Exhibit 99
COMMON STOCK PURCHASE AGREEMENT
This Common Stock Purchase Agreement (the "Agreement") is
made and entered into as of the 20th day of February, 2002,
between Consumer Capital Holdings, Inc., an Nevada Corporation
(the "Seller"), with its principal office ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇.,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and Blue Star Coffee, Inc., a Nevada
Corporation ("Buyer"), of ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇.
RECITALS
1. The Company has authorized the exchange of a total of
12,989,000 Common Shares (the "Shares") of Common Stock of the
Company (as defined below).
2. The Buyer desires to exchange 20,957,985 Common Shares of
the Buyer's Common Stock for 12,989,000 Common Shares of the
Company, pursuant to the terms and conditions contained here.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants,
agreements, conditions, representations, and warranties contained
in this agreement, the Company and Buyer hereby each agree as
follows:
1. DEFINITIONS
As used in this Agreement, and unless the context requires a
different meaning, the following terms shall have the meaning
indicated:
"Affiliate" means, with respect to any specified Person, any
Person that, directly or indirectly, Controls, is controlled by,
or is under common Control with, such specified Person, whether
by contract, through one or more intermediaries or otherwise.
"Articles" means the Articles of Incorporation of the
Company filed with Secretary of State, in the form delivered to
the Buyer, as the same may be amended from time to time.
"Audit Date" means December 31, 2001.
"Balance Sheet Date" means December 31, 2001.
"Board of Directors" means the Board of Directors of the
Company.
"Business Days" means all days other than Saturday or Sunday
or any day on which banking institutions in Las Vegas, Nevada,
are authorized or obligated to close.
"Code" means the Internal Revenue Code of 1986, as amended,
or any successor statute thereto.
"Common Stock" means (i) the common stock of the Company;
(ii) any other capital stock of the Company into which such
common stock is converted, exchanged, reclassified or
reconstituted; (iii) any warrants or options exercisable for any
of the foregoing; and (iv) any right to receive any of the
foregoing other than upon conversion of any security convertible
into any of the foregoing.
PAGE-1
"Control" means the possession, directly or indirectly, of
the power to direct or cause direction of the management and
policies of a Person, whether through ownership of voting
securities, by contract or otherwise.
"Disclosure Materials" means the disclosure materials
previously delivered to the Buyer.
"Environmental Laws" means any and all present and future
laws (whether common or statutory), compacts, treaties,
conventions or rules, regulations, codes, plans requirements,
criteria, standards, orders, decrees, judgments, injunctions,
notices or demand letters issued, promulgated or entered
thereunder by any foreign federal, tribal, state or legal
governmental entity relating to public or employee health and
safety, pollution or protection of the environment, including
without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended by the
Superfund Amendment and Reauthorization Act of 1986 ("CERCLA"),
the Resource conservation and Recovery Act ("RCRA"), the Federal
Safe Drinking Water Act, the Federal Water Pollution Control Act,
the Used Oil Recycling Act of 1980, the Solid Waste Dispose Act,
the Emergency Planning and Community Right-To-Know ▇▇▇ ▇▇▇▇, the
Clean Air Act and any and all other foreign, federal, state,
tribal, and local laws, rules, regulations and orders relating to
the reclamation of land, wetlands and waterways or relation to
use, storage, emissions, discharges, clean-up release or
threatened release of pollutants, contaminants, chemicals or
industrial, toxic or Hazardous Substances on or into the
workplace or the environment (including without limitation,
ambient air oceans, waterways, wetlands, surface water, ground
water {tributary and non-tributary] land surface or subsurface
strata) or otherwise, relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transportation
or handling of pollutants, contaminants, chemicals, or
industrial, toxic, hazardous or similar substances, as all of the
foregoing may be amended, supplemented or re-authorized from time
to time.
"ERISA" means Employee Retirement Income Security Act of
1974, as amended, or any successor statute thereto.
"Exchange Act" means the Securities Exchange Act of 1934,
and the rules and regulations thereunder, as amended from time to
time.
"Financial Statements" means (i) the audited consolidated
balances sheet of the Company as of the Audit date, together with
the audited consolidated statements of operations, audited
consolidated statements of shareholders' equity, and audited
consolidated statements of cash flows for the fiscal year then
ended, accompanied by the report of an independent audit; and
(ii) the unaudited balance sheet of the Company as of the Balance
Sheet Date, together with the unaudited consolidated statements
of operations, unaudited consolidated statements of shareholders'
equity, and unaudited consolidated statements of cash flows of
the Company for the five months then-ended, both monthly and
annual.
"GAAP" means generally accepted accounting principles in
effect from time to time, consistently applied.
"Hazardous Substances" means (i) any and all "waste" and
"hazardous wastes", as defined by CERCLA; (ii) "solid wastes" and
"hazardous wastes", as defined by RCRA; (iii) any pollutant,
contaminate or hazardous, dangerous or toxic chemicals, materials
or substances within the meaning of any Environmental Law; (iv)
any radioactive material, including any source, special nuclear
or by-product material; as defined at 42 U.S.C. 2011 et seq., as
amended; and (v) asbestos in any form or condition.
PAGE-2-
"Option Plan" means the Company's stock option plans, copies
of which have been provided to Buyer.
"Person" means any natural person, incorporated entity,
limited or general partnership, business trust, association,
joint venture, limited liability company, agency (government or
private), division, political sovereign, or subdivision or
instrumentality, or any other entity of any kind, including those
groups identified as "persons" in 13 (d)(3) and 14(d)(2) of the
Exchange Act, and any successor, by merger or otherwise, of such
entity.
"Registration Rights Agreements" means the Registration
Rights Agreement attached hereto as Exhibit A.
"Secretary of State" means the Secretary of State of the
State of Nevada.
"Securities Act" means the Securities Act of 1933 and rules
and regulations thereunder, as amended from time to time.
Other Defined Terms. The following terms shall have the
meanings specified in the Sections set forth below:
Term Section
------- ----------
Closing Date 2.3
Material Contracts 3.18
Proprietary Information 3.26
Shares Recital A
2. PURCHASE AND SALE
2.1 Purchase and Sale. Subject to all the terms and
conditions of this Agreement, at the closing described below
(the "Closing"), the Company agrees to receive from the
Buyer, and Buyer agrees to issue to the Shareholders of the
Company 20,957,985 Shares, in exchange for 12,987,000
shares of the Common Stock of the Company.
2.2 Authorization. At the Closing, the Company will have
authorized the sale and issuance to Buyer of the Shares.
The Shares shall have the rights, preferences, privileges
and restrictions set forth in the Articles.
2.3 Closing; Delivery. The Closing shall take place on
February 20, 2002, at 11:00 a.m., local time, at the offices
of the Company, or at such other time or place as the
Company and Buyer may mutually agree (the date of the
Closing is hereinafter referred to as the "Closing Date").
At the Closing, the Company shall deliver to Pacific Stock
Transfer a Corporate resolution that will instruct the
transfer agent about the exchange ratio representing Buyer's
Shares purchased hereunder, and Buyer shall deliver to the
Company a corporate resolution that will be relayed to
Pacific Stock Transfer.
PAGE-3-
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
As a material inducement to Buyer to enter into this
Agreement, the Company makes the following representations
and warranties to Buyer, subject only to such disclosures
and exceptions as set forth in the Disclosure Materials.
3.1 Organization, Standing, and Qualification of the Company.
The Company is a Subchapter C corporation pursuant to the Code,
duly organized, validly existing, and in good standing under the
laws of the State of Nevada. The Company has all necessary
corporate power and authority to own and operate its properties
and assets, to execute and deliver this Agreement and the
Related Agreements, to issue and sell the shares and to carry out
the provisions of this Agreement and the Related Agreements, and
to carry on its business as now owned and operated by it. The
Company is duly qualified to do business as a foreign corporation
and is in good standing in all jurisdictions, both nationally and
internationally, in which failure to so qualify would have a
materially adverse effect upon its operations or financial
condition.
