SECURITIES PURCHASE AND EXCHANGE AGREEMENT BY AND AMONG NORTH SHORE ACQUISITION CORP., SUNGDONG INDUSTRIES CO. LTD., HWI YOUNG JUNG AND HONG JUN JUNG DATED AS OF SEPTEMBER 8, 2009
BY
AND AMONG
SUNGDONG
INDUSTRIES CO. LTD.,
HWI
▇▇▇▇▇ ▇▇▇▇
AND
HONG
JUN JUNG
DATED
AS OF SEPTEMBER 8, 2009
THIS
SECURITIES PURCHASE AND EXCHANGE AGREEMENT is made and entered into as of
September 8, 2009, by and among North Shore Acquisition Corp., a Delaware
corporation (“NSAQ”), Sungdong
Industries Co. Ltd., a Korean company (“SDI”), Hwi ▇▇▇▇▇ ▇▇▇▇
(“Stockholder”)
and Hong Jun Jung (“Pledgor”). (Each of
the above parties, a “Party,” and collectively, the “Parties,” unless the
context requires otherwise).
RECITALS
A. Stockholder
is the direct and beneficial owner of 11,000 of the 20,000 shares of issued and
outstanding common stock of SDI (“SDI Common
Stock”).
B. Subject
to the terms and conditions of this Agreement (defined below), NSAQ at the
Closing (as defined below), shall acquire, (i) shares of newly issued
convertible voting preferred stock of SDI (“SDI Preferred
Stock”), representing up to 22.77%, but not less than 20.68%, of the
voting power of SDI, in exchange for the payment of the amount of cash remaining
in NSAQ’s Trust Fund (as defined in Section 3.15) at Closing after deduction of
amounts for (i) payment of NSAQ’s expenses in connection with the transactions
contemplated by this Agreement and (ii) payments to NSAQ stockholders that
exercise their conversion rights at the Special Meeting (as defined in Section
5.1(a)) (the “SDI
Preferred Stock Purchase”), and (ii) 7,722 shares of currently issued and
outstanding SDI Common Stock from Stockholder, representing at least 29.82% of
the voting power of SDI, in exchange for an aggregate of 7,341,102 newly issued
shares of common stock of NSAQ (the “Share
Exchange”).
C. Following
the Closing, (i) NSAQ shall own up to 52.59%, but not less than a majority, of
the voting power of SDI and (ii) Stockholder shall initially own 48.04% of the
issued and outstanding shares of NSAQ’s common stock, par value $0.0001 per
share (“NSAQ Common
Stock”), assuming that no NSAQ stockholders exercise their conversion
rights. The term “Agreement” as used
herein refers to this Securities Purchase and Exchange Agreement, as the same
may be amended from time to time, and all schedules hereto (including the SDI
Schedules and the NSAQ Schedules, as defined in the preambles to Articles II and
III hereof, respectively).
NOW,
THEREFORE, in consideration of the covenants, mutual premises and
representations set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Parties agree
as follows:
ARTICLE
I
THE SDI STOCK PREFERRED
STOCK PURCHASE AND THE SHARE EXCHANGE
1.1 SDI Preferred Stock
Purchase.
(a) Purchase and
Sale. Upon the terms and subject to the conditions hereof, at
the Closing, SDI shall issue, sell, transfer, assign and convey to NSAQ, and
NSAQ shall purchase from SDI, the number of shares of SDI Preferred
Stock equal to the quotient obtained by dividing (x) the amount of total cash
remaining in NSAQ’s Trust Fund at Closing after deduction of amounts for (i)
payment of NSAQ’s expenses in connection with the transactions contemplated by
this Agreement and (ii) payments to NSAQ stockholders that exercise their
conversion rights at the Special Meeting, by (y) $7,292 (the “SDI Preferred
Shares”), representing up to 22.77%, but not less than 20.68%, of the
total voting power of SDI, which shall have the voting rights, dividends, rights
and preferences as set forth in SDI’s Korean Registration Certificate attached
as Exhibit A
hereto.
(b) Purchase
Price. The aggregate purchase price to be paid by
NSAQ to SDI for the SDI Preferred Shares shall be the amount of total cash
remaining in NSAQ’s Trust Fund at Closing after deduction of amounts for (i)
payment of NSAQ’s expenses in connection with the transactions contemplated by
this Agreement and (ii) payments to NSAQ stockholders that exercise their
conversion rights at the Special Meeting. The cash issued under this Section
1.1(b) is sometimes referred to herein as the “Cash
Consideration.”
1.2 Share
Exchange.
(a) Upon
the terms and subject to the conditions hereof, at the Closing, Stockholder
shall sell, transfer, assign and convey to NSAQ, and NSAQ shall purchase from
Stockholder, all of the right, title and interest of Stockholder in and to 7,722
shares of SDI Common Stock (the “SDI Common Shares”),
representing at least 29.82% of the total voting power of SDI.
(b) Purchase
Price. In exchange for the SDI Common Shares, NSAQ shall issue
and deliver to Stockholder 7,341,102 shares of NSAQ Common Stock, representing
48.04% of the total voting power of NSAQ, assuming that no NSAQ stockholders
exercise their conversion rights. The shares of NSAQ Common Stock
issued under this Section 1.2(b) are sometimes referred to herein as the “NSAQ
Shares.”
(c) Following
Closing of the SDI Preferred Stock Purchase referenced in Section 1.1 and the
Share Exchange referenced in Section 1.2, NSAQ shall own up to 52.59%, but not
less than a majority, of the total voting power of SDI.
(d) Following
Closing of the SDI Preferred Stock Purchase referenced in Section 1.1 and the
Share Exchange referenced in Section 1.2, Stockholder shall initially own 48.04%
of the total voting power of NSAQ, assuming that no stockholders exercise their
conversion rights.
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(e) As
the sole remedy for the indemnification obligations set forth in Article VII of
this Agreement, 20% of the NSAQ Shares issued to Stockholder (the “Escrow Shares”) shall
be deposited in escrow (the “Escrow Account”), all
in accordance with the terms and conditions of the escrow agreement to be
entered into at the Closing between NSAQ, Stockholder and Continental Stock
Transfer & Trust Company (“Continental”) (or
such other Person as may be agreed by NSAQ and Stockholder), as escrow agent
(“Escrow
Agent”), substantially in the form of Exhibit B hereto (the
“Escrow
Agreement”). The Escrow Agreement shall provide that on the
one year anniversary after the Closing (the “Escrow Release
Date”), the Escrow Agent shall release the Escrow Shares, less that
portion thereof applied in satisfaction of or reserved with respect to
indemnification claims in connection with claims made pursuant to Section 7.1(a)
of this Agreement (“Escrow
Claims”). Any Escrow Shares due to be released on the Escrow
Release Date that continue to be held with respect to any unresolved Escrow
Claim shall be delivered to Stockholder, promptly upon such resolution, subject
to reduction, if any, for the indemnification obligation associated with such
resolved Escrow Claim.
1.3 NSAQ Committee for Purposes
of Escrow Agreement. Prior to the Closing, the board of
directors of NSAQ shall appoint a committee consisting of one or more of its
then-members to act on behalf of NSAQ to take all necessary actions and make all
decisions pursuant to the Escrow Agreement. In the event of a vacancy
in such committee, the board of directors of NSAQ shall appoint as a successor a
Person (as defined below in Section 9.2(c)) who was a director of NSAQ prior to
the Closing Date (as defined below) or, in the event of an inability to appoint
same, another Person who would qualify as an “independent” director of NSAQ and
who has not had any relationship with SDI or Stockholder prior to the
Closing. Such committee is intended to be the “Committee” referred
to in Article VII hereof and the Escrow Agreement.
1.4 The
Closing. Unless this Agreement shall have been terminated
pursuant to Section 8.1, the consummation of the SDI Preferred Stock Purchase
and the Share Exchange (“Closing”) shall take
place at the offices of ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇, P.C., counsel
to NSAQ, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ at a time and date to be
specified by the Parties, which shall be no later than the fifth (5th)
business day after the satisfaction or waiver of the conditions set forth in
Article VI, or at such other time, date and location as the Parties hereto agree
in writing (the “Closing
Date”). Closing signatures may be transmitted by facsimile or
by emailed PDF file.
1.5 Deliveries.
(a) SDI. At
the Closing, SDI will (i) issue the SDI Preferred Shares to NSAQ by delivering
to NSAQ the certificates representing such SDI Preferred Shares, which shall be
duly authorized and validly issued shares free and clear of all Liens (as
defined below in Section 9.2(e)), (ii) provide confirmation that NSAQ is
reflected on the share register of SDI as the registered owner of the SDI
Preferred Shares, and (iii) deliver to NSAQ the certificates, opinions and other
agreements contemplated by Article VI hereof and the other provisions of this
Agreement.
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(b) Stockholder. At
the Closing, Stockholder will (i) assign and transfer to NSAQ all of its right,
title and interest in and to the SDI Common Shares by delivering to NSAQ the
certificates representing such SDI Common Shares, duly endorsed for transfer and
free and clear of all Liens, (ii) provide confirmation that NSAQ is reflected on
the share register of SDI as the registered owner of the SDI Common Shares, and
(iii) deliver to NSAQ the certificates, opinions and other agreements
contemplated by Article VI hereof and the other provisions of this
Agreement.
(c) NSAQ. At
the Closing, NSAQ shall deliver (i) to SDI, the Cash Consideration pursuant to
Section 1.1, (ii) to Stockholder, the NSAQ Common Shares pursuant to Section 1.2
and (iii) the certificates, opinions and other agreements and instruments
contemplated by Article VI hereof and the other provisions of this
Agreement.
1.6 Additional
Agreements. At the Closing, the following agreements will have been
executed and delivered (collectively, the “Transaction
Documents”), the effectiveness of each of which is subject to the
Closing:
(a) The
Escrow Agreement and a mutually agreed upon agent for escrow.
(b) A
Pledge Agreement (“Pledge Agreement”)
and a mutually agreed upon collateral agent in the form attached as Exhibit C
hereto.
(c) A
Lock-Up Agreement (“Lock-Up Agreement”)
in the form attached as Exhibit D
hereto.
1.7
Further
Assurances. Subject to the terms and conditions of this
Agreement, at any time or from time to time after the Closing, each of the
Parties hereto shall execute and deliver such other documents and instruments,
provide such materials and information and take such other actions as may
reasonably be necessary, proper or advisable, to the extent permitted by law, to
fulfill its obligations under this Agreement and the other Transaction Documents
to which it is a party.
1.8 Payment of
Dividends.
(a) Payment of Cash Dividends on
SDI Preferred Shares. Pursuant to the SDI’s Korean
Registration Certificate attached as Exhibit A hereto, SDI
shall issue dividend payments on the SDI Preferred Shares as
follows:
(i) Four
percent (4%) of the Cash Consideration referenced in Section 1.1(b) with respect
to the fiscal year ended December 31, 2009 to be issued to NSAQ no later than
March 31, 2010; and
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(ii) Twelve
and one half (12.5%) of the Cash Consideration referenced in Section 1.1(b) with
respect to each subsequent fiscal year to be issued to NSAQ in each
instance no later than March 31 following the end of such fiscal year; provided
that no such dividends shall be required to be paid with respect to the
preceding fiscal year following conversion of the SDI Preferred Shares into
shares of SDI Common Stock pursuant to Section 1.8(b).
(b) Automatic Conversion of SDI
Preferred Shares. The SDI Preferred Shares shall automatically
convert into an equal number of shares of SDI Common Stock that maintains NSAQ’s
equivalent voting power of SDI upon the earlier to occur of the
following: (i) for the two-month period commencing November 1, 2013
and ending December 31, 2013, if the Weighted Average Stock Price (as defined
below) of the NSAQ Common Stock has increased at least twenty-four percent (24%)
above $8.00 (the “Price Condition”),
and (ii) in the event that the Price Condition has not been met by December 31,
2013, at any time following such date when the Weighted Average Stock Price
exceeds the calculated rate of six percent (6%) multiplied by the number of
years elapsed from the Closing Date, as determined during the period commencing
on November 1 and ending on December 31 for each such year (the “Post-2013 Price
Condition”). For the avoidance of doubt, there shall be no
dividend payment on the SDI Preferred Shares with respect to fiscal year 2013 in
the event that the Price Condition is met or any subsequent fiscal year if the
Post-2013 Price Condition is met. “Weighted Average Stock
Price” as used herein refers to the number of shares traded per day
multiplied by the closing price of the stock per day, divided by the total
volume of shares of NSAQ Common Stock traded during each day during the
period.
(c) Dividend Default
Payment. In the event of the non-payment or delay in payment
of any dividends on the SDI Preferred Shares pursuant to the terms of this
Agreement, an interest rate of sixteen percent (16%) per annum shall apply to
the unpaid amount from the first day following the scheduled payment date of the
applicable dividend until the actual payment date of such dividend.
(d) Payment of Dividends to NSAQ
Common Stockholders. Following the Closing, NSAQ, SDI and
Stockholder shall cause NSAQ to issue cash dividends to its holders of NSAQ
Common Stock in an amount equal to (i) the amount of the dividends received on
the SDI Preferred Shares divided by (ii) the number of issued and outstanding
shares of NSAQ Common Stock less the number of shares of NSAQ Common Stock owned
by Stockholder as a result of the Share Exchange, provided that such amount is
legally available therefor for the payment of such dividends. Such
dividend payments shall be made no later than the tenth (10th)
calendar day following NSAQ’s receipt of the dividend payment on its SDI
Preferred Shares.
(e) Waiver of Dividends by
Stockholder. Stockholder hereby agrees that it shall waive its
rights to any such dividends payable with respect to the NSAQ Shares pursuant to
this Section 1.8; provided, however, that Stockholder shall participate in any
dividend payments on shares of NSAQ Common Stock that are not acquired pursuant
to the Share Exchange.
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(f) Pledge of SSME Shares as
Collateral. In order to secure the payment to NSAQ of the
dividends on the SDI Preferred Shares, Pledgor shall pledge to NSAQ all of his
rights, title and interest in 280,000 common shares of Sungdong Shipbuilding
& Marine Engineering Co., Ltd. (“SSME”) owned by
Pledgor (the “SSME
Pledged Shares”) to NSAQ pursuant to the Pledge Agreement attached as
Exhibit C
hereto. At Closing, Pledgor shall deliver the certificates
representing the SSME Pledged Shares, together with any other documentation
assigning such rights to such shares, to NSAQ, to be held in escrow by a
collateral agent in accordance with the terms of the Pledge
Agreement. In the event that SDI defaults on its obligation to pay
any of the dividends on the SDI Preferred Shares and such dividends continue to
be unpaid for a period of sixty (60) days following the applicable payment date,
NSAQ shall be entitled to take full possession of the SSME Pledged Shares and
liquidate the SSME Pledged Shares, or any part thereof, and take possession of
the proceeds of any such sale, assignment or liquidation in satisfaction of the
obligation to pay the dividends on the SDI Preferred Shares as more fully
described in the Pledge Agreement.
ARTICLE
II
REPRESENTATIONS AND
WARRANTIES OF STOCKHOLDER AND SDI
Subject
to the exceptions set forth in the Schedules described in this Article 2 and
attached hereto (collectively, the “SDI Schedules”),
Stockholder and SDI, jointly and separately, hereby represent and warrant to
NSAQ as follows:
2.1 Organization and
Qualification of SDI. SDI is a corporation duly incorporated,
validly existing and in good standing under the laws of the Republic of Korea
and has the requisite corporate power and authority to own, lease and operate
its assets and properties and to carry on its business as it is now being or
currently planned by SDI to be conducted. SDI is in possession of all
franchises, grants, authorizations, licenses, permits, easements, consents,
certificates, approvals and orders (“Approvals”) necessary
to own, lease and operate the properties it purports to own, operate or lease
and to carry on its business as it is now being conducted, except where the
failure to have such Approvals would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect (as defined below in
Section 9.2(a)) on SDI. Complete and correct copies of the articles
of incorporation (collectively referred to herein as “Charter Documents”)
of SDI, as amended and currently in effect, have been heretofore made available
to NSAQ or NSAQ’s counsel. SDI is not in violation of any of the
provisions of its Charter Documents.
