EXHIBIT 2.1
SHARE EXCHANGE AGREEMENT
This SHARE EXCHANGE AGREEMENT, dated as of September 3, 2008, is made
by and among ▇▇▇▇▇▇▇ INTERNATIONAL INC, a Nevada corporation (the "Acquiror
Company") and CALICO ENTERTAINMENT GROUP, INC, a Nevada Corporation ("CaliCo"),
and each of the persons listed on Exhibit B as a CaliCo Shareholder
(collectively, the "CaliCo Shareholders", and individually a "CaliCo
Shareholder").
BACKGROUND
The CaliCo Shareholders have agreed to transfer to the Acquiror
Company, and the Acquiror Company has agreed to acquire from the CaliCo
Shareholders, all of the issued and outstanding shares of CaliCo (the "CaliCo
Shares"), in exchange for 3,450,000 shares of the Acquiror Company's Common
Stock (the "Exchange Shares"), which Exchange Shares shall constitute 5% of the
issued and outstanding shares of Acquiror Company's Common Stock immediately
after the closing of the transactions contemplated herein, in each case, on the
terms and conditions as set forth herein.
ARTICLE I.
DEFINITIONS
Section 1.1 Unless the context otherwise requires, the terms defined in
this Section 1 will have the meanings herein specified for all purposes of this
Agreement, applicable to both the singular and plural forms of any of the terms
herein defined.
"Acquiror Company Balance Sheet" means the Acquiror Company's balance
sheet at April 30, 2008.
"Acquiror Company Board" means the Board of Directors of the Acquiror
Company.
"Acquiror Company Common Stock" means the Acquiror Company's common
stock, par value US $0.001 per share.
"Affiliate" means any Person that directly or indirectly controls, is
controlled by or is under common control with the indicated Person.
"Agreement" means this Share Exchange Agreement, including all
Schedules and Exhibits hereto, as this Share Exchange Agreement may be from time
to time amended, modified or supplemented.
"Closing Date" has the meaning set forth in Section 3.
"Code" means the United States Internal Revenue Code of 1986, as
amended.
"Commission" means the United States Securities and Exchange Commission
or any other federal agency then administering the Securities Act or any
successor statute.
"Company Indemnified Party" has the meaning set forth in Section 10.2.
"Covered Persons" means all Persons, other than the Acquiror Company,
who are parties to indemnification and employment agreements with the Acquiror
Company existing on or before the Closing Date.
"Damages" means the actual losses, damages, liabilities, penalties,
Taxes, interest and expenses (including reasonable attorneys' fees and
disbursements and other out-of-pocket expenses and costs incurred in connection
with mitigating the Loss and investigating, preparing, settling or defending any
pending or threatened action, claim or proceeding (including those brought by
third Persons)).
"Distributor" means any underwriter, dealer or other Person who
participates, pursuant to a contractual arrangement, in the distribution of the
securities offered or sold in reliance on Regulation S.
"Environmental Laws" means any Law or other requirement relating to the
environment, natural resources, or public or employee health and safety.
"Environmental Permit" means all licenses, permits, authorizations,
approvals, franchises and rights required under any applicable Environmental Law
or Order.
"Equity Security" means any stock or similar security, including,
without limitation, securities containing equity features and securities
containing profit participation features, or any security convertible into or
exchangeable for, with or without consideration, any stock or similar security,
or any security carrying any warrant, right or option to subscribe to or
purchase any shares of capital stock, or any such warrant or right.
"ERISA" means the United States Employee Retirement Income Security Act
of 1974, as amended.
"Exchange" has the meaning set forth in Section 2.1.
"Exchange Act" means the Securities Exchange Act of 1934 or any similar
federal statute, and the rules and regulations of the Commission thereunder, all
as the same are in effect from time to time.
"Exchange Shares" means the Acquiror Company Common Stock being issued
to the CaliCo Shareholders pursuant hereto.
"Exhibits" means the several exhibits referred to and identified in
this Agreement.
"GAAP" means, with respect to any Person, United States generally
accepted accounting principles applied on a consistent basis with such Person's
past practices.
"Governmental Authority" means any federal or national, state or
provincial, municipal or local government governmental authority, regulatory or
administrative agency, governmental commission, department, board, bureau,
agency or instrumentality, political subdivision, commission, court, tribunal,
official, arbitrator or arbitral body, in each case whether United States or
non-United States with jurisdiction over any party hereto.
"Indebtedness" means any obligation, contingent or otherwise. Any
obligation secured by a Lien on, or payable out of the proceeds of, or
production from, property of the relevant party will be deemed to be
Indebtedness.
"Intellectual Property" means all industrial and intellectual property,
including, without limitation, all United States and non-United States patents,
patent applications, patent rights, trademarks, trademark applications, common
law trademarks, Internet domain names, trade names, service marks, service ▇▇▇▇
applications, common law service marks, and the goodwill associated therewith,
copyrights, in both published and unpublished works, whether registered or
2
unregistered, copyright applications, franchises, licenses, know-how, trade
secrets, technical data, designs, customer lists, confidential and proprietary
information, processes and formulae, all computer software programs or
applications, layouts, inventions, development tools and all documentation and
media constituting, describing or relating to the above, including manuals,
memoranda, and records, whether such intellectual property has been created,
applied for or obtained anywhere throughout the world.
"Laws" means, with respect to any Person, any United States or
non-United States federal, national, state, provincial, local, municipal,
international, multilateral or other law (including common law), constitution,
statute, code, ordinance, rule, regulation or treaty applicable to such Person.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien
or charge of any kind, including, without limitation, any conditional sale or
other title retention agreement, any lease in the nature thereof and the filing
of or agreement to give any financing statement under the Uniform Commercial
Code of any jurisdiction and including any lien or charge arising by Law.
"Material Acquiror Company Contract" means any and all agreements,
contracts, arrangements, leases, commitments or otherwise, of the Acquiror
Company, of the type and nature that the Acquiror Company is required to file
with the Commission.
"Material Adverse Effect" means, when used with respect to the Acquiror
Company or CaliCo, as the case may be, any change, effect or circumstance which,
individually or in the aggregate, would reasonably be expected to (a) have a
material adverse effect on the business, assets, financial condition or results
of operations of the Acquiror Company or CaliCo, as the case may be, in each
case taken as a whole or (b) materially impair the ability of the Acquiror
Company (or the Acquiror Company Shareholders) or CaliCo (or the CaliCo
Shareholders), as the case may be, to perform its obligations under this
Agreement, excluding any change, effect or circumstance resulting from (i) the
announcement, pendency or consummation of the transactions contemplated by this
Agreement, (ii) changes in the United States securities markets generally, or
(iii) changes in general economic, currency exchange rate, political or
regulatory conditions in industries in which the Acquiror Company or CaliCo, as
the case may be, operate.
"Order" means any award, decision, injunction, judgment, order, ruling,
subpoena, or verdict entered, issued, made, or rendered by any Governmental
Authority.
"Organizational Documents" means (a) the articles or certificate of
incorporation, memorandum and articles of association and/or the by-laws or code
of regulations of a corporation; (b) the partnership agreement and any statement
of partnership of a general partnership; (c) the limited partnership agreement
and the certificate of limited partnership of a limited partnership; (d) the
articles or certificate of formation and operating agreement of a limited
liability company; (e) any other document performing a similar function to the
documents specified in clauses (a), (b), (c) and (d) adopted or filed in
connection with the creation, formation or organization of a Person; and (f) any
and all amendments to any of the foregoing.
"CaliCo" means, collectively, CaliCo individually and, as the context
requires, the CaliCo Subsidiaries, if any.
"CaliCo Board" means the Board of Directors of CaliCo.
3
"CaliCo Shares" means the 3,450,000 issued and outstanding ordinary
shares of CaliCo.
"CaliCo Subsidiaries" means all of the direct and indirect Subsidiaries
of CaliCo, including, without limitation, any entity that has the right to the
film products.
"Permitted Liens" means (a) Liens for Taxes not yet payable or in
respect of which the validity thereof is being contested in good faith by
appropriate proceedings and for the payment of which the relevant Person has
made adequate reserves; (b) Liens in respect of pledges or deposits under
workmen's compensation laws or similar Laws, carriers, warehousemen, mechanics,
laborers and materialmen and similar Liens, if the obligations secured by such
Liens are not then delinquent or are being contested in good faith by
appropriate proceedings conducted and for the payment of which the relevant
Person has made adequate reserves; (c) statutory Liens incidental to the conduct
of the business of the relevant Person which were not incurred in connection
with the borrowing of money or the obtaining of advances or credits and that do
not in the aggregate materially detract from the value of its property or
materially impair the use thereof in the operation of its business; and (d)
Liens that would not have a Material Adverse Effect.
"Person" means all natural persons, corporations, business trusts,
associations, companies, general partnerships, limited partnerships, limited
liability companies, joint ventures and other entities, governments, agencies
and political subdivisions.