3.2 Capitalization. As of the date of and taking into account
the transactions occurring by or at the initial Closing, the
authorized capital stock of the Buyer consists of 60,000,000
shares of Common stock and 15,000,000 authorized shares of
Undesignated Preferred Stock. Immediately after the Closing, the
outstanding capital stock of the Buyer shall be 23,286,650 shares
of Common Stock and no shares of Undesignated Preferred Stock
outstanding. A schedule listing all shareholders of record of
the Buyer and the numbers of shares of capital stock held or
recorded by each such shareholder, and a listing of all
outstanding options and warrants and other obligation of the
Buyer to issue capital stock or securities convertible into
capital stock of the Buyer is contained in the Disclosed
Materials. Such schedule is complete and accurate as of the
Closing Date. Except as set forth in the Disclosure Materials,
and taking into account the transactions occurring by or at the
Closing Date, there are no outstanding rights, subscriptions,
options, warrants, conversion privileges, preemptive rights, or
other agreements or commitments obligating the Buyer to issue or
transfer any additional equity securities.
3.3 Validity of Stock. The Shares, when issued, sold, and
delivered by the Company in accordance with the terms of this
Agreement, as well as all prior issuances of the Buyer's capital
stock, shall be (or have been) duly authorized, validly issued,
fully paid, and non-assessable and free of any liens or
encumbrances.
3.4 Authorization: Enforceability All corporate action on the
part of the Company necessary for (i) the authorization,
execution, delivery, and performance of all the obligations of
the Company under this Agreement and the consummation of the
transactions contemplated herein and thereunder, and (ii) and the
authorization, issuance, execution, the delivery of the shares
being sold by the Company hereunder has been taken. This
Agreement constitutes a valid and binding obligation of the
Company, enforceable against the company in accordance with their
terms, subject to applicable bankruptcy, insolvency,
reorganization, and moratorium laws and other laws of general
application affecting enforcement of creditors' rights generally
and to general equitable principles.
3.5 Affiliates. The Company does own, directly and indirectly,
interests and investments (debt or equity) in other corporations,
partnerships, businesses, trusts, or other entities, and is a
party to agreements related thereto, as disclosed in the
Disclosure Materials.
PAGE-4-
3.6 Financial Statements. The Company has provided to Buyer the
Financial Statements. The Financial Statements have been
prepared in accordance with GAAP throughout the periods indicated
and with each other, except that unaudited Financial Statements
may not contain all footnotes required by GAAP. The Financial
Statements present fairly the financial condition and operating
results of the Company as of the dates, and for the periods
indicated therein, subject in the case of unaudited Financial
Statements to normal year-end audit adjustments. Except as set
forth in the Financial Statements, the Company has no material
liabilities, contingent or otherwise, other than (i) liabilities
incurred in the ordinary course of business after the Balance
Sheet Date, and (ii) obligations under contracts and commitments
incurred in the ordinary course of business and not required
under GAAP to be reflected in the Financial Statements, which, in
both cases, individually or in the aggregate, are not material to
the financial condition or operating results of the Company.
Except as disclosed in the Financial Statements, the Company is
not a guarantor or indemnitor of any indebtedness of any other
person, firm or corporation. The Company knows of no information
or fact which has or would have a material adverse effect on the
financial condition, business or business prospects of the
Company which has not been disclosed to the Buyer. The Company
maintains and will continue to maintain a standard system of
accounting established and administered in accordance with GAAP.
3.7 Conduct of Business in the Ordinary Course. Since the
Balance Sheet Date, and excluding the transactions contemplated
in this Agreement there has not been:
a. any change in the assets, liabilities, financial condition,
or operating results of the Company from that reflected
in the Financial Statements, other than changes in the
ordinary course of business that have not been, in the
aggregate, materially adverse;
b. any damage, destruction or loss, whether or not covered by
insurance, that has materially and adversely affected the
business, properties, prospects, of financial condition of the
Company (as such business is presently conducted and as it is
presently proposed to be conducted);
c. any waiver or compromise by the Company of a
valuable right or of a material debt owed to it;
d. any satisfaction or discharge of any lien, claim, or
encumbrance or payment of any obligation by the Company, except
in the ordinary course of business and that is not material to
the business, properties, prospects, of financial condition of
the Company (as such business is presently conducted and as it is
presently proposed to be conducted);
e. any material changes to a Material Contract or
arrangement by which the Company or any of its assets is bound or
subject;
f. any material change in any compensation arrangement
or agreement with any employee, officer, director, or
shareholder;
g. any sale, assignment, or transfer of any patents,
trademarks, copy rights, trade secrets, or other intangible
assets;
PAGE-5-
h. any resignation or termination of employment of any key
officer of the Company, and the Company, to the best of its
knowledge, does not know of the impending resignation or
termination of employment of any such officer;
i. receipt of notice that there has been a loss of, or material
order cancellation by, any major customer of the Company;
j. any mortgage, pledge, transfer of a security
interest in, or lien, created by the Company, with respect to any
of its material properties or assets, except liens for taxes not
yet due or payable;
k. any loans or guarantees made by the Company to or
for the benefit of its employees, shareholders, officers, or
directors, or any members of their immediate families, other than
travel advances and other advances made in the ordinary course of
its business;
l. any declaration, setting aside, or payment of any
dividend or other distribution of the Company's assets in respect
to any of the Company's capital stock, or any direct or indirect
redemption, purchase, or other acquisition of any such stock by
the Company;
m. to the best of the Company's knowledge, any other
events or condition of any character that might materially and
adversely affect the business, properties, prospects, or
financial condition of the Company (as such business is presently
conducted and as it is presently proposed to be conducted); or
n. any agreement or commitment by the Company to do any of the
things described in this Section 3.7.
3.8 Absence of Undisclosed Liabilities. To the Company's
knowledge, the Company does not have any material liabilities
(fixed or contingent, including any material tax liabilities due
or to become due) which are not reflected or provided for in the
Financial Statements.
3.9 Tax Returns and Audits. The Company has timely filed all
federal, state, county, local and foreign tax returns and reports
within the times and in the manner prescribed by law and has paid
(or made adequate provision in the Financial Statements) for: all
taxes shown due on such returns, as well as all other assessments
and penalties which have become due and payable. The Company's
federal income and other tax returns have not been audited by the
Internal Revenue Service or any other taxing authority and no
notice of audit has been received. To the Company's knowledge,
the provisions for taxes in the Financial Statements are adequate
for any and all federal, state, county, local and foreign taxes
for the period ending on the Balance Sheet Date and for all prior
periods, whether or not disputed. The Company has not received
notice of any disputes, deficiency assessments, or proposed
adjustments to taxes payable by the Company.
3.10 Assets. The Company has good and marketable title to all of
its personal property, including all assets reflected on the
balance sheets included in the Financial Statements or acquired
by the Company since the Balance Sheet Date, all of which are in
good operating condition and free and clear of material
restrictions on or conditions to transfer or assignment, and free
and clear of all liens, claims, mortgages, pledges, charges,
equities, easements, rights of way, covenants, conditions,
security interests, encumbrances, or restrictions, except for
liens for current taxes or materialmen not yet due and payable or
being contested in good faith.
PAGE-6-
The Company does not own any real
property. The properties of the Company are sufficient for the
conduct of the Company business as not being and presently
planned to be conducted. The Company holds a valid leasehold
interest in all leased properties listed in the Disclosure
Materials, free of any liens, claims, or encumbrances granted by
the Company and is not in default under any such lease. The
Company enjoys peaceful and undisturbed possession of all
premises owned by it, or leased to it from others, and does not
occupy any real property in material violation of any law,
regulations, or decree.
3.11 Insurance Policies. The Company has in full force and
effect (i) adequate insurance policies to protect its assets and
businesses covering property damage by fire, business
interruption or other casualty, sufficient in amount to allow it
to replace any of its properties damaged or destroyed; and (ii)
insurance policies to protect against all liabilities, claims,
and risks against which it is customary in amounts customary for
companies similarly situated with the Company.
3.12 Articles and Bylaws. The Company is not currently in
violation of any provision of the Articles or its Bylaws, as in
effect on each Closing Date. There is no default or event that,
with notice or lapse of time, or both, would conflict with or
constitute a breach of the Articles of the Company's Bylaws.
