement and occurring between the Effective Date
and the date upon which a copy of this Agreement has been delivered
to the Third Party for execution (including, without limitation,
matters relating to accounting, the conduct of operations and the
disposition of production), and, as between the Assignee and the
Third Party, the Assignee hereby ratifies, adopts and confirms all
acts and omissions of the Assignor in its capacity as such trustee
and agent, to the end that all such acts and omissions shall be
deemed to have been effected by the Assignee.
5. The address of the Assignee for notices and other communications
under the Agreement shall be:
E-50
ALLSTAR ENERGY LIMITED
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇
Kindersley, Saskatchewan
SOL ISO
Attention: ▇▇▇ ▇▇▇▇▇▇
6. Each of the parties hereto shall from time to time and at all times
hereafter do and perform all such further acts, and execute and
deliver all such further assignments, notices, releases and other
documents and instruments, as may reasonably be required to more fully
effect and assure the assignment and novation hereby contemplated.
7. This Agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective successors and permitted assigns.
8. This Agreement may be executed in any number of counterparts, and when
a counterpart has been executed and delivered by each of the parties
hereto all counterparts together shall constitute one instrument and
shall have the same force and effect as if all of the parties hereto
had executed and delivered the same instrument.
IN WITNESS ▇▇▇▇▇▇▇▇ the parties hereto have executed and
delivered this Agreement as of the day and year first above written.
2U ▇▇▇▇▇▇.▇▇▇ Inc. Allstar Energy Limited
Per: /s/ ▇▇▇▇ ▇▇▇ ▇▇▇: /s/ Jord-Ash
---------------------------- -------------------------
Liberty Oil Gas Ltd. Jord-Ash, Enterprises, Ltd.
Per: /s/
-----------------------------
▇▇▇ ▇▇▇▇▇
Connoller and CFO
Vertizontal Energy Resources Inc.
Per:
-----------------------------
This is page 3 to an Assignment and Novation Agreement made effective the 30th
day of November, 2000 among 2U ▇▇▇▇▇▇.▇▇▇ Inc., as Assignor, Allstar Energy
Limited, as Assignee, and Jord-Ash Enterprises Ltd., Liberty Oil & Gas Ltd.
and Verti2ontal Energy Resources Inc. as Third Party.
E-51
SCHEDULE "A" TO ASSIGNMENT AND NOVATION AGREEMENT MADE
EFFECTIVE THE 30TH DAY OF NOVEMBER, 2000 BETWEEN 2U
▇▇▇▇▇▇.▇▇▇ INC., AS ASSIGNOR, ALLSTAR ENERGY LIMITED, AS
ASSIGNEE, AND THE PARTY OR PARTIES COMPRISING THE THIRD
PARTY AS IDENTIFIED BELOW
Agreement
---------
▇▇▇▇▇▇▇▇▇ Area - Joint Acquisition, Exploration, Development and Operating
Agreement, Dated July 1, 1999 between Vertizontal Energy Resources
Inc., Power Direct, Inc., Jord-Ash Enterprises Ltd., and Liberty Oil & Gas Ltd.
Third Party
-----------
Vertizontal Energy Resources Inc.
Jord-Ash Enterprises Ltd.
Liberty Oil & Gas Ltd.
E-52
State of Delaware
Office of the Secretary of State
--------------------------------
I ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT
OF "POWER DIRECT, INC." CHANGING ITS NAME FROM "POWER DIRECT, INC." TO "2U
▇▇▇▇▇▇.▇▇▇, INC.", FILED IN THIS OFFICE ON THE THIRTY-FIRST DAY OF JANUARY, A.D.
2000, AT 9 O'CLOCK A.M.
A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE
COUNTY RECORDER OF DEEDS.
(SEAL) /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
(unintelligible) -------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Secretary of State
AUTHENTIFCATION: 0229660
DATE: 02-01-00
E-53
CERTIFICATE OF AMENDMENT OF
ARTICLES OF INCORPORATION OF
POWER DIRECT, INC.,
a Delaware corporation
Power Direct, Inc., a corporation organized under the General
Corporation Law of the State of Delaware ("Corporation"),
does hereby certify:
FIRST: The Corporation has received payment for its capital stock.
SECOND: The amendment to the Corporation's Certificate of Incorporation
set forth in the following resolution was approved by a majority of the
Corporation's Board of Directors and was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of Delaware; and,
further, was approved by the shareholders of the Corporation pursuant to
Section 228 of the General Corporation Law of the State of Delaware.
RESOLVED, that the Certificate of Incorporation of the Corporation
be amended by striking Article FIRST in its entirety and replacing
therefore: "FIRST: The name of this corporation is 2U Online. com, Inc."
---------------------
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed and attested by its duly authorized officer.
Dated: January 31, 2000
/s/ ▇▇▇▇ ▇▇▇
--------------
By: ▇▇▇▇ ▇▇▇
Its: President
ATTEST:
/s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------
By: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Its: Secretary
E-54
WARRANTS TO PURCHASE 1,100,000 SHARES
OF $.0001 PAR VALUE COMMON STOCK OF
POWER DIRECT, INC.
A DELAWARE CORPORATION
This Warrant Certificate certifies that YENN Asset Management (the "Holder"), is
the owner of one million one hundred thousand (1,100,000) Warrants (subject to
adjustment as provided herein), each of which represents the right to subscribe
for and purchase from Power Direct, Inc. a Delaware corporation (the "Company"),
one share of the Common Stock, $.0001 par value, of the Company (the common
stock, including any stock into which it may be changed, reclassified or
converted, is herein referred to as the "Common Stock") at the purchase price
(the "Exercise Price") of $0.30 per share (subject to adjustment as provided
herein).
THIS WARRANT CERTIFICATE AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ARE
SUBJECT TO CERTAIN RESTRICTIONS, CONTAINED IN SECTIONS 5 AND 6 HEREOF, WITH
RESPECT TO THEIR TRANSFER.
The Warrants represented by this Warrant Certificate are subject to the
following provisions, terms and conditions:
1. EXERCISE OF WARRANTS
Exercise of Warrants. The warrants may be exercised by the Holder, in whole or
in part (but not as to a fractional share of Common Stock), by surrender of this
Warrant Certificate at the principal office of the Company at ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇ (or such other office or agency of the
Company as may be designated by notice in writing to the Holder at the address
of such Holder appearing on the books of the Company), with the appropriate form
attached duly exercised, at any time within the period beginning on the date of
this Warrant Certificate, which is specified on Page 12 of this Warrant
Certificate ("Effective Date") and expiring on that date which is exactly
eighteen (18) months after the Effective Date (the "Exercise Period") and by
payment to the Company by certified check or bank draft of the purchase price
for such shares. The Company agrees that the shares of Common Stock so purchased
shall be and are deemed to be issued to the Holder as the record owner of such
shares of Common Stock as of the close of business on the date on which the
Warrant Certificate shall have been surrendered and payment made for such shares
of Common Stock. Certificates representing the shares of Common Stock so
purchased, together with any cash for fractional shares of Common Stock paid
pursuant to Section 2E, shall be delivered to the Holder promptly and in no
event later than ten (10) days after the Warrants shall have been so exercised,
and, unless the Warrants have expired, a new Warrant Certificate, if any, that
shall not have been exercised shall also be delivered to the Holder within such
time.
E-55
2. ADJUSTMENTS
A. Adjustments. The Exercise Price and the number of shares of Common Stock
issuable upon exercise of each Warrant shall be subject to adjustment
from time to time as follows:
(1) Stock Dividends; Stock Splits; Reverse Stock Splits; Reclassifications.