2.2 Subsidiaries.
(a) SDI
has no subsidiaries or participations in joint ventures or other entities
(collectively, “Subsidiaries”), other
than those listed in Schedule 2.2
hereto. SDI owns all of the outstanding equity securities of its
Subsidiaries, free and clear of all Liens, except for those listed on Schedule
2.2. Except for its Subsidiaries, SDI does not own any ownership,
equity, profits or voting interest in any Person or has any agreement or
commitment to purchase any such interest, and has not agreed and is not
obligated to make nor is bound by any written, oral or other agreement,
contract, subcontract, lease, binding understanding, instrument, note, option,
warranty, purchase order, license, sublicense, insurance policy, benefit plan,
commitment or undertaking of any nature, as of the date hereof or as may
hereafter be in effect under which it may become obligated to make, any future
investment in or capital contribution to any other entity.
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(b) Each
Subsidiary of SDI that is a corporation is duly incorporated, validly existing
and in good standing under the laws of its state or country of incorporation (as
listed in Schedule
2.2 hereto) and has the requisite corporate power and authority to own,
lease and operate its assets and properties and to carry on its business as it
is now being or currently planned by SDI to be conducted. Each
Subsidiary of SDI that is a limited liability company is duly organized or
formed, validly existing and in good standing under the laws of its state or
country of organization or formation (as listed in Schedule 2.2 hereto)
and has the requisite power and authority to own, lease and operate its assets
and properties and to carry on its business as it is now being or currently
planned by SDI to be conducted. Each Subsidiary of SDI is in
possession of all Approvals necessary to own, lease and operate the properties
it purports to own, operate or lease and to carry on its business as it is now
being or currently planned by SDI to be conducted, except where the failure to
have such Approvals would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on SDI. No Subsidiary of
SDI is in violation of any of the provisions of its Charter
Documents.
2.3 Capitalization.
(a) As
of the date of this Agreement, the authorized capital stock of SDI consists of
(i) 40,000 shares of common stock, par value KRW10,000 per share, of which
20,000 shares are issued and outstanding as of the date of this Agreement and
all of which are validly issued, fully paid and nonassessable, and (ii) no
shares of preferred stock, Other than SDI Common Stock , SDI has no class or
series of securities authorized by its Charter Documents. Stockholder
is the owner of 11,000 shares of SDI Common Stock.
(b) As
of the date of this Agreement, no shares of SDI Common Stock are reserved for
issuance upon the exercise of outstanding options granted to employees of SDI or
other parties (“SDI
Common Stock Options”). No shares of SDI Common Stock are
reserved for issuance upon the exercise of outstanding warrants or other rights
to purchase SDI Common Stock. All shares of SDI Common
Stock subject to issuance as aforesaid, upon issuance on the terms and
conditions specified in the instrument pursuant to which they are issuable, will
be duly authorized, validly issued, fully paid and nonassessable. All
outstanding shares of SDI Common Stock have been issued and granted in
compliance with all applicable securities laws and (in all material respects)
other applicable laws and regulations.
(c) There
are no subscriptions, options, warrants, equity securities, partnership
interests or similar ownership interests, calls, rights (including preemptive
rights), commitments or agreements of any character to which SDI is a party or
by which it is bound obligating SDI to issue, deliver or sell, or cause to be
issued, delivered or sold, or repurchase, redeem or otherwise acquire, or cause
the repurchase, redemption or acquisition of, any shares of capital stock,
partnership interests or similar ownership interests of SDI, or obligating SDI
to grant, extend, accelerate the vesting of or enter into any such subscription,
option, warrant, equity security, call, right, commitment or
agreement.
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(d) Except
as contemplated by this Agreement, there are no registration rights, and there
is no voting trust, proxy, rights plan, anti-takeover plan or other agreement or
understanding to which SDI is a party or by which SDI is bound with respect to
any equity security of any class of SDI.
(e) No
outstanding shares of SDI Common Stock are unvested or subject to a repurchase
option, risk of forfeiture or other condition under any applicable agreement
with SDI.
(f) The
SDI Preferred Shares to be issued by SDI in connection with the SDI Preferred
Stock Purchase, upon issuance in accordance with the terms of this Agreement,
will be duly authorized and validly issued and such shares of SDI Preferred
Stock will be fully paid and nonassessable.
2.4 Authority Relative to this
Agreement. SDI has all necessary corporate power and authority
to: (i) execute and deliver this Agreement and each ancillary
document that SDI is to execute or deliver pursuant to this Agreement, and (ii)
carry out SDI’s obligations hereunder and thereunder and, to consummate the
transactions contemplated hereby and thereby (including the SDI Preferred Stock
Purchase and the Share Exchange). The execution and delivery of this
Agreement by SDI and the consummation by SDI of the transactions contemplated
hereby (including the SDI Preferred Stock Purchase and the Share Exchange) have
been duly and validly authorized by all necessary corporate action on the part
of SDI (including the approval by its board of directors). No other
corporate proceedings on the part of SDI are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby pursuant to the
Commercial Acts of the Republic of Korea and the terms and conditions of this
Agreement. This Agreement has been duly and validly executed and
delivered by SDI and, assuming the due authorization, execution and delivery
thereof by the other Parties hereto, constitutes the legal and binding
obligation of SDI, enforceable against SDI in accordance with its terms, except
as may be limited by bankruptcy, insolvency, reorganization or other similar
laws affecting the enforcement of creditors’ rights generally and by general
principles of equity.
2.5 No Conflict; Required
Filings and Consents.
(a) The
execution and delivery of this Agreement by SDI does not, and the performance of
this Agreement by SDI shall not, (i) conflict with or violate SDI’s Charter
Documents, (ii) conflict with or violate any Legal Requirements (as defined in
Section 9.2(b)), (iii) result in any breach of or constitute a default (or an
event that with notice or lapse of time or both would become a default) under,
or materially impair SDI’s or any Subsidiary of SDI’s rights or alter the rights
or obligations of any third party under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a Lien or encumbrance on any of the properties or assets of SDI or
any Subsidiary of SDI pursuant to, any of SDI Contracts or (iv) result in the
triggering, acceleration or increase of any payment to any Person pursuant to
any material contract, including any “change in control” or similar provision of
any material contract, except, with respect to clauses (ii), (iii) or (iv), for
any such conflicts, violations, breaches, defaults, triggerings, accelerations,
increases or other occurrences that would not, individually and in the
aggregate, have a Material Adverse Effect on SDI.
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(b) The
execution and delivery of this Agreement by SDI does not, and the performance of
its obligations hereunder will not, require any consent, approval, authorization
or permit of, or filing with or notification to, any Governmental Entity (as defined below in Section 9.2(g))
or other third party (including, without limitation, lenders and
lessors), except (i) for applicable requirements, if any, of the
Securities Act of 1933, as amended (the “Securities Act”), the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), or
United States state securities laws, and the rules and regulations thereunder,
and appropriate documents received from or filed with the relevant authorities
of other jurisdictions in which SDI is licensed or qualified to do business,
(ii) for the filing of any notifications required under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act of 1976, as amended (the “HSR Act”), and the
expiration of the required waiting period thereunder, (iii) the consents,
approvals, authorizations and permits described in Schedule 2.5(b)
hereto, and (iv) where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on SDI or, after the Closing, NSAQ or prevent consummation of the
SDI Preferred Stock Purchase or Share Exchange or otherwise prevent the Parties
hereto from performing their obligations under this Agreement.
2.6 Compliance. SDI
has complied with and is not in violation of any Legal Requirements with respect
to the conduct of its business, or the ownership or operation of its business,
except for failures to comply or violations that, individually or in the
aggregate, have not had and are not reasonably likely to have a Material Adverse
Effect on SDI. SDI is not in default or violation of any term,
condition or provision of any applicable Charter Documents. No written notice of
material non-compliance with any Legal Requirements material to the business of
SDI has been received by SDI (and SDI has no knowledge of any such notice
delivered to any other Person) within the past two years. SDI is not
in violation of any term of any material contract, except for failures to comply
or violations that, individually or in the aggregate, have not had and are not
reasonably likely to have a Material Adverse Effect on SDI.
2.7 Financial Statements;
Projections.
(a) SDI
has made available to NSAQ true and complete copies of the unaudited
consolidated financial statements
(including any related notes thereto) of SDI and its consolidated Subsidiaries
for the quarter and the six months ended June 30,
2009 and the audited consolidated financial statements (including any
related notes thereto) of SDI and its consolidated Subsidiaries for the fiscal
years ended December 31, 2008, 2007, and 2006.
(b) SDI
has made available to NSAQ true and complete copies of the unaudited
consolidated financial statements
(including any related notes thereto) of SSME for the six months ended June 30, 2009 and the
audited consolidated financial statements (including any related notes thereto)
of SSME for the fiscal years ended December 31, 2008 and 2007.
(c) “Unaudited Financial
Statements” as used herein refers to the unaudited financial statements
of SDI and SSME. “Audited Financial
Statements” as used herein refers to the audited financial statements of
SDI and SSME. “Financial Statements”
as used herein refers to all of the financial statements of SDI and SSME, which
includes the Audited Financial Statements and the Unaudited Financial
Statements.
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(d) The
Financial Statements comply as to form in all material respects with generally
accepted accounting principles in the United States (“U.S. GAAP”) applied
on a consistent basis throughout the periods involved, and were prepared in
accordance with U.S. GAAP, and fairly present in all material respects the
financial position of SDI and SSME at the date thereof and the results of their
operations and cash flows for the period indicated.
(e) The
books of account, minute books and transfer ledgers and other similar books and
records of SDI and its Subsidiaries have been maintained in accordance with good
business practice, are complete and correct in all material respects and there
have been no material transactions that are required to be set forth therein and
that have not been so set forth.
(f) Except
as otherwise noted in the Financial Statements, the accounts and notes
receivable of SDI and its Subsidiaries reflected in the Financial Statements:
(i) arose from bona fide sales transactions in the ordinary course of business
and are payable on ordinary trade terms, (ii) are legal, valid and binding
obligations of the respective debtors enforceable in accordance with their
terms, except as such may be limited by bankruptcy, insolvency, reorganization,
or other similar laws affecting creditors’ rights generally, and by general
equitable principles, (iii) are not subject to any valid set-off or counterclaim
to which SDI has been notified in writing as of the date hereof except to the
extent set forth in such balance sheet contained therein, and (iv) are not the
subject of any actions or proceedings brought by or on behalf of SDI or any of
its Subsidiaries as of the date hereof.
(g) The
projections of the financial performance of SDI and SSME that have been provided
to NSAQ (the “Projections”) and
were prepared on the basis of reasonable assumptions, including information
about the projects with which SDI and the Subsidiaries are currently involved.
The Projections were prepared by RSM based on management projections
provided by SDI and SSME in accordance with U.S. GAAP applied on a consistent
basis throughout the periods covered. Neither the Stockholder nor SDI
has any knowledge of facts that would make the Projections materially in
error.
2.8 No Undisclosed
Liabilities. SDI and its Subsidiaries have no liabilities
(absolute, accrued, contingent or otherwise) of a nature required in accordance
with U.S. GAAP to be disclosed on a balance sheet or in the related notes to
financial statements that are, individually or in the aggregate, material to the
business, results of operations or financial condition of SDI and its
Subsidiaries on a consolidated basis, except: (i) liabilities provided for in or
otherwise disclosed in the interim balance sheet and related notes to financial
statements included in the Financial Statements, (ii) such liabilities arising
in the ordinary course of SDI’s and its Subsidiaries’ businesses since June 30,
2009, none of which would reasonably be expected to have a Material Adverse
Effect on SDI and Subsidiaries, and (iii) liabilities or obligations reasonably
incurred by or on behalf of SDI in connection with this Agreement, none of
which, individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect on SDI.
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2.9 Absence of Certain Changes
or Events. Except as set forth in the Financial Statements,
since June 30, 2009, there has not been: (i) any Material Adverse
Effect on SDI, (ii) any declaration, setting aside or payment of any dividend
on, or other distribution (whether in cash, stock or property) in respect of,
any of the shares of SDI Common Stock, or any purchase, redemption or other
acquisition by SDI of any of the shares of SDI Common Stock or any other
securities or any options, warrants, calls or rights to acquire any such shares
or other securities, (iii) any split, combination or reclassification of any of
the shares of SDI Common Stock, (iv) any granting by SDI of any increase in
compensation or fringe benefits, except for normal increases of cash
compensation in the ordinary course of business consistent with past practice,
or any payment by SDI of any bonus, except for bonuses made in the ordinary
course of business consistent with past practice, or any granting by SDI of any
increase in severance or termination pay or any entry by SDI into any currently
effective employment, severance, termination or indemnification agreement or any
agreement the benefits of which are contingent or the terms of which are
materially altered upon the occurrence of a transaction involving SDI of the
nature contemplated hereby, (v) entry by SDI into any licensing or other
agreement with regard to the acquisition or disposition of any Intellectual
Property (as defined in Section 9.2(h) hereof) other than
licenses in the ordinary course of business consistent with past practice or any
amendment or consent with respect to any licensing agreement filed or required
to be filed by SDI with respect to any Governmental Entity, (vi) any material
change by SDI in its accounting methods, principles or practices, except as
required by concurrent changes in U.S. GAAP, (vii) any change in the auditors of
SDI, (viii) any issuance of capital stock of SDI, (ix) any revaluation by SDI of
any of its assets, including, without limitation, writing down the value of
capitalized inventory or writing off notes or accounts receivable or any sale of
assets of SDI other than in the ordinary course of business, or (x) any
agreement, whether written or oral, to do any of the foregoing.
2.10 Litigation. Except
as disclosed in the Financial Statements, there are no material claims, suits,
actions or proceedings pending or, to the knowledge of SDI, threatened against
SDI or any of its Subsidiaries before any court, governmental department,
commission, agency, instrumentality or authority, or any
arbitrator.
2.11 Business
Activities. To SDI’s knowledge, there is no agreement,
commitment, judgment, injunction, order or decree binding upon SDI or any
Subsidiary of SDI or their assets or to which SDI or any Subsidiary of SDI is a
party that has or could reasonably be expected to have the effect of prohibiting
or materially impairing any business practice of SDI or any Subsidiary of SDI,
any acquisition of property by SDI or any Subsidiary of SDI or the conduct of
business by SDI or any Subsidiary of SDI as currently conducted other than such
effects, individually or in the aggregate, which have not had and would not
reasonably be expected to have a Material Adverse Effect on SDI.
2.12 Taxes.
(a) Definition of
Taxes. For the purposes of this Agreement, “Tax” or “Taxes” refers to any
and all United States federal, state, local and foreign taxes (including taxes
in the Republic of Korea), including, without limitation, gross receipts,
income, profits, sales, use, occupation, value added, ad valorem, transfer,
franchise, withholding, payroll, recapture, employment, excise and property
taxes, assessments, governmental charges and duties together with all interest,
penalties and additions imposed with respect to any such amounts and any
obligations under any agreements or arrangements with any other Person with
respect to any such amounts and including any liability of a predecessor entity
for any such amounts.