3.13 Material Contracts.
(a) Except as set forth in the Disclosure Materials,
the Company does not have, nor is it bound by, any
contract, agreement, lease, commitment, or proposed
transaction, judgment, order, writ or decree, written
or oral, absolute or contingent, other than (i)
contracts for the purchase of supplies and services
that were entered into in the ordinary course of
business and that does not involve more than $10,000
and do not extend for more than one year beyond the
date hereof; (ii) sales contracts entered into in the
ordinary course of business; and (iii) contracts
terminable at will by the Company on no more than 30
days' notice without cost or liability to the Company
and that do not involve any employment or consulting
arrangement and are not material to the conduct of the
Company's business. For the purpose of this paragraph,
employment and consulting contracts and contracts with
labor unions, and license agreements and any other
agreements relating to the Company's acquisition or
disposition of patent, copyright, trade secret or other
proprietary rights or technology (other than standard
end-user license agreements) shall not be considered to
be contracts entered into in the ordinary course of
business. Every contract disclosed in the Disclosure
Materials (collectively, the "Material Contracts") is a
legal, valid and binding obligation, enforceable in
accordance with its terms with respect to the Company
and any other parties bound thereby, and true and
complete copies of all Material Contracts have been
provided to the Buyer. The Company is not, nor has it
given or been given notice that any other party is,
currently in breach of any of the terms of any Material
Contract. There is no default or event that, with
notice or lapse of time, or both, would conflict with
or constitute a breach of any Material Contract or
would result in the creation or imposition of any lien
or encumbrance on any of the Company's property. The
Company has not received notice that any party to any
Material Contract intends to cancel, amend or terminate
any such agreement.
PAGE-7-
(b) As previously disclosed, the Company is not
presently engaged in any discussion, unless previously
disclosed (i) with any representative of any
corporation or corporations regarding the consolidation
or merger of the Company with or into any such
corporation or corporations; (ii) with any corporation,
partnership, association or other business entity or
any individual regarding the sale, conveyance or
disposition of all or substantially all of the assets
of the Company, or a transaction or series of related
transactions in which more than 50% of the voting power
of the Company is or was to be disposed; or (iii)
regarding any other form of acquisition, liquidation,
dissolution or winding up or the Company.
3.14 Litigation. There are no actions, suits, or legal,
administrative, or other proceedings or investigations pending,
or, to the best of the Company's knowledge, threatened before any
court, agency, or other tribunal to which the Company is a party
or against or affecting any of the property, assets, businesses,
or financial condition of the Company, except as set forth in the
Disclosure Materials. The Company is not in default with respect
to any other, writ, injunction, or decree of any federal, state,
local or foreign court, department, agency, or instrumentality to
which it is a party. The Company has provided Buyer and its
counsel with true and accurate copies of material documents
relating to any of these matters that are disclosed in the
Disclosure Materials.
3.15 Related Transaction. Except as set forth in the Disclosure
Materials, there are no obligations of the Company to officers,
directors, shareholders or employees of the Company other than
(a) for payment of salary for services rendered; (b)
reimbursement for reasonable expenses incurred on behalf of the
Company; and (c) for other standard employee benefits made
generally available to all employees (including any stock options
outstanding under the Option Plan). None of the officers,
directors of shareholders of the Company, or any members of their
immediate families, are indebted to the Company or have any
direct or indirect ownership interest in any firm or corporation
with which the Company has a business relationship, or any firm
or corporation which competes with the Company, except that
officers, directors and/or shareholders of the Company may own
stock in publicly traded companies which may compete with the
Company. No officer, director or shareholder, or any member of
their immediate families, is, directly or indirectly, interested
in any material contract with the Company (other than such
contracts as relate to any such person's ownership of capital
stock or other securities of the Company). Except as may be
disclosed in the Financial Statements, the Company is not a
guarantor or indemnitor of any indebtedness of any other person,
firm or corporation.
3.16 Agreement Will Not Cause Breach or Violation. The
consummation of the transactions contemplated by this Agreement
(including the issuance and sale of the Shares) will not result
in any violation of or constitute a default or any event that,
with notice or lapse of time, or both, would conflict with or
constitute a breach or default of the Bylaws of the Company or of
any Material Contract or any material provision of local, state,
federal or foreign law, rule or regulation and will not result in
the creation or imposition of any lien or encumbrance on any of
the Company's property or on the Shares.
3.17 Governmental Approvals/Third Party Consents. All consents,
approvals, or authorizations of, or registrations,
qualifications, designations, declarations, or filings with any
federal or state governmental authority, and all consents,
approvals or authorizations of any third party required in
connection with the execution of this Agreement, the Registration
Rights Agreement and the performance of the transactions
contemplated hereby (including the issuance and sale of the
Shares) have been obtained by the Company.
PAGE-8-
The Company has, or
has rights to acquire, all licenses, permits, and other similar
authority necessary for the conduct of its business as now being
conducted by it and as planned to be conducted, the lack of which
could materially and adversely affect the operations or
condition, financial or otherwise, of the Company, and it is not
in default in any material respect under any of such licenses,
permits or other similar authority.
3.18 Environmental Matters. The company is in compliance in all
material respects with all Environmental Laws and, to its
knowledge no material expenditures are or will be required in
order to comply with any Environmental Law. The Company has not
knowingly handled, stored or released, or exposed any person to,
any Hazardous Substances. The Company is not, and has no
knowledge that it will be in the future, liable, or responsible
for clean-up costs, remedial work or damages in connection with
the handling, storage, release, or exposure by the Company of any
Hazardous Substances. To the Company's knowledge, no claims for
clean-up costs, remedial work or damages have been made by any
person or entity in connection with the handling, storage,
release, or exposure by the Company of any Hazardous Substances,
or in connection with any Environmental Law.
3.19 Bankruptcy. The Company has not admitted in writing its
inability to pay its debts generally as they become due, filed or
consented to the filing against it of a petition in bankruptcy or
a petition to take advantage of any insolvency act, made an
assignment for the benefit of creditors, consented to the
appointment of a receiver for itself or for the whole or any
substantial part of its property, or had a petition in bankruptcy
filed against it, been adjudicated a bankrupt, or filed a
petition or answer seeking reorganization or arrangement under
the federal bankruptcy laws or any other law or statute of the
United States of America or any other jurisdiction.
3.20 Intellectual Property.
a. The company owns rights to all intellectual property
necessary to conduct its business as now being conducted and as
planned to be conducted, including all such rights relating to
patents, trademarks, service marks, copyrights, applications
therefor, trade names, trade secrets, export of technology and
other information (collectively "Proprietary Information").
b. The Company possesses commercial rights to all
Proprietary Information and the Proprietary Information is not
subject to any kind of lien, judgment or other encumbrance,
except as otherwise disclosed in the Disclosure Materials.
c. There is no pending or, to the knowledge of the Company,
threatened claim or litigation against the Company or its
Proprietary Information asserting the infringement or other
violation of any intellectual property rights of any third party
or past or current employee of the Company.
d. To the best of the Company's knowledge and belief, there is
no claim that can be asserted by or against a third party for
infringement, misappropriation, breach or otherwise relating to
the Proprietary Information.
PAGE-9-
e. None of the Company's employees has any ownership
rights in any Proprietary Information or any other intellectual
property rights related to the business, products or services of
the Company.
f. No shareholder, director, officer or employee of the Company
has any right, title or interest in or to any of the Proprietary
Information.
3.21 Employees and Consultants. Except as set forth in the
Disclosure Materials, the Company has not entered into any
arrangement with any present or former employee that will result
in any obligation of the Company to make any payment to such
employee upon termination. True and complete copies of all
written employment agreements with the key executive officers of
the Company have been delivered to Buyer prior to the Closing
Date. To the Company's knowledge, no employee of or consultant
to the Company is in material violation of any term of any
employment contract or any other contract or agreement relating
to the relationship of any such employee or consultant with the
Company. The Company has not received notice that any executive
officer intends to terminate his employment with the Company, nor
does the Company have any present intention to terminate the
employment of any executive officer. To the Company's knowledge,
none of its employees are obligated under any contract (including
licenses, covenants, or commitments of any nature) or other
agreement, or subject to any judgment, decree, or order of any
court of administrative agency, that would interfere with the use
of his/her reasonable diligence to promote the interests of the
Company that would conflict with the Company's business as
proposed to be conducted. Neither the execution nor delivery of
this Agreement, nor the conduct of the Company's business as
proposed, will, to the Company's knowledge, conflict with or
result in a breach of terms, conditions or provisions of, or
constitute a default under, any contract, covenant, or instrument
under which any of such employees is obligated, which conflict,
breach, or default would be materially adverse to the Company.
3.22 Employee Benefits Matters. The Company does not maintain or
contribute to any plan or arrangement that constitutes an
"employee pension benefit plan" as defined in Section 3(2) of
ERISA, and is not obligated to contribute to or accrue or pay
benefits under any deferred compensation or retirement funding
arrangement.
