EXHIBIT 99.1
MERGER AGREEMENT
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AGREEMENT AND PLAN OF MERGER
by and
among
DONOBi, Inc.,
a Nevada corporation,
DNOB Acquisitions, Inc.,
a Nevada corporation
and
Koa Internet, Inc.,
a Nevada corporation
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AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
April 12, 2005, by and among DONOBi, Inc., a Nevada corporation (the "Company"),
DNOB Acquisitions, Inc., a Nevada corporation ("Acquisition") and Koa Internet,
Inc., a Nevada corporation ("PRCO").
RECITALS
WHEREAS, the Company and PRCO desire to merge Acquisition with
and into PRCO whereby PRCO shall be the surviving entity pursuant to the terms
and conditions set forth herein and whereby the transaction is intended to
qualify as a tax free reorganization pursuant to Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "IRC"), to the extent permitted by
applicable law;
WHEREAS, in furtherance of such combination, the Boards of
Directors of the Company, Acquisition and PRCO have each approved the merger of
Acquisition with and into PRCO (the "Merger"), upon the terms and subject to the
conditions set forth herein, in accordance with the applicable provisions of the
Nevada General Corporation Law (the "NGCL").
WHEREAS, the stockholder of PRCO desires to exchange all of
its shares of the capital stock of PRCO (the "PRCO Capital Stock") for shares of
the capital stock of the Company (the "Company Capital Stock") as a tax free
reorganization pursuant to Section 368(a) of the IRC, to the extent permitted by
applicable law;
WHERAS, just prior to the Merger, PRCO's 6% Secured
Convertible Debentures Due April 11, 2007 in the principal amount of Six Hundred
Ninety Nine Thousand Six Hundred Dollars ($699,600) (the "PRCO First Debenture")
and PRCO's 6% Convertibule Debenture due April 11, 2008 in the principal amount
of Four Hundred Dollars ($400) (the "PRCO Second Debenture" and, together with
the PRCO First Debenture, the "PRCO Debentures") are convertible into shares of
PRCO common stock, par value $0.01 (the "PRCO Common Stock") (the "PRCO
Underlying Shares"), pursuant to the terms of the PRCO Debentures and the
Purchase Agreement (as defined below) and upon the consummation of the Merger
will be convertible into an equivalent number of shares of the Company's common
stock, par value $0.001 per share (the "Company Common Stock") (the "Company
Underlying Shares");
WHEREAS, upon the effectiveness of the Merger and pursuant to
the terms of this Agreement and the Purchase Agreement, the obligation to issue
Company Underlying Shares will be substituted for the obligation to issue the
PRCO Underlying Shares, the Company will assume the obligations, jointly and
severally, with PRCO under the PRCO Debentures and the Company will assume the
obligations of PRCO under that certain Convertible Debenture Purchase Agreement
dated even date herewith between PRCO and Highgate House, LLC ("Highgate") (the
"Purchase Agreement") and PRCO will be released from certain of such
obligations; and
WHEREAS, all defined terms used herein and not otherwise
defined herein shall have the meanings ascribed to such terms in the Purchase
Agreement.
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NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained, and intending to be legally
bound hereby, the parties agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. At the Effective Time (as hereinafter defined)
and subject to and upon the terms and conditions of this Agreement and the NGCL,
Acquisition shall be merged with and into PRCO pursuant to the Merger. Following
the Merger, PRCO shall continue as the surviving corporation (the "Surviving
Corporation") and the separate corporate existence of Acquisition shall cease.
As part of the Merger and as more fully described in Section 2.1, (i) the [ ]
issued and outstanding shares of the PRCO Common Stock shall be exchanged for
Company Common Stock at the Exchange Ratio (as defined below) and (ii) each
share of Acquisition's issued and outstanding shares of common stock, par value
$.001 per share (the "Acquisition Common Stock"), shall be converted into one
validly issued, fully paid and non-assessable share of common stock, par value
$.01, of the Surviving Corporation (the "Surviving Corporation Common Stock").
1.2 Effective Time. The Merger shall be consummated as
promptly as practicable after satisfaction of all conditions to the Merger set
forth herein, by filing with the Secretary of State of the State of Nevada, a
certificate of merger or similar document (the "Certificate of Merger"), and all
other appropriate documents, executed in accordance with the relevant provisions
of the NGCL. The Merger shall become effective upon the filing of the
Certificate of Merger with the Secretary of the State of the State of Nevada.
The time of such filing shall be referred to herein as the "Effective Time."
1.3 Effects of the Merger. At the Effective Time, all the
rights, privileges, immunities, powers and franchises of Acquisition and PRCO
and all property, real, personal and mixed, and every other interest of, or
belonging to or due to each of Acquisition and PRCO shall vest in the Surviving
Corporation, and all debts, liabilities, obligations and duties of Acquisition
and PRCO, including, without limitation, the performance of all obligations and
duties of PRCO pursuant to the Purchase Agreement, the PRCO Debentures and the
exhibits, schedules and all documents executed in connection therewith or any
other Transaction Document (as defined in the Purchase Agreement), shall become
the debts, liabilities, obligations and duties of the Surviving Corporation
(except as assumed by the Company) without further act or deed, all in the
manner and to the full extent provided by the NGCL. Whenever a conveyance,
assignment, transfer, deed or other instrument or act is necessary to vest any
property or right in the Surviving Corporation, the directors and officers of
the respective constituent corporations shall execute, acknowledge and deliver
such instruments and perform such acts, for which purpose the separate existence
of the constituent corporations and the authority of their respective directors
and officers shall continue, notwithstanding the Merger.
1.4 Certificate of Incorporation. The Certificate of
Incorporation of PRCO, as in effect immediately prior to the Effective Time,
shall be the Certificate of Incorporation of the Surviving Corporation and
thereafter may be amended or repealed in accordance with its terms and
applicable law.
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1.5 By-Laws. At the Effective Time and without any further
action on the part of Acquisition and PRCO, the By-laws of PRCO shall be the
By-laws of the Surviving Corporation and thereafter may be amended or repealed
in accordance with their terms or the Certificate of Incorporation of the
Surviving Corporation and as provided by law.
1.6 Directors. The directors of Acquisition at the Effective
Time shall be the directors of the Surviving Corporation, until the earlier of
their resignation or removal or until their respective successors are duly
elected and qualified, as the case may be.
1.7 Officers. The officers of Acquisition at the Effective
Time shall be the officers of the Surviving Corporation, until the earlier of
their resignation or removal or until their respective successors are duly
appointed and qualified, as the case may be.
1.8 Tax-Free Reorganization. The parties intend that the
Merger shall be treated as a tax-free reorganization pursuant to Section 368(a)
of the IRC, to the extent permitted by applicable law.
ARTICLE II
CONVERSION OF PRCO SHARES AND ASSUMPTION OF PRCO DEBENTURES
2.1 Conversion and Cancellation of PRCO Capital Stock. As of
the Effective Time, by virtue of the Merger and without any action on the part
of the Company, Acquisition or PRCO or the holders of any shares of the capital
stock of Acquisition or PRCO:
(a) Subject to the provisions of Sections 2.4 and 2.5,
each share of PRCO Capital
Stock (the "PRCO Common Stock Shares") issued and outstanding immediately prior
to the Effective Time (other than shares canceled in accordance with Section
2.1(b) and other than with respect to the escrow shares deposited by PRCO with
the Escrow Agent (as defined below) in accordance with the Purchase Agreement
(the "PRCO Escrow Shares") which shall be automatically cancelled and replaced
with an equal number of Company Escrow Shares in accordance with Section 2.2,
shall be converted into 1 (the "Exchange Ratio") of a validly issued, fully paid
and nonassessable share of Company Common Stock (the "Company Common Stock
Shares"). As of the Effective Time, each PRCO Common Stock Share shall no longer
be outstanding and shall automatically be canceled and cease to exist, and each
holder of a certificate representing any PRCO Common Stock Share shall cease to
have any rights with respect thereto other than the right to receive Company
Common Stock Shares to be issued in consideration therefor upon the surrender of
such certificate, properly endorsed to the Company.
(b) Each share of PRCO Capital Stock held in the treasury
of PRCO and each share of PRCO Capital Stock owned by Acquisition or Company
shall be canceled without any conversion thereof and no payment, distribution or
other consideration shall be made with respect thereto.
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(c) Each issued and outstanding share of Acquisition
Common Stock shall be converted into one validly issued, fully paid and
nonassessable share of Surviving Corporation Common Stock.
2.2 Escrow Materials. (a) At the Post-Closing, the Company
shall deposit into escrow with Gottbetter & Partners, LLP, as escrow agent (the
"Escrow Agent") the following, which are hereinafter collectively referred to as
the "Escrow Materials," (i) the escrow agreement annexed hereto and made a part
hereof as Exhibit 2.2(a) (the "Escrow Agreement"), (ii) certificates
representing Eleven Million Five Hundred Thousand (11,500,000) shares of duly
issued Company Common Stock, without restriction and freely tradable pursuant to
Rule 504 of Regulation D of the Securities Act and Section 3(a)(9) of the
Securities Act (the "Company Escrow Shares"), in share denominations specified
by the Purchaser, registered in the name of the Purchaser and/or its assigns;
and (iii) a power of attorney with respect to the Company Underlying Shares and
the Company Escrow Shares, in the form annexed to the Escrow Agreement as
Appendix I. At the Post-Closing, upon the Company fulfilling its obligations
under this Section 2.2, (i) Escrow Agent shall release to the Company the PRCO
Escrow Shares cancelled in accordance with Section 2.1 and (ii) the escrow
agreement (the "PRCO Escrow Agreement"), among the Escrow Agent, the Purchaser
and PRCO shall terminate and all materials held under the PRCO under the PRCO
Escrow Agreement (except for the PRCO Escrow Shares) shall be held in escrow
under the Escrow Agreement and constitute part of the Escrow Materials. The
Escrow Materials shall be held in escrow in accordance with the Escrow
Agreement. The Escrow Materials shall be released from escrow only in accordance
with this Section 2.2, the Purchase Agreement the PRCO Debentures and the Escrow
Agreement.