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(b) Tax Returns and
Audits. SDI and each Subsidiary have filed on a timely basis
(taking into account any extensions received from the relevant taxing
authorities) all returns and reports pertaining to all Taxes that are or were
required to be filed by SDI and each Subsidiary with the appropriate taxing
authorities in all jurisdictions in which such returns and reports are or were
required to be filed, and all such returns and reports are true, correct and
complete in all material respects. All Taxes that are due from or may be
asserted against SDI or any Subsidiary (including deferred Taxes) in respect of
or attributable to all periods ending on or before the Closing Date have been or
will be fully paid, deposited or adequately provided for on the books and
financial statements of SDI or are being contested in good faith by appropriate
proceedings. No issues have been raised (or are currently pending) by any taxing
authority in connection with any of the returns and reports referred to above
that might be determined to have a Material Adverse Effect on SDI or any
Subsidiary. Neither SDI nor any Subsidiary has given or been requested to give
waivers or extensions of any statute of limitations with respect to the payment
of Taxes. There are no tax liens affecting SDI, any Subsidiary or their
respective assets that have not been satisfied or discharged by payment or
concession by the relevant taxing authority.
2.13 Brokers; Third Party
Expenses. SDI has not incurred, nor will it incur, directly or
indirectly, any liability for brokerage, finders’ fees, agent’s commissions or
any similar charges in connection with this Agreement or any transactions
contemplated hereby.
2.14 Governmental
Actions/Filings.
(a) SDI
and each Subsidiary of SDI has been granted and holds, and has made, all
Governmental Actions/Filings (as defined below) necessary to the conduct by SDI
and each Subsidiary of SDI of its business (as presently
conducted). Each such Governmental Action/Filing is in full force and
effect and will not expire prior to December 31, 2009 (except to the extent such
expiration would not reasonably be expected to have a Material Adverse Effect on
SDI) and to SDI’s knowledge, SDI is in substantial compliance with all of its
obligations with respect thereto. To SDI’s knowledge, no event has
occurred and is continuing that requires or permits, or after notice or lapse of
time or both would require or permit, and consummation of the transactions
contemplated by this Agreement or any ancillary documents will not require or
permit (with or without notice or lapse of time, or both), any modification or
termination of any such Governmental Actions/Filings except such events that,
either individually or in the aggregate, would not have a Material Adverse
Effect upon SDI.
(b) No
Governmental Action/Filing is necessary to be obtained, secured or made by SDI
to enable it to continue to conduct its businesses and operations and use its
properties immediately after the Closing in a manner which is consistent with
current practice.
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(c) For
purposes of this Agreement, the term “Governmental
Action/Filing” shall mean any franchise, license, certificate of
compliance, authorization, consent, order, permit, approval, consent or other
action of, or any filing, registration or qualification with, any United States
federal, state, municipal, foreign (included those in the Republic of Korea) or
other governmental, administrative or judicial body, agency or
authority.
2.15 Interested Party
Transactions. Except as expressly stated in the Financial
Statements, no employee, officer, director, shareholder or holder of derivative
securities of SDI or a member of his or her immediate family (collectively, the
“Company
Insiders”) is indebted to SDI, nor is SDI indebted (or committed to make
loans or extend or guarantee credit) to any of such Persons, other than (i) for
payment of salary for services rendered, (ii) reimbursement for reasonable
expenses incurred on behalf of SDI, and (iii) for other employee benefits made
generally available to all employees. To SDI’s knowledge, none of
such individuals has any ownership interest in any Person with whom SDI is
affiliated or with whom SDI has a contractual relationship, or in any Person
that competes with SDI. To the knowledge of SDI, no Company Insider
or any member of a Company Insider’s immediate family is interested in any
material contract with SDI that is adverse to SDI (other than such contracts as
relate to any such Person’s ownership of capital stock or other securities of
SDI or such Person’s employment with SDI).
2.16 No Illegal or Improper
Transactions. Neither SDI nor any Subsidiary nor any other
officer, director, employee, agent or Affiliate of SDI or any Subsidiary has
offered, paid or agreed to pay to any Person or entity (including any
governmental official) or solicited, received or agreed to receive from any such
Person or entity, directly or indirectly, in any manner that is in violation of
any applicable policy of SDI or any Subsidiary, ordinance, regulation or law,
any money or anything of value for the purpose or with the intent of (i)
obtaining or maintaining business for SDI or any Subsidiary, (ii) facilitating
the purchase or sale of any product or service, or (iii) avoiding the imposition
of any fine or penalty.
2.17 Board
Approval. The board of directors of SDI (including any
required committee or subgroup thereof) has, as of the date of this Agreement,
duly approved this Agreement and the transactions contemplated
hereby.
2.18 Stockholder
Matters.
(i) Stockholder
has had both the opportunity to ask questions and receive answers from the
officers and directors of NSAQ and all persons acting on NSAQ’s behalf
concerning the business and operations of NSAQ and to obtain any additional
information to the extent NSAQ possesses or may possess such information or can
acquire it without unreasonable effort or expense necessary to verify the
accuracy of such information;
(ii) Stockholder
has had access to the NSAQ SEC Reports (as defined below in Section 3.7(a))
filed prior to the date of this Agreement;
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(iii) This
Agreement has been duly and validly executed and delivered by Stockholder and,
assuming the due authorization, execution and delivery thereof by the other
Parties hereto, constitutes the legal and binding obligation of Stockholder,
enforceable against Stockholder in accordance with its terms, except as may be
limited by bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors’ rights generally and by general
principles of equity. The execution and delivery of this Agreement by
Stockholder does not, and the performance of its obligations hereunder will not,
require any consent, approval, authorization or permit of, or filing with or
notification to, any Governmental Entity,
except (1) for applicable requirements, if any, of the Securities Act, the
Exchange Act and the rules and regulations thereunder, and (2) where the failure
to obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Stockholder or SDI
or, after the Closing, NSAQ, or prevent consummation of the SDI Preferred Stock
Purchase or the Share Exchange or otherwise prevent the Parties hereto from
performing their material obligations under this Agreement; and
(iv) Stockholder
owns the SDI Common Shares free and clear of all Liens.
(v)
The NSAQ Shares to be acquired by Stockholder will be
acquired for investment for such Stockholder’s own account and not with a view
to the resale or distribution of any part thereof.
(vi) Stockholder
is (i) an “accredited investor” within the meaning of Rule 501 of Regulation D
under the Securities Act and (ii) does not qualify as a “U.S. Person” as defined
in Regulation S under the Securities Act.
(vii) Stockholder
understands that it will acquire “restricted securities” from NSAQ under the
United States federal securities laws and that under such laws and applicable
regulations such securities may only be sold in the United States pursuant to an
effective registration statement or an available exemption from
registration.
(viii) Stockholder
acknowledges that the certificate evidencing the NSAQ Common Stock shall bear
the following legend:
“THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”). THE SECURITIES REPRESENTED
HEREBY MAY NOT BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN OPINION OF COUNSEL,
REASONABLY ACCEPTABLE TO COUNSEL FOR THE COMPANY, TO THE EFFECT THAT THE
PROPOSED SALE, TRANSFER, OR DISPOSITION MAY BE EFFECTUATED WITHOUT REGISTRATION
UNDER THE ACT.”
2.19 Disclosure. No
representation or warranty by Stockholder, SDI or any Subsidiary contained in
this Agreement and no information contained in any Schedule or other instrument
furnished or to be furnished to NSAQ pursuant to this Agreement or in connection
with the transactions contemplated hereby contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary in order to make the statements contained therein not
misleading.
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2.20 Survival of Representations
and Warranties. The representations and warranties of SDI and
Stockholder set forth in this Agreement shall survive the Closing until, and
shall terminate and be of no further force or effect on, the Escrow Release
Date.
ARTICLE
III
REPRESENTATIONS AND
WARRANTIES OF NSAQ
Subject
to the exceptions set forth in the Schedules described in this Article 3 and
attached hereto (collectively, the “NSAQ Schedules”),
NSAQ represents and warrants to, and covenants with, SDI and Stockholder, as
follows:
3.1 Organization and
Qualification.
(a) NSAQ
is a corporation duly incorporated, validly existing and in good standing under
the laws of the State of Delaware and has the requisite corporate power and
authority to own, lease and operate its assets and properties and to carry on
its business as it is now being or currently planned to be
conducted. NSAQ is in possession of all Approvals necessary to own,
lease and operate the properties it purports to own, operate or lease and to
carry on its business as it is now being conducted by NSAQ, except where the
failure to have such Approvals could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on
NSAQ. Complete and correct copies of NSAQ’s Charter Documents, as
amended and currently in effect, have been heretofore made available to
SDI. NSAQ is not in violation of any of the provisions of its Charter
Documents.
(b) NSAQ
is duly qualified or licensed to do business as a foreign corporation and is in
good standing in each jurisdiction where the character of the properties owned,
leased or operated by it or the nature of its activities makes such
qualification or licensing necessary, except for such failures to be so duly
qualified or licensed and in good standing that could not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect on
NSAQ.
3.2 Subsidiaries.
(a) NSAQ
has no direct or indirect Subsidiaries. NSAQ does not own, directly
or indirectly, any ownership, equity, profits or voting interest in any Person,
nor does it have any agreement or commitment to purchase any such interest, and
has not agreed and is not obligated to make nor is bound by any written, oral or
other agreement, contract, subcontract, lease, binding understanding,
instrument, note, option, warranty, purchase order, license, sublicense,
insurance policy, benefit plan, commitment or undertaking of any nature, as of
the date hereof or as may hereafter be in effect under which it may become
obligated to make, any future investment in or capital contribution to any other
entity.
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3.3 Capitalization.
(a) As
of the date of this Agreement, the authorized capital stock of NSAQ consists of
20,000,000 shares of NSAQ Common Stock and
1,000,000 shares of preferred stock, par value $.0001 per share (“NSAQ Preferred
Stock”), of which 7,941,250 shares of NSAQ Common Stock are issued and
outstanding, all of which are validly issued, fully paid and nonassessable, and
no shares of NSAQ Preferred Stock are issued and outstanding. Other than the
NSAQ Common Stock and NSAQ Preferred Stock, NSAQ has no class or series of
securities authorized by its Charter Documents. The NSAQ Common Stock
and NSAQ Preferred Stock are collectively referred to herein as the “NSAQ
Stock.”
(b) No
shares of NSAQ Stock are reserved for issuance upon the exercise of outstanding
options granted to employees of NSAQ or other parties (“NSAQ Stock
Options”). Except for 7,953,000 warrants to purchase NSAQ
Common Stock and the underwriter unit purchase option, as disclosed in the NSAQ
SEC Reports, as of the date of this Agreement, no shares of the NSAQ Stock are
reserved for issuance upon the exercise of outstanding warrants or other rights
to purchase NSAQ Stock.
All shares of the NSAQ Stock subject to issuance as aforesaid, upon issuance on
the terms and conditions specified in the instrument pursuant to which they are
issuable, will be duly authorized, validly issued, fully paid and nonassessable.
All outstanding shares of NSAQ Stock have been issued and granted in compliance
with all applicable securities laws and (in all material respects) other
applicable laws and regulations.
(c) The
NSAQ Shares to be issued by NSAQ in connection with the Share Exchange, upon
issuance in accordance with the terms of this Agreement, will be duly authorized
and validly issued and such shares of NSAQ Common Stock will be fully paid and
nonassessable.
(d) Except
for 7,953,000 warrants to purchase NSAQ Common Stock and the underwriter unit
purchase option, as disclosed in the NSAQ SEC Reports, there are no
subscriptions, options, warrants, equity securities, partnership interests or
similar ownership interests, calls, rights (including preemptive rights),
commitments or agreements of any character to which NSAQ is a party or by which
it is bound obligating the NSAQ to issue, deliver or sell, or cause to be
issued, delivered or sold, or repurchase, redeem or otherwise acquire, or cause
the repurchase, redemption or acquisition of, any shares of capital stock,
partnership interests or similar ownership interests of NSAQ or obligating NSAQ
to grant, extend, accelerate the vesting of or enter into any such subscription,
option, warrant, equity security, call, right, commitment or
agreement.
(e) Except
as set forth in the NSAQ SEC Reports, there are no registration rights, and
there is no voting trust, proxy, rights plan, anti-takeover plan or other
agreements or understandings to which the NSAQ is a party or by which the NSAQ
is bound with respect to any equity security of any class of the
NSAQ.
(f) No
outstanding shares of NSAQ Common Stock are unvested or subject to a repurchase
option, risk of forfeiture or other condition under any applicable agreement
with NSAQ.
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3.4 Authority Relative to this
Agreement. NSAQ has all necessary corporate power and
authority to: (i) execute and deliver this Agreement, and each
ancillary document that NSAQ is to execute or deliver pursuant to this
Agreement, and (ii) carry out NSAQ’s obligations hereunder and thereunder and,
to consummate the transactions contemplated hereby (including the SDI Preferred
Stock Purchase and the Share Exchange). The execution and delivery of
this Agreement and the consummation by NSAQ of the transactions contemplated
hereby (including the SDI Preferred Stock Purchase and the Share Exchange) have
been duly and validly authorized by all necessary corporate action on the part
of NSAQ (including the approval by its board of directors), and no other
corporate proceedings on the part of NSAQ are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby, other than the
NSAQ Stockholder Approval (as defined in Section 5.1(a)). This
Agreement has been duly and validly executed and delivered by NSAQ and, assuming
the due authorization, execution and delivery thereof by the other Parties
hereto, constitutes the legal and binding obligation of NSAQ, enforceable
against NSAQ in accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization or other similar laws affecting the
enforcement of creditors’ rights generally and by general principles of
equity.
3.5 No Conflict; Required
Filings and Consents.
(a) The
execution and delivery of this Agreement by NSAQ do not, and the performance of
this Agreement by NSAQ shall not: (i) conflict with or violate NSAQ’s
Charter Documents, (ii) conflict with or violate any Legal Requirements, or
(iii) result in any breach of or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, or materially
impair NSAQ’s rights or alter the rights or obligations of any third party
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a Lien on any of the properties or
assets of NSAQ, except with respect to clauses (ii) or (iii), for any such
conflicts, violations, breaches, defaults or other occurrences that would not,
individually and in the aggregate, have a Material Adverse Effect on
NSAQ.
(b) The
execution and delivery of this Agreement by NSAQ does not, and the performance
of its obligations hereunder will not, require any consent, approval,
authorization or permit of, or filing with or notification to, any Governmental
Entity, except (i) for applicable requirements, if any, of the Securities Act,
the Exchange Act, Blue Sky Laws, and the rules and regulations thereunder, and
appropriate documents with the relevant authorities of other jurisdictions in
which NSAQ is qualified to do business, (ii) for the filing of any notifications
required under the HSR Act and the expiration of the required waiting period
thereunder, and (iii) where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on NSAQ, or prevent consummation of the SDI Preferred Stock
Purchase or the Share Exchange or otherwise prevent the Parties hereto from
performing their obligations under this Agreement.
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3.6 Compliance. NSAQ
has complied with and is not in violation of any Legal Requirements with respect
to the conduct of its business, or the ownership or operation of its business,
except for failures to comply or violations that, individually or in the
aggregate, have not had and are not reasonably likely to have a Material Adverse
Effect on NSAQ. NSAQ is not in default or violation of any term,
condition or provision of any applicable Charter Documents. No
written notice of material non-compliance with any Legal Requirements has been
received by NSAQ (and NSAQ has no knowledge of any such notice delivered to any
other Person). NSAQ is not in violation of any term of any material
contract, except for failures to comply or violations that, individually or in
the aggregate, have not had and are not reasonably likely to have a Material
Adverse Effect on NSAQ.
3.7 SEC Filings; Financial
Statements.