3.23 Compliance with Laws. (a) The Company has complied with and
is in compliance in all material respects with all foreign,
federal, state and local statutes, laws, ordinances, regulations,
rules, judgments, order and decrees applicable to it and its
assets, business and operations, and (b) the Company has not
received written notice of any claim of default under or
violation of any statute, law, ordinance, regulation, rule,
judgment, order or decree except for any such noncompliance or
claim of default or violation, if any, which in the aggregate do
not and will not have a material adverse affect on the property,
operations, financial condition or prospects of the Company.
3.24 Brokers. All negotiations relating to this Agreement and
the transactions contemplated hereby have been carried on by the
Company directly with the Buyer and without the intervention of
any person on behalf of the Company, and in such manner as not to
give rise to any valid claim against any of the parties for a
finder's fee, brokerage commission or like payment.
PAGE-10-
3.25 Accuracy of Information Furnished. This Agreement, the
Disclosure Materials, the Financial Statements, as well as any
exhibit, certificate, written statement, material or information
furnished by or on behalf of the Company pursuant hereto or in
connection with the transactions contemplated hereby to the
Buyer, do not contain any untrue statement of a material fact or
omit to state any material fact that is necessary to make the
statements contained herein or therein not misleading.
4. REPRESENTATIONS AND WARRANTIES OF BUYER
The Buyer makes the following representations and warranties
to the Company as to itself that:
4.1 Requisite Power and Authority. Buyer is a corporation, duly
organized, validly existing and in good standing under the laws
of the jurisdiction of Nevada, and has all requisite partnership
or corporate power and authority to own its assets and operate
its business. Buyer has all necessary corporate or partnership
power and authority under all applicable provisions of law to
execute and deliver this Agreement and to carry out their
provisions. All action on Buyer's part required for the lawful
execution and delivery of this Agreement has been or will be
effectively taken prior to the Closing Date. Upon its execution
and delivery, this Agreement will be a valid and binding
obligations of the Buyer, enforceable in accordance with its
terms, except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general
application affecting enforcement of creditors' rights; (ii)
general principles of equity that restrict the availability of
equitable remedies.
4.2 Organization, Standing, and Qualification of the Buyer. The
Buyer has all necessary corporate power and authority to own and
operate its properties and assets, to execute and deliver this
Agreement and the Related Agreements, to issue and sell the
shares and to carry out the provisions of this Agreement and the
Related Agreements, and to carry on its business as now owned and
operated by it. The Company is duly qualified to do business as
a foreign corporation and is in good standing in all
jurisdictions, both nationally and internationally, in which
failure to do so qualify would have a materially adverse effect
upon its operations or financial condition.
4.3 Capitalization. As of the date of and taking into account
the transactions occurring by or at the initial Closing, the
authorized capital stock of the Buyer consists of 60,000,000
shares of Common stock and 15,000,000 authorized shares of
Undesignated Preferred Stock. Immediately after the Closing, the
outstanding capital stock of the Buyer shall be 23,286,650 shares
of Common Stock and no shares of Undesignated Preferred Stock
outstanding. A schedule listing all shareholders of record of
the Buyer and the numbers of shares of capital stock held or
recorded by each such shareholder, and a listing of all
outstanding options and warrants and other obligation of the
Buyer to issue capital stock or securities convertible into
capital stock of the Buyer is contained in the Disclosed
Materials. Such schedule is complete and accurate as of the
Closing Date. Except as set forth in the Disclosure Materials,
and taking into account the transactions occurring by or at the
Closing Date, there are no outstanding rights, subscriptions,
options, warrants, conversion privileges, preemptive rights, or
other agreements or commitments obligating the Buyer to issue or
transfer any additional equity securities.
PAGE-11-
4.4 Validity of Stock. The Shares, when issued, sold, and
delivered by the Buyer in accordance with the terms of this
Agreement, as well as all prior issuances of the Buyer's capital
stock, shall be (or have been) duly authorized, validly issued,
fully paid, and non-assessable and free of any liens or
encumbrances.
4.5 Authorization: Enforceability. All corporate action on the
part of the Buyer necessary for (i) the authorization, execution,
delivery, and performance of all the obligations of the Buyer
under this Agreement and the consummation of the transactions
contemplated herein and thereunder, and (ii) and the
authorization, issuance, execution, the delivery of the shares
being exchanged by the Buyer hereunder has been taken. This
Agreement constitute a valid and binding obligation of the Buyer,
enforceable against the company in accordance with their terms,
subject to applicable bankruptcy, insolvency, reorganization, and
moratorium laws and other laws of general application affecting
enforcement of creditors' rights generally and to general
equitable principles.
4.6 Affiliates. The Buyer does not own, directly and
indirectly, interests and investments (debt or equity) in other
corporations, partnerships, businesses, trusts, or other
entities, and is not a party to agreements related thereto.
4.7 Financial Statements. The Buyer has provided to Company the
Financial Statements. The Financial Statements have been
prepared in accordance with GAAP throughout the periods indicated
and with each other, except that unaudited Financial Statements
may not contain all footnotes required by GAAP. The Financial
Statements present fairly the financial condition and operating
results of the Company as of the dates, and for the periods
indicated therein, subject in the case of unaudited Financial
Statements to normal year-end audit adjustments. Except as set
forth in the Financial Statements, the Company has no material
liabilities, contingent or otherwise, other than (i) liabilities
incurred in the ordinary course of business after the Balance
Sheet Date, and (ii) obligations under contracts and commitments
incurred in the ordinary course of business and not required
under GAAP to be reflected in the Financial Statements, which, in
both cases, individually or in the aggregate, are not material to
the financial condition or operating results of the Company.
Except as disclosed in the Financial Statements, the Buyer is not
a guarantor or indemnitor of any indebtedness of any other
person, firm or corporation. The Buyer knows of no information
or fact which has or would have a material adverse effect on the
financial condition, business or business prospects of the Buyer
which has not been disclosed to the Company. The Buyer maintains
and will continue to maintain a standard system of accounting
established and administered in accordance with GAAP.
4.8 Conduct of Business in the Ordinary Course. Since the
Balance Sheet Date, and excluding the transactions contemplated
in this Agreement there has not been:
a. any change in the assets, liabilities, financial condition,
or operating results of the Buyer from that reflected in the
Financial Statements, other than changes in the ordinary course
of business that have not been, in the aggregate, materially
adverse;
b. any damage, destruction or loss, whether or not
covered by insurance, that has materially and adversely affected
the business, properties, prospects, of financial condition of
the Buyer (as such business is presently conducted and as it is
presently proposed to be conducted);
c. any waiver or compromise by the Buyer of a valuable right or
of a material debt owed to it;
d. any satisfaction or discharge of any lien, claim, or
encumbrance or payment of any obligation by the Buyer, except in
the ordinary course of business and that is not material to the
business, properties, prospects, of financial condition of the
Buyer (as such business is presently conducted and as it is
presently proposed to be conducted);
e. any material changes to a Material Contract or
arrangement by which the Buyer or any of its assets is bound or
subject;
f. any material change in any compensation arrangement
or agreement with any employee, officer, director, or
shareholder;
g. any sale, assignment, or transfer of any patents,
trademarks, copy rights, trade secrets, or other intangible
assets;
h. any resignation or termination of employment of any key
officer of the Buyer, and the Buyer, to the best of its
knowledge, does not know of the impending resignation or
termination of employment of any such officer;
i. any mortgage, pledge, transfer of a security interest in, or
lien, created by the Buyer, with respect to any of its material
properties or assets, except liens for taxes not yet due or
payable;
j. any loans or guarantees made by the Buyer to or for the
benefit of its employees, shareholders, officers, or directors,
or any members of their immediate families, other than travel
advances and other advances made in the ordinary course of its
business;
k. any declaration, setting aside, or payment of any dividend
or other distribution of the Buyer's assets in respect to any of
the Buyer's capital stock, or any direct or indirect redemption,
purchase, or other acquisition of any such stock by the Buyer;
l. to the best of the Buyer's knowledge, any other events or
condition of any character that might materially and adversely
affect the business, properties, prospects, or financial
condition of the Buyer (as such business is presently conducted
and as it is presently proposed to be conducted); or
m. any agreement or commitment by the Buyer to do any of the
things described in this Section 4.8.
4.9 Absence of Undisclosed Liabilities. To the Buyer's
knowledge, the Buyer does not have any material liabilities
(fixed or contingent, including any material tax liabilities due
or to become due) which are not reflected or provided for in the
financial Statements.