"Proceeding" means any action, arbitration, audit, hearing,
investigation, litigation, or suit (whether civil, criminal, administrative or
investigative) commenced, brought, conducted, or heard by or before, or
otherwise involving, any Governmental Authority.
"Regulation S" means Regulation S under the Securities Act, as the same
may be amended from time to time, or any similar or successor rule or regulation
hereafter adopted by the Commission.
"Rule 144" means Rule 144 under the Securities Act, as the same may be
amended from time to time, or any similar or successor rule or regulation
hereafter adopted by the Commission.
"Schedule 14(f) Filing" means an information statement filed by the
Acquiror Company on Schedule 14f-1 under the Exchange Act.
"Schedules" means the several schedules referred to and identified and
listed on Exhibit A, setting forth certain disclosures, exceptions and other
information, data and documents referred to at various places throughout this
Agreement.
"SEC Documents" has the meaning set forth in Section 6.26.
"Section 4(2)" means Section 4(2) of the Securities Act, as the same
may be amended from time to time, or any successor statute.
"Securities Act" means the Securities Act of 1933, as amended, or any
similar or successor federal statute, and the rules and regulations of the
Commission thereunder, all as the same will be in effect at the time.
"Subsidiary" means, with respect to any Person, any other Person of
which such Person (a) beneficially owns, either directly or indirectly, more
than 50% of (i) the total combined voting power of all classes of voting
securities of such Person, (ii) the total combined equity interests, or (iii)
4
the capital or profit interests of such Person; or (b) otherwise has the power
to Control such Person.
"Survival Period" has the meaning set forth in Section 10.1.
"Tax" or "Taxes" means all United States, Canadian, other applicable
federal, state or local taxes, charges, fees, levies, imposts, duties and other
assessments, as applicable, including, but not limited to, any income,
alternative minimum or add-on, estimated, gross income, gross receipts, sales,
use, transfer, transactions, intangibles, ad valorem, value-added, franchise,
registration, title, license, capital, paid-up capital, profits, withholding,
payroll, employment, unemployment, excise, severance, stamp, occupation,
premium, real property, recording, personal property, federal highway use,
commercial rent, environmental (including, but not limited to, taxes under
Section 59A of the Code) or windfall profit tax, custom, duty or other tax,
governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest, penalties or additions to tax with respect to any of
the foregoing.
"Tax Group" means any United States, Canadian, and other applicable
federal, state, local or foreign consolidated, affiliated, combined, unitary or
other similar group of which the Acquiror Company is now or was formerly a
member.
"Tax Return" means any return, declaration, report, claim for refund or
credit, information return, statement or other similar document filed with any
Governmental Authority with respect to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Transaction Documents" means, collectively, all agreements,
instruments and other documents to be executed and delivered in connection with
the transactions contemplated by this Agreement.
"United States" means the United States of America.
"United States Dollars" or "US $" or "$" means the currency of the
United States of America.
"U.S. Person" has the meaning set forth in Regulation S under the
Securities Act and set forth on Exhibit C hereto.
ARTICLE II.
EXCHANGE OF CALICO SHARES AND SHARE CONSIDERATION
Section 2.1 Share Exchange. At the Closing, each CaliCo Shareholder
shall transfer to the Acquiror Company the number of CaliCo Shares set out forth
opposite each such CaliCo Shareholder's name in Exhibit B, and, in consideration
therefor, the Acquiror Company shall issue to such CaliCo Shareholder the number
of Exchange Shares set forth opposite each CaliCo Shareholder's name in Exhibit
B (the "Exchange").
Section 2.2 Tax Withholding. The Acquiror Company shall be entitled to
deduct and withhold from the Exchange Shares otherwise deliverable to the CaliCo
Shareholders pursuant to this Agreement such amounts as the Acquiror Company is
required to deduct and withhold with respect to the making of such payment under
the Code or any provision of state, local, provincial or foreign Tax Law. To the
5
extent that amounts are so withheld, such withheld amounts shall be treated for
all purposes of this Agreement as having been paid to such CaliCo Shareholder in
respect of which such deduction and withholding was made.
Section 2.3 Section 368 Reorganization. For United States federal
income tax purposes, the Exchange is intended to constitute a "reorganization"
within the meaning of Section 368(a)(1)(B) of the Code. The parties to this
Agreement hereby adopt this Agreement as a "plan of reorganization" within the
meaning of Sections 1.368-2(g) and 1.368-3(a) of the United States Treasury
Regulations. Notwithstanding the foregoing or anything else to the contrary
contained in this Agreement, the parties acknowledge and agree that no party is
making any representation or warranty as to the qualification of the Exchange as
a reorganization under Section 368 of the Code or as to the effect, if any, that
any transaction consummated prior to the Closing Date has or may have on any
such reorganization status. The parties acknowledge and agree that each (i) has
had the opportunity to obtain independent legal and tax advice with respect to
the transaction contemplated by this Agreement, and (ii) is responsible for
paying its own Taxes, including without limitation, any adverse Tax consequences
that may result if the transaction contemplated by this Agreement is not
determined to qualify as a reorganization under Section 368 of the Code.
Section 2.4 Directors of the Acquiror Company at the Closing Date.
Effective as of the Closing Date the current directors of the Acquiror Company
shall appoint ▇▇▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇ ▇▇▇▇▇▇▇▇▇ as additional members of the
Acquiror Company Board.
ARTICLE III.
CLOSING DATE
The closing of the Exchange will occur on September 5, 2008 or at such
later date as all of the closing conditions set forth in Articles VIII and IX
have been satisfied or waived (the "Closing Date").
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE CALICO SHAREHOLDERS
Each CaliCo Shareholder, severally and not jointly, hereby represents
and warrants to the Acquiror Company:
Section 4.1 Authority. Such CaliCo Shareholder has the right, power,
authority and capacity to execute and deliver this Agreement and each of the
Transaction Documents to which such CaliCo Shareholder is a party, to consummate
the transactions contemplated by this Agreement and each of the Transaction
Documents to which such CaliCo Shareholder is a party, and to perform such
CaliCo Shareholder's obligations under this Agreement and each of the
Transaction Documents to which such CaliCo Shareholder is a party. This
Agreement has been, and each of the Transaction Documents to which such CaliCo
Shareholder is a party will be, duly and validly authorized and approved,
executed and delivered by such CaliCo Shareholder. Assuming this Agreement and
the Transaction Documents have been duly and validly authorized, executed and
delivered by the parties thereto other than such CaliCo Shareholder, this
Agreement is, and each of the Transaction Documents to which such CaliCo
Shareholder is a party have been, duly authorized, executed and delivered by
such CaliCo Shareholder and constitutes the legal, valid and binding obligation
of such CaliCo Shareholder, enforceable against such CaliCo Shareholder in
6
accordance with their respective terms, except as such enforcement is limited by
general equitable principles, or by bankruptcy, insolvency and other similar
Laws affecting the enforcement of creditors rights generally.
Section 4.2 No Conflict. Neither the execution or delivery by such
CaliCo Shareholder of this Agreement or any Transaction Document to which such
CaliCo Shareholder is a party, nor the consummation or performance by such
CaliCo Shareholder of the transactions contemplated hereby or thereby will,
directly or indirectly, contravene, conflict with, constitute a default (or an
event or condition which, with notice or lapse of time or both, would constitute
a default) under, or result in the termination or acceleration of, any agreement
or instrument to which such CaliCo Shareholder is a party or by which the
properties or assets of such CaliCo Shareholder are bound; or (c) contravene,
conflict with, or result in a violation of, any Law or Order to which such
CaliCo Shareholder, or any of the properties or assets of such CaliCo
Shareholder, may be subject. Section
4.3 Ownership of CaliCo Shares. Such CaliCo Shareholder owns, of record
and beneficially, and has good, valid and indefeasible title to and the right to
transfer to the Acquiror Company pursuant to this Agreement, such CaliCo
Shareholder's CaliCo Shares free and clear of any and all Liens. There are no
options, rights, voting trusts, stockholder agreements or any other contracts or
understandings to which such CaliCo Shareholder is a party or by which such
CaliCo Shareholder or such CaliCo Shareholder's CaliCo Shares are bound with
respect to the issuance, sale, transfer, voting or registration of such CaliCo
Shareholder's CaliCo Shares. At the Closing Date, the Acquiror Company will
acquire good, valid and marketable title to such CaliCo Shareholder's CaliCo
hares free and clear of any and all Liens.