In the event that the Company shall (a) pay a dividend with respect to
its capital stock in shares of Common Stock, (b) subdivide its
outstanding shares of Common Stock, (c) combine its outstanding shares
of Common Tock into a smaller number of shares of any class of Common
Stock or (d) issue any shares of its capital stock in a
reclassification of the Common Stock (including any such
reclassification in connection with a merger, consolidation or other
business combination in which the Company is the continuing
corporation) (any one of which actions is herein referred to as an
"Adjustment Event"), the number of shares of Common Stock purchasable
upon exercise of each Warrant immediately prior to the record date for
such Adjustment Event shall be adjusted so that the Holder shall
thereafter be entitled to receive the number of shares of Common Stock
or other securities of the Company (such other securities thereafter
enjoying the rights of shares of Common Stock under this Warrant
Certificate) that such Holder would have owned or have been entitled to
receive after the happening of such Adjustment Event, had such Warrant
been exercised immediately prior to the happening of such Adjustment
Event or any record date with respect thereto. An adjustment made
pursuant to this Section 2A(1) shall become effective immediately after
the effective date of such Adjustment Event retroactive to the record
date, if any, for such Adjustment Event.
(2) Distributions of Subscription Rights or Convertible Securities. In the
event that the Company shall fix a record date for the making of a
distribution to all holders of shares of Common Stock of rights,
options, warrants or convertible or exchangeable securities containing
the right to subscribe for or purchase shares of Common Stock
(excluding those referred to in Section 2A(5) below), then in each such
event the number of shares of Common Stock purchasable after such
record date upon the exercise of each Warrant shall be determined by
multiplying the number of shares of Common Stock purchasable upon the
exercise of each Warrant immediately prior to such record date by a
fraction, the numerator of which shall be the then Current Market Value
(as defined in Section 2A(3) below) of one share of Common Stock on the
record date for such distribution and the denominator of which shall be
the then Current Market Value of one share of Common Stock on the
record date for such distribution less the then fair value (as
determined by the Independent Financial Expert (as defined in Section
2A(3) below, or such subscription rights, options or warrants, or of
such convertible or exchangeable securities distributed with respect to
one such share of Common Stock. Such adjustment shall be made whenever
any such distribution is made and shall become effective on the date of
distribution retroactive to the record date for the determination of
stockholders entitled to receive such distribution.
E-56
(3) Current Market Value. For the purpose of any computation under this
Section 2, the Current Market Value of one share of Common Stock or of
any other security (herein collectively referred to as a "security") at
the date herein specified shall be (1) if the Company does not have a
class of equity securities registered under the Securities Exchange Act
of 1934 (the "Exchange Act"), the value of the security (a) determined
in good faith in the most recently completed arms-length transaction
between the Company and a third party who is not an affiliate of the
Company in which such determination is necessary and the closing of
which occurs on such date or shall have occurred within the six months
preceding such date, provided that the Board of Directors of the
Company shall in god faith determine that any such value represents a
reasonable estimate of the fair value of a share of Common Stock as of
such date, (b) if no transactions shall have occurred on such date or
within such six-month period, most recently determined as of a date
within the six months preceding such date by an Independent Financial
Expert (in the event of more than one such determination, the
determination for the later date shall be used) or (c) if no such
determination shall have been made within such six month period,
determined as of such date by an Independent Financial Expert, or (2)
if the Company does have a class of equity securities registered under
the Exchange Act, deemed to be the average of the daily market prices
of the security for five trading days before such date or, if the
Company has had a class of equity securities registered under the
Exchange Act for less than five trading days before such date, then the
average of the daily market prices for all of the trading days before
such date for which daily market prices are available. For purposes of
this definition, control means the power to direct the management and
policies of a person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise.
The market price for each such business day shall be (1) in the case of
a security listed or admitted to trading on any securities exchange,
the closing price, regular way, on such day, or if no sale takes place
on such day, the average of the closing bid and asked prices on such
day; (2) in the case of a security not then listed or admitted to
trading on any securities exchange, the last reported sale price on
such day, or if no sale takes place on such day, the average of the
closing bid and asked prices on such day, as reported by a reputable
quotation source designated by the Company; (3) in the case of a
security not then listed or admitted to trading on any security
exchange and as to which no such reported sale price or bid and asked
prices are available, the average of the reported high bid and low
asked prices on such day, as reported by a reputable quotation source,
or a newspaper of general circulation in the County of New Castle,
State of Delaware, customarily published on each business day,
designated by the Company, or if there shall be no bid and asked prices
on such day, the average of the high bid and low asked prices, as so
reported, on the most recent day (not more than five days prior to the
date in question) for which prices have been so reported; and (4) if
there are no bid and asked prices reported during the five days prior
to the date in question, the Current Market Value of the security shall
be determined as if the Company did not have a class of equity
securities registered under the Exchange Act.
E-57
For purposes of this Section 2A(3), an Independent Financial Expert
shall mean a nationally recognized investment banking firm (i) which
does not (and whose directors, officers, employees and affiliates do
not), have a direct or indirect financial interest in the Company
(other than the beneficial ownership, directly or indirectly, of less
than three percent of the outstanding shares of capital stock of the
Company); (ii) which has not been, and, at the time it is called upon
to give independent financial advice to the Company, is not (and none
of whose directors, officers, employees or affiliates is) a promoter,
director or officer of the Company or any of it's affiliates or an
underwriter with respect to any of the Company's securities; (iii)
which does not provide any advice or opinions to the Company except as
an Independent Financial Expert; and (iv) which is mutually agreeable
to the Company and the holders of a majority of the Warrants. If the
Company and the Holders do not promptly agree as to the Independent
Financial Expert, each shall appoint one investment banking firm and
the two firms so appointed shall select the Independent Financial
Expert to be employed by the Company. An Independent Financial Expert
may be compensated by the Company for opinions or services it provides
as an Independent Financial Expert. In making its determination of
value of the Common Stock, the Independent Financial Expert, in its
best professional judgement, determines to be most appropriate. After
the Independent Financial Expert has made its determination, the
Company shall cause the Independent Financial Expert to prepare a
report (a "Value Report") stating the methods of valuation considered
or used and the value of the Common Stock or other security it values
and containing a statement as to the nature and scope of the
examination made. The Value Report shall accompany any Adjustment
Notice ( as defined in Section 2B) sent by the Company to the Holder
pursuant to Section 2B; provided, that the adjustment to the Exercise
Price that is the subject of such Adjustment Notice requires the
services of an Independent Financial Expert.
(4) Adjustment of Exercise Price. Whenever the number of shares of Common
Stock purchasable upon the exercise of each Warrant is adjusted
pursuant to Sections 2A(1) and 2A(2), the Exercise Price for each share
of Common Stock purchasable upon the exercise of each Warrant
immediately prior to such adjustment, and the denominator of which
shall be the number of shares of Common Stock so purchasable
immediately thereafter.