(b) Upon the effectiveness of the Merger and in accordance
with Section 2.7 hereof, the Company shall substitute the Company Underlying
Shares and the Company Escrow Shares for the PRCO Underlying Shares and the PRCO
Escrow Shares with regard to all of the rights and obligations, specifically
including the conversion rights, under the PRCO Debentures, and the PRCO Escrow
Shares shall be cancelled.
2.3 [Intentionally left blank].
2.4 Adjustment of the Exchange Ratio. In the event that, prior
to the Effective Time, any stock split, combination, reclassification or stock
dividend with respect to the Company Common Stock or PRCO Common Stock, any
change or conversion of Company Common Stock or PRCO Common Stock or into other
securities or any other dividend or distribution with respect to the Company
Common Stock or PRCO Common Stock (other than regular quarterly dividends)
should occur or, if a record date with respect to any of the foregoing should
occur, appropriate and proportionate adjustments shall be made to the Exchange
Ratio, and thereafter all references to an Exchange Ratio shall be deemed to be
to such Exchange Ratio as so adjusted.
2.5 No Fractional Shares. No certificates or scrip
representing fractional shares of Company Common Stock shall be issued upon the
surrender for exchange of certificates and such fractional share shall not
entitle the record or beneficial owner thereof to vote or to any other rights as
a stockholder of the Company. The number of shares of Company Common Stock to be
issued shall be rounded up to the nearest whole share.
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2.6 Further Assurances. If at any time after the Effective
Time the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments or assurances or any other acts or things are
necessary, desirable or proper (a) to vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation, its right, title or interest in, to or
under any of the rights, privileges, powers, franchises, properties or assets of
either PRCO or Acquisition or (b) otherwise to carry out the purposes of this
Agreement, the Surviving Corporation and its proper officers and directors or
their designees shall be authorized (to the fullest extent allowed under
applicable law) to execute and deliver, in the name and on behalf of either PRCO
or Acquisition , all such deeds, bills of sale, assignments and assurances and
do, in the name and on behalf of PRCO or Acquisition, all such other acts and
things necessary, desirable or proper to vest, perfect or confirm its right,
title or interest in, to or under any of the rights, privileges, powers,
franchises, properties or assets of PRCO or Acquisition, as applicable, and
otherwise to carry out the purposes of this Agreement.
2.7 PRCO Debentures. (a) As of the Effective Time, the Company
assumes, jointly and severally with PRCO, all of the obligations and
responsibilities under the PRCO Debentures to the holder or holders of the PRCO
Debentures. With respect to the PRCO Debentures, at the Effective Time, the
Company shall (i) replace the PRCO Underlying Shares, with the Company
Underlying Shares and (ii) replace the Escrow Shares deposited by PRCO with the
Escrow Agent with the Company Escrow Shares.
(b) At the Effective Time, (i) all references in the PRCO
Debentures to "Company Common Stock" (as defined in the PRCO Debentures) shall
be references to Company Common Stock (as defined herein) and (ii) all
references to the "Company" (as defined in the PRCO Debentures) in the PRCO
Debentures shall be read as references to the "Company" (as defined herein) as
if the PRCO Debentures were issued on the date the PRCO Debentures were issued,
by the Company (as defined herein), specifically including all calculations in
the PRCO Debentures such as the determination of the conversion price, the
Conversion Price, the Fixed Conversion Price and the Floating Conversion Price.
The Exchange Ratio (as defined herein) shall have no effect on the PRCO
Debentures or the assumption thereof by the Company (as defined herein).
(c) At the Effective Time, PRCO shall assign and the Company
shall assume all of PRCO's obligations and covenants under the Purchase
Agreement as if the Company executed the Purchase Agreement instead of PRCO on
the date thereof. At the Effective Time, all references to the "Company" (as
defined in the Purchase Agreement) in the Purchase Agreement shall mean the
Company (as defined herein) and all references to dates or tolling of periods
shall be read as if the Company (as defined herein) executed the Purchase
Agreement instead of the "Company" (as defined in the Purchase Agreement). At
the Effective Time, all of the remedies available to the current and future
holders of the PRCO Debentures under the Purchase Agreement against the
"Company" (as defined in the Purchase Agreement) shall be available against the
Company (as defined herein).
(d) The provisions described in this Section 2.7 shall not be
amended and shall be in effect until the earlier of (i) the date all of the PRCO
Convertible Debentures have been converted into Company Common Stock Shares or
redeemed and (ii) three (3) years from the date the PRCO Debentures were issued.
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(e) The current and future holders of the PRCO Debentures
shall be third party beneficiaries of this Agreement. There shall be no other
third party beneficiaries to this Agreement or any part hereof.
ARTICLE III
CLOSING
Subject to satisfaction of the conditions to closing set forth
in this Agreement and unless this Agreement is otherwise terminated in
accordance with the provisions contained herein, the closing of the Merger and
the Contemplated Transactions (the "Post-Closing") shall take place at the
offices of Gottbetter & Partners, LLP, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ as
promptly as practicable after satisfaction of the conditions set forth in this
Agreement, which in no event shall be more than ten days after the Closing Date
under the Purchase Agreement (except if such 10th day is not a Business Day,
then the next Business Day) (the "Post-Closing Date").
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of the Company and
Acquisition. Except as disclosed in the Reports (as defined below) or in a
document of even date herewith referring to the representations and warranties
in this Agreement and delivered by Company to PRCO prior to the execution and
delivery of this Agreement (the "Company Disclosure Schedule"), Acquisition and
the Company hereby make the following representations and warranties to PRCO,
all of which shall survive the Post-Closing, subject to the limitations set
forth in Section 8.1 hereof:
(a) Organization and Good Standing. Acquisition is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Nevada, with full corporate power and authority to conduct its
business as it is now being conducted, to own or use the properties and assets
that it owns or uses, and to perform all its obligations under this Agreement.
The Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Nevada, with full corporate power and
authority to conduct its business as it is now being conducted, to own or use
the properties and assets that it owns or uses, and to perform all its
obligations under this Agreement and, upon the Post-Closing the PRCO Debentures.
Company has no subsidiaries other than Acquisition and other than as set forth
on the Company Disclosure Schedule (individually, a "Subsidiary" and
collectively, the "Subsidiaries"). Acquisition has no subsidiaries. Each of the
Company and Acquisition is duly qualified to do business and is in good standing
as a foreign corporation in each jurisdiction in which either the ownership or
use of the properties owned or used by it, or the nature of the activities
conducted by it, requires such qualification, except for such failures to be so
qualified or in good standing would not have a Material Adverse Effect.
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(b) Authority; No Conflict.
i. This Agreement and any agreement executed in connection
herewith by Company or Acquisition constitute the legal, valid and binding
obligations of the Company and Acquisition, as the case may be, enforceable
against the Company and Acquisition, as the case may be, in accordance with
their respective terms, except as such enforceability is limited by bankruptcy,
insolvency and other laws affecting the rights of creditors and by general
equitable principles. The Company has the absolute and unrestricted right,
power, authority and capacity to execute and deliver this Agreement and any
agreement executed by it in connection herewith and to perform its obligations
hereunder and thereunder.
ii. Neither the execution and delivery of this Agreement
by each of the Company and Acquisition, nor the consummation or performance by
each of any of its respective obligations contained in this Agreement or in
connection with the Contemplated Transactions will, directly or indirectly (with
or without notice or lapse of time):
a. contravene, conflict with or result in a violation
of (x) any provision of the Organizational Documents of the Company or
Acquisition, as the case may be, or (y) any resolution adopted by the board of
directors or the stockholders of the Company or Acquisition, as the case may be;
b. contravene, conflict with or result in a violation
of, or give any governmental body or other Person the right to challenge any of
the Contemplated Transactions or to exercise any remedy or obtain any relief
under, any Legal Requirement or any Order to which the Company or Acquisition or
any of the assets owned or used by the Company or Acquisition may be subject;
c. contravene, conflict with or result in a violation
or breach of any provision of, or give any Person the right to declare a default
or exercise any remedy under, or to accelerate the maturity or performance of,
or to cancel, terminate or modify, this Agreement, the PRCO Debentures (once
assumed by Company) or any Applicable Contract;
d. result in the imposition or creation of any
material encumbrance upon or with respect to any of the material assets owned or
used by the Company or Acquisition;
e. cause the Company or Acquisition to become subject
to, or to become liable for the payment of, any tax; or
f. cause any of the assets owned by the Company or
Acquisition to be reassessed or revalued by any taxing authority or other
governmental body, except in connection with the transfer of real estate
pursuant to this Agreement or the Contemplated Transactions, if any.