Section 4.4 Litigation. There is no pending Proceeding against such
CaliCo Shareholder that challenges, or may have the effect of preventing,
delaying or making illegal, or otherwise interfering with, any of the
transactions contemplated by this Agreement and, to the knowledge of such CaliCo
Shareholder, no such Proceeding has been threatened, and no event or
circumstance exists that is reasonably likely to give rise to or serve as a
basis for the commencement of any such Proceeding. Section
4.5 No Brokers or Finders. No Person has, or as a result of the
transactions contemplated herein will have, any right or valid claim against
such CaliCo Shareholder for any commission, fee or other compensation as a
finder or broker, or in any similar capacity. Section
4.6 Investment Representations. Each CaliCo Shareholder, severally and
not jointly, hereby represents and warrants to the Acquiror Company:
(a) Unregistered Shares. Each CaliCo Shareholder understands
and agrees that the Exchange Shares to be issued pursuant to this Agreement has
not been registered under the Securities Act or the securities laws of any state
of the United States or any foreign country and that the issuance of the
Exchange Shares is being effected in reliance upon an exemption from
registration afforded either under Section 4(2) of the Securities Act for
transactions by an issuer not involving a public offering or Regulation S for
offers and sales of securities outside the United States.
7
(b) Status. Such CaliCo Shareholder is not a U.S. Person. Such
CaliCo Shareholder understands that the Exchange Shares are being offered and
sold to such CaliCo Shareholder in reliance upon the truth and accuracy of the
representations, warranties, agreements, acknowledgments and understandings of
such CaliCo Shareholder set forth in this Agreement, in order that the Acquiror
Company may determine the applicability and availability of the exemptions from
registration of the Exchange Shares on which the Acquiror Company is relying.
(c) Representations of Non-U.S. Persons. Such CaliCo
Shareholder that is acknowledging that such CaliCo Shareholder not a U.S. Person
on the signature page hereto further makes the representations and warranties to
the Acquiror Company set forth on Exhibit D.
(d) Stock Legends. Each CaliCo Shareholder hereby agrees with
the Acquiror Company to the inclusion, as applicable of the following legends,
or legends substantially similar, on the certificates for the Exchange Shares
and any other legend required under any applicable Law, including, without
limitation, any United States state corporate and state securities law, or
contract:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE
SECURITIES LAWS AND NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN
MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED EXCEPT
(1) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND
APPLICABLE STATE SECURITIES LAWS OR (2) PURSUANT TO AN AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND APPLICABLE
STATE SECURITIES LAWS, IN WHICH CASE THE HOLDER MUST, PRIOR TO SUCH
TRANSFER, FURNISH TO THE ISSUER AN OPINION OF COUNSEL, WHICH COUNSEL
AND OPINION ARE REASONABLY SATISFACTORY TO THE ISSUER, THAT SUCH
SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE
TRANSFERRED IN THE MANNER CONTEMPLATED PURSUANT TO AN AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND APPLICABLE
STATE SECURITIES LAWS.
(e) Opinion. No CaliCo Shareholder will transfer any or all of
the Exchange Shares pursuant to Rule 144 or Regulation S or absent an effective
registration statement under the Securities Act and applicable state securities
law covering the disposition of such CaliCo Shareholder's Exchange Shares,
without first providing the Acquiror Company with an opinion of counsel (which
counsel and opinion are reasonably satisfactory to the Acquiror Company) to the
effect that such transfer will be made in compliance with Rule 144 or Regulation
S or will be exempt from the registration and the prospectus delivery
requirements of the Securities Act and the registration or qualification
requirements of any applicable United States state securities laws.
8
(f) Consent. Each CaliCo Shareholder understands and
acknowledges that the Acquiror Company may refuse to transfer the Exchange
Shares, unless such CaliCo Shareholder complies with this Section 4.2 and any
other restrictions on transferability set forth in Exhibit D. Each CaliCo
Shareholder consents to the Acquiror Company making a notation on its records or
giving instructions to any transfer agent of the Acquiror Company's Common Stock
in order to implement the restrictions on transfer of the Exchange Shares.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF CALICO
CaliCo represents and warrants to the Acquiror Company as follows:
Section 5.1 Organization and Qualification. CaliCo is duly organized
and validly existing under the laws of the state of Nevada, has all requisite
authority and power (corporate and other), governmental licenses,
authorizations, consents and approvals to carry on its business as presently
conducted and as contemplated to be conducted, to own, hold and operate its
properties and assets as now owned, held and operated by it, to enter into this
Agreement, to carry out the provisions hereof except where the failure to be so
organized, existing and, if applicable, in good standing or to have such
authority or power will not, in the aggregate, either (i) have a Material
Adverse Effect on, CaliCo or (ii) materially impair the ability of and the
CaliCo Shareholders each to perform their material obligations under this
Agreement. CaliCo is duly qualified, licensed or domesticated as a foreign
corporation in good standing in each jurisdiction wherein the nature of its
activities or its properties owned or leased makes such qualification, licensing
or domestication necessary, except where the failure to be so qualified,
licensed or domesticated will not have a Material Adverse Effect. Set forth on
Schedule 5.1 is a list of those jurisdictions in which CaliCo presently conducts
its business or owns, holds and operates its properties and assets.
Section 5.2 Subsidiaries. Except as set forth on Schedule 5.2, CaliCo
does not own directly or indirectly, any equity or other ownership interest in
any Person. Each CaliCo Subsidiary is duly organized and validly existing under
the laws of the jurisdiction of its organization as set forth on Schedule 5.2,
has all requisite authority and power (corporate and other), governmental
licenses, authorizations, consents and approvals to carry on its business as
presently conducted and as contemplated to be conducted, to own, hold and
operate its properties and assets as now owned, held and operated by it, except
where the failure to be so organized, existing and in good standing or to have
such authority or power will not, in the aggregate, have a Material Adverse
Effect. Each CaliCo Subsidiary is duly qualified, licensed or domesticated as a
foreign corporation in good standing in each jurisdiction wherein the nature of
its activities or its properties owned or leased makes such qualification,
licensing or domestication necessary, except where the failure to be so
qualified, licensed or domesticated will not have a Material Adverse Effect. Set
forth on Schedule 5.2 is a list of those jurisdictions in which any CaliCo
Subsidiary presently conducts its business or owns, holds and operates its
properties and assets.
Section 5.3 Articles of Association and Governing Rules. True, correct
and complete copies of the Organizational Documents of CaliCo and each CaliCo
Subsidiary have been delivered to the Acquiror Company prior to the execution of
this Agreement, and no action has been taken to amend or repeal such
Organizational Documents. CaliCo is not in violation or breach of any of the
9
provisions of its Organizational Documents, except for such violations or
breaches as would not have a Material Adverse Effect.
Section 5.4 Authorization and Validity of this Agreement and the
Transaction Documents. The recording of the transfer of the CaliCo Shares and
the delivery of new certificates representing the CaliCo Shares registered in
the name of Acquiror Company are within CaliCo's corporate powers, have been
duly authorized by all necessary corporate action, do not require from the
CaliCo Board or CaliCo Shareholders any consent or approval that has not been
validly and lawfully obtained, and require no authorization, consent, approval,
license, exemption of or filing or registration with any Governmental Authority,
as the case may be, except for those that, if not obtained or made would not
have a Material Adverse Effect.
Section 5.5 No Violations. None of the execution, delivery or
performance by CaliCo of this Agreement or any Transaction Document to which
CaliCo is a party, nor the consummation by CaliCo of the transactions
contemplated hereby violates any provision of its Organizational Documents, or
violates or conflicts with, or constitute a default (or an event or condition
which, with notice or lapse of time or both, would constitute a default) under,
or result in the termination or acceleration of, or result in the creation of
imposition of any Lien under, any agreement or instrument to which CaliCo is a
party or by which CaliCo is or will be bound or subject, or violate any Laws.
Section 5.6 Binding Obligations. Assuming this Agreement has been duly
and validly authorized, executed and delivered by the Acquiror Company, the
Acquiror Company Shareholders and the CaliCo Shareholders, this Agreement is and
all agreements or instruments contemplated hereby to which CaliCo is a party,
will be, duly authorized, executed and delivered by CaliCo and are the legal,
valid and binding Agreement of CaliCo and is enforceable against CaliCo in
accordance with their respective terms, except as such enforcement is limited by
general equitable principles, or by bankruptcy, insolvency and other similar
laws affecting the enforcement of creditors rights generally.
Section 5.7 Capitalization and Related Matters.
(a) Capitalization. The authorized capital stock of CaliCo
consists of 75,000,000 shares of common stock $0.001 par value each. There are
no outstanding or authorized options, warrants, calls, subscriptions, rights
(including any preemptive rights or rights of first refusal), agreements or
commitments of any character obligating CaliCo to issue any ordinary shares or
any other Equity Securities of CaliCo. All issued and outstanding shares of
CaliCo's capital stock are duly authorized, validly issued, fully paid and
nonassessable and have not been issued in violation of any preemptive or similar
rights.
(b) No Redemption Requirements. There are no outstanding
contractual obligations (contingent or otherwise) of CaliCo to retire,
repurchase, redeem or otherwise acquire any outstanding shares of capital stock
of, or other Equity Securities in, CaliCo or to provide funds to or make any
investment (in the form of a loan, capital contribution or otherwise) in any
other Person.