(5) Issuance of Common Stock to Stockholders of Less Than Current Market
Value. In the event that the Company sells and issues to a stockholder
of the Company or to any "affiliate" of such stockholder shares of any
Common Stock, or rights, options, warrants or convertible or
E-58
exchangeable securities containing the right to subscribe for or
purchase shares of Common Stock (excluding (i) shares, options,
warrants or convertible or exchangeable securities issued in any of the
transactions described in Sections 2A(1) and 2A(2) above, (ii) the
Warrants and any shares of Common Stock issuable upon exercise thereof,
(iii) shares of Common Stock or other securities, or options or rights
in respect thereof, issued to full-time employees of the Company or its
subsidiaries in the ordinary course of business as compensation for
services rendered or to be rendered or as part of an employee incentive
program and (iv) shares of Common Stock or other securities issued upon
exercise, conversion or exchange of rights, options, warrants or
convertible or exchangeable securities issued in any of the
transactions described in Section 2A(1) and 2A(2) above or in a
transaction with respect to which no adjustment was required pursuant
to this Section 2A (but including shares, rights, options, warrants or
convertible or exchangeable securities issued as consideration in any
merger, consolidation or other business combination) at a price per
share of Common Stock (determined, in the case of such rights, options,
warrants or convertible or exchangeable securities, by dividing (a) the
total amount receivable by the Company in consideration of the sale and
issuance of such rights, options, warrants or convertible or
exchangeable securities (which amount may be zero if such rights,
options, warrants or convertible or exchangeable securities are issued
without consideration), plus the total consideration payable to the
Company upon exercise, conversion or exchange thereof, by (b) the total
number of shares of Common Stock contemplated by such rights, opinions,
warrants or convertible or exchangeable securities) that is less than
the then Current Market Value per share of such Common Stock (as
determined by the Independent Financial Expert in accordance with
Section 2A(3) above) in effect immediately prior to such sale and
issuance, then the Exercise Price shall be adjusted (calculated to the
nearest $0.01) so that it shall equal the price determined by
multiplying the Exercise Price in effect immediately prior thereto by a
fraction, the numerator of which shall be (i) an amount equal to the
sum of (A) the number of shares of Common Stock outstanding immediately
prior to such sale and issuance plus (B) the number of shares of Common
Stock outstanding (determined as provided below) immediately after such
sale and issuance. Such adjustment shall be made successively whenever
such an issuance is made.
Upon the occurrence of a sale and issuance described in the preceding
paragraph, the number of shares of Common Stock purchasable under the
exercise of this Warrant Certificate shall be that number determined by
multiplying the number of shares of Common Stock issuable upon exercise
immediately prior to such adjustment by a fraction, the numerator of
which is the Exercise Price in effect immediately prior to such
adjustment and the denominator of which is the Exercise Price as so
adjusted.
E-59
For the purposes of such adjustments, the shares of Common Stock which
the holder of any such rights, options, warrants or convertible or
exchangeable securities shall be entitled to subscribe for or purchase
shall be deemed to be issued and outstanding as of the date of such
sale and issuance and the consideration received by the Company for
such rights, options, warrants or convertible or exchangeable
securities (which consideration may be zero if such rights, options,
warrants or convertible or exchangeable securities are issued without
consideration), plus the consideration or premiums stated in such
rights, options, warrants or convertible or exchangeable securities to
be paid for the shares of any Common Stock covered thereby. In case the
Company shall sell and issue, in a transaction to which this paragraph
2A(5) applies, shares of Common Stock or rights, options, warrants or
convertible or exchangeable securities containing the right to
subscribe for or purchase shares of Common Stock, for consideration
consisting, in whole or in part, of property other than cash or its
equivalent, then determining the "price per share of Common Stock" and
the "consideration received by the Company" for purposes of the first
sentence of this Section 2A(5), the Board of Directors of the Company
shall determine, in good faith, the fair value of the rights, options,
warrants or convertible or exchangeable securities then being sold as
part of such unit. There shall be no adjustment of the Exercise Price
pursuant to this Section 2A(5) if the amount of such adjustment shall
be less than $0.01 per share of Common Stock; provided, however, that
any adjustments which by reason of this provision are not required to
be made shall be carried forward and taken into account in any
subsequent adjustment.
(6) Expiration of Rights, Options and Conversion Privileges. Upon the
expiration without being exercised of any rights, options, warrants
or conversion or exchange privileges for which an adjustment has been
made pursuant to this Warrant Certificate, the Exercise Price and the
number of shares of Common Stock purchasable upon the exercise of
each Warrant shall, upon such expiration, be readjusted and shall
thereafter, upon any future exercise, be such as they would have been
had they been originally adjusted (or had the original adjustment not
be required, as the case may be) as if (i) the only shares of Common
Stock so issued were the shares of such rights, options, warrants or
conversion or exchange rights and (ii) such shares of Common Stock,
if any, were issued or sold for the consideration actually received
by the Company upon such exercise plus the consideration, if an,
actually received by the Company for issuance, sale or grant of all
such rights, options, warrants or conversion or exchange rights
whether or not exercised; provided, however, that no such
readjustment shall have the effect of increasing the Exercise Price
by an amount, or decreasing the number of shares purchasable upon
exercise of each Warrant by number, in excess of the amount or number
of the adjustment initially made in respect to the issuance, sale or
grant of such rights, options, warrants or conversion or exchange
rights.
E-60
(7) De Minimis Adjustments. Except as provided in Section 2A(5) with
reference to adjustments required by such Section 2A(5), no
adjustment in the number of shares of Common Stock purchasable
hereunder shall be required unless such adjustment would require
an increase or decrease of at least one percent (1%) in the number
of share of Common Stock purchasable upon an exercise of each
Warrant; provided, however, that any adjustments which by reason
of this Section 2A(7) are not required to b made shall be carried
forward and taken into account in any subsequent adjustment.
All calculations shall be made to the nearest full share.
(8) Duty to Make Fair Adjustments in Certain Cases. If any event occurs
as to which in the opinion of the Board of Directors the other
provisions of this Section 2A are not strictly applicable or if
strictly applicable would not fairly protect the purchase rights of
the Warrants in accordance with the essential intent and principles
of such provisions, then the Board of Directors of the Company shall
make an adjustment in the application of such provisions, in
accordance with such essential intent and principles, so as to
protect such purchase rights as aforesaid.
(9) Adjustment for Asset Distributions. If the Company shall fix a record
date for the making of a distribution to all holders of shares of
Common Stock of evidence of indebtedness of the Company or other
assets (other than ordinary cash dividends not in excess of the
retained earnings of the Company determined by the application of
generally accepted accounting principles), then the Exercise Price
for each share of Common Stock payable upon exercise of each Warrant
shall be reduced by he then fair value (as determined by the
Independent Financial Expert (as define in Section 2A(3) above) of
the indebtedness or other assets distributed in respect of one such
share. Such adjustment shall be made whenever any such distribution
is made and shall become effective on the date of distribution
retroactive to the record date for the determination of stockholders
entitled to receive such distribution.
B. Notice of Adjustment. Whenever the number of shares of Common Stock
purchasable upon the exercise of each Warrant or the Exercise Price is
adjusted, as herein provided, the Company shall promptly notify the Holder
in writing (such writing referred to as an "Adjustment Notice") of such
adjustment or adjustments and shall deliver to the Holder a certificate of
firm independent public accountants selected by the Board of Directors of
the Company (who may be the regular accountants employed by the Company) or
of the Independent Financial Expert, if any, which makes a determination of
Current Market Value with respect to any such adjustment setting forth the
number of shares of Common Stock purchasable upon the exercise of each
Warrant and the Exercise Price after such adjustment, setting forth a brief
statement of the facts requiring such adjustment and setting forth the
computation by which such adjustment was made.
C. Statement on Warrant Certificates. The form of this Warrant Certificate
need not be changed because of any change in the Exercise Price or in the
number of kind of shares purchasable upon the exercise of a Warrant and any
Warrant Exercise Price and the same number and kind of shares as are stated
in this Warrant Certificate. The Company may at the time in its sole
discretion make any change in the form of a warrant certificate that it may
deem appropriate and that does not affect the substance thereof and any
warrant certificate thereafter issued, whether in exchange or substitution
for any outstanding warrant certificate or otherwise, may be in the form so
changed.