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(c) Capitalization. The capitalization of the Company as of
October 31, 2004 is as set forth in the Form 10-QSB for the period ended October
31, 2004, increased as set forth in the next sentence. The Company has not
issued any capital stock since that date other than pursuant to (i) employee
benefit plans disclosed in the Reports (as defined in Section 4.1(d)) or (ii)
outstanding warrants, options or other securities disclosed in the Reports,
except as set forth on Company Disclosure Schedule. All of the issued and
outstanding shares of the Company Capital Stock have been duly authorized and
validly issued and are fully paid and non-assessable. Except for this Agreement
and as disclosed in the Reports, there are no outstanding options, warrants,
script, rights to subscribe to, registration rights, calls or commitments of any
character whatsoever relating to, or securities, rights or obligations
convertible into or exchangeable for, or giving any Person any right to
subscribe for or acquire, any shares of the Company Common Stock, or contracts,
commitments, understandings, or arrangements by which the Company or any
Subsidiary is or may become bound to issue additional shares of the Company
Common Stock, or securities or rights convertible or exchangeable into shares of
the Company Common Stock. None of the outstanding Company Capital Stock was
issued in violation of the Securities Act or any other legal requirement.
(d) Financial Statements. The Company has delivered or made
available to PRCO copies of its Form 10-KSB Annual Report for the fiscal year
ended January 31, 2004 and copies of its quarterly reports on Form 10-QSB for
the quarters ended April 30, 2004, July 31, 2004 and October 31, 2004, each as
filed with the SEC and including, in each case, any amendments thereto
(collectively, the "Reports"). The financial statements contained are in all
material respects in accordance with the books and records of the Company and
have been prepared in accordance with GAAP applied on a consistent basis
throughout the periods indicated, all as more particularly set forth in the
notes to such statements. The consolidated balance sheets contained in such
Reports (the "Company Balance Sheets") present fairly in all material respects
as of their dates the consolidated financial condition of the Company and its
subsidiaries. Except as and to the extent reflected or reserved against in the
Company Balance Sheets (including the notes thereto), the Company did not have,
as of the date of any such Company Balance Sheet, any material liabilities or
obligations (absolute or contingent) of a nature customarily reflected in a
balance sheet or the notes thereto. The consolidated statements of operations,
consolidated statements of stockholders' equity and changes in consolidated
statements of cash flows present fairly in all material respects the results of
operations and changes in financial position of the Company and its subsidiaries
for the periods indicated.
(e) SEC Filings. The Company has filed all reports required to
be filed with the SEC under the rules and regulations of the SEC and all such
reports have complied in all material respects, as of their respective filing
dates and effective dates, as the case may be, with all the applicable
requirements of the Securities Exchange Act of 1934, as amended. As of the
respective filing and effective dates, none of such reports (including without
limitation, the Reports) contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
(f) Absence of Material Adverse Change. Since the date of the
latest Company Balance Sheets, there have been no events, changes or occurrences
which have had or are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect.
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(g) Issuance of Company Securities. The Company Common Stock,
and when issued in accordance with this Agreement, the Purchase Agreement, the
Escrow Agreement and the PRCO Debentures, the Company Underlying Shares and the
Company Escrow Shares, shall be duly authorized, validly issued, fully-paid and
nonassessable. The Company currently has, and at all times while the PRCO
Debentures are outstanding will maintain, an adequate reserve of shares of the
Company Common Stock to enable it to perform its obligations under this
Agreement and the PRCO Debentures. Except as set forth in the Reports, there is
no equity line of credit or convertible security or instrument outstanding of
the Company.
(h) Undisclosed Liabilities. Except as disclosed in any
Schedule to this Agreement, none of the Company, Acquisition or the Subsidiaries
has any material obligations and liabilities (contingent or otherwise) except
those liabilities (i) that are reflected in the Company Balance Sheets or in the
notes thereto, or disclosed in the notes therein in accordance with GAAP or, in
accordance with GAAP, are not required to be so reflected or disclosed, or (ii)
that were incurred after the date of the Company Balance Sheets in the Ordinary
Course of Business, none of which results from, arises out of, relates to, is in
the nature of, or was caused by any breach of contract, breach of warranty,
tort, infringement, or violation of law or could reasonably be expected to have
a Material Adverse Effect.
(i) Taxes.
i. The Company has filed or caused to be filed on a
timely basis all tax returns that are or were required to be filed by it
pursuant to applicable Legal Requirements. The Company has paid, or made
provision for the payment of, all taxes that have or may have become due
pursuant to those tax returns or otherwise, or pursuant to any assessment
received by the Company, except such taxes, if any, as are listed in the Company
Disclosure Schedule and are being contested in good faith as to which adequate
reserves have been provided in the Company Balance Sheets.
ii. All tax returns filed by the Company are true,
correct and complete in all material respects.
(j) Employee Benefits. Except as disclosed in the Reports, the
Company does not sponsor or otherwise maintain a "pension plan" within the
meaning of Section 3(2) of ERISA or any other retirement plan other than the
Company Profit Sharing and 401(k) Plan and Trust that is intended to qualify
under Section 401 of the Code, nor do any unfunded liabilities exist with
respect to any employee benefit plan, past or present. No employee benefit plan,
any trust created thereunder or any trustee or administrator thereof has engaged
in a "prohibited transaction," as defined in Section 4975 of the Code, which may
have a Material Adverse Effect.
(k) Governmental Authorizations. The Company, Acquisition and
the Subsidiaries have all permits that are legally required to enable them to
conduct their business in all material respects as now conducted.
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(l) Legal Proceedings; Orders.
i. Except as set forth in the Reports, there is no
material pending Proceeding:
a. that has been commenced by or against the
Company, Acquisition or the Subsidiaries, or any of the assets owned or used by,
the Company, Acquisition or the Subsidiaries; or
b. that challenges, or that may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any
Contemplated Transaction.
ii. Except as set forth in the Reports:
a. there is no material Order to which the Company or
the Subsidiaries, or any of the assets owned or used by the Company, Acquisition
or the Subsidiaries, is subject; and
b. no officer, director, agent, or employee of the
Company or Acquisition is subject to any material Order that prohibits such
offer, director, agent or employee from engaging in or continuing any conduct,
activity or practice relating to the business of the Company or Acquisition, as
the case may be.
(m) Absence of Certain Changes and Events. Except as set forth
in the Reports, since the date of the most recent Company Balance Sheets, except
as heretofore set forth, the Company and the Subsidiaries and Acquisition, since
the date of its inception, have conducted their business only in the Ordinary
Course of Business, and other than as contemplated by this Agreement or the
Contemplated Transactions there has not been any:
i. change in the authorized or issued capital of the
Company, including the Company Common Stock or the authorized or issued capital
stock of Acquisition and the Subsidiaries; grant of any stock option or right to
purchase shares of capital stock of the Company; issuance of any equity lines of
credit, security convertible into such capital stock; grant of any registration
rights; purchase, redemption, retirement, or other acquisition or payment of any
dividend or other distribution or payment in respect of shares of capital stock;
ii. amendment to the Organizational Documents of the
Company, Acquisition or the Subsidiaries;
iii. damage to or destruction or loss of any material
asset or property of the Company, Acquisition or the Subsidiaries, whether or
not covered by insurance, causing a Material Adverse Effect;
iv. receipt of notice that any of their substantial
customers have terminated or intends to terminate their relationship, which
termination would have a Material Adverse Effect;
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v. entry into any transaction other than in the
Ordinary Course of Business;
vi. entry into, termination of, or receipt of written
notice of termination of any material (i) license, distributorship, dealer,
sales representative, joint venture, credit, or similar agreement, or (ii)
contract or transaction;
vii. sale (other than sales of inventory in the Ordinary
Course of Business), lease, or other disposition of any asset or property of the
Company, Acquisition or the Subsidiaries or mortgage, pledge, or imposition of
any lien or other encumbrance on any material asset or property of the Company,
Acquisition or the Subsidiaries;
viii. cancellation or waiver of any claims or rights
with a value to the Company in excess of $10,000;
ix. material change in the accounting methods used by
the Company, Acquisition or
the Subsidiaries; or
x. agreement, whether oral or written, by the Company,
Acquisition or the Subsidiaries to do any of the foregoing.
(n) No Default or Violation. The Company, Acquisition and the
Subsidiaries (i) are in material compliance with all applicable material terms
and requirements of each material contract under which they have or had any
obligation or liability or by which they or any of the assets owned or used by
them is or was bound and (ii) is not in material violation of any Legal
Requirement.
(o) Certain Payments. Since the most recent date of the
Company Balance Sheets, neither the Company, Acquisition or the Subsidiaries,
nor any director, officer, agent or employee of the Company or the Subsidiaries
has directly or indirectly (a) made any contribution, gift, bribe, rebate,
payoff, influence payment, kickback or other payment to any Person, private or
public, regardless of form, whether in money, property or services (i) to obtain
favorable treatment in securing business, (ii) to pay for favorable treatment
for business secured, (iii) to obtain special concessions or for special
concessions already obtained, for or in respect of the Company, Acquisition or
the Subsidiaries or (iv) in violation of any Legal Requirement, or (b)
established or maintained any fund or asset that has not been recorded in the
books and records of the Company, Acquisition or the Subsidiaries.
(p) Brokers or Finders. The Company and Acquisition have not
incurred any obligation or liability, contingent or otherwise, for brokerage or
finders' fees or agents' commissions or other similar payment in connection with
this Agreement.
4.2 Representations and Warranties of PRCO. PRCO hereby makes
the following representations and warranties to the Company, all of which shall
survive the Post-Closing, subject to the limitations set forth in Section 8.2
hereof:
(a) Organization, Good Standing and Purpose. PRCO is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Nevada with full power and authority to conduct its businesses
as it is now being conducted, to own or use the properties and assets that it
owns or uses, and to perform all of its obligations under this Agreement. PRCO
has no subsidiaries. PRCO is duly qualified to do business and is in good
standing as a foreign corporation in each jurisdiction in which either the
ownership or use of the properties owned or used by it, or the nature of the
activities conducted by it, requires such qualification, except for such
failures to be so qualified or in good standing would not have a Material
Adverse Effect.