10
(c) Due Authorization. The exchange of the CaliCo Shares has
been duly authorized, and the CaliCo Shares have been validly issued and are
fully paid and nonassessable.
(d) Shareholders. Exhibit B contains a true and complete list
of the names and addresses of the record and beneficial holders of all of the
outstanding capital stock of CaliCo and each Subsidiary of CaliCo. Except as
expressly provided in this Agreement or on Schedule 5.7(a), no holder of CaliCo
Shares or any other Equity Security of CaliCo or any other Person is entitled to
any preemptive right, right of first refusal or similar right as a result of the
issuance of the CaliCo Shares, the transactions contemplated hereby or
otherwise. Except as set forth on Schedule 5.7(a), there is no voting trust,
agreement or arrangement among any of the CaliCo Shareholders of any capital
stock of CaliCo affecting the exercise of the voting rights of any such capital
stock.
Section 5.8 Compliance with Laws; No Defaults. Except as would not have
a Material Adverse Effect, the business and operations of CaliCo have been and
are being conducted in accordance with all applicable Laws and all applicable
Orders of all Governmental Authorities. Except as would not have a Material
Adverse Effect, CaliCo is not, and is not alleged to be, in violation of, or
(with or without notice or lapse of time or both) in default under, or in breach
of, any term or provision of its Organizational Documents or of any indenture,
loan or credit agreement, note, deed of trust, mortgage, security agreement or
other material agreement, lease, license or other instrument, commitment,
obligation or arrangement to which CaliCo is a party or by which any of CaliCo's
properties, assets or rights are bound or affected. To the knowledge of CaliCo,
no other party to any material contract, agreement, lease, license, commitment,
instrument or other obligation to which CaliCo is a party is (with or without
notice or lapse of time or both) in default thereunder or in breach of any term
thereof. CaliCo is not subject to any obligation or restriction of any kind or
character, nor is there, to the knowledge of CaliCo, any event or circumstance
relating to CaliCo that materially and adversely affects in any way its
business, properties, assets or prospects or that would prevent or make
burdensome its performance of or compliance with all or any part of this
Agreement or the consummation of the transactions contemplated hereby or
thereby.
Section 5.9 Certain Proceedings. There is no pending Proceeding that
has been commenced against CaliCo and that challenges, or may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any of the
transactions contemplated by this Agreement. To CaliCo's knowledge, no such
Proceeding has been threatened.
Section 5.10 No Brokers or Finders. No Person has, or as a result of the
transactions contemplated hereby will have, any right or valid claim against
CaliCo for any commission, fee or other compensation as a finder or broker, or
in any similar capacity.
Section 5.11 Title to and Condition of Properties. CaliCo owns or holds
under valid leases or other rights to use all real property, plants, machinery
and equipment necessary for the conduct of the business of CaliCo as presently
conducted, except where the failure to own or hold such property, plants,
machinery and equipment would not have a Material Adverse Effect.
11
Section 5.12 CaliCo Board Recommendation. The CaliCo Board has, by
unanimous written consent, determined that this Agreement and the transactions
contemplated by this Agreement, are advisable and in the best interests of the
CaliCo Shareholders.
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES OF THE ACQUIROR COMPANY
The Acquiror Company represents and warrants to the CaliCo Shareholders
and CaliCo as follows:
Section 6.1 Organization and Qualification. The Acquiror Company is
duly organized, validly existing and in good standing under the laws of the
State of Nevada, has all requisite authority and power (corporate and other),
governmental licenses, authorizations, consents and approvals to carry on its
business as presently conducted and to own, hold and operate its properties and
assets as now owned, held and operated by it, except where the failure to be so
organized, existing and in good standing, or to have such authority and power,
governmental licenses, authorizations, consents or approvals would not have a
Material Adverse Effect. The Acquiror Company is duly qualified, licensed or
domesticated as a foreign corporation in good standing in each jurisdiction
wherein the nature of its activities or its properties owned, held or operated
makes such qualification, licensing or domestication necessary, except where the
failure to be so duly qualified, licensed or domesticated and in good standing
would not have a Material Adverse Effect. Schedule 6.1 sets forth a true,
correct and complete list of the Acquiror Company's jurisdiction of organization
and each other jurisdiction in which the Acquiror Company presently conducts its
business or owns, holds and operates its properties and assets.
Section 6.2 Subsidiaries. The Acquiror Company does not own, directly
or indirectly, any Equity Securities or other ownership interest in any Person.
Section 6.3 Organizational Documents. True, correct and complete copies
of the Organizational Documents of the Acquiror Company have been delivered to
CaliCo prior to the execution of this Agreement, and no action has been taken to
amend or repeal such Organizational Documents. The Acquiror Company is not in
violation or breach of any of the provisions of its Organizational Documents,
except for such violations or breaches as would not have a Material Adverse
Effect.
Section 6.4 Authorization. The Acquiror Company has all requisite
authority and power (corporate and other), governmental licenses,
authorizations, consents and approvals to enter into this Agreement and each of
the Transaction Documents to which the Acquiror Company is a party, to
consummate the transactions contemplated by this Agreement and each of the
Transaction Documents to which the Acquiror Company is a party and to perform
its obligations under this Agreement and each of the Transaction Documents to
which the Acquiror Company is a party. The execution, delivery and performance
by the Acquiror Company of this Agreement and each of the Transaction Documents
to which the Acquiror Company is a party have been duly authorized by all
12
necessary corporate action and do not require from the Acquiror Company Board or
the stockholders of the Acquiror Company any consent or approval that has not
been validly and lawfully obtained. The execution, delivery and performance by
the Acquiror Company of this Agreement and each of the Transaction Documents to
which the Acquiror Company is a party requires no authorization, consent,
approval, license, exemption of, or filing or registration with, any
Governmental Authority or other Person other than (a) the Schedule 14(f) Filing,
and (b) such other customary filings with the Commission for transactions of the
type contemplated by this Agreement.
Section 6.5 No Violation. Neither the execution nor the delivery by the
Acquiror Company of this Agreement or any Transaction Document to which the
Acquiror Company is a party, nor the consummation or performance by the Acquiror
Company of the transactions contemplated hereby or thereby will, directly or
indirectly, (a) contravene, conflict with, or result in a violation of any
provision of the Organizational Documents of the Acquiror Company; (b)
contravene, conflict with, constitute a default (or an event or condition which,
with notice or lapse of time or both, would constitute a default) under, or
result in the termination or acceleration of, or result in the imposition or
creation of any Lien under, any agreement or instrument to which the Acquiror
Company is a party or by which the properties or assets of the Acquiror Company
are bound; (c) contravene, conflict with, or result in a violation of, any Law
or Order to which the Acquiror Company, or any of the properties or assets owned
or used by the Acquiror Company, may be subject; or (d) contravene, conflict
with, or result in a violation of, the terms or requirements of, or give any
Governmental Authority the right to revoke, withdraw, suspend, cancel, terminate
or modify, any licenses, permits, authorizations, approvals, franchises or other
rights held by the Acquiror Company or that otherwise relate to the business of,
or any of the properties or assets owned or used by, the Acquiror Company,
except, in the case of clause (b), (c), or (d), for any such contraventions,
conflicts, violations, or other occurrences as would not have a Material Adverse
Effect.
Section 6.6 Binding Obligations. Assuming this Agreement and the
Transaction Documents have been duly and validly authorized, executed and
delivered by the parties thereto other than the Acquiror Company, this Agreement
and each of the Transaction Documents to which the Acquiror Company is a party
are duly authorized, executed and delivered by the Acquiror Company and
constitutes or will constitute the legal, valid and binding obligations of the
Acquiror Company, enforceable against the Acquiror Company in accordance with
its terms, except as such enforcement is limited by general equitable
principles, or by bankruptcy, insolvency and other similar Laws affecting the
enforcement of creditors rights generally.
Section 6.7 Securities Laws. Assuming the accuracy of the
representations and warranties of the CaliCo Shareholders contained in Section 4
and Exhibits D, the issuance of the Exchange Shares pursuant to this Agreement
(a) is exempt from the registration and prospectus delivery requirements of the
Securities Act, (b) has been registered or qualified (or are exempt from
registration and qualification) under the registration permit or qualification
requirements of all applicable state securities Laws, and (c) has been
accomplished in conformity with all other applicable United States federal and
state securities Laws. Section
6.8 Capitalization and Related Matters.
(a) Capitalization. The authorized capital stock of the
Acquiror Company consists of 100,000,000 shares of the Acquiror Company's Common
Stock, of which 71,012,847 shares are issued and outstanding. All issued and
outstanding shares of the Acquiror Company's Common Stock are duly authorized,
validly issued, fully paid and nonassessable, and have not been issued in
13
violation of any preemptive or similar rights. At the Closing Date, the Acquiror
Company will have sufficient authorized and unissued Acquiror Company's Common
Stock to consummate the transactions contemplated hereby. Except as disclosed in
the SEC Documents, there are no outstanding options, warrants, purchase
agreements, participation agreements, subscription rights, conversion rights,
exchange rights or other Equity Securities or contracts that could require the
Acquiror Company to issue, sell or otherwise cause to become outstanding any of
its authorized but unissued shares of capital stock or any Equity Securities or
Equity Securities convertible into, exchangeable for or carrying a right or
option to purchase Equity Securities or to create, authorize, issue, sell or
otherwise cause to become outstanding any new class of Equity Securities. There
are no outstanding stockholders' agreements, voting trusts or arrangements,
registration rights agreements, rights of first refusal or other contracts
pertaining to the Equity Securities of the Acquiror Company. The issuance of all
of the shares of Acquiror Company's Common Stock described in this Section
6.8(a) have been in compliance with United States federal and state securities
Laws.