E-61
D. Notice to Holder of Record Date, Dissolution, Liquidation or Winding Up.
The Company shall cause to be mailed (by first class mail, postage prepaid)
to the Holder of such of the record date for any dividend, distribution or
payment, in cash or in kind (including, without limitation, evidence of
indebtedness and assets), with respect to shares of Common Stock at least
20 calendar days before any such date. In case at any time after the date
hereof, there shall be voluntary or involuntary dissolution, liquidation or
winding up of the Company, then the Company shall cause to be mailed (by
first class mail, postage prepaid) to the Holder at the Holder's address as
shown on the books of the Company, at the earliest practicable time (and,
in any event, not less than 20 calendar days before any date set for
definitive action), notice of the date on which such dissolution,
liquidation or winding up shall take place, as the case may be. The notices
referred to above shall also specify the date as of which the holders of
the shares of Common Stock of record or other securities underlying the
Warrants shall be entitled to receive such dividend, ties, money or the
property deliverable upon such dissolution, liquidation or winding up, as
the case may be (the "Entitlement Date"). In the case of a distribution of
evidence of indebtedness or assets (other than in dissolution, liquidation
or winding up) which has the effect of reducing the Exercise Price to zero
or less pursuant to Section 2A(9), if the Holder elects to exercise the
Warrants in accordance with Section 1 and become a holder of the Common
Stock on the Entitlement Date, the Holder shall thereafter receive the
evidence of indebtedness or assets distributed in respect of shares of
Common Stock. In the case of any dissolution, liquidation or winding up of
the Company, the Holder shall receive on the Entitlement Date the cash or
other property, less the Exercise Price for the Warrants then in effect,
that such Holder would have entitled to receive had the Warrants been
exercisable and exercised immediately prior to such dissolution,
liquidation or winding up (or, if appropriate, record date therefor) and
any right of a Holder to exercise the Warrants shall terminate.
E. Fractional Interest. The Company shall not be required to issue fractional
shares of Common Stock on the exercise of the Warrants. If more than one
Warrant shall be presented for exercise in full at the same time by the
same holder, the number of full shares of Common Stock which shall be
issuable upon such exercise shall be computed on the basis of the aggregate
number of whole shares of Common Stock purchasable on the exercise of the
Warrants so presented. If any fraction of a share of Common Stock would,
except for the provisions of this Section 2E be issuable on the exercise of
the Warrants (or specified proportion thereof), the Company shall pay an
amount in cash calculated by it to be equal to the fair value of one share
of Common Stock, as determined by the Board of Directors of the company in
good faith, multiplied by such fraction computed to the nearest whole cent.
E-62
3. RESERVATION AND AUTHORIZATION OF COMMON STOCK
The Company covenants and agrees (a) that all shares of Common Stock which may
be issued upon the exercise of the Warrants represented by this Warrant
Certificate will, upon issuance, be validly issued, fully paid and
non-assessable and free of all insurance or transfer taxes, liens and charges
with respect to the issue thereof, (b) that during the Exercise Period, the
Company will at all times have authorized, and reserved for the purpose of issue
or transfer upon exercise of the Warrants evidenced by this Warrant Certificate,
sufficient shares of Common Stock to provide for the exercise of the Warrants
represented by this Warrant Certificate, and (c) that the Company will take all
such action as may be necessary to ensure that the shares of Common Stock
issuable upon the exercise of the Warrants may be so issued without violation of
any applicable law or regulation, or any requirements of any domestic securities
exchange upon which any capital stock of the Company may be listed; provided,
however, that nothing contained herein shall impose upon the Company any
obligation to register the warrants evidenced by this Warrant Certificate of
such Common Stock under applicable securities laws. In the event that any
securities of the Company, other than the Common Stock, are issuable upon
exercise of the Warrants, the Company will take or refrain from taking any
action referred to in clauses (a) through (c) of this Section 3 as though such
clauses applied, mutatis mutandis to such other securities then issuable upon
the exercise of the Warrants.
4. NO VOTING RIGHTS
This Warrant Certificate shall not entitle the Holder to any voting rights or
other rights as a stockholder of the Company.
5. EXERCISE OR TRANSFER OF WARRANTS OR COMMON STOCK
The Holder of this Warrant Certificate agrees to be obligated by any and all
provisions with respect to the limitations, including limitations imposed for
Securities Act compliance, on the transfer of the Warrants and the shares of
Common Stock or other securities issuable upon exercise of the Warrants.
6. WARRANTS TRANSFERABLE
Subject to the provision of Section 5, this Warrant Certificate and the Warrants
it evidences are transferrable, in whole or in part, without charge to the
Holder, at the office or agency of the Company referred to in Section 1, by the
Holder in person or by duly authorized attorney, upon surrender of this Warrant
Certificate properly endorsed. Each taker and holder of this Warrant
Certificate, by taking or holding the same, consents and agrees that this
Warrant Certificate, when endorsed in blank, shall be deemed negotiable, and
that such holder, when this Warrant Certificate shall have been so endorsed, may
be treated by the Company and all other persons dealing with this Warrant
Certificate as the absolute owner hereof for any purpose and as the person
entitled to exercise the rights represented by this Warrant Certificate, or to
the transfer hereof on the books of the Company, any notice to the contrary
notwithstanding; but until such transfer on such books, the Company may treat
the registered holder hereof as the owner for all purposes.
E-63
7. REGISTRATION RIGHTS
The Company agrees that it will give at least 30 days prior written notice to
the Holder of the Company's intention to file any registration statement
relating to any of the Company's securities and will afford the Holder the
opportunity to register the Warrants and any shares of the Company's Common
Stock held by the Holder and to take advantage, to a reasonable extent, of all
Blue Sky qualifications effected by the Holder in connection therewith, upon
receiving request for such registration within 15 days thereafter.
The Company shall have the privilege of postponing action pursuant to the
provisions to the provisions of this Section 7 for a reasonable period of time
(not exceeding 180 days) in the event the filing would, in the reasonable
opinion of the Board of Directors of the Company, adversely affect a material
financing project, or a proposed or pending acquisition, merger, or other
corporate reorganization for which the Company is or is expected to be a party.
Upon receipt of such written request, the Company shall promptly give written
notice thereof to the Holder at its address as that address appears on the books
of the Company, offering to include the Warrants and all Common Stock of the
Company held by the Holder in a registration statement to be filed by the
Company as provided herein, if the Holder makes a written request therefor
within 15 days after the giving of such notice by the Company; provided,
however, that if the Company shall have elected pursuant to this Section 7 above
to postpone action under this section, the Company shall, in such notice,
specify the termination date of the period of such postponement and the time for
the Holder to make said written request shall be extended to 15 days after said
termination date.
The costs and expenses of any such registration statement or other filing as
provided in this Section 7 shall be borne and paid by the Company for any such
request by the Holder.
8. CLOSING OF BOOKS
The Company will at no time close its transfer books against the transfer of any
Warrant or of any shares of Common Stock or other securities issuable upon the
exercise of any Warrant in any manner which interferes with the timely exercise
of the Warrants.
E-64
9. WARRANTS EXCHANGEABLE, LOSS, THEFT
This Warrant Certificate is exchangeable, upon the surrender hereof by the
Holder at the office or agency of the Company referred to in Section 1, for new
Warrant Certificates in similar form representing in the aggregate the right to
subscribe for and purchase the number of shares of Common Stock which may be
subscribed for and purchased hereunder, each such new Warrant to represent the
right to subscribe and purchase such number of shares of Common Stock as shall
be designed by the Holder at the time of such surrender. Upon receipt of
evidence satisfactory to the Company of the loss, theft, destruction or
mutilation, upon surrender or cancellation of this Warrant Certificate, the
Company will issue to the Holder a new Warrant Certificate in similar form, in
lieu of this Warrant Certificate, representing the right to subscribe for and
purchase the number of shares of Common Stock which may be subscribed for and
purchased hereunder.