(a) NSAQ
has made available to SDI a correct and complete copy of each report,
registration statement and definitive proxy statement filed by NSAQ with the SEC
(the “NSAQ SEC
Reports”), which are all the forms, reports and documents required to be
filed by NSAQ with the SEC prior to the date of this Agreement. All
NSAQ SEC Reports required to be filed by NSAQ in the twenty-four (24) month
period prior to the date of this Agreement were filed in a timely
manner. As of their respective dates the NSAQ SEC Reports: (i) were
prepared in accordance and complied in all material respects with the
requirements of the Securities Act or the Exchange Act, as the case may be, and
the rules and regulations of the SEC thereunder applicable to such NSAQ SEC
Reports, and (ii) did not at the time they were filed (and if amended or
superseded by a filing prior to the date of this Agreement then on the date of
such filing and as so amended or superseded) contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. Except to the extent set forth in
the preceding sentence, NSAQ makes no representation or warranty whatsoever
concerning any NSAQ SEC Report as of any time other than the date or period with
respect to which it was filed.
(b) Each
set of financial statements (including, in each case, any related notes thereto)
contained in NSAQ SEC Reports, including each NSAQ SEC Report filed after the
date hereof until the Closing, complied or (with respect to filings after the
date hereof) will comply as to form in all material respects with the published
rules and regulations of the SEC with respect thereto, was or (with respect to
filings after the date hereof) will be prepared in accordance with U.S. GAAP
applied on a consistent basis throughout the periods involved (except as may be
indicated in the notes thereto or, in the case of unaudited statements, do not
contain footnotes as permitted by Form 10-Q of the Exchange Act) and each fairly
presents or (with respect to filings after the date hereof) will fairly present
in all material respects the financial position of NSAQ at the respective dates
thereof and the results of its operations and cash flows for the periods
indicated, except that the unaudited interim financial statements were, are or
(with respect to filings after the date hereof) will be subject to normal
adjustments that were not or are not expected to have a Material Adverse Effect
on NSAQ taken as a whole.
3.8 No Undisclosed
Liabilities. NSAQ has no liabilities (absolute, accrued,
contingent or otherwise) of a nature required to be disclosed on a balance sheet
or in the related notes to the financial statements included in NSAQ SEC Reports
that are, individually or in the aggregate, material to the business, results of
operations or financial condition of NSAQ, except (i) liabilities provided for
in or otherwise disclosed in a balance sheet or in the related notes to the
financial statements included in NSAQ SEC Reports filed prior to the date
hereof, (ii) liabilities incurred since June 30, 2009 in the ordinary course of
business, none of which would reasonably be expected to have a Material Adverse
Effect on NSAQ and (iii) liabilities or obligations reasonably incurred by or on
behalf of NSAQ in connection with this Agreement, none of which, individually or
in the aggregate, would reasonably be expected to have a Material Adverse Effect
on NSAQ.
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3.9 Absence of Certain Changes
or Events. Except as contemplated by this Agreement, since
June 30, 2009, there has not been: (i) any Material Adverse Effect on NSAQ, (ii)
any declaration, setting aside or payment of any dividend on, or other
distribution (whether in cash, stock or property) in respect of, any of NSAQ’s
capital stock, or any purchase, redemption or other acquisition by NSAQ of any
of NSAQ’s capital stock or any other securities of NSAQ or any options,
warrants, calls or rights to acquire any such shares or other securities, (iii)
any split, combination or reclassification of any of NSAQ’s capital stock, (iv)
any granting by NSAQ of any increase in compensation or fringe benefits, except
for normal increases of cash compensation in the ordinary course of business
consistent with past practice, or any payment by NSAQ of any bonus, except for
bonuses made in the ordinary course of business consistent with past practice,
or any granting by NSAQ of any increase in severance or termination pay or any
entry by NSAQ into any currently effective employment, severance, termination or
indemnification agreement or any agreement the benefits of which are contingent
or the terms of which are materially altered upon the occurrence of a
transaction involving NSAQ of the nature contemplated hereby, (v) entry by NSAQ
into any licensing or other agreement with regard to the acquisition or
disposition of any Intellectual Property other than licenses in the ordinary
course of business consistent with past practice or any amendment or consent
with respect to any licensing agreement filed or required to be filed by NSAQ
with respect to any Governmental Entity, (vi) any material change by NSAQ in its
accounting methods, principles or practices, except as required by concurrent
changes in U.S. GAAP, (vii) any change in the auditors of NSAQ, (viii) any
issuance of capital stock of NSAQ, (ix) any revaluation by NSAQ of any of its
assets, including, without limitation, writing down the value of capitalized
inventory or writing off notes or accounts receivable or any sale of assets of
NSAQ other than in the ordinary course of business or (x) any agreement, whether
written or oral, to do any of the foregoing.
3.10 Litigation. There
are no claims, suits, actions or proceedings pending or to NSAQ’s knowledge,
threatened against NSAQ, before any court, governmental department, commission,
agency, instrumentality or authority, or any arbitrator.
3.11 Business
Activities. Since its organization, NSAQ has not conducted any
business activities other than activities directed toward the accomplishment of
a business combination. Except as set forth in the NSAQ Charter
Documents, there is no agreement, commitment, judgment, injunction, order or
decree binding upon NSAQ or to which NSAQ is a party that has or could
reasonably be expected to have the effect of prohibiting or materially impairing
any business practice of NSAQ, any acquisition of property by NSAQ or the
conduct of business by NSAQ as currently conducted other than such effects,
individually or in the aggregate, that have not had and would not reasonably be
expected to have, a Material Adverse Effect on NSAQ.
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3.12 Taxes.
(a) NSAQ
has timely filed all returns required to be filed by NSAQ with any Tax authority
prior to the date hereof, except such returns that are not material to
NSAQ. All such returns are true, correct and complete in all material
respects. NSAQ has paid all Taxes shown to be due on such
returns.
(b) All
Taxes that NSAQ is required by law to withhold or collect have been duly
withheld or collected, and have been timely paid over to the proper governmental
authorities to the extent due and payable.
(c) NSAQ
has not been delinquent in the payment of any Tax that has not been accrued for
in NSAQ’s books and records of account for the period for which such Tax
relates, nor is there any Tax deficiency outstanding, proposed or assessed
against NSAQ, nor has NSAQ executed any unexpired waiver of any statute of
limitations on or extending the period for the assessment or collection of any
Tax.
(d) To
the knowledge of NSAQ, no audit or other examination of any return of NSAQ by
any Tax authority is presently in progress, nor has NSAQ been notified of any
request for such an audit or other examination.
(e) No
adjustment relating to any returns filed by NSAQ has been proposed in writing,
formally or informally, by any Tax authority to NSAQ or any representative
thereof.
(f) NSAQ
has no liability for any unpaid Taxes that have not been accrued for or reserved
on NSAQ’s balance sheets included in the audited financial statements for the
most recent fiscal year ended, whether asserted or unasserted, contingent or
otherwise, other than any liability for unpaid Taxes that may have accrued since
the end of the most recent fiscal year in connection with the operation of the
business of NSAQ in the ordinary course of business, none of which is material
to the business, results of operations or financial condition of NSAQ or, if any
such amount is material, it has been accrued on the books and records of NSAQ in
accordance with U.S. GAAP.
3.13 Interested Party
Transactions. Except as set forth in the NSAQ SEC Reports
filed prior to the date of this Agreement: (a) no employee, officer,
director or stockholder of NSAQ or a member of his or her immediate family is
indebted to NSAQ, nor is NSAQ indebted (or committed to make loans or extend or
guarantee credit) to any of them, other than reimbursement for reasonable
expenses incurred on behalf of NSAQ; (b) to NSAQ’s knowledge, none of such
individuals has any direct or indirect ownership interest in any Person with
whom NSAQ is affiliated or with whom NSAQ has a material contractual
relationship, or any Person that competes with NSAQ; and (c) to NSAQ’s
knowledge, no officer, director or stockholder or any member of their immediate
families is, directly or indirectly, interested in any material contract with
NSAQ (other than such contracts as relate to any such individual ownership of
capital stock or other securities of NSAQ).
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3.14 Board
Approval. The board of directors of NSAQ (including any
required committee or subgroup of the board of directors of NSAQ) has, as of the
date of this Agreement, by majority vote (i) declared the advisability of the
SDI Preferred Stock Purchase and the Share Exchange and approved this Agreement
and the transactions contemplated hereby, (ii) determined that the SDI Preferred
Stock Purchase and the Share Exchange are in the best interests of the
stockholders of NSAQ, and (iii) determined that the fair market value of the
portion of SDI that it is acquiring is equal to at least 80% of NSAQ’s net
assets.
3.15 Trust
Fund. As of the date hereof and at the Closing Date, NSAQ has
and will have no less than $49,715,284 invested in United States Government
securities or money market funds meeting certain conditions under Rule 2a-7
promulgated under the Investment Company Act of 1940 in a trust account
administered by Continental (the “Trust Fund”);
provided that a portion of the Trust Fund shall be utilized in accordance with
Section 5.19.
3.16 Governmental
Filings. NSAQ has been granted and holds, and has made, all
Governmental Actions/Filings necessary to the conduct by NSAQ of its business
(as presently conducted), which is true, complete and correct. Each
such Governmental Action/Filing is in full force and effect and will not expire
prior to December 31, 2009, and NSAQ is in compliance with all of its
obligations with respect thereto. No event has occurred and is
continuing that requires or permits, or after notice or lapse of time or both
would require or permit, and consummation of the transactions contemplated by
this Agreement or any ancillary documents will not require or permit (with or
without notice or lapse of time, or both), any modification or termination of
any such Governmental Actions/Filings except such events which, either
individually or in the aggregate, would not have a Material Adverse Effect upon
NSAQ.
3.17 Brokers; Third Party
Expenses. Except as set forth in Schedule 3.17 hereto,
NSAQ has not incurred, nor will it incur, directly or indirectly, any liability
for brokerage, finders’ fees, agent’s commissions or any similar charges in
connection with this Agreement or any transactions contemplated
hereby.
3.18 Disclosure. No
representation or warranty by NSAQ contained in this Agreement and no
information contained in any Schedule or other instrument furnished or to be
furnished to SDI or the Stockholder pursuant to this Agreement or in connection
with the transactions contemplated hereby contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary in order to make the statements contained therein not
misleading.
3.19 Survival of Representations
and Warranties. The representations and warranties NSAQ set
forth in this Agreement shall survive the Closing until, and shall terminate and
be of no further force or effect on, the Escrow Release Date.
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ARTICLE
IV
CONDUCT PRIOR TO THE
EFFECTIVE TIME
4.1 Conduct of Business by SDI
and NSAQ. During the period from the date of this Agreement
and continuing until the earlier of the termination of this Agreement pursuant
to its terms or the Closing, each of SDI and NSAQ shall, except to the extent
that the other Party shall otherwise consent in writing or as contemplated by
this Agreement, carry on its business in the usual, regular and ordinary course
consistent with past practices, in substantially the same manner as heretofore
conducted and in compliance with all applicable laws and regulations (except
where noncompliance would not be reasonably expected to have a Material Adverse
Effect), pay its debts and taxes when due subject to good faith disputes over
such debts or taxes, pay or perform other material obligations when due, and use
commercially reasonable efforts consistent with past practices and policies
to (i) preserve substantially intact its present business organization, (ii)
keep available the services of its present key officers and key employees and
(iii) preserve its relationships with customers, suppliers, distributors,
licensors, licensees, and others with which it has significant business
dealings. In addition, except as required by the terms of this
Agreement, without the prior written consent of the other Party, during the
period from the date of this Agreement and continuing until the earlier of the
termination of this Agreement pursuant to its terms or the Closing, each of SDI
and NSAQ shall not do any of the following:
(a) waive
any stock repurchase rights, accelerate, amend or (except as specifically
provided for herein) change the period of exercisability of options or
restricted stock, or reprice options granted under any employee, consultant,
director or other stock plans or authorize cash payments in exchange for any
options granted under any of such plans;
(b) grant
any severance or termination pay to (i) any officer or (ii) any employee, except
with respect to SDI or any of its Subsidiaries, pursuant to applicable law, the
existing terms of written agreements outstanding, or policies existing on the
date hereof and as previously or concurrently disclosed in writing or made
available to the other Party, or adopt any new severance plan, or amend or
modify or alter in any manner any severance plan, agreement or arrangement
existing on the date hereof;
(c) transfer
or license to any person or otherwise extend, amend or modify any material
rights to any Intellectual Property of SDI, any Subsidiary of SDI or NSAQ, as
applicable, or enter into grants to transfer or license to any person future
patent rights, other than, with respect to SDI or any Subsidiary of SDI in the
ordinary course of business consistent with past practices provided that in no
event shall SDI, any Subsidiary of SDI or NSAQ license on an exclusive basis or
sell any Intellectual Property of SDI, any Subsidiary of SDI or NSAQ as
applicable;
(d) declare,
set aside or pay any dividends on or make any other distributions (whether in
cash, stock, equity securities or property) in respect of any capital stock, or
split, combine or reclassify any capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for any capital stock;
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(e) except
as permitted by Section 5.20, purchase, redeem or otherwise acquire, directly or
indirectly, any shares of capital stock or other equity securities or ownership
interests of SDI and NSAQ, as applicable;
(f) issue,
deliver, sell, authorize, pledge or otherwise encumber, or agree to any of the
foregoing with respect to, any shares of capital stock or other equity
securities or ownership interests or any securities convertible into or
exchangeable for shares of capital stock or other equity securities or ownership
interests, or subscriptions, rights, warrants or options to acquire any shares
of capital stock or other equity securities or ownership interests or any
securities convertible into or exchangeable for shares of capital stock or other
equity securities or other ownership interests, or enter into other agreements
or commitments of any character obligating it to issue any such shares, equity
securities or other ownership interests or convertible or exchangeable
securities;
(g) except
to comply with the terms of this Agreement and to the extent necessary to become
a subsidiary of NSAQ, amend its Charter Documents;
(h) acquire
or agree to acquire by merging or consolidating with, or by purchasing any
equity interest in or a portion of the assets of, or by any other manner, any
business or any corporation, partnership, association or other business
organization or division thereof, or otherwise acquire or agree to acquire any
assets, in the case of SDI, which are material, individually or in the
aggregate, to the business of SDI or enter into any joint ventures, strategic
partnerships or alliances or other arrangements that provide for exclusivity of
territory or otherwise restrict such Party’s ability to compete or to offer or
sell any products or services;
(i) sell,
lease, license, encumber or otherwise dispose of any properties or assets,
except with respect to SDI and its Subsidiaries, (A) sales of inventory in the
ordinary course of business consistent with past practice, and (B) the sale,
lease or disposition (other than through licensing) of property or assets that
are not material, individually or in the aggregate, to the business of SDI and
its Subsidiaries, taken as a whole;
(j) incur
any indebtedness for borrowed money (other than, with respect to SDI and its
Subsidiaries, under its existing credit facilities as may be required for
working capital needs in the ordinary course of business and, with respect to
NSAQ, as permitted pursuant to Section 5.18) or guarantee any such indebtedness
of another Person or Persons, issue or sell any debt securities or options,
warrants, calls or other rights to acquire any debt securities of NSAQ or SDI or
any Subsidiary of SDI, as applicable, enter into any “keep well” or other
agreement to maintain any financial statement condition or enter into any
arrangement having the economic effect of any of the foregoing;
(k) pay,
discharge, settle or satisfy any claims, liabilities or obligations (absolute,
accrued, asserted or unasserted, contingent or otherwise), or litigation
(whether or not commenced prior to the date of this Agreement) other than the
payment, discharge, settlement or satisfaction, in the ordinary course of
business consistent with past practices or in accordance with their terms, or
liabilities recognized or disclosed in the most recent financial statements
included in the NSAQ SEC Reports filed prior to the date of this Agreement or
SDI’s Unaudited Financial Statements, as applicable, or incurred since the date
of such financial statements, or waive the benefits of, agree to modify in any
manner, terminate, release any person from or knowingly fail to enforce any
confidentiality or similar agreement to which SDI or any Subsidiary of SDI is a
party or of which SDI or any Subsidiary of SDI is a beneficiary or to which NSAQ
is a party or of which NSAQ is a beneficiary, as applicable;
23
(l) except
in the ordinary course of business consistent with past practices, modify, amend
or terminate any material contract, as applicable, or waive, delay the exercise
of, release or assign any material rights or claims thereunder;
(m) enter
into any transaction with or distribute or advance any assets or property to any
of its officers, directors, partners, stockholders, managers, members or other
Affiliates other than the payment of salary and benefits and tax distributions
in the ordinary course of business consistent with past practices;
or
(n) agree
in writing or otherwise agree, commit or resolve to take any of the actions
described in Section 4.1 (a) through (m) above.