(b) No Redemption Requirements. Except as set forth in the SEC
Documents, there are no outstanding contractual obligations (contingent or
otherwise) of the Acquiror Company to retire, repurchase, redeem or otherwise
acquire any Equity Securities of shares of capital stock of, or other Equity
Securities of, the Acquiror Company or to provide funds to or make any
investment (in the form of a loan, capital contribution or otherwise) in any
other Person.
(c) Due Authorization. The issuance of the Exchange Shares has
been duly authorized and, upon delivery to the CaliCo Shareholders of
certificates therefor in accordance with the terms of this Agreement, the
Exchange Shares will have been validly issued and fully paid, and will be
nonassessable, have the rights, preferences and privileges specified, will be
free of preemptive rights and will be free and clear of all Liens and
restrictions, other than Liens created by the CaliCo Shareholders and
restrictions on transfer imposed by this Agreement and the Securities Act.
Section 6.9 Compliance with Laws. Except as would not have a Material
Adverse Effect, the business and operations of the Acquiror Company have been
and are being conducted in accordance with all applicable Laws and Orders.
Except as would not have a Material Adverse Effect, the Acquiror Company has not
received notice of any violation (or any Proceeding involving an allegation of
any violation) of any applicable Law or Order by or affecting such Acquiror
Company and, to the knowledge of the Acquiror Company, no Proceeding involving
an allegation of violation of any applicable Law or Order is threatened or
contemplated. Except as would not have a Material Adverse Effect, the Acquiror
Company is not subject to any obligation or restriction of any kind or
character, nor is there, to the knowledge of the Acquiror Company, any event or
circumstance relating to the Acquiror Company that materially and adversely
affects in any way its business, properties, assets or prospects or that
prohibits the Acquiror Company from entering into this Agreement or would
prevent or make burdensome its performance of or compliance with all or any part
of this Agreement or the consummation of the transactions contemplated hereby.
14
Section 6.10 Certain Proceedings. There is no pending Proceeding that
has been commenced against the Acquiror Company. To the knowledge of the
Acquiror Company, no such Proceeding has been threatened.
Section 6.11 No Brokers or Finders. No Person has, or as a result of
the transactions contemplated hereby will have, any right or valid claim against
the Acquiror Company for any commission, fee or other compensation as a finder
or broker, or in any similar capacity.
Section 6.12 Absence of Undisclosed Liabilities. Except as set forth in
the SEC Documents, the Acquiror Company has no debt, obligation or liability
(whether accrued, absolute, contingent, liquidated or otherwise, whether due or
to become due, whether or not known to the Acquiror Company) arising out of any
transaction entered into at or prior to the Closing Date or any act or omission
at or prior to the Closing Date, except to the extent set forth on or reserved
against on the Acquiror Company Balance Sheet. All debts, obligations or
liabilities with respect to directors and officers will be cancelled prior to
the Closing. The Acquiror Company has not incurred any liabilities or
obligations under agreements entered into in the usual and ordinary course of
business since April 30, 2008. The Acquiror Company Balance Sheet provides a
true and fair view of the assets and liabilities (whether accrued, absolute,
contingent, liquidated or otherwise, whether due or to become due, whether or
not known to Acquiror Company) as at April 30, 2008.
Section 6.13 Changes. Except as set forth in the SEC Documents, the
Acquiror Company has, since April 30, 2008, conducted its business in the
ordinary course and has not:
(a) Non-Ordinary Course Transactions. Entered into any
transaction other than in the usual and ordinary course of business, except for
this Agreement.
(b) Adverse Changes. Suffered or experienced any change in, or
affecting, its condition (financial or otherwise), properties, assets,
liabilities, business, operations, results of operations or prospects other than
changes, events or conditions in the usual and ordinary course of its business,
none of which would have a Material Adverse Effect;
(c) Loans. Made any loans or advances to any Person;
(d) Liens. Created or permitted to exist any Lien on any
material property or asset of the Acquiror Company, other than Permitted Liens;
(e) Capital Stock. Issued, sold, disposed of or encumbered, or
authorized the issuance, sale, disposition or encumbrance of, or granted or
issued any option to acquire any shares of its capital stock or any other of its
securities or any Equity Security, or altered the term of any of its outstanding
securities or made any change in its outstanding shares of capital stock or its
capitalization, whether by reason of reclassification, recapitalization, stock
split, combination, exchange or readjustment of shares, stock dividend or
otherwise;
(f) Dividends. Declared, set aside, made or paid any dividend
or other distribution to any of its stockholders;
15
(g) Material Contracts. Terminated or modified any Material
Acquiror Company Contract, except for termination upon expiration in accordance
with the terms thereof;
(h) Claims. Released, waived or cancelled any claims or rights
relating to or affecting the Acquiror Company in excess of US $10,000 in the
aggregate or instituted or settled any Proceeding involving in excess of US
$10,000 in the aggregate;
(i) Discharge of Liabilities. Paid, discharged or satisfied
any claim, obligation or liability in excess of US $10,000 in the aggregate,
except for claims, obligations or liabilities incurred prior to the date of this
Agreement in the ordinary course of business;
(j) Indebtedness. Created, incurred, assumed or otherwise
become liable for any Indebtedness in excess of US $10,000 in the aggregate,
other than professional fees relating to the SEC Documents or the transactions
contemplated hereby;
(k) Guarantees. Guaranteed or endorsed in a material amount
any obligation or net worth of any Person;
(l) Acquisitions. Acquired the capital stock or other
securities or any ownership interest in, or substantially all of the assets of,
any other Person;
(m) Accounting. Changed its method of accounting or the
accounting principles or practices utilized in the preparation of its financial
statements, other than as required by GAAP;
(n) Agreements. Except as set forth in the SEC Documents,
entered into any agreement, or otherwise obligated itself, to do any of the
foregoing.
Section 6.14 Material Contracts.
(a) Except to the extent filed with the SEC Documents, the
Acquiror Company has made available to CaliCo, prior to the date of this
Agreement, true, correct and complete copies of each written Material Acquiror
Company Contract, including each amendment, supplement and modification thereto.
(b) Absence of Defaults. Each Material Acquiror Company
Contract is a valid and binding agreement of the Acquiror Company and, to the
knowledge of the Acquiror Company, the other parties thereto, and each such
Material Company Contract is in full force and effect. Except as would not have
a Material Adverse Effect, the Acquiror Company is not in breach or default of
any Material Acquiror Company Contract to which it is a party and, to the
knowledge of the Acquiror Company, no other party to any Material Acquiror
Company Contract is in breach or default thereof. Except as would not have a
Material Adverse Effect, no event has occurred or circumstance exists that (with
or without notice or lapse of time) would (a) contravene, conflict with or
result in a violation or breach of, or become a default or event of default
under, any provision of any Material Acquiror Company Contract or (b) permit the
Acquiror Company or any other 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 any Material Acquiror Company Contract. The Acquiror Company
has not received notice of the pending or threatened cancellation, revocation or
16
termination of any Material Acquiror Company Contract to which it is a party.
There are no renegotiations of, or attempts to renegotiate, or outstanding
rights to renegotiate any material terms of any Material Acquiror Company
Contract.
Section 6.15 Employees.
(a) The Acquiror Company has no employees, independent
contractors or other Persons providing research or other services to it. Except
as would not have a Material Adverse Effect, the Acquiror Company is and has
been in full compliance with all Laws regarding employment, wages, hours,
benefits, equal opportunity, collective bargaining, the payment of Social
Security and other taxes, occupational safety and health and plant closing. The
Acquiror Company is not liable for the payment of any compensation, damages,
taxes, fines, penalties or other amounts, however designated, for failure to
comply with any of the foregoing Laws.
(b) No director, officer or employee of the Acquiror Company
is a party to, or is otherwise bound by, any contract (including any
confidentiality, noncompetition or proprietary rights agreement) with any other
Person and each employee of the Acquiror Company is employed on an at-will
basis.
Section 6.16 Tax Returns and Audits.