10. MERGERS, CONSOLIDATIONS, ETC.
A. Except as may otherwise be provided in Section 2A(5), if the Company shall
merge or consolidate with another corporation, the holder of this Warrant
Certificate shall thereafter have the right, upon exercise hereof and
payment of the Exercise Price, to receive solely the kind and amount of
shares of stock (including, if applicable, Common Stock), other securities,
property or cash or any combination thereof receivable by a holder of the
number of shares of Common Stock for which this Warrant Certificate might
have been exercised immediately prior to such merger or consolidation
(assuming, if applicable, that the holder of such Common Stock failed to
exercise its rights of election, if any, as to the kind or amount of shares
of stock, other securities, property or cash or combination thereof
receivable upon such merger or consolidation).
B. In case of any reclassification or change of the shares of Common Stock
issuable upon exercise of this Warrant Certificate (other than elimination
or Par value, a change in par value, or from par value to no par value, or
as the result of a subdivision or combination of shares (which is provided
for elsewhere herein),but including any reclassification of the shares of
Common Stock into two or more classes or series of shares) or in case of
any merger or consolidation of another corporation into the Company in
which the Company is the surviving corporation and in which there is a
reclassification or change of the shares of Common Stock (other than a
change in par value, or from par value to no par value, or as a result of a
subdivision or combination (which is provided for elsewhere herein), but
including any reclassification of the shares of Common Stock, the Holder
shall thereafter have the right, upon exercise hereof and payment of the
Exercise Price, to receive solely the kind and amount of shares of stock
(including, if applicable, Common Stock), other securities, property or
cash or any combination thereof receivable upon such reclassification,
change, merger or consolidation by a holder of the number of shares of
Common Stock for which this Warrant Certificate might have been exercised
immediately prior to such reclassification, change, merger or consolidation
(assuming, if applicable, that the holder of such Common Stock failed to
exercise its rights of election, if any, as to the kind or amount of shares
of stock, other securities, property or cash or combination thereof
receivable upon such reclassification, change, merger or consolidation).
E-65
11. RIGHTS AND OBLIGATIONS SURVIVE EXERCISE OF WARRANTS
The rights and obligations of the Company, of the Holder, and of the
holders of shares of Common Stock or other securities issued upon exercise
of the Warrants, contained in Sections 5 and 7 of this Warrant Certificate
shall survive the exercise of the Warrants.
April 30 1999
Dated: ----------------------,----
Power Direct, Inc.,
A Delaware corporation
/s/ ▇▇▇▇ ▇▇▇
By: --------------------------
Its: ▇▇▇▇ ▇▇▇, President
/s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
By: --------------------------
Its: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Secretary
E-66
WARRANTS TO PURCHASE 1,000,000 SHARES
OF $.0001 PAR VALUE COMMON STOCK OF
POWER DIRECT, INC.
A DELAWARE CORPORATION
This Warrant Certificate certifies that ▇▇▇▇ Investments Ltd. (the "Holder"), is
the owner of one million (1,000,000) Warrants (subject to adjustment as provided
herein), each of which represents the right to subscribe for and purchase from
Power Direct, Inc. a Delaware corporation (the "Company"), one share of the
Common Stock, no par value, of the Company (the common stock, including any
stock into which it may be changed, reclassified or converted, is herein
referred to as the "Common Stock") at the purchase price (the "Exercise Price")
of $0.25 per share (subject to adjustment as provided herein).
THIS WARRANT CERTIFICATE AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ARE
SUBJECT TO CERTAIN RESTRICTIONS, CONTAINED IN SECTIONS 5 AND 6 HEREOF, WITH
RESPECT TO THEIR TRANSFER.
The Warrants represented by this Warrant Certificate are subject to the
following provisions, terms and conditions:
1. EXERCISE OF WARRANTS
Exercise of Warrants. The warrants may be exercised by the Holder, in whole or
in part (but not as to a fractional share of Common Stock), by surrender of this
Warrant Certificate at the principle office of the Company at ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇ (or such other office or agency of the
Company as may be designated by notice in writing to the Holder at the address
of such Holder appearing on the books of the Company), with the appropriate form
attached duly exercised, at any time within the period beginning one day after
the Holder's subscription for Units (each Unit consisting of one share of no par
value Common Stock of the Company at $0.25 per share) was accepted by the
Company, and expiring on that date which is exactly two years and one day after
the Holder's subscription for Units was accepted by the Company (the "Exercise
Period") and by payment to the Company by certified check or bank draft of the
purchase price for such shares. The Company agrees that the shares of Common
Stock so purchased shall be and are deemed to be issued to the Holder as the
record owner of such shares of Common Stock as of the close of business on the
date on which the Warrant Certificate shall have been surrendered and payment
made for such shares of Common Stock. Certificates representing the shares of
Common Stock so purchased, together with any cash for fractional shares of
Common Stock paid pursuant to Section 2E, shall be delivered to the Holder
promptly and in no event later than ten (10) days after the Warrants shall have
been so exercised, and, unless the Warrants have expired, a new Warrant
Certificate, if any, that shall not have been exercised shall also be delivered
to the Holder within such time.
E-67
2. ADJUSTMENTS
A. Adjustments. The Exercise Price and the number of shares of Common
Stock issuable upon exercise of each Warrant shall be subject to
adjustment from time to time as follows:
(1) Stock Dividends; Stock Splits; Reverse Stock Splits; Reclassifications.
In the event that the Company shall (a) pay a dividend with respect to
its capital stock in shares of Common Stock, (b) subdivide its
outstanding shares of Common Stock, (c) combine its outstanding shares
of Common Tock into a smaller number of shares of any class of Common
Stock or (d) issue any shares of its capital stock in a
reclassification of the Common Stock (including any such
reclassification in connection with a merger, consolidation or other
business combination in which the Company is the continuing
corporation) (any one of which actions is herein referred to as an
"Adjustment Event"), the number of shares of Common Stock purchasable
upon exercise of each Warrant immediately prior to the record date for
such Adjustment Event shall be adjusted so that the Holder shall
thereafter be entitled to receive the number of shares of Common Stock
or other securities of the Company (such other securities thereafter
enjoying the rights of shares of Common Stock under this Warrant
Certificate) that such Holder would have owned or have been entitled to
receive after the happening of such Adjustment Event, had such Warrant
been exercised immediately prior to the happening of such Adjustment
Event or any record date with respect thereto. An adjustment made
pursuant to this Section 2A(1) shall become effective immediately after
the effective date of such Adjustment Event retroactive to the record
date, if any, for such Adjustment Event.
(2) Distributions of Subscription Rights or Convertible Securities. In the
event that the Company shall fix a record date for the making of a
distribution to all holders of shares of Common Stock of rights,
options, warrants or convertible or exchangeable securities containing
the right to subscribe for or purchase shares of Common Stock
(excluding those referred to in Section 2A(5) below), then in each such
event the number of shares of Common Stock purchasable after such
record date upon the exercise of each Warrant shall be determined by
multiplying the number of shares of Common Stock purchasable upon the
exercise of each Warrant immediately prior to such record date by a
fraction, the numerator of which shall be the then Current Market Value
(as defined in Section 2A(3) below) of one share of Common Stock on the
record date for such distribution and the denominator of which shall be
the then Current Market Value of one share of Common Stock on the
record date for such distribution less the then fair value (as
determined by the Independent Financial Expert (as defined in Section
2A(3) below, or such subscription rights, options or warrants, or of
such convertible or exchangeable securities distributed with respect to
one such share of Common Stock. Such adjustment shall be made whenever
any such distribution is made and shall become effective on the date of
distribution retroactive to the record date for the determination of
stockholders entitled to receive such distribution.