11
(b) Authority; No Conflict.
i. This Agreement and any agreement executed in
connection herewith have been duly authorized by all required action of PRCO and
constitute the legal, valid and binding obligations of PRCO, enforceable against
PRCO in accordance with their respective terms. PRCO has the absolute and
unrestricted right, power and authority to execute and deliver this Agreement
and any agreements executed in connection herewith and to perform its
obligations hereunder and thereunder.
ii. Neither the execution and delivery of this Agreement
by PRCO, nor the consummation or performance by it of any of its obligations
contained in this Agreement or in connection with the Contemplated Transactions
by the Company will, directly or indirectly (with or without notice or lapse of
time):
a. contravene, conflict with or result in a violation
of (x) any provision of the Organizational Documents of PRCO or (y) any
resolution adopted by the board of directors or the stockholders of PRCO;
b. contravene, conflict with or result in a violation
of, or give any governmental body or other Person the right to challenge any of
the Contemplated Transactions or to exercise any remedy or obtain any relief
under, any Legal Requirement or any Order to which PRCO or any of the assets
owned or used by PRCO may be subject;
c. contravene, conflict with or result in a violation
or breach of any provision of, or give any Person the right to declare a default
or exercise any remedy under, or to accelerate the maturity or performance of,
or to cancel, terminate or modify, this Agreement, the Purchase Agreement, the
PRCO Debentures or any Applicable Contract;
d. result in the imposition or creation of any material
encumbrance upon or with respect to any of the material assets owned or used by
PRCO;
e. cause PRCO to become subject to, or to become liable
for the payment of, any tax; or
f. cause any of the assets owned by PRCO to be
reassessed or revalued by any taxing authority or other governmental body,
except in connection with the transfer of real estate pursuant to this Agreement
or the Contemplated Transactions.
iii. PRCO is not required to obtain any consent from
any Person in connection with the execution and delivery of this Agreement or
the consummation or performance of any of the Contemplated Transactions, other
than the requisite approval of its stockholder, [▇▇▇ ▇▇▇▇▇▇] ( the "PRCO
Stockholder"), which approval has been obtained.
12
(c) Capitalization. The entire authorized PRCO Capital Stock
consists of $[__] PRCO Common Stock, of which [ ] shares are issued and
outstanding and held by the PRCO Stockholder of which 11,500,000 are held in
escrow pursuant to the PRCO Escrow Agreement (as defined below). With the
exception of the PRCO Common Stock Shares and the PRCO Debentures, there are no
other outstanding equity or debt securities of the Company. No legend or other
reference to any purported encumbrance appears upon any certificate representing
the PRCO Common Stock Shares, other than applicable Securities Act legends. The
issued and outstanding PRCO Common Stock Shares have been duly authorized and
validly issued and are fully paid and non-assessable. Except for the PRCO
Debentures and the agreements relating thereto set forth in the Purchase
Agreement, there are no outstanding options, voting agreements or arrangements,
warrants, script, rights to subscribe to, registration rights, calls or
commitments of any character whatsoever relating to, or, securities, rights or
obligations convertible into or exchangeable for, or giving any Person any right
to subscribe for or acquire, any shares of PRCO Capital Stock or other
securities, or contracts, commitments, understandings, or arrangements by which
PRCO is or may become bound to issue additional shares of PRCO Capital Stock or
other securities, or securities or rights convertible or exchangeable into
shares of PRCO Capital Stock or other securities. Except as set forth in this
Section 4.2(c), PRCO has no outstanding equity, debt, debt or equity equivalent
security, or debt or equity lines of credit. None of the outstanding PRCO Common
Stock Shares were issued in violation of the Securities Act or any other legal
requirement. PRCO does not own, and has no contract to acquire, any equity
securities or other securities of any Person or any direct or indirect equity or
ownership interest in any other business. The PRCO Escrow Shares have been duly
authorized, validly issued, fully paid and are non-assessable pursuant to the
escrow agreement between PRCO, Highgate and the Escrow Agent (the "PRCO Escrow
Agreement"). The PRCO Underlying Shares have been duly authorized, and when and
if issued pursuant to the terms of the Purchase Agreement, will be fully paid
and non-assessable.
(d) Financial Statements. PRCO has delivered to the Company a
balance sheet of PRCO as at March 31, 2005 (the "PRCO Balance Sheet"), and a
statement of operations for the period from January 1, 2003 to March 31, 2005.
Such financial statements were prepared in accordance with GAAP, are set forth
in Schedule 4.2(d) hereto and fairly present the financial condition and the
results of operations of PRCO as at March 31, 2005 of and for the period then
ended.
(e) Absence of Material Adverse Change. Since the date of the
most recent PRCO Balance Sheet provided under Section 4.2(d) hereof, there have
been no events, changes or occurrences which have had or are reasonably likely
to have, individually or in the aggregate, a material adverse effect on PRCO.
(f) Books and Records. The books of account, minute books,
stock record books, and other records of PRCO, all of which have been made
available to the Company and original copies of which will be delivered to the
Company at the Post-Closing, are complete and correct and have been maintained
in accordance with sound business practices, including the maintenance of an
adequate system of internal controls. The minute books of PRCO contain accurate
and complete records of all meetings held of, and corporate action taken by, the
stockholders, the Board of Directors, and any committees of the Board of
Directors of PRCO.
13
(g) No Undisclosed Liabilities. There are no material
undisclosed liabilities of PRCO, whether absolute, accrued, contingent, or
otherwise, other than the PRCO Debentures and as set forth in Schedule 4.2(g).
(h) Title to Properties; Encumbrances. PRCO has good and
marketable title to all the properties, interest in such properties and assets,
real and personal, reflected in the PRCO Balance Sheet or acquired after the
date of such balance sheet, free and clear of all mortgages, liens, pledges,
charges or encumbrances except (i) mortgages and other encumbrances referred to
in the notes to the PRCO Balance Sheet.
(i) Legal Proceedings; Orders.
i. Except as set forth in Schedule 4.2(i) hereto,
there is no pending Proceeding:
a. that has been commenced or threatened by or
against PRCO or any of its officers, directors, agents or employees as such or
that otherwise relates to or may affect the business of, or any of the assets
owned or used by, PRCO; or
b. that challenges, or that may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any
Contemplated Transaction.
ii. Except as set forth in Schedule 4.2(i) hereto:
a. there is no Order to which PRCO, or any of the
assets owned or used by PRCO, is subject; and
b. no officer, director, agent, or employee of PRCO
is subject to any Order that prohibits such offer, director, agent or employee
from engaging in or continuing any conduct, activity or practice relating to the
business of PRCO.
(j) Brokers or Finders. PRCO has incurred no liability,
contingent or otherwise, for brokerage or finders' fees or agents' commissions
or other similar payment in connection with this Agreement, other than what has
been disclosed herein.
(k) No Default or Violation. Schedule 4.2(k) hereto lists each
contract, agreement and commitment to which PRCO is a party or otherwise bound
(each, an "PRCO Contract") or has any obligation or liability pursuant thereto.
PRCO (i) is in compliance with all terms and requirements of each PRCO Contract
and (ii) is not in violation of any Legal Requirement.
(l) Taxes.
i. PRCO has filed or caused to be filed on a timely
basis all tax returns that are or were required to be filed by it pursuant to
applicable Legal Requirements. PRCO has paid, or made provision for the payment
of, all taxes that have or may have become due pursuant to those tax returns or
otherwise, or pursuant to any assessment received by PRCO, except such taxes, if
any, as are listed in Schedule 4.2(l) hereto and are being contested in good
faith as to which adequate reserves have been provided in the PRCO Balance
Sheets.
14
ii. All tax returns filed by PRCO are true, correct and
complete in all material respects and no taxes are currently owed or tax returns
due by or on behalf of PRCO.
(m) Absence of Certain Changes and Events. Except as set forth
in Schedule 4.2(m) hereto, since the date of the PRCO Balance Sheet, PRCO has
conducted its business only in the Ordinary Course of Business, there has not
been any material adverse effect on PRCO's business or operations, and there has
not been any:
i. change in the authorized or issued capital stock
of PRCO; grant of any stock option or right to purchase shares of capital stock
of PRCO; issuance of any security convertible into such capital stock; grant of
any registration rights; purchase, redemption, retirement, or other acquisition
or payment of any dividend or other distribution or payment in respect of shares
of capital stock;
ii. amendment to the Organizational Documents of PRCO;
iii. damage to or destruction or loss of any asset or
property of PRCO, whether or not covered by insurance or any other event or
circumstance, materially and adversely affecting the properties, assets,
business, financial condition, or prospects of PRCO;
iv. receipt of notice that any of its substantial
customers have terminated or intends to terminate their relationship, which
termination would have a material adverse effect on its financial condition,
results or operations, business assets or properties of PRCO;
v. entry into any transaction other than in the
Ordinary Course of Business;
vi. entry into, termination of, or receipt of written
notice of termination of any (i) license, distributorship, dealer, sales
representative, joint venture, credit, or similar agreement, or (ii) contract or
transaction;
vii. sale, lease, or other disposition of any asset
or property of PRCO or mortgage, pledge, or imposition of any lien or other
encumbrance on any asset or property of PRCO;
viii. cancellation or waiver of any claims or rights
with a value to PRCO in excess of $10,000;
ix. material change in the accounting methods used by
PRCO;
x. accrual or payment of any salaries or other
compensation, increase in salaries, compensation or bonuses or retention or
hiring of, any consultant or employee;
15
xi. debt or other liability incurred, other than the PRCO
Debentures; or
xii. agreement, whether oral or written, by PRCO to do any
of the foregoing, other than the Purchase Agreement.