(a) Tax Returns. The Acquiror Company has filed all Tax
Returns required to be filed by or on behalf of the Acquiror Company and has
paid all Taxes of the Acquiror Company required to have been paid (whether or
not reflected on any Tax Return). Except as set forth in the SEC Documents, (a)
no Governmental Authority in any jurisdiction has made a claim, assertion or
threat to the Acquiror Company that the Acquiror Company is or may be subject to
taxation by such jurisdiction; (b) there are no Liens with respect to Taxes on
the Acquiror Company's property or assets other than Permitted Liens; and (c)
there are no Tax rulings, requests for rulings, or closing agreements relating
to the Acquiror Company for any period (or portion of a period) that would
affect any period after the date hereof.
(b) No Adjustments or Changes. Neither the Acquiror Company
nor any other Person on behalf of the Acquiror Company (a) has executed or
entered into a closing agreement pursuant to Section 7121 of the Code or any
predecessor provision thereof or any similar provision of Law; or (b) has agreed
to or is required to make any adjustments pursuant to Section 481(a) of the Code
or any similar provision of Law.
(c) No Disputes. There is no pending audit, examination,
investigation, dispute, Proceeding or claim with respect to any Taxes of the
Acquiror Company, nor is any such claim or dispute pending or contemplated, nor
is there any basis for any such dispute, Proceeding or claim. The Acquiror
Company has delivered to CaliCo true, correct and complete copies of all Tax
Returns, if any, examination reports and statements of deficiencies assessed or
asserted against or agreed to by the Acquiror Company since its inception and
any and all correspondence with respect to the foregoing.
(d) Real Property Holding Company. The Acquiror Company is not
and has not been a United States real property holding corporation within the
meaning of Section 897(c)(2) of the Code at any time during the applicable
period specified in Section 897(c)(1)(A)(ii) of the Code.
17
(e) No Tax Allocation or Sharing Agreements. The Acquiror
Company is not a party to any Tax allocation or sharing agreement. The Acquiror
Company (a) has not been a member of a Tax Group filing a consolidated income
Tax Return under Section 1501 of the Code (or any similar provision of state,
local or foreign law), and (b) has no liability for Taxes for any Person under
Treasury Regulations Section 1.1502-6 (or any similar provision of Law) as a
transferee or successor, by contract or otherwise.
(f) No other Tax Related Agreements. The Acquiror Company is
not a party to any agreement, contract or arrangement for services that would
result, individually or in the aggregate, in the payment of any amount that
would not be deductible by reason of Section 162(m), 280G or 404 of the Code.
The Acquiror Company is not a "consenting corporation" within the meaning of
Section 341(f) of the Code. The Acquiror Company does not have any "tax-exempt
bond financed property" or "tax-exempt use property" within the meaning of
Section 168(g) or (h), respectively of the Code. The Acquiror Company does not
have any outstanding closing agreement, ruling request, request for consent to
change a method of accounting, subpoena or request for information to or from a
Governmental Authority in connection with any Tax matter. During the last two
years, the Acquiror Company has not engaged in any exchange with a related party
(within the meaning of Section 1031(f) of the Code) under which gain realized
was not recognized by reason of Section 1031 of the Code.
Section 6.17 Material Assets. The financial statements of the Acquiror
Company set forth in the SEC Documents reflect the material properties and
assets (real and personal) owned or leased by the Acquiror Company.
Section 6.18 Insurance. The Acquiror Company has made available to
CaliCo, prior to the date of this Agreement, true, correct and complete copies
of any insurance policies maintained by the Acquiror Company on its properties
and assets. Except as would not have a Material Adverse Effect, all of such
policies (a) taken together, provide adequate insurance coverage for the
properties, assets and operations of each Acquiror Company for all risks
normally insured against by a Person carrying on the same business as such
Acquiror Company, and (b) are sufficient for compliance with all applicable Laws
and Material Acquiror Company Contracts. Except as would not have a Material
Adverse Effect, all of such policies are valid, outstanding and in full force
and effect and, by their express terms, will continue in full force and effect
following the consummation of the transactions contemplated by this Agreement.
Except as set forth in the SEC Documents, the Acquiror Company has not received
(x) any refusal of coverage or any notice that a defense will be afforded with
reservation of rights, or (y) any notice of cancellation or any other indication
that any insurance policy is no longer in full force or effect or will not be
renewed or that the issuer of any policy is not willing or able to perform its
obligations thereunder. All premiums due on such insurance policies on or prior
to the date hereof have been paid. There are no pending claims with respect to
the Acquiror Company or its properties or assets under any such insurance
policies, and there are no claims as to which the insurers have notified the
Acquiror Company that they intend to deny liability. There is no existing
default under any such insurance policies.
18
Section 6.19 Litigation; Orders. Except as set forth in the SEC
Documents, there is no Proceeding (whether federal, state, local or foreign)
pending or, to the knowledge of the Acquiror Company, threatened against or
affecting the Acquiror Company or the Acquiror Company's properties, assets,
business or employees. To the knowledge of the Acquiror Company, there is no
fact that might result in or form the basis for any such Proceeding. The
Acquiror Company is not subject to any Orders.
Section 6.20 Licenses. Except as would not have a Material Adverse
Effect, the Acquiror Company possesses from the appropriate Governmental
Authority all licenses, permits, authorizations, approvals, franchises and
rights that are necessary for the Acquiror Company to engage in its business as
currently conducted and to permit the Acquiror Company to own and use its
properties and assets in the manner in which it currently owns and uses such
properties and assets (collectively, "Acquiror Company Permits"). The Acquiror
Company has not received notice from any Governmental Authority or other Person
that there is lacking any license, permit, authorization, approval, franchise or
right necessary for the Acquiror Company to engage in its business as currently
conducted and to permit the Acquiror Company to own and use its properties and
assets in the manner in which it currently owns and uses such properties and
assets. Except as would not have a Material Adverse Effect, the Acquiror Company
Permits are valid and in full force and effect. Except as would not have a
Material Adverse Effect, no event has occurred or circumstance exists that may
(with or without notice or lapse of time): (a) constitute or result, directly or
indirectly, in a violation of or a failure to comply with any Acquiror Company
Permit; or (b) result, directly or indirectly, in the revocation, withdrawal,
suspension, cancellation or termination of, or any modification to, any Acquiror
Company Permit. The Acquiror Company has not received notice from any
Governmental Authority or any other Person regarding: (a) any actual, alleged,
possible or potential contravention of any Acquiror Company Permit; or (b) any
actual, proposed, possible or potential revocation, withdrawal, suspension,
cancellation, termination of, or modification to, any Acquiror Company Permit.
All applications required to have been filed for the renewal of such Company
Permits have been duly filed on a timely basis with the appropriate Persons, and
all other filings required to have been made with respect to such Acquiror
Company Permits have been duly made on a timely basis with the appropriate
Persons. All Acquiror Company Permits are renewable by their terms or in the
ordinary course of business without the need to comply with any special
qualification procedures or to pay any amounts other than routine fees or
similar charges, all of which have, to the extent due, been duly paid.
Section 6.21 Interested Party Transactions. No officer, director or
stockholder of the Acquiror Company or any Affiliate or "associate" (as such
term is defined in Rule 405 under the Securities Act) of any such Person, has or
has had, either directly or indirectly, (1) an interest in any Person which (a)
furnishes or sells services or products which are furnished or sold or are
proposed to be furnished or sold by the Acquiror Company, or (b) purchases from
or sells or furnishes to, or proposes to purchase from, sell to or furnish any
Acquiror Company any goods or services; or (2) a beneficial interest in any
contract or agreement to which the Acquiror Company is a party or by which it
may be bound or affected.
Section 6.22 Governmental Inquiries. The Acquiror Company has provided
to CaliCo a copy of each material written inspection report, questionnaire,
inquiry, demand or request for information received by the Acquiror Company from
19
any Governmental Authority, and the Acquiror Company's response thereto, and
each material written statement, report or other document filed by the Acquiror
Company with any Governmental Authority.
Section 6.23 Bank Accounts and Safe Deposit Boxes. The Acquiror Company
does not use a deposit or financial account, a lock box, or a safety deposit
box, in its business as presently conducted.
Section 6.24 Intellectual Property. The Acquiror Company does not own,
use or license any Intellectual Property in its business as presently conducted,
except as set forth in the SEC Documents. None of the intellectual property
owned by the Acquiror Company infringes on the rights of any person.
Section 6.25 Title to and Condition of Properties. Except as would not
have a Material Adverse Effect, the Acquiror Company owns good and marketable
title to, or holds under valid leases or other rights to use, all real property,
plants, machinery, equipment and other personal property necessary for the
conduct of its business as presently conducted, free and clear of all Liens,
except Permitted Liens. The material buildings, plants, machinery and equipment
necessary for the conduct of the business of the Acquiror Company as presently
conducted are structurally sound, are in good operating condition and repair and
are adequate for the uses to which they are being put, and none of such
buildings, plants, machinery or equipment is in need of maintenance or repairs,
except for ordinary, routine maintenance and repairs that are not material in
nature or cost.