E-68
(3) Current Market Value. For the purpose of any computation under this
Section 2, the Current Market Value of one share of Common Stock or of
any other security (herein collectively referred to as a "security") at
the date herein specified shall be (1) if the Company does not have a
class of equity securities registered under the Securities Exchange Act
of 1934 (the "Exchange Act"), the value of the security (a) determined
in good faith in the most recently completed arms-length transaction
between the Company and a third party who is not an affiliate of the
Company in which such determination is necessary and the closing of
which occurs on such date or shall have occurred within the six months
preceding such date, provided that the Board of Directors of the
Company shall in god faith determine that any such value represents a
reasonable estimate of the fair value of a share of Common Stock as of
such date, (b) if no transactions shall have occurred on such date or
within such six-month period, most recently determined as of a date
within the six months preceding such date by an Independent Financial
Expert (in the event of more than one such determination, the
determination for the later date shall be used) or (c) if no such
determination shall have been made within such six month period,
determined as of such date by an Independent Financial Expert, or (2)
if the Company does have a class of equity securities registered under
the Exchange Act, deemed to be the average of the daily market prices
of the security for five trading days before such date or, if the
Company has had a class of equity securities registered under the
Exchange Act for less than five trading days before such date, then the
average of the daily market prices for all of the trading days before
such date for which daily market prices are available. For purposes of
this definition, control means the power to direct the management and
policies of a person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise.
The market price for each such business day shall be (1) in the case of
a security listed or admitted to trading on any securities exchange,
the closing price, regular way, on such day, or if no sale takes place
on such day, the average of the closing bid and asked prices on such
day; (2) in the case of a security not then listed or admitted to
trading on any securities exchange, the last reported sale price on
such day, or if no sale takes place on such day, the average of the
closing bid and asked prices on such day, as reported by a reputable
quotation source designated by the Company; (3) in the case of a
security not then listed or admitted to trading on any security
exchange and as to which no such reported sale price or bid and asked
prices are available, the average of the reported high bid and low
asked prices on such day, as reported by a reputable quotation source,
or a newspaper of general circulation in North America, customarily
published on each business day, designated by the Company, or if there
shall be no bid and asked prices on such day, the average of the high
bid and low asked prices, as so reported, on the most recent day (not
more than five days prior to the date in question) for which prices
have been so reported; and (4) if there are no bid and asked prices
reported during the five days prior to the date in question, the
Current Market Value of the security shall be determined as if the
Company did not have a class of equity securities registered under the
Exchange Act.
E-69
For purposes of this Section 2A(3), an Independent Financial Expert
shall mean a nationally recognized investment banking firm (i) which
does not (and whose directors, officers, employees and affiliates do
not), have a direct or indirect financial interest in the Company
(other than the beneficial ownership, directly or indirectly, of less
than three percent of the outstanding shares of capital stock of the
Company); (ii) which has not been, and, at the time it is called upon
to give independent financial advice to the Company, is not (and none
of whose directors, officers, employees or affiliates is) a promoter,
director or officer of the Company or any of it's affiliates or an
underwriter with respect to any of the Company's securities; (iii)
which does not provide any advice or opinions to the Company except as
an Independent Financial Expert; and (iv) which is mutually agreeable
to the Company and the holders of a majority of the Warrants. If the
Company and the Holders do not promptly agree as to the Independent
Financial Expert, each shall appoint one investment banking firm and
the two firms so appointed shall select the Independent Financial
Expert to be employed by the Company. An Independent Financial Expert
may be compensated by the Company for opinions or services it provides
as an Independent Financial Expert. In making its determination of
value of the Common Stock, the Independent Financial Expert, in its
best professional judgement, determines to be most appropriate. After
the Independent Financial Expert has made its determination, the
Company shall cause the Independent Financial Expert to prepare a
report (a "Value Report") stating the methods of valuation considered
or used and the value of the Common Stock or other security it values
and containing a statement as to the nature and scope of the
examination made. The Value Report shall accompany any Adjustment
Notice ( as defined in Section 2B) sent by the Company to the Holder
pursuant to Section 2B; provided, that the adjustment to the Exercise
Price that is the subject of such Adjustment Notice requires the
services of an Independent Financial Expert.
(4) Adjustment of Exercise Price. Whenever the number of shares of Common
Stock purchasable upon the exercise of each Warrant is adjusted
pursuant to Sections 2A(1) and 2A(2), the Exercise Price for each share
of Common Stock purchasable upon the exercise of each Warrant
immediately prior to such adjustment, and the denominator of which
shall be the number of shares of Common Stock so purchasable
immediately thereafter.
E-70
(5) Issuance of Common Stock to Stockholders of Less Than Current Market
Value. In the event that the Company sells and issues to a stockholder
of the Company or to any "affiliate" of such stockholder shares of any
Common Stock, or rights, options, warrants or convertible or
exchangeable securities containing the right to subscribe for or
purchase shares of Common Stock (excluding (i) shares, options,
warrants or convertible or exchangeable securities issued in any of the
transactions described in Sections 2A(1) and 2A(2) above, (ii) the
Warrants and any shares of Common Stock issuable upon exercise thereof,
(iii) shares of Common Stock or other securities, or options or rights
in respect thereof, issued to full-time employees of the Company or its
subsidiaries in the ordinary course of business as compensation for
services rendered or to be rendered or as part of an employee incentive
program and (iv) shares of Common Stock or other securities issued upon
exercise, conversion or exchange of rights, options, warrants or
convertible or exchangeable securities issued in any of the
transactions described in Section 2A(1) and 2A(2) above or in a
transaction with respect to which no adjustment was required pursuant
to this Section 2A (but including shares, rights, options, warrants or
convertible or exchangeable securities issued as consideration in any
merger, consolidation or other business combination) at a price per
share of Common Stock (determined, in the case of such rights, options,
warrants or convertible or exchangeable securities, by dividing (a) the
total amount receivable by the Company in consideration of the sale and
issuance of such rights, options, warrants or convertible or
exchangeable securities (which amount may be zero if such rights,
options, warrants or convertible or exchangeable securities are issued
without consideration), plus the total consideration payable to the
Company upon exercise, conversion or exchange thereof, by (b) the total
number of shares of Common Stock contemplated by such rights, opinions,
warrants or convertible or exchangeable securities) that is less than
the then Current Market Value per share of such Common Stock (as
determined by the Independent Financial Expert in accordance with
Section 2A(3) above) in effect immediately prior to such sale and
issuance, then the Exercise Price shall be adjusted (calculated to the
nearest $0.01) so that it shall equal the price determined by
multiplying the Exercise Price in effect immediately prior thereto by a
fraction, the numerator of which shall be (i) an amount equal to the
sum of (A) the number of shares of Common Stock outstanding immediately
prior to such sale and issuance plus (B) the number of shares of Common
Stock outstanding (determined as provided below) immediately after such
sale and issuance. Such adjustment shall be made successively whenever
such an issuance is made.
Upon the occurrence of a sale and issuance described in the preceding
paragraph, the number of shares of Common Stock purchasable under the
exercise of this Warrant Certificate shall be that number determined by
multiplying the number of shares of Common Stock issuable upon exercise
immediately prior to such adjustment by a fraction, the numerator of
which is the Exercise Price in effect immediately prior to such
adjustment and the denominator of which is the Exercise Price as so
adjusted.