4.10 Tax Returns and Audits-Buyer. The Buyer has timely filed
all federal, state, county, local and foreign tax returns and
reports within the times and in the manner prescribed by law and
has paid (or made adequate provision in the Financial Statements)
for: all taxes shown due on such returns, as well as all other
assessments and penalties which have become due and payable.
PAGE-13-
The Buyer's federal income and other tax returns have not been
audited by the Internal Revenue Service or any other taxing
authority and no notice of audit has been received. To the
Buyer's knowledge, the provisions for taxes in the Financial
Statements are adequate for any and all federal, state, county,
local and foreign taxes for the period ending on the Balance
Sheet Date and for all prior periods, whether or not disputed.
The Buyer has not received notice of any disputes, deficiency
assessments, or proposed adjustments to taxes payable by the
Buyer.
4.11 Assets. The Buyer has good and marketable title to all of
its personal property, including all assets reflected on the
balance sheets included in the Financial Statements or acquired
by the Company since the Balance Sheet Date, all of which are in
good operating condition and free and clear of material
restrictions on or conditions to transfer or assignment, and free
and clear of all liens, claims, mortgages, pledges, charges,
equities, easements, rights of way, covenants, conditions,
security interests, encumbrances, or restrictions, except for
liens for current taxes or materialmen not yet due and payable or
being contested in good faith. The Buyer does not own any real
property. The Buyer enjoys peaceful and undisturbed possession
of all premises owned by it, or leased to it from others, and
does not occupy any real property in material violation of any
law, regulations, or decree.
4.12 Articles and Bylaws-Buyer. The Buyer is not currently in
violation of any provision of the Articles or its Bylaws, as in
effect on each Closing Date. There is no default or event that,
with notice or lapse of time, or both, would conflict with or
constitute a breach of the Articles of the Buyer's Bylaws.
4.13 Material Contracts.
a. Except as set forth in the Disclosure Materials, the
Buyer does not have, nor is it bound by, any contract, agreement,
lease, commitment, or proposed transaction, judgment, order, writ
or decree, written or oral, absolute or contingent, other than
(i) contracts for the purchase of supplies and services that were
entered into in the ordinary course of business and that does not
involve more than $10,000 and do not extend for more than one
year beyond the date hereof; (ii) sales contracts entered into in
the ordinary course of business; and (iii) contracts terminable
at will by the Buyer on no more than 30 days' notice without cost
or liability to the Buyer and that do not involve any employment
or consulting arrangement and are not material to the conduct of
the Buyer's business. For the purpose of this paragraph,
employment and consulting contracts and contracts with labor
unions, and license agreements and any other agreements relating
to the Buyer's acquisition or disposition of patent, copyright,
trade secret or other proprietary rights or technology (other
than standard end-user license agreements) shall not be
considered to be contracts entered into in the ordinary course of
business. Every contract disclosed in the Disclosure Materials
(collectively, the "Material Contracts") is a legal, valid and
binding obligation, enforceable in accordance with its terms with
respect to the Buyer and any other parties bound thereby, and
true and complete copies of all Material Contracts have been
provided to the Company. The Buyer is not, nor has it given or
been given notice that any other party is, currently in breach of
any of the terms of any Material Contract. There is no default
or event that, with notice or lapse of time, or both, would
conflict with or constitute a breach of any Material Contract or
would result in the creation or imposition of any lien or
encumbrance on the Buyers, any of the Buyer's property. The
Buyer has not received notice that any party to any Material
Contract intends to cancel, amend or terminate any such
agreement.
PAGE-14-
b. As previously disclosed, the Buyer is not presently engaged
in any discussion, unless previously disclosed (i) with any
representative of any corporation or corporations regarding the
consolidation or merger of the Company with or into any such
corporation or corporations; (ii) with any corporation,
partnership, association or other business entity or any
individual regarding the sale, conveyance or disposition of all
or substantially all of the assets of the Buyer, or a transaction
or series of related transactions in which more than 50% of the
voting power of the Buyer is or was to be disposed; or (iii)
regarding any other form of acquisition, liquidation, dissolution
or winding up or the Buyer.
4.14 Litigation. There are no actions, suits, or legal,
administrative, or other proceedings or investigations pending,
or, to the best of the Buyer's knowledge, threatened before any
court, agency, or other tribunal to which the Buyer is a party or
against or affecting any of the property, assets, businesses, or
financial condition of the Buyer, except as set forth in the
Disclosure Materials. The Buyer is not in default with respect
to any other, writ, injunction, or decree of any federal, state,
local or foreign court, department, agency, or instrumentality to
which it is a party. The Buyer has provided Company and its
counsel with true and accurate copies of material documents
relating to any of these matters that are disclosed in the
Disclosure Materials.
4.15 Related Transaction. Except as set forth in the Disclosure
Materials, there are no obligations of the Buyer to officers,
directors, shareholders or employees of the Buyer other than (a)
for payment of salary for services rendered; (b) reimbursement
for reasonable expenses incurred on behalf of the Buyer; and (c)
for other standard employee benefits made generally available to
all employees (including any stock options outstanding under the
Option Plan). None of the officers, directors of shareholders of
the Buyer, or any members of their immediate families, are
indebted to the Buyer or have any direct or indirect ownership
interest in any firm or corporation with which the Buyer has a
business relationship, or any firm or corporation which competes
with the Buyer, except that officers, directors and/or
shareholders of the Buyer may own stock in publicly traded
companies which may compete with the Company. No officer,
director or shareholder, or any member of their immediate
families, is, directly or indirectly, interested in any material
contract with the Buyer (other than such contracts as relate to
any such person's ownership of capital stock or other securities
of the Buyer). Except as may be disclosed in the Financial
Statements, the Buyer is not a guarantor or indemnitor of any
indebtedness of any other person, firm or corporation.
4.16 Agreement Will Not Cause Breach or Violation. The
consummation of the transactions contemplated by this Agreement
(including the issuance and sale of the Shares) will not result
in any violation of or constitute a default or any event that,
with notice or lapse of time, or both, would conflict with or
constitute a breach or default of the Bylaws of the Buyer or of
any Material Contract or any material provision of local, state,
federal or foreign law, rule or regulation and will not result in
the creation or imposition of any lien or encumbrance on any of
the Buyer's property or on the Shares.
PAGE-15-
4.17 Governmental Approvals/Third Party Consents. All consents,
approvals, or authorizations of, or registrations,
qualifications, designations, declarations, or filings with any
federal or state governmental authority, and all consents,
approvals or authorizations of any third party required in
connection with the execution of this Agreement, and the
performance of the transactions contemplated hereby (including
the issuance of the Shares) have been obtained by the Buyer. The
Buyer has, or has rights to acquire, all licenses, permits, and
other similar authority necessary for the conduct of its business
as now being conducted by it and as planned to be conducted, the
lack of which could materially and adversely affect the
operations or condition, financial or otherwise, of the Buyer,
and it is not in default in any material respect under any of
such licenses, permits or other similar authority.
4.18 Environmental Matters. The Buyer is in compliance in all
material respects with all Environmental Laws and, to its
knowledge no material expenditures are or will be required in
order to comply with any Environmental Law. The Buyer has not
knowingly handled, stored or released, or exposed any person to,
any Hazardous Substances. The Buyer is not, and has no knowledge
that it will be in the future, liable, or responsible for clean-
up costs, remedial work or damages in connection with the
handling, storage, release, or exposure by the Buyer of any
Hazardous Substances. To the Buyer's knowledge, no claims for
clean-up costs, remedial work or damages have been made by any
person or entity in connection with the handling, storage,
release, or exposure by the Buyer of any Hazardous Substances, or
in connection with any Environmental Law.
4.19 Bankruptcy. The Buyer has not admitted in writing its
inability to pay its debts generally as they become due, filed or
consented to the filing against it of a petition in bankruptcy or
a petition to take advantage of any insolvency act, made an
assignment for the benefit of creditors, consented to the
appointment of a receiver for itself or for the whole or any
substantial part of its property, or had a petition in bankruptcy
filed against it, been adjudicated a bankrupt, or filed a
petition or answer seeking reorganization or arrangement under
the federal bankruptcy laws or any other law or statute of the
United States of America or any other jurisdiction.