(n) Compliance with Law. Except as set forth in Schedule
4.2(n) hereto:
i. PRCO has complied in all material respects with,
and is not in violation of, in any material respect, any Law to which it or its
business is subject; and
ii. PRCO has obtained all licenses, permits, certificates
or other governmental authorizations (collectively "Authorizations") necessary
for the ownership or use of its assets and properties or the conduct of its
business; and
(iii) PRCO has not received written notice of violation of,
or knows of any material violation of, any Laws to which it or its business is
subject or any Authorization necessary for the ownership or use of its assets
and properties or the conduct of its business.
(o) Environmental Laws. PRCO has not received any notice or
claim (and is not aware of any facts that would form a reasonable basis for any
claim), or entered into any negotiations or agreements with any other Person,
and, to the best knowledge of PRCO, PRCO is not the subject of any investigation
by any governmental or regulatory authority, domestic or foreign, relating to
any material or potentially material liability or remedial action under any
Environmental Laws. There are no pending or, to the knowledge of PRCO,
threatened, actions, suits or proceedings against PRCO or any of its properties,
assets or operations asserting any such material liability or seeking any
material remedial action in connection with any Environmental Laws.
(p) Intellectual Property. (i) PRCO owns, or is validly
licensed or otherwise has the right to use, all patents, and patent rights
("Patents") and all trademarks, trade secrets, trademark rights, trade names,
trade name rights, service marks, service ▇▇▇▇ rights, copyrights and other
proprietary intellectual property rights and computer programs (the
"Intellectual Property Rights"), in each case, which are material to the conduct
of the business of PRCO.
(ii) To the best knowledge of PRCO, PRCO has not
interfered with, infringed upon (without license to infringe), misappropriated
or otherwise come into conflict with any Patent of any other Person. PRCO has
not interfered with, infringed upon, misappropriated or otherwise come into
conflict with any Intellectual Property Rights of any other Person. PRCO has not
received any written charge, complaint, claim, demand or notice alleging any
such interference, infringement, is appropriation or violation (including any
claim that PRCO must license or refrain from using any Patents or Intellectual
Property Rights of any other Person) which has not been settled or otherwise
fully resolved. To the best knowledge of PRCO, no other Person has interfered
with, infringed upon (without license to infringe), misappropriated or otherwise
come into conflict with any Patents or Intellectual Property Rights of PRCO.
16
(q) Employees. (a) PRCO has [ ] employees and ▇▇▇ ▇▇▇▇▇▇, who
is the President of PRCO; (b) all employees have been fully paid for all
services rendered by them to PRCO in their capacity as employees of PRCO and are
owed no further salary or compensation in connection therewith; (c) PRCO has
complied in all respects with all applicable Laws respecting employment and
employment practices, terms and conditions of employment, wages and hours, and
PRCO is not liable for any arrears of wages or any taxes or penalties for
failure to comply with any such Laws; (d) PRCO believes that PRCO's relations
with its employees is satisfactory; (e) there are no controversies pending or,
to the best knowledge of PRCO, threatened between PRCO and any of its employees
or former employees; (f) PRCO is not a party to any collective bargaining
agreement or other labor union contract applicable to persons employed by PRCO,
nor, to the best knowledge of PRCO, are there any activities or proceedings of
any labor union to organize any such employees; (g) there are no unfair labor
practice complaints pending against PRCO before the National Labor Relations
Board or any current union representation questions involving employees of PRCO;
(h) there is no strike, slowdown, work stoppage or lockout existing, or, to the
best knowledge of PRCO, threatened, by or with respect to any employees of PRCO;
(i) no charges are pending before the Equal Employment Opportunity Commission or
any state, local or foreign agency responsible for the prevention of unlawful
employment practices with respect to PRCO; (j) there are no claims pending
against PRCO before any workers' compensation board; (k) PRCO has not received
notice that any Federal, state, local or foreign agency responsible for the
enforcement of labor or employment laws intends to conduct an investigation of
or relating to PRCO and, to the best knowledge of PRCO, no such investigation is
in progress; and (l) PRCO has no consultants or independent contractors.
(r) Employee Benefit Plans. There are no "employee pension
benefit plans" (as defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) or "employee welfare benefit plans"
(as defined in Section 3(1) of ERISA) maintained, or contributed to, by PRCO for
the benefit of any current or any former employees, officers or directors of
PRCO.
(s) Rule 504 Securities. The PRCO Debentures (which include
the Escrow Shares for the PRCO Underlying Shares) were sold in accordance with
Rule 504 of Regulation D of the Securities Act of 1933, as amended (the
"Securities Act"), and Section 80A.15.2(g) of the Minnesota Statutes, 1986 (the
"Minnesota Act") and Administrative Rule 2875.0170, to an accredited investor
residing in the State of Minnesota. Accordingly, at the Effective Time and
pursuant to Rule 504, the Minnesota Act, and Section 3(a)(9) of the Securities
Act, the PRCO Debentures (which include the Company Escrow Shares for the
Company Underlying Shares) shall continue to be without restriction and shall be
freely tradable in accordance with Rule 504.
ARTICLE V
COVENANTS
5.1 Covenants of the Company and Acquisition.
(a) Conduct of Business. Between the date hereof and up to and
including the Post-Closing Date, each of the Company and Acquisition shall:
17
i. conduct its business only in the Ordinary Course
of Business;
ii. use its commercially reasonable efforts to preserve
intact the current business organization of the Company and Acquisition, as the
case may be, keep available the services of the current officers, employees and
agents of the Company and Acquisition, as the case may be, and maintain the
relations and good will with suppliers, customers, landlords, creditors,
employees, agents and others having business relationships with the Company and
Acquisition, as the case may be;
iii. not pay, incur or declare any dividends or
distributions with respect to its stockholders or amend its Certificate of
Incorporation or By-Laws, without the prior written consent of the PRCO
Debenture Holder;
iv. not authorize, issue, sell, purchase or redeem any
shares of its capital stock or any options or other rights to acquire ownerships
interests without the prior written consent of the PRCO Debenture Holder except
as may be required by pre-existing commitments disclosed herein or in the
Reports;
v. not incur any indebtedness for money borrowed or
issue any debt securities, or incur or suffer to be incurred any liability or
obligation of any nature whatsoever, except those incurred in the Ordinary
Course of Business, or cause or permit any material lien, encumbrance or
security interest to be created or arise on or in respect of any material
portion of its properties or assets;
vi. not make any investment of a capital nature
either by purchased stock or securities, contribution to capital, property
transfer or otherwise, or by the purchase of any property or assets of any other
Person;
vii. not do any other act which would cause any
representation or warranty of the Company in this Agreement to be or become
untrue in any material respect or that is not in the Ordinary Course of
Business;
viii. report periodically to the PRCO Debenture Holder
concerning the status of the business and operations of the Company upon the
reasonable request of the PRCO Debenture Holder; and
ix. confer with the PRCO Debenture Holder concerning
operational matters of a material nature upon the reasonable request of the PRCO
Debenture Holder.
(b) Proposals; Other Offers. Commencing on the date of
execution of this Agreement up to and including the Post-Closing Date, each of
the Company and Acquisition shall not, directly or indirectly (whether through
an employee, a representative, an agent or otherwise), solicit or encourage any
inquiries or proposals, engage in negotiations for or consent to or enter into
any agreement providing for the acquisition of its business. Each of the Company
and Acquisition shall not, directly or indirectly (whether through an employee,
a representative, an agent or otherwise) disclose any nonpublic information
relating to the Company and Acquisition or afford access to any of the books,
records or other properties of the Company and Acquisition to any person or
entity that is considering, has considered or is making any such acquisition
inquiry or proposal relating to the Company's and Acquisition's business.
18
(c) Further Assurances. Prior to the Post-Closing Date, with
the cooperation of PRCO where appropriate, each of the Company and Acquisition
shall use commercially reasonable efforts to:
i. promptly comply with all filing requirements which
federal, state or local law may impose on the Company or Acquisition, as the
case may be, with respect to the Contemplated Transactions by this Agreement;
and
ii. take all actions necessary to be taken, make any
filing and obtain any consent, authorization or approval of or exemption by any
governmental authority, regulatory agency or any other third party (including
without limitation, any landlord or lessor of the Company and any party to whom
notification is required to be delivered or from whom any form of consent is
required) which is required to be filed or obtained by the Company or
Acquisition in connection with the Contemplated Transactions by this Agreement.
(d) Access to Additional Agreements and Information. Prior to
the Post-Closing Date, the Company and Acquisition shall make available to the
PRCO Debenture Holder (as well as its counsel, accountants and other
representatives) any and all agreements, contracts, documents, other instruments
and personnel material to the Company's business, including without limitation,
those contracts to which the Company or Acquisition is a party and those by
which each of its business or any of the Company's or Acquisition's assets are
bound.
5.2 Covenants of PRCO.
(a) Conduct of Business. Between the date hereof and up to and
including the Post-Closing Date, PRCO shall:
i. conduct its business only in the Ordinary Course
of Business;
ii. use its commercially reasonable efforts to preserve
intact the current business organization of PRCO, keep available the services of
the current officers, employees and agents of PRCO, and maintain the relations
and good will with suppliers, customers, landlords, creditors, employees, agents
and others having business relationships with PRCO;
iii. not pay, incur or declare any dividends or
distributions with respect to its stockholders or amend its Certificate of
Incorporation or By-Laws, without the prior written consent of the Company and
PRCO Debenture Holder;
iv. not authorize, issue, sell, purchase or redeem
any shares of its capital stock or any options or other rights to acquire
ownerships interests without the prior written consent of the Company and PRCO
Debenture Holder;
v. not incur any indebtedness for money borrowed or
issue and debt securities, or incur or suffer to be incurred any liability or
obligation of any nature whatsoever, or cause or permit any material lien,
encumbrance or security interest to be created or arise on or in respect of any
material portion of its properties or assets;
19
vi. not make any investment of a capital nature either
by purchased stock or securities, contribution to capital, property transfer or
otherwise, or by the purchase of any property or assets of any other Person;
vii. not do any other act which would cause
representation or warranty of PRCO in this Agreement to be or become untrue in
any material respect or that is not in the Ordinary Course of Business
consistent with past practice;
viii. report periodically to the Company and the PRCO
Debenture Holder concerning the status of the business and operations of PRCO;
and
ix. confer with the Company and the PRCO Debenture
Holder concerning operational matters of a material nature.