E-71
For the purposes of such adjustments, the shares of Common Stock which
the holder of any such rights, options, warrants or convertible or
exchangeable securities shall be entitled to subscribe for or purchase
shall be deemed to be issued and outstanding as of the date of such
sale and issuance and the consideration received by the Company for
such rights, options, warrants or convertible or exchangeable
securities (which consideration may be zero if such rights, options,
warrants or convertible or exchangeable securities are issued without
consideration), plus the consideration or premiums stated in such
rights, options, warrants or convertible or exchangeable securities to
be paid for the shares of any Common Stock covered thereby. In case the
Company shall sell and issue, in a transaction to which this paragraph
2A(5) applies, shares of Common Stock or rights, options, warrants or
convertible or exchangeable securities containing the right to
subscribe for or purchase shares of Common Stock, for consideration
consisting, in whole or in part, of property other than cash or its
equivalent, then determining the "price per share of Common Stock" and
the "consideration received by the Company" for purposes of the first
sentence of this Section 2A(5), the Board of Directors of the Company
shall determine, in good faith, the fair value of the rights, options,
warrants or convertible or exchangeable securities then being sold as
part of such unit. There shall be no adjustment of the Exercise Price
pursuant to this Section 2A(5) if the amount of such adjustment shall
be less than $0.01 per share of Common Stock; provided, however, that
any adjustments which by reason of this provision are not required to
be made shall be carried forward and taken into account in any
subsequent adjustment.
(6) Expiration of Rights, Options and Conversion Privileges. Upon the
expiration without being exercised of any rights, options, warrants
or conversion or exchange privileges for which an adjustment has been
made pursuant to this Warrant Certificate, the Exercise Price and the
number of shares of Common Stock purchasable upon the exercise of
each Warrant shall, upon such expiration, be readjusted and shall
thereafter, upon any future exercise, be such as they would have been
had they been originally adjusted (or had the original adjustment not
be required, as the case may be) as if (i) the only shares of Common
Stock so issued were the shares of such rights, options, warrants or
conversion or exchange rights and (ii) such shares of Common Stock,
if any, were issued or sold for the consideration actually received
by the Company upon such exercise plus the consideration, if an,
actually received by the Company for issuance, sale or grant of all
such rights, options, warrants or conversion or exchange rights
whether or not exercised; provided, however, that no such
readjustment shall have the effect of increasing the Exercise Price
by an amount, or decreasing the number of shares purchasable upon
exercise of each Warrant by number, in excess of the amount or number
of the adjustment initially made in respect to the issuance, sale or
grant of such rights, options, warrants or conversion or exchange
rights.
E-72
(7) De Minimis Adjustments. Except as provided in Section 2A(5) with reference
to adjustments required by such Section 2A(5), no adjustment in the number
of shares of Common Stock purchasable hereunder shall be required unless
such adjustment would require an increase or decrease of at least one
percent (1%) in the number of share of Common Stock purchasable upon an
exercise of each Warrant; provided, however, that any adjustments which by
reason of this Section 2A(7) are not required to b made shall be carried
forward and taken into account in any subsequent adjustment. All
calculations shall be made to the nearest full share.
(8) Duty to Make Fair Adjustments in Certain Cases. If any event occurs as to
which in the opinion of the Board of Directors the other provisions of this
Section 2A are not strictly applicable or if strictly applicable would not
fairly protect the purchase rights of the Warrants in accordance with the
essential intent and principles of such provisions, then the Board of
Directors of the Company shall make an adjustment in the application of
such provisions, in accordance with such essential intent and principles,
so as to protect such purchase rights as aforesaid.
(9) Adjustment for Asset Distributions. If the Company shall fix a record date
for the making of a distribution to all holders of shares of Common Stock
of evidence of indebtedness of the Company or other assets (other than
ordinary cash dividends not in excess of the retained earnings of the
Company determined by the application of generally accepted accounting
principles), then the Exercise Price for each share of Common Stock payable
upon exercise of each Warrant shall be reduced by he then fair value (as
determined by the Independent Financial Expert (as define in Section 2A(3)
above) of the indebtedness or other assets distributed in respect of one
such share. Such adjustment shall be made whenever any such distribution is
made and shall become effective on the date of distribution retroactive to
the record date for the determination of stockholders entitled to receive
such distribution.
B. Notice of Adjustment. Whenever the number of shares of Common Stock
purchasable upon the exercise of each Warrant or the Exercise Price is
adjusted, as herein provided, the Company shall promptly notify the Holder
in writing (such writing referred to as an "Adjustment Notice") of such
adjustment or adjustments and shall deliver to the Holder a certificate of
firm independent public accountants selected by the Board of Directors of
the Company (who may be the regular accountants employed by the Company) or
of the Independent Financial Expert, if any, which makes a determination of
Current Market Value with respect to any such adjustment setting forth the
number of shares of Common Stock purchasable upon the exercise of each
Warrant and the Exercise Price after such adjustment, setting forth a brief
statement of the facts requiring such adjustment and setting forth the
computation by which such adjustment was made.
C. Statement on Warrant Certificates. The form of this Warrant Certificate
need not be changed because of any change in the Exercise Price or in the
number of kind of shares purchasable upon the exercise of a Warrant and
any Warrant Exercise Price and the same number and kind of shares as are
stated in this Warrant Certificate. The Company may at the time in its
sole discretion make any change in the form of a warrant certificate that
it may deem appropriate and that does not affect the substance thereof and
any warrant certificate thereafter issued, whether in exchange or
substitution for any outstanding warrant certificate or otherwise, may be
in the form so changed.
E-73
D. Notice to Holder of Record Date, Dissolution, Liquidation or Winding Up.
The Company shall cause to be mailed (by first class mail, postage prepaid)
to the Holder of such of the record date for any dividend, distribution or
payment, in cash or in kind (including, without limitation, evidence of
indebtedness and assets), with respect to shares of Common Stock at least
20 calendar days before any such date. In case at any time after the date
hereof, there shall be voluntary or involuntary dissolution, liquidation or
winding up of the Company, then the Company shall cause to be mailed (by
first class mail, postage prepaid) to the Holder at the Holder's address as
shown on the books of the Company, at the earliest practicable time (and,
in any event, not less than 20 calendar days before any date set for
definitive action), notice of the date on which such dissolution,
liquidation or winding up shall take place, as the case may be. The notices
referred to above shall also specify the date as of which the holders of
the shares of Common Stock of record or other securities underlying the
Warrants shall be entitled to receive such dividend, ties, money or the
property deliverable upon such dissolution, liquidation or winding up, as
the case may be (the "Entitlement Date"). In the case of a distribution of
evidence of indebtedness or assets (other than in dissolution, liquidation
or winding up) which has the effect of reducing the Exercise Price to zero
or less pursuant to Section 2A(9), if the Holder elects to exercise the
Warrants in accordance with Section 1 and become a holder of the Common
Stock on the Entitlement Date, the Holder shall thereafter receive the
evidence of indebtedness or assets distributed in respect of shares of
Common Stock. In the case of any dissolution, liquidation or winding up of
the Company, the Holder shall receive on the Entitlement Date the cash or
other property, less the Exercise Price for the Warrants then in effect,
that such Holder would have entitled to receive had the Warrants been
exercisable and exercised immediately prior to such dissolution,
liquidation or winding up (or, if appropriate, record date therefor) and
any right of a Holder to exercise the Warrants shall terminate.
E. Fractional Interest. The Company shall not be required to issue fractional
shares of Common Stock on the exercise of the Warrants. If more than one
Warrant shall be presented for exercise in full at the same time by the
same holder, the number of full shares of Common Stock which shall be
issuable upon such exercise shall be computed on the basis of the aggregate
number of whole shares of Common Stock purchasable on the exercise of the
Warrants so presented. If any fraction of a share of Common Stock would,
except for the provisions of this Section 2E be issuable on the exercise of
the Warrants (or specified proportion thereof), the Company shall pay an
amount in cash calculated by it to be equal to the fair value of one share
of Common Stock, as determined by the Board of Directors of the company in
good faith, multiplied by such fraction computed to the nearest whole cent.