ARTICLE
V
ADDITIONAL
AGREEMENTS
5.1 Proxy Statement; Special
Meeting.
(a) As
soon as is reasonably practicable after execution of this
Agreement, NSAQ shall prepare and file with the SEC under the
Exchange Act, and with all other applicable regulatory bodies, proxy materials
for the purpose of soliciting proxies from holders of NSAQ Common Stock to vote,
at a meeting of the holders of NSAQ Common Stock to be called for such purpose
(the “Special
Meeting”), in favor of, among other things, (i) the adoption of this
Agreement and the approval of the SDI Preferred Stock Purchase and the Share
Exchange, (ii) the issuance of the NSAQ Shares in connection with the Share
Exchange, (iii) if mutually agreed to by NSAQ and SDI, the redomestication of
NSAQ to the British Virgin Islands, (iv) the change of the name of NSAQ to a
name selected by SDI, (v) increasing the authorized number of shares of NSAQ
Common Stock, (vi) the election of directors of NSAQ pursuant to Section 5.2,
whose election shall be effective as of the Closing, (vii) other changes to
NSAQ’s certificate of incorporation agreed by the Parties, including (1)
changing corporate existence to perpetual; (2) incorporating the classification
of directors that would result from the election of directors as contemplated by
Section 5.2; (3) removing provisions that will no longer be applicable to NSAQ
after the SDI Preferred Stock Purchase and the Share Exchange, and (4) making
certain other changes in terms, gender and number that are substantively
immaterial; and (viii) an adjournment proposal to adjourn the Special Meeting
if, based on the tabulated vote count, NSAQ is not authorized to proceed with
the SDI Preferred Stock Purchase and the Share Exchange (romanettes (i) through
(viii), collectively, the “NSAQ Stockholder
Approval”). Such proxy materials shall be in the form of a
proxy statement to be used for the purposes of soliciting proxies from holders
of NSAQ Common Stock for the matters to be acted upon at the Special Meeting
(the “Proxy
Statement”). SDI shall furnish to NSAQ on a timely basis all information
concerning SDI (or any of its Subsidiaries) as NSAQ may reasonably request in
connection with the preparation of the Proxy Statement. SDI and its
counsel shall be given an opportunity to review, comment on and approve (such
approval not to be unreasonably withheld, conditioned or delayed) the Proxy
Statement (including any amendments thereto) prior to its filing with the
SEC. NSAQ, with the assistance of SDI, shall promptly respond to any
SEC comments on the Proxy Statement and shall otherwise use commercially
reasonable efforts to cause the Proxy Statement to be approved for issuance by
the SEC as promptly as practicable. NSAQ shall also take any and all
commercially reasonable actions required to satisfy the requirements of the
Exchange Act.
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(b) As
soon as reasonably practicable following approval by the SEC, NSAQ shall
distribute the Proxy Statement to the holders of NSAQ Common Stock and, pursuant
thereto, shall call the Special Meeting in accordance with the Delaware General
Corporation Law (the “DGCL”) and, subject
to the other provisions of this Agreement, solicit proxies from such holders to
vote in favor of the adoption of this Agreement and the approval of the SDI
Preferred Stock Purchase and the Share Exchange and the other matters presented
to the stockholders of NSAQ for approval or adoption at the Special Meeting,
including, without limitation, the matters described in Section
5.1(a).
(c) NSAQ
shall comply with all applicable provisions of and rules under the Exchange Act
and all applicable provisions of the DGCL in the preparation, filing and
distribution of the Proxy Statement, the solicitation of proxies thereunder, and
the calling and holding of the Special Meeting. Without limiting the foregoing,
NSAQ shall ensure that the Proxy Statement does not, as of the date on which it
is first distributed to holders of NSAQ Common Stock, and as of the date of the
Special Meeting, contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements made, in light
of the circumstances under which they were made, not misleading (provided that
NSAQ shall not be responsible for the accuracy or completeness of any
information relating to SDI or Stockholder any other information furnished by
SDI or Stockholder for inclusion in the Proxy Statement). SDI
represents and warrants that the information relating to SDI supplied in writing
by SDI and Stockholder for inclusion in the Proxy Statement will not as of the
date on which the Proxy Statement (or any amendment or supplement thereto) is
first distributed to holders of NSAQ Common Stock or at the time of the Special
Meeting contain any statement that, at such time and in light of the
circumstances under which it is made, is false or misleading with respect to any
material fact, or omits to state any material fact required to be stated therein
or necessary in order to make the statement therein not false or
misleading.
(d) NSAQ,
acting through its board of directors, shall include in the Proxy Statement the
recommendation of its board of directors that the holders of NSAQ Common Stock
vote in favor of the adoption of this Agreement and the approval of the SDI
Preferred Stock Purchase and the Share Exchange, and shall otherwise use
commercially reasonable efforts to obtain the NSAQ Stockholder
Approval.
5.2 Directors and Officers of
NSAQ after Closing. The Parties shall take all necessary
action so that the following persons are nominated for election as directors at
the Special Meeting: (i) three (3) nominees appointed by Stockholder,
at least one of which shall be fluent in English, and (ii) one (1) nominee
appointed by NSAQ.
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5.3 HSR
Act. If required pursuant to the HSR Act, as promptly as
practicable after the date of this Agreement, NSAQ and SDI shall each prepare
and file the notifications and any other information required of it thereunder
in connection with the transactions contemplated by this Agreement and shall
promptly and in good faith respond to all information requested of it by the
United States Federal Trade Commission (the “FTC”) and the United
States Department of Justice (the “DOJ”) in connection
with such notifications in accordance with all applicable requirements of all
Governmental Entities. NSAQ and SDI shall cooperate in good faith
with each other and such Governmental Entities. NSAQ and SDI shall
(a) promptly inform the other of any communication to or from the FTC, the DOJ
or any other Governmental Entity regarding the transactions contemplated by this
Agreement, (b) give the other prompt notice of the commencement of any action,
suit, litigation, arbitration, proceeding or investigation by or before any
Governmental Entity with respect to such transactions, (c) request an early
termination of the waiting period under the HSR Act and (d) keep the other
reasonably informed as to the status of any such action, suit, litigation,
arbitration, proceeding or investigation. Filing fees with respect to
the notifications required under the HSR Act shall be paid by NSAQ.
5.4 Other
Actions.
(a) As
promptly as practicable after execution of this Agreement, NSAQ shall prepare
and file a Current Report on Form 8-K pursuant to the Exchange Act to report the
execution of this Agreement (“Signing Form 8-K”),
which SDI shall review, comment upon and approve (which approval shall not be
unreasonably withheld or delayed) prior to filing.
(b) Prior
to Closing, NSAQ shall prepare a draft Form 8-K announcing the Closing, together
with, or incorporating by reference, the financial statements prepared by SDI
and its accountant, and such other information that may be required to be
disclosed with respect to the SDI Preferred Stock Purchase and the Share
Exchange in any report or form to be filed with the SEC (“Closing Form 8-K”),
which SDI shall review, comment upon and approve (which approval shall not be
unreasonably withheld or delayed) prior to filing. Concurrently with
the Closing or as soon as practicable thereafter, NSAQ shall file the Closing
Form 8-K with the SEC.
(c) SDI
and NSAQ shall further cooperate with each other and use their respective
commercially reasonable efforts to take or cause to be taken all actions, and do
or cause to be done all things, necessary, proper or advisable on their part
under this Agreement and applicable laws to consummate the SDI Preferred Stock
Purchase and the Share Exchange and the other transactions contemplated by this
Agreement as soon as practicable, including preparing and filing as soon as
practicable all documentation to effect all necessary notices, reports and other
filings and to obtain as soon as practicable all consents, registrations,
approvals, permits and authorizations necessary or advisable to be obtained from
any third party and/or any Governmental Entity. This obligation shall
include, on the part of NSAQ, sending to Continental a termination letter with
respect to the Investment Management Trust Agreement by and between NSAQ and
Continental.
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5.5 Required
Information. In connection with the preparation of the Signing
Form 8-K, the Proxy Statement and the Closing Form 8-K, or any other filing
notice or application made by or on behalf of NSAQ and/or SDI to any Government
Entity or other third party in connection with the SDI Preferred Stock Purchase
and the Share Exchange and the other transactions contemplated hereby, and for
such other reasonable purposes, SDI and NSAQ each shall, upon request by the
other, furnish the other with all information concerning themselves, their
respective directors, officers, managers, members and stockholders (including
the directors of NSAQ and SDI to be elected effective as of the Closing pursuant
to Section 5.2 hereof) and such other matters as may be reasonably necessary or
advisable in connection with the SDI Preferred Stock Purchase and the Share
Exchange, or any other statement, filing, notice or application made by or on
behalf of SDI and NSAQ to any third party and/or any Governmental Entity in
connection with the SDI Preferred Stock Purchase and the Share Exchange and the
other transactions contemplated hereby. Each Party warrants and
represents to the other Party that all such information shall be true and
correct in all material respects and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading.
5.6 Confidentiality; Access to
Information.
(a) Non-Disclosure and
Confidentiality. Each Party hereto shall keep secret and
confidential any and all documents and information, including this Agreement and
the terms and conditions hereof, provided by any other Party in connection with
the execution or performance of this Agreement (the “Confidential
Information”) and shall neither disclose to a third party nor use the
Confidential Information other than for the purpose of achieving the objectives
of this Agreement. If a shareholder, officer, employee, worker, agent
or trading counterparty of any Party has disclosed any of the Confidential
Information to a third party, that Party shall be liable hereunder for the
disclosure as if that Party had committed the disclosure. The
obligation of confidentiality contained herein shall not apply in a case in
which the data and information is: (i) generally known to the public; (ii) known
through a third party other than that Party and the receiving Party is not aware
of any confidentiality obligations binding on such third party; or (iii)
required to be disclosed by applicable laws and regulations. No Party
may use or provide to its shareholders, officers, employees, workers, agents or
other trading counterparties any information related to this Agreement unless
such use or provision is required for achieving the objective of this Agreement,
or for compliance with law.
(b) Access to
Information.
(i) SDI
will afford NSAQ and its financial advisors, accountants, counsel and other
representatives reasonable access during normal business hours, upon reasonable
notice, to the properties, books, records and key personnel of SDI during the
period prior to the Closing, and subject to any applicable confidentiality
agreements with third parties, to obtain all information concerning the
business, including the status of business development efforts, properties,
results of operations and personnel of SDI as NSAQ may reasonably
request. No information or knowledge obtained by NSAQ in any
investigation pursuant to this Section 5.6 will affect or be deemed to modify
any representation or warranty contained herein or the conditions to the
obligations of the Parties to consummate the SDI Preferred Stock Purchase and
the Share Exchange.
27
(ii) NSAQ
will afford SDI and its financial advisors, underwriters, accountants, counsel
and other representatives reasonable access during normal business hours, upon
reasonable notice, to the properties, books, records and personnel of NSAQ
during the period prior to the Closing, and subject to any applicable
confidentiality agreements with third parties (the existence and scope of which
have been disclosed to SDI), to obtain all information concerning the business,
including properties, results of operations and personnel of NSAQ, as SDI may
reasonably request. No information or knowledge obtained by SDI in
any investigation pursuant to this Section 5.6 will affect or be deemed to
modify any representation or warranty contained herein or the conditions to the
obligations of the Parties to consummate the SDI Preferred Stock Purchase and
the Share Exchange.
5.7 Public
Disclosure. From the date of this Agreement until Closing or
termination of this Agreement, the Parties shall cooperate in good faith to
jointly prepare and mutually agree upon all press releases and public
announcements pertaining to this Agreement and the transactions governed by it,
and no Party shall issue or otherwise make any public announcement or
communication pertaining to this Agreement or the transactions contemplated
hereby without the prior consent of NSAQ (in the case of SDI) or SDI (in the
case of NSAQ), except as provided by Section 5.4 or as required by any legal
requirement or by the rules and regulations of, or pursuant to any agreement of,
a stock exchange or trading system. Each Party will not unreasonably
withhold approval from the others with respect to any press release or public
announcement. If any Party determines with the advice of counsel that
it is required to make this Agreement or any terms of the transaction public or
otherwise issue a press release or make public disclosure with respect thereto,
it shall, at a reasonable time before making any public disclosure, consult with
the other Party regarding such disclosure, seek such confidential treatment for
such terms or portions of this Agreement or the transaction as may be reasonably
requested by the other Party and disclose only such information as is legally
compelled to be disclosed. This provision will not apply to
confidential communications by any Party to its counsel, accountants, investors,
and other professional advisors.
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5.8 Commercially Reasonable
Efforts. Upon the terms and subject to the conditions set
forth in this Agreement, each Party agrees to use commercially reasonable
efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, and to assist and cooperate with the other Parties in doing, all things
necessary, proper or advisable to consummate and make effective, in the most
expeditious manner practicable, the SDI Preferred Stock Purchase and the Share
Exchange and the other transactions contemplated by this Agreement, including
using commercially reasonable efforts to accomplish the
following: (i) the taking of all reasonable acts necessary to cause
the conditions precedent set forth in Article VI to be satisfied, (ii) the
obtaining of all necessary actions, waivers, consents, approvals, orders and
authorizations from Governmental Entities and the making of all necessary
registrations, declarations and filings (including registrations, declarations
and filings with Governmental Entities, if any) and the taking of all reasonable
steps as may be necessary to avoid any suit, claim, action, investigation or
proceeding by any Governmental Entity, (iii) the obtaining of all consents,
approvals or waivers from third parties required as a result of the transactions
contemplated in this Agreement, including the consents referred to in Schedule 2.5 hereto
of SDI Schedule, (iv) the defending of any suits, claims, actions,
investigations or proceedings, whether judicial or administrative, challenging
this Agreement or the consummation of the transactions contemplated hereby,
including seeking to have any stay or temporary restraining order entered by any
court or other Governmental Entity vacated or reversed, and (v) the execution or
delivery of any additional instruments reasonably necessary to consummate the
transactions contemplated by, and to fully carry out the purposes of, this
Agreement. In connection with and without limiting the foregoing,
NSAQ and its board of directors, and SDI and its board of directors, shall, if
any state takeover statute or similar statute or regulation is or becomes
applicable to the SDI Preferred Stock Purchase, the Share Exchange, this
Agreement or any of the transactions contemplated by this Agreement, use
commercially reasonable efforts to enable the SDI Preferred Stock Purchase and
the Share Exchange and the other transactions contemplated by this Agreement to
be consummated as promptly as practicable on the terms contemplated by this
Agreement. Notwithstanding anything herein to the contrary, nothing
in this Agreement shall be deemed to require NSAQ or SDI to agree to any
divestiture by itself or any of its Affiliates of shares of capital stock or of
any business, assets or property, or the imposition of any material limitation
on the ability of any of them to conduct their business or to own or exercise
control of such assets, properties and stock.