(b) Proposals; Other Offers. Commencing on the date of
execution of this Agreement through the Post-Closing Date, PRCO shall not,
directly or indirectly (whether through an employee, a representative, an agent
or otherwise), solicit or encourage any inquiries or proposals, engage in
negotiations for or consent to or enter into any agreement providing for the
acquisition of its business. PRCO shall not, directly or indirectly (whether
through an employee, a representative, an agent or otherwise) disclose any
nonpublic information relating to PRCO or afford access to any of the books,
records or other properties of PRCO to any person or entity that is considering,
has considered or is making any such acquisition inquiry or proposal relating to
the PRCO's business.
(c) Further Assurances. Prior to the Post-Closing Date, with
the cooperation of the Company where appropriate, PRCO shall:
i. promptly comply with all filing requirements which
federal, state or local law may impose on PRCO with respect to the Contemplated
Transactions by this Agreement and cooperate with the Company regarding the
same; and
ii. take all actions necessary to be taken, make any
filing and obtain any consent, authorization or approval of or exemption by any
governmental authority, regulatory agency or any other third party (including
without limitation, any landlord or lessor of PRCO and any party to whom
notification is required to be delivered or from whom any form of consent is
required) which is required to be filed or obtained by PRCO in connection with
the Contemplated Transactions by this Agreement.
(d) Actions by PRCO. PRCO shall take no action or enter into
any agreements or arrangements except as may be required by this Agreement.
(e) No Change in Capital Stock. Prior to the Effective Time,
no change will be made in the authorized, issued or outstanding capital stock of
PRCO, and no subscriptions, options, rights, warrants, calls, commitments or
agreements relating to the authorized, issued or outstanding capital stock of
PRCO will be entered into, issued, granted or created.
20
(f) Access to Additional Agreements and Information. Prior to
the Post-Closing Date, PRCO shall make available to the Company and PRCO
Debenture Holder (as well as its counsel, accountants and other representatives)
any and all agreements, contracts, documents, other instruments and personnel
material of PRCO's business, including without limitation, those contracts to
which PRCO is a party and those by which its business or any of PRCO's assets
are bound.
(g) Further Assurances. Prior to the Post-Closing Date, with
the cooperation of the Company where appropriate, PRCO shall use commercially
reasonable efforts to:
i. promptly comply with all filing requirements which
federal, state or local law may impose on PRCO with respect to the Contemplated
Transactions by this Agreement; and
ii. take all actions necessary to be taken, make any
filing and obtain any consent, authorization or approval of or exemption by any
governmental authority, regulatory agency or any other third party (including
without limitation, any landlord or lessor of PRCO and any party to whom
notification is required to be delivered or from whom any form of consent is
required) which is required to be filed or obtained by PRCO in connection with
the Contemplated Transactions by this Agreement.
5.3 Governmental Filings and Consents. The Company,
Acquisition and PRCO shall cooperate with one another in filing any necessary
applications, reports or other documents with any federal or state agencies,
authorities or bodies having jurisdiction with respect to the business of the
Company, Acquisition or PRCO and in seeking any necessary approval, consultation
or prompt favorable action of, with or by any of such agencies, authorities or
bodies.
5.4 Publicity. Any public announcement or press release
relating to this Agreement or the Contemplated Transactions must be approved by
the PRCO Debenture Holder and the Company in writing before being made or
released. The Company shall have the right to issue a press release or make
other disclosure without the PRCO Debenture Holder's written approval if in the
opinion of the Company's counsel such a release is necessary to comply with SEC
Rules and Regulations or other Law; provided that, the PRCO Debenture Holder
receives a copy of such prepared press release or other disclosures for purposes
of review at least 24 hours before it is issued. This 24 hour period may be
shortened if in the opinion of the Company's counsel it is required by Law;
provided that, the PRCO Debenture Holder and the Company receives a copy of such
release as long as reasonably practical before it is issued.
5.5 Tax Returns. The current officers of the Company shall
have the right to prepare any tax returns of the Company with respect to any
period that ends on or before the Post-Closing Date. Such tax returns shall be
timely filed by the Company. PRCO shall cooperate with said officers in the
preparation of such tax returns.
21
ARTICLE VI
CONDITIONS
6.1 Conditions to Obligations of PRCO. The obligation of PRCO
to consummate the Contemplated Transactions is subject to the fulfillment of
each of the following conditions, any of which may be waived by PRCO in its sole
discretion:
(a) Copies of Resolutions. At the Post-Closing (i) the Company
shall have furnished PRCO with a certificate of its CEO or President, as the
case may be, in the form of Exhibit 6.1(a) annexed hereto, certifying that
attached thereto are copies of resolutions duly adopted by the board of
directors of the Company authorizing the execution, delivery and performance of
this Agreement and all other necessary or proper corporate action to enable the
Company to comply with the terms of this Agreement and (ii) Acquisition shall
have furnished PRCO with a certificate of its CEO or President, as the case may
be, in the form of Exhibit 6.1(e) annexed hereto, certifying that attached
thereto are copies of resolutions duly adopted by the board of directors of
Acquisition authorizing the execution, delivery and performance of this
Agreement and all other necessary or proper corporate action to enable
Acquisition to comply with the terms of this Agreement.
(b) Opinion of Company's Counsel. The Company shall have
furnished to PRCO, at the Post-Closing, an opinion of its legal counsel, dated
as of the Post-Closing Date, substantially in the form of Exhibit 6.1(b) annexed
hereto.
(c) Opinion of Company's Special Securities Counsel. The
Company shall have furnished to PRCO, at the Post-Closing, with an opinion of
the special securities counsel to the Company, dated as of the Post-Closing
Date, substantially in the form of Exhibit 6.1(c) annexed hereto.
(d) Instruction Letter to Transfer Agent. The Company shall
have furnished PRCO, at the Post-Closing, with a letter to its transfer agent,
to accept the legal opinion set forth in Section 6.1(c), dated as of the
Post-Closing Date, substantially in the form of Exhibit 6.1(d) annexed hereto.
(e) Accuracy of Representations and Warranties; Performance of
Covenants. Each of the representations and warranties of the Company and
Acquisition set forth in this Agreement was true, correct and complete in all
material respects when made (except for representations and warranties that
speak as of a specific date, which representations and warranties shall be true,
correct and complete in all material respects as of such date) and shall also be
true, correct and complete in all material respects at and as of the
Post-Closing Date (except for representations and warranties that speak as of a
specific date, which representations and warranties shall be true, correct and
complete in all material respects as of such date), with the same force and
effect as if made at and as of the Post-Closing Date. The Company shall have
performed and complied in all material respects with all agreements and
covenants required by this Agreement to be performed by the Company and
Acquisition at or prior to the Post-Closing Date.
22
(f) Delivery of Certificate. (A) The Company shall have
delivered to PRCO a certificate, in the form of Exhibit 6.1(f) annexed hereto,
dated the Post-Closing Date, and signed by the CEO or President of the Company
affirming that the representations and warranties as set forth in Section 4.1
were and are true, correct and complete as required by Section 6.1(e) and (B)
Acquisition shall have delivered to PRCO a certificate, in the form of Exhibit
6.1(h) annexed hereto, dated the Post-Closing Date, and signed by the CEO or
President of Acquisition affirming that the representations and warranties as
set forth in Section 4.1 were and are true, correct and complete as required by
Section 6.1(e).
(g) Consents and Waivers. At the Post-Closing, any and all
necessary consents, authorizations, orders or approvals shall have been
obtained, except as the same shall have been waived by the PRCO Debenture
Holder.
(h) Litigation. On the Post-Closing Date, there shall be no
effective injunction, writ or preliminary restraining order or any order of any
kind whatsoever with respect to the Company issued by a court or governmental
agency (or other governmental or regulatory authority) of competent jurisdiction
restraining or prohibiting the consummation of the Contemplated Transactions or
making consummation thereof unduly burdensome to PRCO. On the Post-Closing Date
and immediately prior to consummation of the Contemplated Transactions, no
proceeding or lawsuit shall have been commenced, be pending or have been
threatened by any governmental or regulatory agency or authority or any other
Person restraining or prohibiting the consummation of the Contemplated
Transactions.
(i) Delivery of Documents and Other Information. Prior to the
Post-Closing Date, the Company and Acquisition shall have made available or
delivered to PRCO all of the agreements, contracts, documents and other
instruments requested by PRCO.
(j) Delivery of Registration Rights Agreement. The Company
shall have delivered to Highgate a fully executed Registration Rights Agreement,
in the form of Exhibit 6.1(j) annexed hereto, dated the Post-Closing Date.
(k) Delivery of Security Agreement. The Company shall have
delivered to Highgate a fully executed Security Agreement, in the form of
Exhibit 6.1(k) annexed hereto, dated the Post-Closing Date.
(l) Delivery of Instruction Letter. The Company shall have
delivered to Highgate a fully executed Irrevocable Letter of Instruction to
Transfer Agent (the "Instruction Letter"), in the form of Exhibit 6.1(l) annexed
hereto, dated the Post-Closing Date.