Section 6.26 SEC Documents; Financial Statements. The Acquiror Company
has filed all reports required to be filed by it under the Exchange Act,
including those required pursuant to Section 13(a) or 15(d) thereof, for the
three (3) years preceding the date hereof (the foregoing materials being
collectively referred to herein as the "SEC Documents") and is current with
respect to its Exchange Act filing requirements. As of their respective dates,
the SEC Documents complied in all material respects with the requirements of the
Securities Act and the Exchange Act and the rules and regulations of the
Commission promulgated thereunder, and none of the SEC Documents, when filed,
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 statement
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of the Acquiror Company included in the SEC
Documents comply in all material respects with applicable accounting
requirements and the rules and regulations of the Commission with respect
thereto as in effect at the time of filing, were prepared in accordance with
GAAP applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto, or, in the case of unaudited statements as
permitted by Form 10-Q adopted by the Commission), and fairly present in all
material respects (subject in the case of unaudited statements, to normal,
recurring audit adjustments) the financial position of the Acquiror Company as
at the dates thereof and the results of its operations and cash flows for the
periods then ended. The Acquiror Company is not aware of any facts which would
make the Acquiror Company's Common Stock ineligible for quotation on the OTC
Bulletin Board.
20
Section 6.27 Stock Option Plans; Employee Benefits.
(a) Stock Option Plans. The Acquiror Company has no stock
option plans providing for the grant by the Acquiror Company of stock options to
directors, officers or employees.
(b) Employee Benefit Plans. The Acquiror Company has no
employee benefit plans or arrangements covering its present and former employees
or providing benefits to such persons in respect of services provided the
Acquiror Company.
Section 6.28 Environmental and Safety Matters. Except as set forth in
the SEC Documents and except as would not have a Material Adverse Effect, the
Acquiror Company has at all time been and is in compliance with all
Environmental Laws applicable to the Acquiror Company. There are no Proceedings
pending or threatened against the Acquiror Company alleging the violation of any
Environmental Law or Environmental Permit applicable to the Acquiror Company or
alleging that the Acquiror Company is a potentially responsible party for any
environmental site contamination. Neither this Agreement nor the consummation of
the transactions contemplated by this Agreement shall impose any obligations to
notify or obtain the consent of any Governmental Authority or third Persons
under any Environmental Laws applicable to the Acquiror Company.
Section 6.29 Money Laundering Laws. The operations of the Acquiror
Company are and have been conducted at all times in compliance with applicable
financial recordkeeping and reporting requirements of the Currency and Foreign
Transactions Reporting Act of 1970, as amended, the money laundering statutes of
all Governmental Authorities, and the rules and regulations thereunder and any
related or similar rules, regulations or guidelines, issued, administered or
enforced by any Governmental Authority (collectively, the "Money Laundering
Laws") and no Proceeding involving the Acquiror Company with respect to the
Money Laundering Laws is pending or, to the knowledge of the Acquiror Company,
threatened.
Section 6.30 Board Recommendation. The Acquiror Company Board, at a
meeting duly called and held, has determined that this Agreement and the
transactions contemplated by this Agreement are advisable and in the best
interests of the Acquiror Company's stockholders.
ARTICLE VII.
COVENANTS OF THE ACQUIROR COMPANY
Section 7.1 Rule 144 Reporting. With a view to making available to the
Acquiror Company's stockholders the benefit of certain rules and regulations of
the Commission which may permit the sale of the Acquiror Company Common Stock to
the public without registration, from and after the Closing Date, the Acquiror
Company agrees to make and keep public information available, as those terms are
understood and defined in Rule 144; and file with the Commission, in a timely
manner, all reports and other documents required of the Acquiror Company under
the Exchange Act.
Section 7.2 SEC Documents. From and after the Closing Date, in the
event the Commission notifies the Acquiror Company of its intent to review any
SEC Document filed prior to the Closing Date or the Acquiror Company receives
any oral or written comments from the Commission with respect to any SEC
21
Document filed prior to the Closing Date, the Acquiror Company shall promptly
notify the Acquiror Company Shareholders and the Acquiror Company Shareholders
shall fully cooperate with the Acquiror Company.
ARTICLE VIII.
CONDITIONS PRECEDENT OF THE ACQUIROR COMPANY
The Acquiror Company's obligation to acquire the CaliCo Shares and to
take the other actions required to be taken by the Acquiror Company at the
Closing Date is subject to the satisfaction, at or prior to the Closing Date, of
each of the following conditions (any of which may be waived by the Acquiror
Company, in whole or in part):
Section 8.1 Accuracy of Representations. The representations and
warranties of CaliCo and the CaliCo Shareholders set forth in this Agreement or
in any Schedule or certificate delivered pursuant hereto that are not qualified
as to materiality shall be true and correct in all material respects as of the
date of this Agreement except to the extent a representation or warranty is
expressly limited by its terms to another date and without giving effect to any
supplemental Schedule. The representations and warranties of CaliCo and the
CaliCo Shareholders set forth in this Agreement or in any Schedule or
certificate delivered pursuant hereto that are qualified as to materiality shall
be true and correct in all respects as of the date of this Agreement, except to
the extent a representation or warranty is expressly limited by its terms to
another date and without giving effect to any supplemental Schedule.
Section 8.2 Performance by CaliCo and the CaliCo Shareholders. All of
the covenants and obligations that CaliCo and CaliCo Shareholders are required
to perform or to comply with pursuant to this Agreement (considered
collectively), and each of these covenants and obligations (considered
individually), must have been duly performed and complied with in all material
respects. Each document required to be delivered by CaliCo and the CaliCo
Shareholders pursuant to this Agreement must have been delivered.
Section 8.3 No Force Majeure Event. There shall not have been any
delay, error, failure or interruption in the conduct of the business of CaliCo,
or any loss, injury, delay, damage, distress, or other casualty, due to force
majeure, including but not limited to (a) acts of G-d; (b) fire or explosion;
(c) war, acts of terrorism or other civil unrest; or (d) national emergency.
Section 8.4 Officer's Certificate. CaliCo will have delivered to the
Acquiror Company a certificate executed by an officer of CaliCo, certifying the
satisfaction by CaliCo of the conditions specified in Sections 8.1, 8.2, and
8.3.
Section 8.5 CaliCo Shareholders' Certificate. Each CaliCo Shareholder
will have delivered to the Acquiror Company a certificate executed by such
CaliCo Shareholder, certifying the satisfaction of the conditions of the CaliCo
Shareholders specified in Sections 8.1 and 8.2.
Section 8.6 Consents. All material consents, waivers, approvals,
authorizations or orders required to be obtained, and all filings required to be
made, by CaliCo and/or the CaliCo Shareholders for the authorization, execution
and delivery of this Agreement and the consummation by them of the transactions
contemplated by this Agreement, shall have been obtained and made by CaliCo or
22
the CaliCo Shareholders, as the case may be, except where the failure to receive
such consents, waivers, approvals, authorizations or orders or to make such
filings would not have a Material Adverse Effect on CaliCo or the Acquiror
Company.
Section 8.7 Documents. CaliCo and the CaliCo Shareholders shall have
delivered to the Acquiror Company at the Closing (a) share certificates
evidencing the number of CaliCo Shares held by each CaliCo Shareholder (as set
forth in Exhibit B), along with executed share transfer forms transferring such
CaliCo Shares to the Acquiror Company together with a certified copy, if
required, of a board resolution of CaliCo approving the registration of the
transfer of such shares to Acquiror Company (subject to Closing), (b) each of
the Transaction Documents to which CaliCo and/or the CaliCo Shareholders is a
party, duly executed, (c) and such other documents as the Acquiror Company may
reasonably request for the purpose of (i) evidencing the accuracy of any of the
representations and warranties of CaliCo and the CaliCo Shareholders pursuant to
Section 8.1, (ii) evidencing the performance of, or compliance by CaliCo and the
CaliCo Shareholders with, any covenant or obligation required to be performed or
complied with by CaliCo or the CaliCo Shareholders, as the case may be, (iii)
evidencing the satisfaction of any condition referred to in this Section, or
(iv) otherwise facilitating the consummation or performance of any of the
transactions contemplated by this Agreement.
Section 8.8 No Proceedings. There must not have been commenced or
threatened by any third party against the Acquiror Company, CaliCo or any CaliCo
Shareholder, or against any Affiliate thereof, any Proceeding (which Proceeding
remains unresolved as of the Closing Date) (a) involving any challenge to, or
seeking damages or other relief in connection with, any of the transactions
contemplated by this Agreement, or (b) that may have the effect of preventing,
delaying, making illegal, or otherwise interfering with any of the transactions
contemplated by this Agreement.
Section 8.9 No Claim Regarding Stock Ownership or Consideration. There
shall not have been made or threatened by any Person any claim asserting that
such Person (a) is the holder of, or has the right to acquire or to obtain
beneficial ownership of the CaliCo Shares or any other stock, voting, equity, or
ownership interest in, CaliCo, or (b) is entitled to all or any portion of the
Acquiror Company Shares.