5.9 Sale
Restrictions. No public market
sales of shares of the NSAQ Common Stock issued as a result of the Share
Exchange shall be made by Stockholder during the period prescribed by and as
otherwise permitted pursuant by the Lock-Up Agreement executed by Stockholder in
connection with this Agreement.
5.10 No Securities
Transactions. Neither SDI nor Stockholder nor any of their
respective Affiliates, directly or indirectly, shall engage in any transactions
involving the securities of NSAQ prior to the time of the making of a public
announcement of the transactions contemplated by this Agreement. SDI
shall use commercially reasonable efforts to require each of its officers,
directors, employees, agents, advisors, contractors, associates, clients,
customers and representatives, to comply with the foregoing
requirement.
5.11 No Claim Against Trust
Fund. Notwithstanding anything else in this Agreement, SDI and
Stockholder acknowledges that it has read NSAQ’s final prospectus dated November
30, 2007 and understands that NSAQ has established the Trust Fund for the
benefit of NSAQ’s public stockholders and that NSAQ may disburse monies from the
Trust Fund only (a) to NSAQ’s public stockholders in the event they elect to
convert their respective shares into cash in accordance with NSAQ’s Charter
Documents and/or the liquidation of NSAQ, (b) to NSAQ after, or concurrently
with, the consummation of a business combination, and (c) to NSAQ in limited
amounts for its working capital requirements and tax obligations. SDI
and Stockholder further acknowledge that, if the transactions contemplated by
this Agreement, or, upon termination of this Agreement, another business
combination, are not consummated by November 30, 2009, NSAQ will be obligated to
return to its stockholders the amounts being held in the Trust
Fund. Accordingly, SDI, for itself and its Subsidiaries, affiliated
entities, directors, officers, employees, stockholders, representatives,
advisors and all other associates and Affiliates, and Stockholder, for itself,
hereby waive all rights, title, interest or claim of any kind against NSAQ to
collect from the Trust Fund any monies that may be owed to them by NSAQ for any
reason whatsoever, including but not limited to a breach of this Agreement by
NSAQ or any negotiations, agreements or understandings with NSAQ (whether in the
past, present or future), and will not seek recourse against the Trust Fund at
any time for any reason whatsoever. This paragraph will survive this
Agreement and will not expire and will not be altered in any way without the
express written consent of the Committee, NSAQ, SDI and
Stockholder.
29
5.12 Disclosure of Certain
Matters. Each of NSAQ and SDI will provide the other with
prompt written notice of any event, development or condition that (a) would
cause any of the conditions set forth in Article VI not to be satisfied or (b)
would require any amendment or supplement to the Proxy Statement.
5.13 Securities
Listing. NSAQ and SDI shall use commercially reasonable
efforts to obtain listing for trading of the NSAQ Common Stock, NSAQ’s
warrants and NSAQ’s units on the NYSEA, the New York Stock Exchange or the
Nasdaq Stock Market, as mutually agreed upon by NSAQ and SDI if NSAQ shall meet
the listing requirements for such exchange or market.
5.14 Charter Protections;
Directors’ and Officers’ Liability Insurance.
(a) All
rights to indemnification for acts or omissions occurring through the Closing
Date now existing in favor of the current directors and officers of NSAQ as
provided in the Charter Documents of NSAQ or in any indemnification agreements
shall survive the SDI Preferred Stock Purchase and the Share Exchange and shall
continue in full force and effect in accordance with their terms.
(b) For
a period of six (6) years after the Closing Date, NSAQ shall cause to be
maintained in effect the current policies of directors’ and officers’ liability
insurance maintained by NSAQ and SDI, respectively (or policies of at least the
same coverage and amounts containing terms and conditions which are no less
advantageous), with respect to claims arising from facts and events that
occurred prior to the Closing Date.
(c) If
NSAQ or any of its successors or assigns (i) consolidates with or merges into
any other Person and shall not be the continuing or surviving entity of such
consolidation or merger, or (ii) transfers or conveys all or substantially all
of its properties and assets to any Person, then, in each such case, to the
extent necessary, proper provision shall be made so that the successors and
assigns of NSAQ assume the obligations set forth in this Section
5.14.
(d) The
provisions of this Section 5.14 are intended to be for the benefit of, and shall
be enforceable by, each Person who will have been a director or officer of NSAQ
for all periods ending on or before the Closing Date and may not be changed
without the consent of Committee.
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5.15 Insider Loans; Equity
Ownership in Subsidiaries. SDI agrees to list and provide to
NSAQ prior to the Closing and make schedules for payment and/or performance of
obligations relating to: (i) any and all loans made by SDI to any Company
Insider to be repaid to SDI and any other amount owed by such Company Insider to
SDI; and (ii) guaranties or similar arrangements pursuant to which SDI has
guaranteed the payment or performance of obligations of such Company Insider to
a third party. For the purpose of this Agreement, the Company Insider shall mean
any officer, director, employee, stockholder or holder of derivative securities
of SDI at or prior to Closing.
5.16 Audited Financial
Information. SDI shall use
commercially reasonable efforts to deliver to NSAQ the Financial Statements of
SDI as soon as practicable, which Financial Statements shall be included in the
Proxy Statement.
5.17 Access to Financial
Information. SDI will, and will use commercially reasonable
efforts to cause its auditors to (a) continue to provide NSAQ and its advisors
access to all of SDI’s financial information used in the preparation of its
Audited Financial Statements and Unaudited Financial Statements and (b)
cooperate fully with any reviews performed by NSAQ or its advisors of any such
financial statements or information.
5.18 NSAQ Borrowings;
Indebtedness. Through the Closing, NSAQ shall be allowed to
borrow from its directors, officers and/or stockholders to meet its reasonable
capital requirements, with any such loans to be made only as reasonably required
by the operation of NSAQ in due course on a non-interest bearing basis and
repayable at Closing from the Trust Fund. Any indebtedness of NSAQ
existing immediately prior to the Closing shall be paid in full immediately upon
the release of funds from the Trust Fund.
5.19 Trust Fund
Disbursement. NSAQ shall cause the Trust Fund to be disbursed
to NSAQ as otherwise contemplated by this Agreement immediately upon the
Closing. All liabilities and obligations of NSAQ due and owing or
incurred at or prior to the Closing shall be paid as and when due, including all
amounts payable (i) to stockholders who elect to have their shares converted to
cash in accordance with the provisions of NSAQ’s Charter Documents, (ii) all
amounts payable in connection with any of the arrangements or transactions
contemplated by Section 5.20 (including all costs and expenses in connection
therewith), (iii) as deferred underwriters’ compensation in connection with
NSAQ’s initial public offering, (iv) for income tax or other tax obligations of
NSAQ prior to Closing, (v) as repayment of loans and reimbursement of expenses
to directors, officers and founding stockholders of NSAQ and (vi) to third
parties (e.g., professionals, printers, etc.) who have rendered services to NSAQ
in connection with its operations and efforts to effect a business combination,
including the SDI Preferred Stock Purchase and the Share Exchange.
5.20 Certain Actions with Respect
to NSAQ Securities. NSAQ shall use its best efforts to prevent
NSAQ stockholders from voting against the adoption of the Securities Purchase
and Exchange Agreement in order to increase the probability that NSAQ public
stockholders will vote in favor of and approve such
agreement. Notwithstanding NSAQ’s best efforts, if it is anticipated
that there will be any votes against the adoption of the Securities Purchase and
Share Exchange Agreement, SDI shall cause SSME to purchase a maximum of
2,541,200 shares of NSAQ Common Stock (equivalent to forty percent (40%) of the
public shares of NSAQ Common Stock) prior to the Special Meeting in order to
secure approval of the transactions contemplated hereby.
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5.21 Warrant
Purchases. NSAQ shall use its best efforts to assist SSME to
purchase at least 1,400,000 of NSAQ’s outstanding warrants no later than the
record date of the Special Meeting.
5.22 Post-Closing
Issuances of SDI Stock. SDI shall not issue
or sell any shares of, or rights to acquire shares of, SDI Stock that reduces
NSAQ’s ownership and voting power to less than 52.59% except for SDI’s issuance
of shares or rights issue stipulated in Charter Documents for which NSAQ waives
its vested rights of first refusal.
ARTICLE
VI
CONDITIONS
TO THE TRANSACTION
6.1 Conditions to Obligations of
Each Party to Effect the SDI Preferred Stock Purchase and the Share
Exchange. The respective obligations of each Party to this
Agreement to effect the SDI Preferred Stock Purchase and the Share Exchange
shall be subject to the satisfaction at or prior to the Closing Date of the
following conditions:
(a) NSAQ Stockholder
Approval. The NSAQ Stockholder Approval shall have been
obtained by the requisite vote under the laws of the State of
Delaware.
(b) NSAQ Common
Stock. Holders of forty percent (40%) or more of the shares of
NSAQ Common Stock issued in NSAQ’s initial public offering of securities and
outstanding immediately before the Closing shall not have exercised their rights
to convert their shares into a pro rata share of the Trust Fund in accordance
with NSAQ’s Charter Documents.
(c) HSR Act; No
Order. All specified waiting periods under the HSR Act shall
have expired (or been terminated early), and no Governmental Entity shall have
enacted, issued, promulgated, enforced or entered any statute, rule, regulation,
executive order, decree, injunction or other order (whether temporary,
preliminary or permanent) that is in effect and that has the effect of making
the SDI Preferred Stock Purchase or the Share Exchange illegal or otherwise
prohibiting consummation of the SDI Preferred Stock Purchase or the Share
Exchange, substantially on the terms contemplated by this
Agreement.
6.2 Additional Conditions to
Obligations of SDI and Stockholder. The obligations of SDI and
Stockholder to consummate and effect the SDI Preferred Stock Purchase and the
Share Exchange shall be subject to the satisfaction at or prior to the Closing
Date of each of the following conditions, any of which may be waived, in
writing, exclusively by SDI:
(a) Representations and
Warranties. Each representation and warranty of NSAQ contained
in this Agreement that is (i) qualified as to materiality shall have been true
and correct (A) as of the date of this Agreement and (B) on and as of the
Closing Date with the same force and effect as if made on the Closing Date, and
(ii) not qualified as to materiality shall have been true and correct (A) as of
the date of this Agreement and (B) in all material respects on and as of the
Closing Date with the same force and effect as if made on the Closing
Date. SDI shall have received a certificate with respect to the
foregoing signed on behalf of NSAQ by an authorized officer of NSAQ (“NSAQ Closing
Certificate”).
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(b) Agreements and
Covenants. NSAQ shall have performed or complied in all
material respects with all agreements and covenants required by this Agreement
to be performed or complied with by it on or prior to the Closing Date, and the
NSAQ Closing Certificate shall include a provision to such effect.
(c) No
Litigation. No action, suit or proceeding shall be
pending or threatened before any Governmental Entity that is reasonably likely
to (i) prevent consummation of any of the transactions contemplated by this
Agreement, (ii) cause any of the transactions contemplated by this Agreement to
be rescinded following consummation, or (iii) affect materially and adversely
the right of NSAQ to own, operate or control any of the assets and operations of
SDI following the SDI Preferred Stock Purchase and the Share Exchange and no
order, judgment, decree, stipulation or injunction to any such effect shall be
in effect.
(d) Consents. NSAQ
shall have obtained the consents, waivers and approvals required to be obtained
by NSAQ in connection with the consummation of the transactions contemplated
hereby, other than consents, waivers and approvals the absence of which, either
alone or in the aggregate, would not reasonably be expected to have a Material
Adverse Effect on NSAQ, and the NSAQ Closing Certificate shall include a
provision to such effect.
(e) SEC
Compliance. Immediately prior to Closing, NSAQ shall be in
compliance in all material respects with the reporting requirements under the
Securities Act and Exchange Act.
(f) Resignations. The
officers and directors of NSAQ listed in Schedule 6.2(f) shall
have resigned from all of their positions and offices with NSAQ, and the
directors designated in Section 5.2 shall have been elected at the Special
Meeting.
(g) Escrow Agreement. The
Escrow Agreement shall have been executed and delivered by NSAQ and Stockholder
and shall be in full force and effect with respect to NSAQ and
Stockholder.
(h) Trust
Fund. NSAQ shall have
made appropriate arrangements, subject to Section 5.19, to have the Trust Fund
dispersed to NSAQ immediately upon the Closing and in accordance with Section
5.19. At the Closing, the chief executive officer of NSAQ shall
deliver a certificate to SDI setting forth the amount of disbursements from the
Trust Fund or from the NSAQ or any of its subsidiaries at or after the closing
required to be made to satisfy all liabilities and obligations of NSAQ
due and owing or incurred at or prior to Closing (the “CEO Certificate”),
such liabilities and obligations not to exceed the amounts therefor set forth on
Schedule
6.2(h). For clarity, Schedule 6.2(h) does not include amounts
payable as contemplated by clauses (i), (ii) or (v) of Section 5.19, but does
include all other amounts paid or payable out of the Trust Fund or otherwise by
NSAQ after the date hereof and to and including the Closing.
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(i) Limitation on
Conversions. The number of
shares of NSAQ Common Stock owned
by stockholders that exercise
their
rights to convert their shares into a pro
rata share of the Trust Fund shall not exceed
10% of NSAQ Common Stock issued in NSAQ’s initial public
offering and outstanding immediately before the Closing, and such
condition shall supersede the condition set forth in Section 6.1(b).
(j) Warrant
Purchases. SSME shall have purchased at least 1,400,000
outstanding warrants issued by NSAQ.
(k) Other
Deliveries. At or prior to the Closing, NSAQ shall have
delivered to SDI such other documents or certificates as shall reasonably be
required by SDI and its counsel in order to consummate the transactions
contemplated hereunder.
6.3 Additional Conditions to the
Obligations of NSAQ. The obligations of NSAQ to consummate and
effect the SDI Preferred Stock Purchase and the Share Exchange shall be subject
to the satisfaction at or prior to the Closing Date of each of the following
conditions, any of which may be waived, in writing, exclusively by
NSAQ:
(a) Representations
and Warranties. Each representation and warranty of SDI and
Stockholder contained in this Agreement that is (i) qualified as to materiality
shall have
been true and correct (A) as of the date of this Agreement and (B) on and
as of the Closing Date with the same force and effect as if made on the Closing
Date, and (ii) not qualified as to materiality shall have been true and correct
(A) as of the date of this Agreement and (B) in all material respects on and as
of the Closing Date, with the same force and effect as if made on the Closing
Date. NSAQ shall have received a certificate with respect to the
foregoing signed on behalf of SDI by an authorized officer of SDI (“SDI
Closing Certificate”).
(b) Agreements and
Covenants. SDI and Stockholder shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by them at or prior to the
Closing Date, and SDI Closing Certificate shall include a provision to such
effect.
(c) No
Litigation. No action, suit or proceeding shall be pending or
threatened before any Governmental Entity that is reasonably likely to (i)
prevent consummation of any of the transactions contemplated by this Agreement,
(ii) cause any of the transactions contemplated by this Agreement to be
rescinded following consummation, or (iii) affect materially and adversely the
right of NSAQ to own, operate or control any of the assets and operations of SDI
following the SDI Preferred Stock Purchase and the Share Exchange and no order,
judgment, decree, stipulation or injunction to any such effect shall be in
effect.
(d) Consents. SDI
shall have obtained the consents, waivers, permits and approvals required to be
obtained by SDI in connection with the consummation of the transactions
contemplated hereby, other than consents, waivers, permits and approvals the
absence of which, either alone or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on SDI and the SDI Closing
Certificate shall include a provision to such effect.