E-74
3. RESERVATION AND AUTHORIZATION OF COMMON STOCK
The Company covenants and agrees (a) that all shares of Common Stock which may
be issued upon the exercise of the Warrants represented by this Warrant
Certificate will, upon issuance, be validly issued, fully paid and
non-assessable and free of all insurance or transfer taxes, liens and charges
with respect to the issue thereof, (b) that during the Exercise Period, the
Company will at all times have authorized, and reserved for the purpose of issue
or transfer upon exercise of the Warrants evidenced by this Warrant Certificate,
sufficient shares of Common Stock to provide for the exercise of the Warrants
represented by this Warrant Certificate, and (c) that the Company will take all
such action as may be necessary to ensure that the shares of Common Stock
issuable upon the exercise of the Warrants may be so issued without violation of
any applicable law or regulation, or any requirements of any domestic securities
exchange upon which any capital stock of the Company may be listed; provided,
however, that nothing contained herein shall impose upon the Company any
obligation to register the warrants evidenced by this Warrant Certificate of
such Common Stock under applicable securities laws. In the event that any
securities of the Company, other than the Common Stock, are issuable upon
exercise of the Warrants, the Company will take or refrain from taking any
action referred to in clauses (a) through (c) of this Section 3 as though such
clauses applied, mutatis mutandis to such other securities then issuable upon
the exercise of the Warrants.
4. NO VOTING RIGHTS
This Warrant Certificate shall not entitle the Holder to any voting rights or
other rights as a stockholder of the Company.
5. EXERCISE OR TRANSFER OF WARRANTS OR COMMON STOCK
The Holder of this Warrant Certificate agrees to be obligated by any and all
provisions with respect to the limitations, including limitations imposed for
Securities Act compliance, on the transfer of the Warrants and the shares of
Common Stock or other securities issuable upon exercise of the Warrants.
6. WARRANTS TRANSFERABLE
Subject to the provision of Section 5, this Warrant Certificate and the Warrants
it evidences are transferrable, in whole or in part, without charge to the
Holder, at the office or agency of the Company referred to in Section 1, by the
Holder in person or by duly authorized attorney, upon surrender of this Warrant
Certificate properly endorsed. Each taker and holder of this Warrant
Certificate, by taking or holding the same, consents and agrees that this
Warrant Certificate, when endorsed in blank, shall be deemed negotiable, and
that such holder, when this Warrant Certificate shall have been so endorsed, may
be treated by the Company and all other persons dealing with this Warrant
Certificate as the absolute owner hereof for any purpose and as the person
entitled to exercise the rights represented by this Warrant Certificate, or to
the transfer hereof on the books of the Company, any notice to the contrary
notwithstanding; but until such transfer on such books, the Company may treat
the registered holder hereof as the owner for all purposes.
E-75
7. REGISTRATION RIGHTS
The Company agrees that it will give at least 30mdays prior written notice to
the Holder of the Company's intention to file any registration statement
relating to any of the Company's securities and will afford the Holder the
opportunity to register the Warrants and any shares of the Company's Common
Stock held by the Holder and to take advantage, to a reasonable extent, of all
Blue Sky qualifications effected by the Holder in connection therewith, upon
receiving request for such registration within 15 days thereafter.
The Company shall have the privilege of postponing action pursuant to the
provisions to the provisions of this Section 7 for a reasonable period of time
(not exceeding 180 days) in the event the filing would, in the reasonable
opinion of the Board of Directors of the Company, adversely affect a material
financing project, or a proposed or pending acquisition, merger, or other
corporate reorganization for which the Company is or is expected to be a party.
Upon receipt of such written request, the Company shall promptly give written
notice thereof to the Holder at its address as that address appears on the books
of the Company, offering to include the Warrants and all Common Stock of the
Company held by the Holder in a registration statement to be filed by the
Company as provided herein, if the Holder makes a written request therefor
within 15 days after the giving of such notice by the Company; provided,
however, that if the Company shall have elected pursuant to this Section 7 above
to postpone action under this section, the Company shall, in such notice,
specify the termination date of the period of such postponement and the time for
the Holder to make said written request shall be extended to 15 days after said
termination date.
The costs and expenses of any such registration statement or other filing as
provided in this Section 7 shall be borne and paid by the Company for any such
request by the Holder.
8. CLOSING OF BOOKS
The Company will at no time close its transfer books against the transfer of any
Warrant or of any shares of Common Stock or other securities issuable upon the
exercise of any Warrant in any manner which interferes with the timely exercise
of the Warrants.
E-76
9. WARRANTS EXCHANGEABLE, LOSS, THEFT
This Warrant Certificate is exchangeable, upon the surrender hereof by the
Holder at the office or agency of the Company referred to in Section 1, for new
Warrant Certificates in similar form representing in the aggregate the right to
subscribe for and purchase the number of shares of Common Stock which may be
subscribed for and purchased hereunder, each such new Warrant to represent the
right to subscribe and purchase such number of shares of Common Stock as shall
be designed by the Holder at the time of such surrender. Upon receipt of
evidence satisfactory to the Company of the loss, theft, destruction or
mutilation, upon surrender or cancellation of this Warrant Certificate, the
Company will issue to the Holder a new Warrant Certificate in similar form, in
lieu of this Warrant Certificate, representing the right to subscribe for and
purchase the number of shares of Common Stock which may be subscribed for and
purchased hereunder.
10. MERGERS, CONSOLIDATIONS, ETC.
A. Except as may otherwise be provided in Section 2A(5), if the Company shall
merge or consolidate with another corporation, the holder of this Warrant
Certificate shall thereafter have the right, upon exercise hereof and
payment of the Exercise Price, to receive solely the kind and amount of
shares of stock (including, if applicable, Common Stock), other securities,
property or cash or any combination thereof receivable by a holder of the
number of shares of Common Stock for which this Warrant Certificate might
have been exercised immediately prior to such merger or consolidation
(assuming, if applicable, that the holder of such Common Stock failed to
exercise its rights of election, if any, as to the kind or amount of shares
of stock, other securities, property or cash or combination thereof
receivable upon such merger or consolidation).
B. In case of any reclassification or change of the shares of Common Stock
issuable upon exercise of this Warrant Certificate (other than elimination
or Par value, a change in par value, or from par value to no par value, or
as the result of a subdivision or combination of shares (which is provided
for elsewhere herein),but including any reclassification of the shares of
Common Stock into two or more classes or series of shares) or in case of
any merger or consolidation of another corporation into the Company in
which the Company is the surviving corporation and in which there is a
reclassification or change of the shares of Common Stock (other than a
change in par value, or from par value to no par value, or as a result of a
subdivision or combination (which is provided for elsewhere herein), but
including any reclassification of the shares of Common Stock, the Holder
shall thereafter have the right, upon exercise hereof and payment of the
Exercise Price, to receive solely the kind and amount of shares of stock
(including, if applicable, Common Stock), other securities, property or
cash or any combination thereof receivable upon such reclassification,
change, merger or consolidation by a holder of the number of shares of
Common Stock for which this Warrant Certificate might have been exercised
immediately prior to such reclassification, change, merger or consolidation
(assuming, if applicable, that the holder of such Common Stock failed to
exercise its rights of election, if any, as to the kind or amount of shares
of stock, other securities, property or cash or combination thereof
receivable upon such reclassification, change, merger or consolidation).
E-77
11. RIGHTS AND OBLIGATIONS SURVIVE EXERCISE OF WARRANTS
The rights and obligations of the Company, of the Holder, and of the
holders of shares of Common Stock or other securities issued upon exercise
of the Warrants, contained in Sections 5 and 7 of this Warrant Certificate
shall survive the exercise of the Warrants.
November 15, 1999
Dated: --------------------------
Power Direct, Inc.,
A Delaware corporation
/s/ ▇▇▇▇ ▇▇▇
By: ---------------------------
Its: ▇▇▇▇ ▇▇▇, President
/s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
By: ----------------------------
Its: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Secretary
E-78