4.20 Employees and Consultants. Except as set forth in the
Disclosure Materials, the Buyer has not entered into any
arrangement with any present or former employee that will result
in any obligation of the Buyer to make any payment to such
employee upon termination. True and complete copies of all
written employment agreements with the key executive officers of
the Company have been delivered to Company prior to the Closing
Date. To the Buyer's knowledge, no employee of or consultant to
the Buyer is in material violation of any term of any employment
contract or any other contract or agreement relating to the
relationship of any such employee or consultant with the Buyer.
The company has not received notice that any executive officer
intends to terminate his employment with the Buyer, nor does the
Buyer have any present intention to terminate the employment of
any executive officer. To the Buyer's knowledge, none of its
employees are obligated under any contract (including licenses,
covenants, or commitments of any nature) or other agreement, or
subject to any judgment, decree, or order of any court of
administrative agency, that would interfere with the use of
his/her reasonable diligence to promote the interests of the
Buyer that would conflict with the Buyer's business as proposed
to be conducted. Neither the execution nor delivery of this
Agreement, nor the conduct of the Buyer's business as proposed,
will, to the Buyer's knowledge, conflict with or result in a
breach of terms, conditions or provisions of, or constitute a
default under, any contract, covenant, or instrument under which
any of such employees is obligated, which conflict, breach, or
default would be materially adverse to the Buyer.
PAGE-16-
4.21 Employee Benefits Matters. The Buyer does not maintain or
contribute to any plan or arrangement that constitutes an
"employee pension benefit plan" as defined in Section 3(2) of
ERISA, and is not obligated to contribute to or accrue or pay
benefits under any deferred compensation or retirement funding
arrangement.
4.22 Compliance with Laws. (a) The Buyer has complied with and
is in compliance in all material respects with all foreign,
federal, state and local statutes, laws, ordinances, regulations,
rules, judgments, order and decrees applicable to it and its
assets, business and operations, and (b) the Buyer has not
received written notice of any claim of default under or
violation of any statute, law, ordinance, regulation, rule,
judgment, order or decree except for any such noncompliance or
claim of default or violation, if any, which in the aggregate do
not and will not have a material adverse affect on the property,
operations, financial condition or prospects of the Buyer.
4.23 Brokers. All negotiations relating to this Agreement and
the transactions contemplated hereby have been carried on by the
Buyer directly with the Company and without the intervention of
any person on behalf of the Company, and in such manner as not to
give rise to any valid claim against any of the parties for a
finder's fee, brokerage commission or like payment.
4.24 Accuracy of Information Furnished. This Agreement, the
Disclosure Materials, the Financial Statements, as well as any
exhibit, certificate, written statement, material or information
furnished by or on behalf of the Buyer pursuant hereto or in
connection with the transactions contemplated hereby to the
Company, do not contain any untrue statement of a material fact
or omit to state any material fact that is necessary to make the
statements contained herein or therein not misleading.
4.25 Investment Representations. Buyer understands that the
Shares have not been registered under the Securities Act. Buyer
also understands that the Shares are being exchanged pursuant to
an exemption from registration contained in the Securities Act
based in part upon Buyer's representations contained in this
Agreement. Buyer hereby represents and warrants as follows:
(e) Company Information. Company has received and
read the Financial Statements and has had an
opportunity to discuss the Buyer's business, management
and financial affairs with directors, officers and
management of the Buyer and has had the opportunity to
review the Buyer's operations and facilities. Company
also has had the opportunity to ask questions of and
receive answers from the Buyer and its management
regarding the terms and conditions of this exchange.
5. CONDITIONS TO BUYER'S OBLIGATIONS AT CLOSING.
The obligation of Buyer to consummate the transactions
contemplated hereby on the Closing Date is subject to the
satisfaction on or before the Closing Date of the following
conditions (unless such condition provides specifically that it
shall relate solely to a later date):
PAGE-17-
5.1 Representation and Warranties. All representations and
warranties of the company herein or in any exhibit or certificate
delivered hereunder shall be true and correct as of the date
hereof, and as of the Closing Date, with the same force and
effect as if made on and as of such Closing Date, subject to such
disclosures and exceptions as may be specifically described in
the Disclosure Materials.
5.2 Performance. All covenants, obligations and conditions
required by the terms of this Agreement to be performed or
complied with by the Buyer at or before the Closing Date shall
have been duly and properly performed.
5.3 Approval of Documentation. All corporate and other
proceedings in connection with the transactions contemplated by
this Agreement and the form and substance of all documents
delivered hereunder shall be reasonably satisfactory to Buyer and
to its counsel.
5.4 Consents. All necessary agreements and consents of any
third parties to the consummation of the transactions
contemplated by this Agreement shall have been obtained by the
Company and delivered to Company.
5.5 Approvals. All necessary approvals or authorizations
of any governmental authority of the United States or of any
state therein or of any foreign governmental authority that are
required in connection with the execution and performance of this
Agreement, including the issuance and sale of the Shares, shall
have been obtained and shall be effective as of the Closing Date.
5.6 Board of Director Resolutions. All resolutions required by
the Board of Directors pertaining to this Agreement shall have
been delivered to Buyer and Company on or before the Closing
Date, and approved by it.
5.7 Buyer Review. The Company shall have completed its
review of, and shall be satisfied with its conclusions regarding,
the Company's business, operations and projections on or before
the closing Date.
5.8 Maintenance of Corporate Status. The Company and Buyer
shall maintain its corporate or partnership existence in good
standing or effective under the laws of its jurisdiction of
organization and any other states or jurisdictions in which its
failure to qualify as a foreign corporation or entity would have
a material adverse effect on its operations or financial
condition.
5.9 Compliance with Governing Documents. The Company shall
comply in all material respects with its Articles; Bylaws or
other governing documents.
5.10 Compliance with Laws, Licenses and Permits: No
infringement. The Buyer and Company shall comply with all
applicable federal, state, local, foreign and other laws,
regulations and ordinances, and with all applicable federal,
state, local and foreign governmental licenses and permits
necessary for conducting its business, except to the extent that
any noncompliance would not have a material adverse effect upon
the Company. The Company shall not knowingly engage in any
activities that infringe upon the intellectual property rights of
any other person, corporation, partnership or other entity which
could have a material adverse effect upon the Company.
PAGE-18-
5.11 Discharge of Obligations. The Company shall pay and
discharge all taxes, assessments, and governmental charges
lawfully levied or imposed upon it (in each case before they
become delinquent and before penalties accrue), all lawful claims
for labor, materials, supplies and rents, and all other debts and
liabilities that if unpaid would by law be a lien or charge upon
any of the assets or properties of the Company or lead to
suspension of the business of the Company (except to the extent
contested in good faith by the Company and for which adequate
reserves are established).
5.12 Maintenance of Properties. The Company shall maintain all
real and personal property used in the business of the Company in
good operating condition, and shall make all repairs, renewals,
replacements, additions and improvements to those properties as
are necessary or appropriate in the ordinary course of business.
5.13 Maintenance of Proprietary Information. The Company shall
maintain all Proprietary Information, and all applications and
registrations therefor owned or held by the Company, in full
force and effect, except as otherwise determined in the ordinary
course of business. The Company shall not encumber or license
others to use the Proprietary Information owned by it except in
the ordinary course of the Company's business and shall maintain
the confidentiality and trade secret status of all Proprietary
Information that is confidential except where disclosure is
necessary to obtain copyright registrations or patents, or is
necessary or desirable in the ordinary course of the Company's
business. The Company shall cause each key management employee
of the Company and each Consultant to enter into confidentiality
agreements in a form approved in writing by the Buyer within 30
days of the Closing. The Company shall consult with the Buyer
and shall take such actions in accordance with the Buyer's advice
as may be necessary or desirable to protect and enhance the
Proprietary Information of the Company.
5.14 Insurance. The company shall maintain in full force and
effect (a) adequate insurance policies to protect its assets and
businesses covering property damage by fire, business
interruption or other casualty, sufficient in amount to allow it
to replace any of its properties damaged or destroyed; (b)
insurance policies to protect against all liabilities, claims,
and risks against which it is customary, in amounts customary for
companies similarly situated with the Company; and (c) customary
liability insurance policies for its directors and officers.
5.15 Compensation of Directors. Each member of the Board of
Directors shall be entitled to (a) customary liability insurance
obtained at commercially reasonable rates, and (b) reimbursement
by the Company for all out-of-pocket expenses, including, without
limitation, travel expenses, incurred by such director in
connection with the performance of such director's duties,
subject to approval by the Board of Directors, such approval not
to be unreasonably withheld.