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(e) Lock-Up
Agreement. The Lock-Up Agreement shall have been executed and
delivered by Stockholder and shall be in full force and effect with respect to
Stockholder.
(f) Escrow Agreement. The
Escrow Agreement shall have been executed and delivered by NSAQ, Stockholder,
and Escrow Agent and shall be in full force and effect with respect to NSAQ and
Stockholder.
(g) Pledge Agreement. The
Pledge Agreement shall have been executed and delivered by NSAQ and the Pledgor
and shall be in full force and effect with respect to NSAQ, and the
Pledgor.
(h) SDI Preferred
Stock. The SDI Preferred Stock has been created by SDI and
SDI’s Korean Registration Certificate has been filed.
(i) Other
Deliveries. At or prior to Closing, SDI shall have delivered
to NSAQ such other documents or certificates as shall reasonably be required by
NSAQ and its counsel in order to consummate the transactions contemplated
hereunder.
ARTICLE
VII
INDEMNIFICATION
7.1 Indemnification.
(a) Subject
to the terms and conditions of this Article VII (including without limitation
the limitations set forth in Section 7.4), NSAQ and their respective
representatives, successors and permitted assigns (the “NSAQ Indemnitees”)
shall be indemnified, defended and held harmless with respect to the matters
under Sections 7.1(a)(i) and 7.1(a)(ii), below, but only to the extent of the
Escrow Shares, from and against all Losses (as defined below) asserted against,
resulting to, imposed upon, or incurred by any NSAQ Indemnitee by reason of,
arising out of or resulting from:
(i) the
inaccuracy or breach of any representation or warranty of SDI or Stockholder
contained in or made pursuant to this Agreement, any Schedule or any certificate
delivered by SDI to NSAQ pursuant to this Agreement with respect hereto or
thereto in connection with the Closing; or
(ii) the
non-fulfillment or breach of any covenant or agreement of SDI or Stockholder
contained in this Agreement or any other agreement among the Parties
contemplated hereby.
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(b) As
used in this Article VII, the term “Losses”, subject to
Section 7.4(e) hereof, shall include all actual losses, liabilities, damages,
judgments, awards, orders, penalties, settlements, costs and expenses
(including, without limitation, interest, penalties, court costs and reasonable
legal fees and expenses) including those arising from any demands, claims,
suits, actions, costs of investigation, notices of violation or noncompliance,
causes of action, proceedings and assessments whether or not made by third
parties or whether or not ultimately determined to be valid. Solely
for the purpose of determining the amount of any Losses (and not for determining
any breach) for which the NSAQ Indemnitees or SDI Indemnitees (as defined below)
(each of the NSAQ Indemnitees and SDI Indemnitees, the “Indemnitees”) may be
entitled to indemnification pursuant to Article VII, any representation or
warranty contained in this Agreement that is qualified by a term or terms such
as “material,” “materially,” or “Material Adverse Effect” shall be deemed made
or given without such qualification and without giving effect to such
words.
7.2 Indemnification of Third
Party Claims. The indemnification obligations and liabilities
under this Article VII with respect to actions, proceedings, lawsuits,
investigations, demands or other claims brought against an Indemnitee by a
Person other than the NSAQ, SDI or Stockholder (a “Third Party Claim”)
shall be subject to the following terms and conditions (for purposes of this
Agreement, “Indemnified
Representative” means NSAQ, acting through the Committee, with respect to
an indemnification claim by an NSAQ Indemnitee, and Stockholder, with respect to
an indemnification claim by an SDI Indemnitee, and “Indemnifying
Representative” means the Stockholder, with respect to an indemnification
claim by an NSAQ Indemnitee, and NSAQ, acting through the Committee, with
respect to an indemnification claim by an SDI Indemnitee:
(a) Notice of
Claim. The Indemnified Representative, will give the
Indemnifying Representative prompt written notice after receiving written notice
of any Third Party Claim or discovering the liability, obligation or facts
giving rise to such Third Party Claim (a “Notice of Claim”),
which Notice of Third Party Claim shall set forth (i) a brief description of the
nature of the Third Party Claim, (ii) the total amount of the actual
out-of-pocket Loss or the anticipated potential Loss (including any costs or
expenses which have been or may be reasonably incurred in connection therewith),
and (iii) whether such Loss may be covered (in whole or in part) under any
insurance and the estimated amount of such Loss that may be covered under such
insurance, and the Indemnifying Representative shall be entitled to participate
in the defense of Third Party Claim at its expense.
(b) Defense. The
Indemnifying Representative shall have the right, at its option (subject to the
limitations set forth in Section 7.2(c) below) and at its own expense, by
written notice to the Indemnified Representative, to assume the entire control
of, subject to the right of Indemnified Representative to participate (at its
expense and with counsel of its choice) in, the defense, compromise or
settlement of the Third Party Claim as to which such Notice of Claim has been
given, and shall be entitled to appoint a recognized and reputable counsel
reasonably acceptable to the Indemnified Representative to be the lead counsel
in connection with such defense. If the Indemnifying Representative is permitted
and elects to assume the defense of a Third Party Claim:
(i) the
Indemnifying Representative shall diligently and in good faith defend such Third
Party Claim and shall keep the Indemnified Representative reasonably informed of
the status of such defense; provided, however, that the Indemnified
Representative shall have the right to approve any settlement, which approval
will not be unreasonably withheld, delayed or conditioned except to the extent
the settlement relates solely to monetary damages that are indemnified fully
under Section 7.1; and
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(ii) the
Indemnified Representative shall cooperate fully in all respects with the
Indemnifying Representative in any such defense, compromise or settlement
thereof, including, without limitation, the selection of counsel, and the
Indemnified Representative shall make available to the Indemnifying
Representative all pertinent information and documents under its
control.
(c) Limitations of Right to
Assume Defense. The Indemnifying Representative shall not be
entitled to assume control of such defense if (i) the Third Party Claim relates
to or arises in connection with any criminal proceeding, action, indictment,
allegation or investigation; (ii) the Third Party Claim seeks, as one of its
principal claims, an injunction or equitable relief against an Indemnitee; or
(iii) there is a reasonable probability that a Third Party Claim may materially
and adversely affect the Indemnitee other than as a result of money damages or
other money payments.
(d) Other
Limitations. Failure to give prompt Notice of Claim or to
provide copies of relevant available documents or to furnish relevant available
data shall not constitute a defense (in whole or in part) to any Third Party
Claim by an Indemnitee against the Indemnifying Representative and shall not
affect the Indemnifying Representative’s duty or obligations under this Article
VII, except to the extent (and only to the extent that) such failure shall have
adversely affected the ability of the Indemnifying Representative to defend
against or reduce its liability or caused or increased such liability or
otherwise caused the damages to the Indemnitee to be greater than such damages
would have been had the Indemnified Representative given the Indemnifying
Representative prompt notice hereunder. So long as the Indemnifying
Representative is defending any such action actively and in good faith, the
Indemnified Representative shall not settle such action without the consent of
the Indemnifying Representative, such consent not to be unreasonably withheld or
delayed. The Indemnified Representative shall make available to the
Indemnifying Representative all relevant records and other relevant materials
required by them and in the possession or under the control of the Indemnified
Representative, for the use of the Indemnifying Representative and its
representatives in defending any such action, and shall in other respects give
reasonable cooperation in such defense.
(e) Failure to
Defend. If the Indemnifying Representative, promptly after
receiving a Notice of Claim, fails to defend such Third Party Claim actively and
in good faith, the Indemnified Representative, subject to the limitations of
Section 7.4, will (upon further written notice) have the right to undertake the
defense, compromise or settlement of such Third Party Claim as it may determine
in its reasonable discretion; provided that the Indemnifying Representative
shall have the right to approve any settlement, which approval will not be
unreasonably withheld, delayed or conditioned.
(f) Indemnitee
Rights. Anything in this Section 7.2 to the contrary
notwithstanding, the Indemnifying Representative shall not, without the written
consent of the Indemnified Representative, settle or compromise any action or
consent to the entry of any judgment that does not include as an unconditional
term thereof the giving by the claimant or the plaintiff to each of the
Indemnitees of a full and unconditional release from all liability and
obligation in respect of such action without any payment by any
Indemnitee.
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(g) Representative
Consent. Unless the Indemnifying Representative has consented
to a settlement of a Third Party Claim, the amount of the settlement shall not
be a binding determination of the amount of the Loss.
7.3 Insurance and Tax
Effect.
(a) To
the extent that any Losses that are subject to indemnification pursuant to this
Article VII are covered by insurance, the Indemnitees shall use commercially
reasonable efforts to obtain the maximum recovery under such insurance; provided
that the Indemnitees shall nevertheless be entitled to bring a claim for
indemnification under this Article VII in respect of such Losses.
(b) To
the extent that any Losses that are subject to indemnification pursuant to this
Article VII are deductible for income tax purposes by an Indemnitee, the amount
of any Loss shall be reduced by the income tax savings to such Party as a result
of the payment of such Loss.
7.4 Limitations on
Indemnification.
(a) Survival; Time
Limitation. The representations, warranties, covenants and
agreements in this Agreement or in any writing delivered by SDI or Stockholder
to NSAQ, or by NSAQ to SDI or Stockholder, in connection with this Agreement
(including the certificate required to be delivered by SDI pursuant to Section
6.3(a) and the certificate required to be delivered by the NSAQ pursuant to
Section 6.2(a) shall survive the Closing until the Escrow Release Date (the
“Survival
Period”).
(b) Any
indemnification claim made by an Indemnitee in writing prior to the termination
of the Survival Period shall be preserved despite the subsequent termination of
the Survival Period and any claim set forth in a Notice of Claim sent prior to
the expiration of such Survival Period shall survive until final resolution
thereof. Except as set forth in the immediately preceding sentence,
(i) no claim for indemnification under this Article VII shall be brought after
the end of the Survival Period, and (ii) the indemnification rights of the
Indemnitees under this Article VII shall terminate and be of no further force or
effect; provided that, until the first anniversary of the Escrow Release Date
(the “Extended
Indemnity Period”), an SDI Indemnitee may bring a claim for
indemnification under this Article VII for any claims, action, suit or
proceeding, to the extent arising out of or resulting from the actions taken by
NSAQ in accordance with Section 5.20 or any agreement between NSAQ and SDI
contemplated thereby. For purposes of the proviso in this subsection
(b), any indemnification claim made by an SDI Indemnitee in writing prior to the
expiration of the Extended Indemnity Period shall be preserved despite the
subsequent expiration of the Extended Indemnity Period and any claim set forth
in a Notice of Claim sent prior to the expiration of such Extended Indemnity
Period shall survive until final resolution thereof.
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(c) Deductible. No
amount shall be payable under Article VII to an NSAQ Indemnitee unless and until
the aggregate amount of all indemnifiable Losses otherwise payable to NSAQ
Indemnitees exceeds $1,500,000 (the “Deductible”), in
which event the amount payable shall be only the amount in excess of the
Deductible. No amount shall be payable under Article VII to an SDI
Indemnitee unless and until the aggregate amount of all indemnifiable Losses
otherwise payable to SDI Indemnitees exceeds the Deductible, in which event the
amount payable shall be only the amount in excess of the
Deductible.
(d) Aggregate Amount
Limitation. The aggregate liability for Losses pursuant to
Section 7.1(a) shall not in any event exceed the Escrow Shares and no NSAQ
Indemnitee shall have any claim against SDI’s stockholders in respect of any
claim pursuant to this Article VII (and shall only have recourse to the Escrow
Shares for such purpose). The aggregate liability for Losses pursuant
to Section 7.1(c) shall not in any event exceed an amount of shares of NSAQ
Common Stock equivalent to the Escrow Shares as of the Closing and shall only be
payable in shares of NSAQ Common Stock.
(e) No Special or Consequential
Damages. In no event shall Losses be deemed to include any
special, indirect, consequential or punitive damages.
7.5 Exclusive
Remedy. The Parties acknowledge and agree that, from and after
the Closing, the sole remedy of the Indemnitees with respect to any and all
claims for damages arising out of or relating to this Agreement shall be
pursuant and subject to the requirements of the indemnification provisions set
forth in this Article VII. Notwithstanding any of the foregoing,
nothing contained in this Article VII shall in any way impair, modify or
otherwise limit an Indemnitees’ right to bring any claim, demand or suit against
the other Party based upon such other Party’s actual fraud.
7.6 Application of Escrow
Shares. The Parties acknowledge that all actions to be taken
by the NSAQ Indemnitees pursuant to this Article VII shall be taken on their
behalf by the Committee in accordance with the provisions of the Escrow
Agreement. The Escrow Agent, pursuant to the Escrow Agreement after the Closing,
may apply all or a portion of the Escrow Shares to satisfy any claim for
indemnification pursuant to this Article VII. The Escrow Agent will hold the
remaining portion of the Escrow Shares until final resolution of all claims for
indemnification or disputes relating thereto. Notwithstanding anything to the
contrary contained herein, all Escrow Shares remaining in escrow following the
Final Escrow Release Date in excess of the Escrow Shares necessary to satisfy
any timely filed claim for indemnification shall be released and delivered to
the Persons entitled to them on such date.
7.7 Indemnification of SDI
Indemnitee. In the event that an SDI Indemnitee is entitled to
be indemnified by NSAQ for Losses incurred by such SDI Indemnitee pursuant to
this Article VII, NSAQ shall issue to such SDI Indemnitee shares of NSAQ Common
Stock (subject to Section 7.4(d)) with a Fair Market Value (as defined in the
Escrow Agreement) equal to the amount of such Losses. In the event
that Losses suffered by an SDI Indemnitee are as a result of Losses suffered by
NSAQ (by virtue of their ownership interest in NSAQ), then each SDI Indemnitee
shall be entitled to recover a percentage of such losses equal to such SDI
Indemnitee’s percentage ownership of NSAQ Common Stock.
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ARTICLE
VIII
TERMINATION
8.1 Termination. This
Agreement may be terminated at any time prior to the Closing:
(a) by
mutual written agreement of all the Parties at any time;
(b) by
either NSAQ, SDI or Stockholder if the SDI Preferred Stock Purchase and the
Share Exchange shall not have been consummated by the earlier of date that NSAQ
is required to liquidate and March 31, 2010; provided, however, that the right
to terminate this Agreement under this Section 8.1(b) shall not be available to
any Party whose action or failure to act has been a principal cause of or
resulted in the failure of the SDI Preferred Stock Purchase and the Share
Exchange to occur on or before such date and such action or failure to act
constitutes a breach of this Agreement;
(c) by
either NSAQ, SDI or Stockholder if a Governmental Entity shall have issued an
order, decree, judgment or ruling or taken any other action, in any case having
the effect of permanently restraining, enjoining or otherwise prohibiting the
SDI Preferred Stock Purchase or the Share Exchange, which order, decree, ruling
or other action is final and nonappealable;
(d) by
SDI or Stockholder, upon a material breach of any representation, warranty,
covenant or agreement on the part of NSAQ set forth in this Agreement, or if any
representation or warranty of NSAQ shall have become untrue, in either case such
that the conditions set forth in Article VI would not be satisfied as of the
time of such breach or as of the time such representation or warranty shall have
become untrue; provided, that if such breach by NSAQ is curable by NSAQ prior to
the Closing Date, then SDI or Stockholder may not terminate this Agreement under
this Section 8.1(d) for thirty (30) days after delivery of written notice from
SDI to NSAQ of such breach, provided NSAQ continues to exercise commercially
reasonable efforts to cure such breach (it being understood that SDI may
not terminate this Agreement pursuant to this Section 8.1(d) if it shall have
materially breached this Agreement or if such breach by NSAQ is cured during
such thirty (30)-day period);
(e) by
NSAQ, upon a material breach of any representation, warranty, covenant or
agreement on the part of SDI or Stockholder set forth in this Agreement, or if
any representation or warranty of SDI or Stockholder shall have become untrue,
in either case such that the conditions set forth in Article VI would not be
satisfied as of the time of such breach or as of the time such representation or
warranty shall have become untrue, provided, that if such breach is curable by
SDI or Stockholder prior to the Closing Date, then NSAQ may not terminate this
Agreement under this Section 8.1(e) for thirty (30) days after delivery of
written notice from NSAQ to SDI or Stockholder of such breach, provided SDI or
such Stockholder continues to exercise commercially reasonable efforts to cure
such breach (it being understood that NSAQ may not terminate this Agreement
pursuant to this Section 8.1(e) if it shall have materially breached this
Agreement or if such breach by SDI or such Stockholder is cured during such
thirty (30)-day period); or
40
(f) by
either NSAQ, SDI or Stockholder, if, at the Special Meeting (including any
adjournments thereof), this Agreement and the transactions contemplated hereby
shall fail to be approved and adopted by the affirmative vote of the holders of
NSAQ Common Stock required under NSAQ’s amended and restated certificate of
incorporation, or the holder of more than 10% of the number of shares of NSAQ
Common Stock issued in NSAQ’s initial public offering and outstanding as of the
date of the record date of the Special Meeting exercise their rights to convert
the shares of NSAQ Common Stock held by them into cash in accordance with NSAQ’s
amended and restated certificate of incorporation.