6.2 Conditions to Obligations of the Company and Acquisition.
The obligations of the Company and Acquisition to consummate the Contemplated
Transactions are subject to the fulfillment of each of the following conditions,
any of which may be waived by the Company and Acquisition, in their sole
discretion:
(a) Copies of Resolutions. At the Post-Closing, PRCO shall
have furnished the Company with a certificate of its President, in the form of
Exhibit 6.2(a) annexed hereto, certifying that attached thereto are copies of
resolutions duly adopted by the board of directors of PRCO authorizing the
execution, delivery and performance of the terms of this Agreement and all other
necessary or proper corporate action to enable PRCO to comply with the terms of
this Agreement.
23
(b) Opinion of PRCO's Counsel. PRCO shall have furnished to
the Company, at the Post-Closing, with an opinion of counsel to PRCO, dated as
of the Post-Closing Date, substantially in the form of Exhibit 6.2(b) annexed
hereto.
(c) Opinion of PRCO's Special Securities Counsel. PRCO shall
have furnished to the Company, at the Closing, with an opinion of the special
securities counsel to PRCO dated as of the Post-Closing Date, substantially in
the form of Exhibit 6.2(c) annexed hereto.
(d) Accuracy of Representations and Warranties; Performance of
Covenants. Each of the representations and warranties of PRCO was true, correct
and complete in all material respects when made (except for representations and
warranties that speak as of a specific date, which representations and
warranties shall be true, correct and complete in all material respects as of
such date) and shall also be true, correct and complete in all material respects
at and as of the Post-Closing Date (except for representations and warranties
that speak as of a specific date, which representations and warranties shall be
true, correct and complete in all material respects as of such date), with the
same force and effect as if made at and as of the Post-Closing Date. PRCO shall
have performed and complied in all material respects with all agreements and
covenants required by this Agreement to be performed by PRCO at or prior to the
Post-Closing Date.
(e) Delivery of Certificate. PRCO shall have delivered to the
Company a certificate, in the form of Exhibit 6.2(e) annexed hereto, dated the
Post-Closing Date and signed by the CEO or President of PRCO, affirming that the
representations and warranties of PRCO as set forth in Section 4.2 were and are
true, correct and complete and PRCO's agreements and covenants have been
performed as required by Section 6.2(d).
(f) Compliance with Rule 504. In connection with the issuance
of the Securities by PRCO under the Purchase Agreement, on or prior to the
Post-Closing Date PRCO shall be in full compliance with Rule 504 of Regulation D
of the Securities Act of 1933, as amended, and PRCO shall have delivered to the
Company at the Post-Closing a filed copy of the Form D required to be filed with
the SEC in connection therewith.
(g) Consents and Waivers. On or prior to the Post-Closing
Date, any and all necessary consents, authorizations, orders or approvals shall
have been obtained, except as the same shall have been waived by the Company.
(h) Litigation. On the Post-Closing Date, there shall be no
effective injunction, writ or preliminary restraining order or any order of any
kind whatsoever with respect to PRCO issued by a court or governmental agency
(or other governmental or regulatory authority) of competent jurisdiction
restraining or prohibiting the consummation of the Contemplated Transactions or
making the consummation thereof unduly burdensome to the Company or PRCO. On the
Post-Closing Date, no proceeding or lawsuit shall have been commenced,
threatened or be pending or by any governmental or regulatory agency or
authority or any other person with respect to the Contemplated Transactions.
24
(i) Delivery of Documents and Other Information. Prior to the
Post-Closing Date, PRCO shall have made available or delivered to the Company
all of the agreements, contracts, documents and other instruments required to be
delivered pursuant to the provisions of this Agreement.
ARTICLE VII
TERMINATION
7.1 Termination by Mutual Agreement. This Agreement may be
terminated at any time by mutual consent of the parties hereto, provided that
such consent to terminate is in writing and is signed by each of the parties
hereto.
7.2 Termination for Failure to Close. This Agreement shall be
automatically terminated if the Closing shall not have occurred within ten (10)
days of the date hereof (except if such 10th day is not a Business Day, then the
next Business Day).
7.3 Termination by Operation of Law. This Agreement may be
terminated by any party hereto if there shall be any statute, rule or regulation
that renders consummation of the Contemplated Transactions illegal or otherwise
prohibited, or a court of competent jurisdiction or any government (or
governmental authority) shall have issued an order, decree or ruling, or has
taken any other action restraining, enjoining or otherwise prohibiting the
consummation of such transactions and such order, decree, ruling or other action
shall have become final and nonappealable.
7.4 Termination for Failure to Perform Covenants or
Conditions. This Agreement may be terminated prior to the Post-Closing Date:
(a) by PRCO if: (i) any of the representations and warranties
made in this Agreement by the Company or Acquisition shall not be materially
true and correct, when made or at any time prior to consummation of the
Contemplated Transactions as if made at and as of such time; (ii) any of the
conditions set forth in Section 6.1 hereof have not been fulfilled in all
material respects by the Post-Closing Date; (iii) the Company or Acquisition
shall have failed to observe or perform any of its material obligations under
this Agreement; or (iv) as otherwise set forth herein; or
(b) by the Company or Acquisition if: (i) any of the
representations and warranties of PRCO or the PRCO Stockholder shall not be
materially true and correct when made or at any time prior to consummation of
the Contemplated Transactions as if made at and as of such time; (ii) any of the
conditions set forth in Section 6.2 hereof have not been fulfilled in all
material respects by the Post-Closing Date; (iii) PRCO or the PRCO Stockholder
shall have failed to observe or perform any of their material respective
obligations under this Agreement; or (iv) as otherwise set forth herein.
25
7.5 Effect of Termination or Default; Remedies. In the event
of termination of this Agreement as set forth above, this Agreement shall
forthwith become void and there shall be no liability on the part of any party
hereto, provided that such party is a Non-Defaulting Party (as defined below).
The foregoing shall not relieve any party from liability for damages actually
incurred as a result of such party's breach of any term or provision of this
Agreement.
7.6 Remedies; Specific Performance. In the event that any
party shall fail or refuse to consummate the Contemplated Transactions or if any
default under or beach of any representation, warranty, covenant or condition of
this Agreement on the part of any party (the "Defaulting Party") shall have
occurred that results in the failure to consummate the Contemplated
Transactions, then in addition to the other remedies provided herein, the
non-defaulting party (the "Non-Defaulting Party") shall be entitled to seek and
obtain money damages from the Defaulting Party, or may seek to obtain an order
of specific performance thereof against the Defaulting Party from a court of
competent jurisdiction, provided that the Non-Defaulting Party seeking such
protection must file its request with such court within forty-five (45) days
after it becomes aware of the Defaulting Party's failure, refusal, default or
breach. In addition, the Non-Defaulting Party shall be entitled to obtain from
the Defaulting Party court costs and reasonable attorneys' fees incurred in
connection with or in pursuit of enforcing the rights and remedies provided
hereunder.
ARTICLE VIII
SURVIVAL; INDEMNIFICATION
8.1 Survival of Representations and Warranties of the Company.
All representations and warranties of the Company shall survive the execution
and delivery of this Agreement and the Post-Closing hereunder and shall
thereafter survive until the earlier of (i) the fourth anniversary of the
Post-Closing Date and (ii) the date of the PRCO Debentures have been fully
converted or otherwise cease to be outstanding (the "Conversion Date") and shall
then terminate except to the extent that notice of the Company's or Acquisition
liability in respect of any inaccuracy in or breach of any representation or
warranty shall have been given on or prior to such second anniversary or
Conversion Date.
8.2 Survival of Representations and Warranties of PRCO. All
representations and warranties of PRCO shall terminate upon the Closing except
to the extent that notice of PRCO's liability in respect of any inaccuracy in or
breach of any representation or warranty shall have been given on or prior to
Closing.
8.3 Obligation of the Company to Indemnify. The Company agrees
to indemnify, defend and hold harmless PRCO (and its directors, officers,
employees, affiliates, stockholders, debenture holders, agents, attorneys,
successors and assigns) from and against all losses, liabilities, damages,
deficiencies, costs or expenses (including interest, penalties and reasonable
attorneys' and consultants' fees and disbursements) (collectively, "Losses")
based upon, arising out of or otherwise in respect of any (i) inaccuracy in any
representation or warranty of the Company contained in this Agreement or in the
Schedules and Exhibits hereto or (ii) breach by the Company of any covenant or
agreement contained in this Agreement.
26
8.4 Obligation of and PRCO to Indemnify. PRCO agrees to
indemnify, defend and hold harmless the Company (and its directors, officers,
employees, affiliates, stockholders, agents, attorneys, successors and assigns)
from and against any Losses based upon, arising out of or otherwise in respect
of any (i) inaccuracy in any representation or warranty of PRCO contained in
this Agreement or (ii) breach by PRCO of any covenant or agreement contained in
this Agreement.
8.5 Notice and Opportunity to Defend. (a) Promptly after
receipt by any Person entitled to indemnity under this Agreement (an
"Indemnitee") of notice of any demand, claim or circumstances which, with the
lapse of time, would or might give rise to a claim or the commencement (or
threatened commencement) of any action, proceeding or investigation (an
"Asserted Liability") that may result in a Loss, the Indemnitee shall give
notice thereof (the "Claims Notice") to any other party (or parties) who is or
may be obligated to provide indemnification pursuant to Section 8.3 or 8.4 (the
"Indemnifying Party"). The Claims Notice shall describe the Asserted Liability
in reasonable detail and shall indicate the amount (estimated, if necessary and
to the extent feasible) of the Loss that has been or may be suffered by the
Indemnitee.