5.16 Books and Records. The Company shall keep proper books of
records and account, in which full and correct entries shall be
made of all financial transactions and the assets and business of
the Company in accordance with GAAP. The Company shall provide
Buyer with access to all such books and records and allow Buyer
to make copies and abstracts thereof at reasonable times.
PAGE-19-
5.17 Stock Redemptions. The Company shall not apply any of
its assets for the redemption, retirement, purchase or
acquisition of any shares of any series or class of stock of the
company, except as provided in the Articles.
5.18 Further Assurances. The Company, at its expense, will
execute and deliver promptly to the Buyer upon request all such
other and further documents, agreements and instruments in
compliance with or pursuant to its covenants and agreements
herein, and will make any recordings, file any notices, and
obtain any consents as may be necessary or appropriate in
connection therewith.
5.19 Notices. Within five business days of obtaining
knowledge of any of the events described below, the Company shall
give written notice to each member of the Board of Directors of:
a. any (i) default or event of default under any Material
Contract of the Company; (ii) initiation or resolution of any
material dispute, litigation, investigation, or proceeding which
may exist at any time between the Company and any private third
party or governmental authority; (iii) any default or breach of
the terms of this Agreement or any of the Registration Rights
Agreement by the Company; (iv) any events which would render any
of the representations, warranties and covenents of the Company
contained herein to be untrue; and (v) any other matter that has
resulted in a material adverse effect in the condition of the
Company, whether financial or otherwise.
b. Each notice pursuant to this Section 5.21 shall be
accompanied by a statement on behalf of the Company by the Chief
Executive Officer, President or Chief Financial Officer of the
Company setting forth details of the occurrence referred to
therein, stating what action the Company proposes to take with
respect thereto, the Company officer responsible for such action
and the timetable with respect to such action.
6. SURVIVAL
All covenants, agreements, representations and warranties
and other statements of the Company made herein and in the
certificates, lists, exhibits, schedules or other written
information delivered or furnished to the Buyer in
connection herewith shall be deemed material and to have
been relied upon by the Buyer, and, except as may be
provided otherwise in this Agreement, shall survive the
execution and delivery of this Agreement, the Closing, the
delivery of the Shares, and any investigation at any time
(or any statement as to the results thereof) made by or on
behalf of the Buyer and shall remain in full force and
effect, and shall bind the Company's successors and assigns,
whether so expressed or not, and all such covenants,
agreements, representations and warranties shall inure to
the benefit of the Buyer's successors and assigns and to
transferees of the Shares, whether so expressed or not.
7. INDEMNIFICATION
7.1 Indemnification from the Company.
a. Without limitation of any other provision of this Agreement,
the Company agrees to defend, indemnify and hold the Buyer and is
Affiliates and their respective direct and indirect partners,
members, shareholders, directors, officers, employees and agents
and each person who controls any of them within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange
Act (parties receiving the benefit of the indemnification
provisions herein shall be referred to collectively as
"Indemnified Parties" and individually as an "Indemnified Party")
PAGE-20-
harmless from and against any and all losses, claims, damages,
obligations, liens, assessments, judgments, fines, liabilities,
and other costs and expenses (including without limitation
interest, penalties and any investigation, legal and other
expenses incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claim
asserted, as the same are incurred, and including any diminution
in the value of the Shares) of any kind or nature whatsoever
(collectively, "Liabilities") which may be sustained or suffered
by any such indemnified Party, based upon, arising out of, by
reason of or otherwise in respect of or in connection with (i)
any inaccuracy in or breach of any representation or warranty
made by the Company in this Agreement, in the Registration Rights
Agreement, or in any other agreement, instrument or other
document delivered pursuant to this Agreement or the Registration
Rights Agreement, (ii) any breach of any covenant or agreement
made by the Company in this Agreement, in the Registration Rights
Agreement, or in any other agreement, instrument or other
document delivered pursuant to this Agreement or the Registration
Rights Agreement, or (iii) any third party or governmental action
relating to any action taken or omitted to be taken or alleged to
have been taken or omitted to have been taken by an Indemnified
Party as Shareholder, director, agent, representative or
controlling person of the Company, including, without limitation,
any and all losses, claims, damages, expenses and liabilities,
joint or several (including any investigation, legal and other
expenses incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claim
asserted as the same may be incurred) arising or alleged to arise
under the Securities Act, the Exchange Act or other federal or
state statutory law or regulation, at common law or otherwise,
including without limitation any such claim alleging so-called
control person liability or securities law liability; provided,
however, that the Company will not be liable to an Indemnified
Party (A) to the extent that it is finally judicially determined
that such Liabilities resulted from the willful misconduct or
gross negligence of such Indemnified Party; or (B) to the extent
that it is finally judicially determined that such Liabilities
resulted from the material breach by such Indemnified Party of
any representation, warranty, covenant or other agreement of such
Indemnified Party contained in this Agreement or the Registration
Rights Agreement; provided, further that if and to the extent
that such indemnification is unenforceable for any reason, the
Company shall make the maximum contribution to the payment and
satisfaction of such indemnified liability which shall be
permissible under applicable laws.
b. The indemnification and contribution provided for in this
Section 7.1 will remain in full force and effect regardless of
any investigation made by or on behalf of the Indemnified Parties
or any officer, director, partner, employee, agent or controlling
person of the Indemnified Parties.
c. The Company agrees to pay any and all stamp, transfer and
other similar taxes, if any, payable or determined to be payable
in connection with the execution and delivery of this Agreement
and the issuance of securities hereunder.
PAGE-21-
7.2 Indemnification from the Buyer.
a. Without limitation of any other provision of this Agreement,
the Buyer agrees to defend, indemnify and hold the Company and is
Affiliates and their respective direct and indirect partners,
members, shareholders, directors, officers, employees and agents
and each person who controls any of them within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange
Act (parties receiving the benefit of the indemnification
provisions herein shall be referred to collectively as
"Indemnified Parties" and individually as an "Indemnified Party")
harmless from and against any and all losses, claims, damages,
obligations, liens, assessments, judgments, fines, liabilities,
and other costs and expenses (including without limitation
interest, penalties and any investigation, legal and other
expenses incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claim
asserted, as the same are incurred, and including any diminution
in the value of the Shares) of any kind or nature whatsoever
(collectively, "Liabilities") which may be sustained or suffered
by any such indemnified Party, based upon, arising out of, by
reason of or otherwise in respect of or in connection with (i)
any inaccuracy in or breach of any representation or warranty
made by the Company in this Agreement, in the Registration Rights
Agreement, or in any other agreement, instrument or other
document delivered pursuant to this Agreement or the Registration
Rights Agreement, (ii) any breach of any covenant or agreement
made by the Company in this Agreement, in the Registration Rights
Agreement, or in any other agreement, instrument or other
document delivered pursuant to this Agreement or the Registration
Rights Agreement, or (iii) any third party or governmental action
relating to any action taken or omitted to be taken or alleged to
have been taken or omitted to have been taken by an Indemnified
Party as Shareholder, director, agent, representative or
controlling person of the Buyer, including, without limitation,
any and all losses, claims, damages, expenses and liabilities,
joint or several (including any investigation, legal and other
expenses incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claim
asserted as the same may be incurred) arising or alleged to arise
under the Securities Act, the Exchange Act or other federal or
state statutory law or regulation, at common law or otherwise,
including without limitation any such claim alleging so-called
control person liability or securities law liability; provided,
however, that the Buyer will not be liable to an Indemnified
Party (A) to the extent that it is finally judicially determined
that such Liabilities resulted from the willful misconduct or
gross negligence of such Indemnified Party; or (B) to the extent
that it is finally judicially determined that such Liabilities
resulted from the material breach by such Indemnified Party of
any representation, warranty, covenant or other agreement of such
Indemnified Party contained in this Agreement or the Registration
Rights Agreement; provided, further that if and to the extent
that such indemnification is unenforceable for any reason, the
Buyer shall make the maximum contribution to the payment and
satisfaction of such indemnified liability which shall be
permissible under applicable laws.
b. The indemnification and contribution provided for in this
Section 7.2 will remain in full force and effect regardless of
any investigation made by or on behalf of the Indemnified Parties
or any officer, director, partner, employee, agent or controlling
person of the Indemnified Parties.
PAGE-22-
c. The Buyer agrees to pay any and all stamp, transfer and
other similar taxes, if any, payable or determined to be payable
in connection with the execution and delivery of this Agreement
and the issuance of securities hereunder.