8.2 Notice of Termination;
Effect of Termination.
(a) Any
termination of this Agreement under Section 8.1 above will be effective
immediately upon (or, if the termination is pursuant to Section 8.1(d) or
Section 8.1(e) and the proviso therein is
applicable, thirty (30) days after) the delivery of written notice of the
terminating party to the other Parties hereto.
(b) In
the event of the termination of this Agreement as provided in Section 8.1, this
Agreement shall be of no further force or effect and the SDI Preferred Stock
Purchase and the Share Exchange shall be abandoned, except for and subject to
the following: (i) Sections 5.6(a), 5.11, 8.2 and 8.3 and Article IX
(General Provisions) shall survive the termination of this Agreement, and (ii)
nothing herein shall relieve any party from liability for any breach of this
Agreement.
8.3 Fees and
Expenses. Except as may be otherwise agreed by the Parties in
writing, all fees and expenses incurred in connection with this Agreement and
the transactions contemplated hereby shall be paid by the Party incurring such
expenses whether or not the SDI Preferred Stock Purchase and the Share Exchange
are consummated.
ARTICLE
IX
GENERAL
PROVISIONS
9.1 Notices. All
notices and other communications hereunder shall be in writing and shall be
deemed given if delivered personally or by commercial delivery service, or sent
via facsimile (receipt by intended recipient confirmed) to the Parties at the
following addresses or facsimile numbers (or at such other address or facsimile
numbers for a Party as shall be specified by like notice):
if to
NSAQ, to:
545-7 Dogok-Dong
SoftForum
▇/▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇-▇▇,
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
41
135-270
Attention:
Sang ▇▇▇▇ ▇▇▇
Telephone:
▇▇-▇-▇▇▇-▇▇▇▇
Fax:
▇▇-▇-▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇ P.C.
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇ ▇▇▇▇,
▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇
▇. ▇▇▇▇, Esq.
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: 212-983-3115
if to SDI, to:
Sungdong Industries Co.,
Ltd.
▇▇▇-▇ ▇▇▇▇▇▇-▇▇
▇▇▇▇▇▇▇▇-▇▇▇▇
▇▇▇▇▇▇-▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Han
Uk ▇▇▇
Telephone: ▇▇-▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇-▇▇-▇▇▇-▇▇▇▇
with a copy to SSME:
Sungdong Shipbuilding & Marine
Engineering Co., Ltd.
▇▇▇▇-▇ ▇▇▇▇▇-▇▇
▇▇▇▇▇▇▇-▇▇▇▇,
▇▇▇▇▇▇▇▇-▇▇
▇▇▇▇▇▇▇▇▇▇▇▇-▇▇, ▇▇▇▇▇
▇▇▇▇▇
Attention: ▇▇▇▇▇▇
▇▇▇, Esq.
Telephone: ▇▇-▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇-▇▇-▇▇▇-▇▇▇▇
with a copy to DR&AJU International
Law Firm:
DR&AJU International Law
Firm
11/12/13F
Donghoon Tower ▇▇▇-▇▇
▇▇▇▇▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇-▇▇
▇▇▇▇▇,
▇▇▇▇▇
Attention: Kyeong
Rok Geong, Esq.
Telephone: ▇▇-▇-▇▇▇-▇▇▇▇
Fax:
▇▇-▇-▇▇▇-▇▇▇▇
42
if to Stockholder, to:
Hwi ▇▇▇▇▇
▇▇▇▇
▇▇▇▇-▇ ▇▇▇▇▇-▇▇
▇▇▇▇▇▇▇-▇▇▇▇,
▇▇▇▇▇▇▇▇-▇▇
▇▇▇▇▇▇▇▇▇▇▇▇-▇▇, ▇▇▇▇▇
▇▇▇▇▇
Telephone: ▇▇-▇▇-▇▇▇-▇▇▇▇
Fax:
▇▇-▇▇-▇▇▇-▇▇▇▇
9.2 Interpretation. The
definitions of the terms herein shall apply equally to the singular and plural
forms of the terms defined. Whenever the context shall require, any
pronoun shall include the corresponding masculine, feminine and neuter
forms. When a reference is made in this Agreement to an Exhibit or
Schedule, such reference shall be to an Exhibit or Schedule to this Agreement
unless otherwise indicated. When a reference is made in this
Agreement to Sections or subsections, such reference shall be to a Section or
subsection of this Agreement. Unless otherwise indicated the words
“include,” “includes” and “including” when used herein shall be deemed in each
case to be followed by the words “without limitation.” The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. When reference is made herein to “the business of” an
entity, such reference shall be deemed to include the business of all
Subsidiaries of such entity. Reference to the Subsidiaries of an
entity shall be deemed to include all Subsidiaries of such
entity. For purposes of this Agreement:
(a) the
term “Material Adverse
Effect” when used in connection with SDI or NSAQ, as the case may be,
means any change, event, or occurrence, individually or when aggregated with
other changes, events, or occurrences, that is materially adverse to the
business, operations, financial results, financial condition or material assets
of SDI or NSAQ, as applicable, and SDI’s Subsidiaries, taken as a whole (and, in
the case of NSAQ, both before and after giving effect to the SDI Preferred Stock
Purchase and the Share Exchange); provided however that none of the following
alone or in combination shall be deemed, in and of itself, to constitute a
Material Adverse Effect: any changes, events, occurrences or effects arising out
of, resulting from or attributable to (A) acts of war, sabotage or terrorism, or
any escalation or worsening of any such acts of war, sabotage or terrorism, (B)
earthquakes, hurricanes, tornados or other natural disasters, (C) changes
attributable to the public announcement or pendency of the transactions
contemplated hereby, (D) any change in U.S. GAAP, or (E) with respect to SDI,
except to the extent they disproportionately affect SDI and its Subsidiaries,
conditions affecting (1) the industry in which SDI and its Subsidiaries operate
generally or (2) the U.S. economy or financial markets generally.
(b) the
term “Legal
Requirements” means any United States federal, state, local, municipal,
foreign (including those of the Republic of Korea) or other law, statute,
constitution, principle of common law, resolution, ordinance, code, edict,
decree, rule, regulation, ruling or requirement issued, enacted, adopted,
promulgated, implemented or otherwise put into effect by or under the authority
of any Governmental Entity;
(c) the
term “Person”
shall mean any individual, corporation (including any non-profit corporation),
general partnership, limited partnership, limited liability partnership, joint
venture, estate, trust, company (including any limited liability company or
joint stock company), firm or other enterprise, association, organization,
entity or Governmental Entity;
43
(d) the
term “knowledge” means
actual knowledge or awareness as to a specified fact or event of a Person that
is an individual or of an executive officer or director of a Person that is a
corporation or of a Person in a similar capacity of an entity other than a
corporation;
(e) the
term “Lien”
means any mortgage, pledge, security interest, encumbrance, lien, restriction or
charge of any kind (including, without limitation, any conditional sale or other
title retention agreement or lease in the nature thereof, any sale with recourse
against the seller or any Affiliate of the seller, or any agreement to give any
security interest);
(f) the
term “Affiliate” means, as
applied to any Person, any other Person directly or indirectly controlling,
controlled by or under direct or indirect common control with, such Person; for
purposes of this definition, “control” (including with correlative meanings, the
terms “controlling,” “controlled by” and “under common control with”), as
applied to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such
Person, whether through the ownership of voting securities, by contract or
otherwise;
(g) the
term “Governmental
Entity” shall mean any Korean or United States federal or state court,
administrative agency, commission, governmental or regulatory authority or
similar body; and
(h) the
term “Intellectual
Property” shall mean any or all of the following and all worldwide common
law and statutory rights in, arising out of, or associated therewith: (i)
patents and applications therefor and all reissues, divisions, renewals,
extensions, provisional applications, continuations and continuations-in-part
thereof (“Patents”); (ii)
inventions (whether patentable or not), invention disclosures, improvements,
trade secrets, proprietary information, know-how, technology, technical data,
and all documentation relating to any of the foregoing; (iii) copyrights,
copyrights registrations and applications therefor, and all other rights
corresponding thereto throughout the world (“Copyrights”); (iv)
software and software programs; (v) domain names; (vi) industrial designs and
any registrations and applications therefor; (vii) trade names, logos, common
law trademarks and service marks, trademark and service ▇▇▇▇ registrations and
applications therefor (collectively, “Trademarks”); (viii)
all databases and data collections and all rights therein; (ix) all moral rights
of authors, and (x) any similar or equivalent rights to any of the foregoing (as
applicable).
9.3 Counterparts; Electronic
Delivery. This Agreement and each other document executed in
connection with the transactions contemplated hereby, and the consummation
thereof, may be executed in one or more counterparts, all of which shall be
considered one and the same document and shall become effective when one or more
counterparts have been signed by each of the Parties and delivered to the other
Party, it being understood that all Parties need not sign the same
counterpart. Delivery by facsimile or electronic transmission to
counsel for the other Party of a counterpart executed by a Party shall be deemed
to meet the requirements of the previous sentence.
44
9.4 Entire Agreement; Third
Party Beneficiaries. This Agreement and the documents and
instruments and other agreements among the Parties hereto as contemplated by or
referred to herein, including the Exhibits and Schedules hereto (a) constitute
the entire agreement among the Parties with respect to the subject matter hereof
and supersede all prior agreements and understandings, both written and oral,
among the Parties with respect to the subject matter hereof (except to the
extent expressly stated to survive the execution of this Agreement and the
consummation of the transactions contemplated hereby); and (b) are not intended
to confer upon any other person any rights or remedies hereunder (except as
specifically provided in this Agreement).
9.5 Severability. In
the event that any provision of this Agreement, or the application thereof,
becomes or is declared by a court of competent jurisdiction to be illegal, void
or unenforceable, the remainder of this Agreement will continue in full force
and effect and the application of such provision to other persons or
circumstances will be interpreted so as reasonably to effect the intent of the
Parties hereto. The Parties further agree to replace such void or
unenforceable provision of this Agreement with a valid and enforceable provision
that will achieve, to the extent possible, the economic, business and other
purposes of such void or unenforceable provision.
9.6 Other Remedies; Specific
Performance. Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a Party will be deemed cumulative with
and not exclusive of any other remedy conferred hereby, or by law or equity upon
such Party, and the exercise by a Party of any one remedy will not preclude the
exercise of any other remedy. The Parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the Parties shall
be entitled to seek an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in any
court of the United States or any state having jurisdiction, this being in
addition to any other remedy to which they are entitled at law or in
equity.
9.7 Governing
Law. This Agreement shall be governed by and construed in
accordance with the internal law of the State of Delaware regardless of the law
that might otherwise govern under applicable principles of conflicts of law
thereof.
9.8 Jurisdiction.
Each Party hereby consents to the exclusive jurisdiction of the federal and
state courts located in the State of New York, New York County, with respect to
any action or legal proceeding that may arise out of this Agreement or the
interpretation thereof and agrees that service of process in any such action or
proceeding may be made by registered mail. for such
purpose. Each of SDI and Stockholder hereby appoints ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇, PC as their respective agent to accept and
acknowledge on its behalf service of any and all process which may be served in
any arbitration, action, proceeding or counterclaim in any way relating to or
arising out of this Agreement.
45
9.9 Rules of
Construction. The Parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Agreement
and, therefore, waive the application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other document will
be construed against the Party drafting such agreement or document.
9.10 Assignment. No
Party may assign either this Agreement or any of its rights, interests, or
obligations hereunder without the prior written approval of the other
Parties. Subject to the first sentence of this Section 9.10, this
Agreement shall be binding upon and shall inure to the benefit of the Parties
hereto and their respective successors and permitted assigns.
9.11 Amendment. This
Agreement may be amended by the Parties hereto at any time by execution of an
instrument in writing signed on behalf of each of the Parties.
9.12 Extension;
Waiver. At any time prior to the Closing, any Party hereto
may, to the extent legally allowed, (i) extend the time for the performance of
any of the obligations or other acts of the other Parties hereto, (ii) waive any
inaccuracies in the representations and warranties made to such Party contained
herein or in any document delivered pursuant hereto, and (iii) waive compliance
with any of the agreements or conditions for the benefit of such Party contained
herein. Any agreement on the part of a Party hereto to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such Party. Delay in exercising any right under
this Agreement shall not constitute a waiver of such right.
9.13 Currency. All references to
currency amounts in this Agreement shall mean United States dollars unless noted
otherwise.
9.14 Language. This Agreement shall be
drafted in English and Korean. In the event of any discrepancy
between the two versions, the English version shall take
precedence.
9.15 Schedules. The
information furnished in the Schedules is arranged in sections corresponding to
the Sections of this Agreement, and the disclosures in any section of the
Schedules shall qualify (a) the corresponding Section of this Agreement and (b)
other Sections of this Agreement to the extent (notwithstanding the absence of a
specific cross-reference), that it is clear from a reasonable reading of the
Schedules and such other Sections of this Agreement that such disclosure is also
applicable to such other Sections of this Agreement. The Schedules
and the information and disclosures contained in such Schedules are intended
only to qualify and limit the representations, warranties and covenants of the
Parties contained in this Agreement and shall not be deemed to expand in any way
the scope of any such representation, warranty or covenant (except as explicitly
set forth therein). The inclusion of any information in the Schedules
shall not be deemed to be an admission or acknowledgment that such information
is material or outside the ordinary course of business. The inclusion
of any fact or information in a Schedule is not intended to be construed as an
admission or concession as to the legal effect of any such fact or information
in any proceeding between any Party and any Person who is not a
Party.
[Remainder of page intentionally left
blank. Signature page to follow.]
46
IN
WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed as
of the date first written above.
|
By:
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/s/ Sang-▇▇▇▇ ▇▇▇
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Name:
Sang-▇▇▇▇ ▇▇▇
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Title:
Chairman
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SUNGDONG
INDUSTRIES CO. LTD.
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By:
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/s/ Hong Jun Jung
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Name:
Hong Jun Jung
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Title:
CEO
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/s/ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇
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▇▇▇
▇▇▇▇▇ ▇▇▇▇
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/s/ Hong Jun Jung
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Hong
Jun
Jung
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