(b) The Indemnifying Party may elect to compromise or defend,
at its own expense and by its own counsel, any Asserted Liability. If the
Indemnifying Party elects to compromise or defend such Asserted Liability, it
shall within 30 days after the date the Claims Notice is given (or sooner, if
the nature of the Asserted Liability so requires) notify the Indemnitee of its
intent to do so, and the Indemnitee shall cooperate, at the expense of the
Indemnifying Party, in the compromise of, or defense against, such Asserted
Liability. If the Indemnifying Party elects not to compromise or defend the
Asserted Liability, fails to notify the Indemnitee of its election as herein
provided or contests its obligation to indemnify under this Agreement, the
Indemnitee may pay, compromise or defend such Asserted Liability and all
reasonable expenses incurred by the Indemnitee in defending or compromising such
Asserted Liability, all amounts required to be paid in connection with any such
Asserted Liability pursuant to the determination of any court, governmental or
regulatory body or arbitrator, and amounts required to be paid in connection
with any compromise or settlement consented to by the Indemnitee, shall be borne
by the Indemnifying Party. Except as otherwise provided in the immediately
preceding sentence, the Indemnitee may not settle or compromise any claim over
the objection of the Indemnifying Party. In any event, the Indemnitee and the
Indemnifying Party may participate, at their own expense, in (but the Indemnitee
may not control) the defense of such Asserted Liability. If the Indemnifying
Party chooses to defend any claim, the Indemnitee shall make available to the
Indemnifying Party any books, records or other documents within its control that
are necessary or appropriate for such defense.
ARTICLE IX
DEFINITIONS
The following terms, which are capitalized in this Agreement,
shall have the meanings set forth below for the purpose of this Agreement.
27
"Applicable Contract" means any Contract (a) to which the
Company is a party and under which the Company has or may acquire any material
rights, (b) under which the Company or PRCO, as the case may be, is a party and
has or may become subject to any material obligation or material liability or
(c) by which the Company or PRCO, as the case may be, or any of the material
assets owned or used by it is or may become bound.
"Contemplated Transactions" means all of the transactions
contemplated by this Agreement, including, without limitation:
(1) the Merger; and
(2) the performance by the parties of their respective covenants and obligations
under this Agreement.
"Environmental Laws" means all applicable federal, state,
local or foreign laws, rules and regulations, orders, decrees, judgments,
permits, filings and licenses relating (i) to protection and clean-up of the
environment and activities or conditions related thereto, including those
relating to the generation, handling, disposal, transportation or release of
hazardous substances and (ii) the health or safety of employees in the workplace
environment, all as amended from time to time, and shall also include any common
law theory based on nuisance, trespass, negligence or other tortious conduct.
"ERISA" means the Employee Retirement Income Security Act of
1974 or any successor law, and regulations and rules issued pursuant to such law
or any successor law.
"GAAP" means generally accepted accounting principles in the
United States, applied on a consistent basis.
"Law" means all applicable laws, statutes, ordinances, rules,
regulations, orders, writs, injunctions, judgments or decrees entered, enacted,
promulgated, enforced or issued by any court or other governmental or regulatory
authority, domestic or foreign.
"Legal Requirement" means any federal, state, local,
municipal, foreign, international, multinational or other administrative law,
ordinance, principle of common law, regulation, statute, treaty, court or
arbitrator.
"Material Adverse Effect" means a material adverse effect upon
the business or financial condition of the Company (when used in Section 4.1) or
PRCO (when used in Section 4.2), taken as a whole with any subsidiaries.
"Order" means any award, decision, injunction, judgment,
order, ruling, subpoena or verdict entered, issued, made or rendered by any
court, administrative agency or other governmental body or by any arbitrator.
"Ordinary Course of Business" means an action taken by a
Person where:
(1) such action is consistent with the past practices of such
Person and is taken in the ordinary course of the normal day-to-day operations
of such Person;
28
(2) such action is not required to be authorized by the board
of directors of such Person (or by any Person or group of Persons exercising
similar authority); and
(3) such action is similar in nature and magnitude to actions
customarily taken, without any authorization by the board of directors (or by
any Person or group of Persons exercising similar authority), in the ordinary
course of the normal day-to-day operations of other Persons that are in the same
line of business as such Person.
"Organizational Documents" means the articles or certificate
of incorporation and the by-laws of a corporation and any amendment thereto.
"Person" means any individual, corporation (including any
non-profit corporation), general or limited partnership, limited liability
company, joint venture, estate, trust, association, organization, labor union or
other entity or governmental body.
"Proceeding" means any action, arbitration, audit, hearing,
investigation, litigation or suit (whether civil, criminal, administrative,
investigative or informal) commenced, brought, conducted or heard by or before,
or otherwise involving, any governmental body or arbitrator.
"SEC" means the United States Securities and Exchange
Commission.
"Securities Act" means the Securities Act of 1933, as amended.
ARTICLE X
MISCELLANEOUS
10.1 Fees and Expenses. Except as otherwise provided in this
Agreement, each party hereto will bear its own legal, accounting and other fees
and expenses incident to the Contemplated Transactions herein. Any fees and
expenses required to be paid by any party hereunder shall be limited to
reasonable and necessary fees and expenses
10.2 Modification, Amendments and Waiver. The parties hereto
may amend, modify or otherwise waive any provision of this Agreement by mutual
consent, provided that such consent and any amendment, modification or waiver is
in writing and is signed by each of the parties hereto.
10.3 Assignment. Neither the Company nor PRCO shall have the
authority to assign its respective rights or obligations under this Agreement
without the prior written consent of the PRCO Debenture Holder.
10.4 Successors. This Agreement shall be binding upon and, to
the extent permitted in this Agreement, shall inure to the benefit of the
parties and their respective successors and permitted assigns.
10.5 Entire Agreement. This Agreement and the exhibits,
schedules and other documents referred to herein contain the entire agreement
among the parties hereto with respect to the Contemplated Transactions and
supersede all prior agreements with respect thereto, whether written or oral.
29
10.6 Governing Law. This Agreement and the exhibits hereto
shall be governed by and construed in accordance with the laws of the State of
New York, without giving effect to principles of conflicts or choice of laws
thereof. Any action to enforce the terms of this Agreement or any of its
exhibits shall be brought exclusively in the state and/or federal courts
situated in the County and State of New York. Service of process in any action
by either party to enforce the terms of this Agreement may be made by serving a
copy of the summons and complaint, in addition to any other relevant documents,
by commercial overnight courier to the other party at its principal address set
forth in this Agreement.
10.7 Notices. Any notice, request, demand, waiver, consent,
approval, or other communication which is required or permitted to be given to
any party hereunder shall be in writing and shall be deemed given only if
delivered to the party personally or sent to the party by facsimile upon
electronic confirmation of receipt (promptly followed by a hard-copy delivered
in accordance with this Section 10.7) or three days after being mailed by
registered or certified mail (return receipt requested), with postage and
registration or certification fees thereon prepaid, or if sent by nationally
recognized overnight courier, one day after being mailed, addressed to the party
at its address set forth below:
If to PRCO prior to Koa Internet, Inc.
Post-Closing: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇, President
Tel: ▇▇▇.▇▇▇.▇▇▇▇
Fax: ▇▇▇.▇▇▇.▇▇▇▇
If to PRCO after Koa Internet, Inc.,
Post-Closing: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
Tel: ▇▇▇.▇▇▇.▇▇▇▇
Fax: ▇▇▇.▇▇▇.▇▇▇▇
If to Acquisition: DNOB Acquisitions, Inc..
▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III,
President
Tel: ▇▇▇.▇▇▇.▇▇▇▇
Fax: ▇▇▇.▇▇▇.▇▇▇▇
30
If to the Company: DONOBi, Inc.,
▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III,
President
Tel: ▇▇▇.▇▇▇.▇▇▇▇
Fax: ▇▇▇.▇▇▇.▇▇▇▇
or to such other persons or addresses as may be designated in writing by the
party to receive such notice. If mailed as aforesaid, the day of mailing or
transmission shall be the date any such notice shall be deemed to have been
delivered.
10.8 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be an original, but all of which shall
constitute but one agreement. In the event that any signature is delivered by
facsimile transmission, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
page were an original thereof.
10.9 Rights Cumulative. All rights, powers and privileges
conferred hereunder upon the parties, unless otherwise provided, shall be
cumulative and shall not be restricted to those given by law. Failure to
exercise any power given any party hereunder or to insist upon strict compliance
by any other party shall not constitute a waiver of any party's right to demand
exact compliance with any of the terms or provisions hereof.
10.10 Severability of Provisions. The provisions of this
Agreement shall be considered severable in the event that any of such provisions
are held by a court of competent jurisdiction to be invalid, void or otherwise
unenforceable. Such invalid, void or otherwise unenforceable provisions shall be
automatically replaced by other provisions which are valid and enforceable and
which are as similar as possible in term and intent to those provisions deemed
to be invalid, void or otherwise unenforceable and the remaining provisions
hereof shall remain enforceable to the fullest extent permitted by law.
10.11 Headings. The headings set forth in the articles and
sections of this Agreement and in the exhibits and the schedules to this
Agreement are inserted for convenience of reference only and shall not be deemed
to constitute a part hereof.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement or
have caused this Agreement to be executed and delivered on the date and year
first above written.
DONOBi, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III
------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III, President
KOA INTERNET, INC.
By: /s/ ▇▇▇ ▇▇▇▇▇▇
------------------------------
▇▇▇ ▇▇▇▇▇▇, President
DNOB ACQUISITIONS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III
------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III, President
32