7.3 Notification. Each Indemnified Party under this
Section 7 shall promptly, after the receipt of notice of the
commencement of any action, investigation, claim or other
proceeding against such Indemnified Party in respect of which
indemnity may be sought from the Company under this Section 7,
notify the Company in writing of the commencement thereof. The
failure of any Indemnified Party to so notify the Company of any
such action shall not relieve the Company from any liability to
such Indemnified Party under this Section 7 except to the extent
that such failure to notify results in a loss of a material
defense of such Indemnified Party or in actual prejudice due to
such action. In case any such action, claim or other proceeding
shall be brought against any Indemnified Party and such
Indemnified Party shall notify the company of the commencement
thereof, the Company shall be entitled to assume the defense
thereof at its own expense, with counsel satisfactory to such
Indemnified Party in its reasonable judgment; provided, however,
that any Indemnified Party may, at its own expense, retain
separate counsel to participate in such defense. Notwithstanding
the foregoing, in any action, claim or proceeding in which both
the Company on the one hand and an Indemnified Party on the other
hand is, or is reasonably likely to become, a party, such
Indemnified Party shall have the right to employ separate counsel
at the Company's expense and to control its own defense of such
action, claim or proceeding if, in the reasonable opinion of
counsel to the Company, a conflict or potential conflict exists
between the parties makes separate representation advisable. The
Company agrees that it will not, without the prior written
consent of the Buyer (such consent not to be unreasonably
withheld), settle, compromise or consent to the entry of any
judgment in any pending or threatened claim, action or proceeding
relating to the matters contemplated hereby (if any Indemnified
Party is a party thereto or has been actually threatened to be
made a party thereto) unless such settlement, compromise or
consent includes an unconditional release of the Buyer and each
other Indemnified Party from all liability arising or that may
arise out of such claim, action or proceeding. The rights
accorded to Indemnified Party hereunder shall be in addition to
any rights that any Indemnified Party may have at common law, by
separate agreement or otherwise.
7.4 Registration Rights Agreement. Notwithstanding
anything to the contrary in this Section 7, the Indemnification
and contribution provisions of the Registration Rights Agreement
shall govern any claim made with respect to registration
statement filed pursuant thereto or sales made thereunder.
8. MISCELLANEOUS PROVISIONS
8.1 Termination. This Agreement may be terminated at any time
prior to the Closing Date:
a. by the mutual written consent of the Buyer and the Company;
b. by either Buyer or the Company if the Closing shall not have
occurred prior to March 2, 2002 (the "Termination Date") unless
such Termination Date is extended by mutual written consent of
the Buyer and the Company, provided that the right to terminate
this Agreement under this Section 8.1 (b) shall not be available
to any party whose failure to fulfill any obligation under this
Agreement has been the cause of, or results in, the failure of
the Closing to have occurred by the Termination Date.
PAGE-23-
8.2 Modification and Waivers. This Agreement may not be
amended or modified, nor may the right of any party be waived,
except by a written document that is executed by Buyer and the
Company.
8.3 Assignment. This Agreement is and shall be binding
upon and inure to the benefit of the parties and their respective
successors and permitted assigns. Neither party may assign the
Agreement to any third party without the prior written consent of
the other parties.
8.4 Rights and Obligations of Third Parties. Nothing in
this Agreement, whether express or implied, is intended to confer
any rights or remedies under or by reason of this Agreement on
any persons other than the parties to it and their respective
successors and permitted assigns, nor is anything in this
Agreement intended to relieve or discharge the obligation or
liability of any third parties to any party to this Agreement,
nor shall any provision give any third party any right of
subrogation against any party to this Agreement.
8.5 Notices. Any notice, request, consent, or other
communication hereunder shall be in writing, and shall be sent by
one of the following means: (a) by registered or certified first
class mail, postage prepaid, return receipt requested; (b) by
facsimile transmission with confirmation of receipt; (c) by
overnight courier service; or (d) by personal delivery, and shall
be properly addressed as follows:
If to the Company, to: Consumer Capital Holdings, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇ ▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
If to the Buyer, to: Blue Star Coffee, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Or to such other address or addresses as the Company or
Buyer shall hereafter designate to the other parties in
writing. Notices sent by mail shall be effective five
days after they are sent, and notices delivered
personally, by facsimile or by courier shall be
effective at the time of delivery thereof.
8.6 Entire Agreement. This Agreement, including the
exhibits to the Agreement, constitutes the entire agreement
between the parties hereto in relation to the subject matter
hereof, Any prior written or oral negotiations, correspondent, or
understandings relating to the subject matter hereof shall be
superseded by this Agreement and shall have no force or effect.
The representations, warranties, covenants and agreements made
herein shall survive any investigation made by Buyer.
PAGE-24-
8.7 Severability. If any provision that is not essential
to the effectuation of the basic purpose of this Agreement is
determined by a court of competent jurisdiction to be invalid and
contrary to any existing or future law, such invalidity shall not
impair the operation of the remaining provisions of this
Agreement.
8.8 Headings. The headings of the Sections of this
Agreement are inserted for convenience of reference only and
shall not affect the construction or interpretation of any
provisions hereof.
8.9 Exhibits. The exhibits to this Agreement are a part of
this Agreement for all purposes. Terms which are defined in this
Agreement shall have the same meanings when used in such
exhibits.
8.10 Counterparts. This Agreement may be executed in any
number of counterparts, each of which when executed and delivered
shall be an original, but all of which together shall constitute
one and the same instrument.
8.11 Expenses. Reasonable expense incurred in preparation of
this Agreement shall be paid by the Company.
8.12 Governing Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of Nevada
(as applied to contracts entered into wholly within such state).
8.13 Delays or Omissions. No delay or omission to exercise any
right, power, or remedy accruing to either party, upon any breach
or default of the other party under this Agreement, shall impair
any such right, power, or remedy, nor shall it be construed to be
a waiver of any such breach or default, or an acquiescence
therein or of or in any similar breach of default thereafter
occurring; nor shal any waiver of any single breach or default
be deemed a waiver of any other breach or default theretofore or
thereafter occurring. Any waiver, permit, consent, or approval
on the part of either party of any breach or default by the other
party under this Agreement, or any waiver of any provisions or
conditions of this Agreement must be made in writing signed by
the parties and shall be effective only to the extent
specifically set forth in such writing. All remedies either
under this Agreement or by law or otherwise afforded to either
party, shall be cumulative and not alternative.
8.14 Arbitration. Except as set forth in Section 7 hereof, the
parties hereby covenant and agree that any legal suit, dispute,
claim, demand, controversy or cause of action of any kind and
nature whatsoever, known or unknown, fixed or contingent, that
either a Shareholder or the Company may have or any time in the
future claim to have based in whole or in part, or arising from
or out of or that in any way is related to the negotiations,
execution, interpretation or enforcement of this Agreement
(collectively, the "Disputes") shall be completely and finally
settled by submission of any such Disputes to arbitration under
the rules of the American Arbitration Association ("AAA") then in
effect. There shall be one arbitrator, and such arbitrator shall
be chosen my mutual agreement of the parties in accordance with
AAA rules. Unless the parties agree otherwise, the arbitration
proceedings shall take place in Las Vegas, Nevada.
PAGE-25-
The arbitrator shall apply Nevada law to all issues in dispute, in
accordance with Section 8.14 above. Notice of demand for
arbitration shall be filed in writing with the other party to
this Agreement and with the AAA. In no event shall the demand
for arbitration be made after the date when institution of legal
or equitable proceedings based on such Dispute would be barred by
the applicable statute of limitations. The finding of the
arbitrator shall be final and binding on the parties. Judgment
on such award may be entered in any court of competent
jurisdiction, or application may be made to that court for a
judicial acceptance of the award and an order or enforcement, as
the party seeking to enforce that award may elect. The
prevailing party in any such action shall be entitled to receive
from the losing party all reasonable costs and expenses,
including the reasonable fees of attorneys, accountants, and
other experts, incurred by the prevailing party in investigating
and prosecuting (or defending) such action, together with any
such fees which may be incurred in enforcing any award of
judgment.
IN WITNESS WHEREOF, the undersigned have executed this Stock
Purchase Agreement by an authorized representative as of the day
and year first above written.
COMPANY: Consumer Capital Holdings, Inc.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------
▇▇▇▇▇▇▇ ▇.▇▇▇▇▇▇,
President & CEO
BUYER: Blue Star Coffee, Inc.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
President & CEO
PAGE-26-