ARTICLE IX.
CONDITIONS PRECEDENT OF CALICO
AND THE CALICO SHAREHOLDERS
The CaliCo Shareholders' obligation to transfer the CaliCo Shares and
the obligations of CaliCo to take the other actions required to be taken by
CaliCo in advance of or at the Closing Date are subject to the satisfaction, at
or prior to the Closing Date, of each of the following conditions (any of which
may be waived by CaliCo and the CaliCo Shareholders jointly, in whole or in
part):
Section 9.1 Accuracy of Representations. The representations and
warranties of the Acquiror Company and Acquiror Company Shareholders set forth
in this Agreement or in any Schedule or certificate delivered pursuant hereto
that are not qualified as to materiality shall be true and correct in all
material respects as of the date of this Agreement except to the extent a
representation or warranty is expressly limited by its terms to another date and
without giving effect to any supplemental Schedule. The representations and
23
warranties of the Acquiror Company and Acquiror Company Shareholders set forth
in this Agreement or in any Schedule or certificate delivered pursuant hereto
that are qualified as to materiality shall be true and correct in all respects
as of the date of this Agreement, except to the extent a representation or
warranty is expressly limited by its terms to another date and without giving
effect to any supplemental Schedule.
Section 9.2 Performance by the Acquiror Company.
(a) All of the covenants and obligations that the Acquiror
Company and Acquiror Company Shareholders are required to perform or to comply
with pursuant to this Agreement (considered collectively), and each of these
covenants and obligations (considered individually), must have been performed
and complied with in all respects.
(b) Each document required to be delivered by the Acquiror
Company and Acquiror Company Shareholders pursuant to this Agreement must have
been delivered.
Section 9.3 No Force Majeure Event. There shall not have been any
delay, error, failure or interruption in the conduct of the business of the
Acquiror Company, or any loss, injury, delay, damage, distress, or other
casualty, due to force majeure including but not limited to (a) acts of G-d; (b)
fire or explosion; (c) war, acts of terrorism or other civil unrest; or (d)
national emergency.
Section 9.4 Certificate of Officer. The Acquiror Company will have
delivered to CaliCo a certificate, dated the Closing Date, executed by an
officer of the Acquiror Company, certifying the satisfaction of the conditions
specified in Sections 9.1, 9.2, and 9.3.
Section 9.5 Certificate of Acquiror Company Shareholders. The Acquiror
Company Shareholders will have delivered to CaliCo a certificate, dated the
Closing Date, executed by such Acquiror Company Shareholder, if a natural
person, or an authorized officer of the Acquiror Company Shareholder, if an
entity, certifying the satisfaction of the conditions specified in Sections 9.1,
9.2 and 9.3.
Section 9.6 Consents.
(a) All material consents, waivers, approvals, authorizations
or orders required to be obtained, and all filings required to be made, by the
Acquiror Company for the authorization, execution and delivery of this Agreement
and the consummation by it of the transactions contemplated by this Agreement,
shall have been obtained and made by the Acquiror Company, except where the
failure to receive such consents, waivers, approvals, authorizations or orders
or to make such filings would not have a Material Adverse Effect on CaliCo or
the Acquiror Company.
(b) Without limiting the foregoing, if required, the Schedule
14(f) Filing shall have been mailed to the stockholders of the Acquiror Company
not less than ten (10) days prior to the Closing Date. No Proceeding occasioned
by the Section 14(f) Filing shall have been initiated or threatened by the
Commission (which Proceeding shall remain unresolved as of the Closing Date).
24
Section 9.7 Documents. The Acquiror Company must have caused the
following documents to be delivered to CaliCo and/or the CaliCo Shareholders:
(a) Share certificates evidencing each CaliCo Shareholder's
portion of the Exchange Shares (as set forth in Exhibit B);
(b) A Secretary's Certificate, dated the Closing Date
certifying attached copies of (A) the Organizational Documents of the Acquiror
Company, (B) the resolutions of the Acquiror Company Board approving this
Agreement and the transactions contemplated hereby; and (C) the incumbency of
each authorized officer of the Acquiror Company signing this Agreement and any
other agreement or instrument contemplated hereby to which the Acquiror Company
is a party;
(c) A Certificate of Good Standing of the Acquiror Company;
(d) Each of the Transaction Documents to which the Acquiror
Company is a party, duly executed; and
(e) Such other documents as CaliCo may reasonably request for
the purpose of (i) evidencing the accuracy of any representation or warranty of
the Acquiror Company pursuant to Section 9.1, (ii) evidencing the performance by
the Acquiror Company of, or the compliance by the Acquiror Company with, any
covenant or obligation required to be performed or complied with by, the
Acquiror Company, (iii) evidencing the satisfaction of any condition referred to
in this Section 9, or (iv) otherwise facilitating the consummation of any of the
transactions contemplated by this Agreement.
Section 9.8 No Proceedings. Since the date of this Agreement, there
must not have been commenced or threatened against the Acquiror Company, CaliCo
or any CaliCo Shareholder, or against any Affiliate thereof, any Proceeding
(which Proceeding remains unresolved as of the date of this Agreement) (a)
involving any challenge to, or seeking damages or other relief in connection
with, any of the transactions contemplated hereby, or (b) that may have the
effect of preventing, delaying, making illegal, or otherwise interfering with
any of the transactions contemplated hereby.
Section 9.9 No Claims regarding Stock Ownership or other Compensation.
There shall not have been made or threatened by any Person any claim asserting
that such Person is the holder of, or has the right to acquire or to obtain
beneficial ownership of the Acquiror Company Common Stock or any other stock,
voting, equity, or ownership interest in, the Acquiror Company.
ARTICLE X.
INDEMNIFICATION; REMEDIES
Section 10.1 Survival. All representations, warranties, covenants, and
obligations in this Agreement shall expire on the first (1st) anniversary of the
date this Agreement is executed (the "Survival Period"). The right to
indemnification, payment of Damages or other remedy based on such
representations, warranties, covenants, and obligations will not be affected by
any investigation conducted with respect to, or any knowledge acquired (or
capable of being acquired) at any time, whether before or after the execution
25
and delivery of this Agreement, with respect to the accuracy or inaccuracy of or
compliance with, any such representation, warranty, covenant, or obligation. The
waiver of any condition based on the accuracy of any representation or warranty,
or on the performance of or compliance with any covenant or obligation, will not
affect the right to indemnification, payment of Damages, or other remedy based
on such representations, warranties, covenants, and obligations.
Section 10.2 Indemnification by the Acquiror Company. From and after
the execution of this Agreement until the expiration of the Survival Period, the
Acquiror Company shall indemnify and hold harmless and the CaliCo Shareholders
(collectively, the "Company Indemnified Parties"), from and against any Damages
arising, directly or indirectly, from or in connection with:
(a) Any misrepresentation or breach of warranty made by the
Acquiror Company in this Agreement or in any certificate delivered by the
Acquiror Company pursuant to this Agreement;
(b) any breach by the Acquiror Company of any covenant or
obligation of the Acquiror Company in this Agreement required to be performed by
the Acquiror Company on or prior to the Closing Date; or
(c) any and all Damages against the Acquiror Company,
occurring on or prior to the Closing Date.
Section 10.3 Limitations on Liability. No Company Indemnified Party
shall be entitled to indemnification pursuant to Section 10.2, unless and until
the aggregate amount of Damages to all Company Indemnified Parties with respect
to such matters under Section 10.4 exceeds US$20,000, at which time, CaliCo
Indemnified Parties shall be entitled to indemnification for the total amount of
such Damages in excess of US $20,000.
Section 10.4 Determining Damages. Materiality qualifications to the
representations and warranties of CaliCo and the Acquiror Company shall not be
taken into account in determining the amount of Damages occasioned by a breach
of any such representation and warranty for purposes of determining whether the
aggregate damage threshold set forth in Section 10.3 has been met.
ARTICLE XI.
GENERAL PROVISIONS
Section 11.1 Expenses. Except as otherwise expressly provided in this
Agreement, each party to this Agreement will bear its respective expenses
incurred in connection with the preparation, execution, and performance of this
Agreement and the transactions contemplated by this Agreement, including all
fees and expenses of agents, representatives, counsel, and accountants. In the
event of termination of this Agreement, the obligation of each party to pay its
own expenses will be subject to any rights of such party arising from a breach
of this Agreement by another party.
26
Section 11.2 Public Announcements. The Acquiror Company shall promptly,
but no later than three (3) days following the execution of this Agreement,
issue a press release disclosing the transactions contemplated hereby. Prior to
the Closing Date, CaliCo and the Acquiror Company shall consult with each other
in issuing any other press releases or otherwise making public statements or
filings and other communications with the Commission or any regulatory agency or
stock market or trading facility with respect to the transactions contemplated
hereby, and neither party shall issue any such press release or otherwise make
any such public statement, filings or other communications without the prior
written consent of the other, which consent shall not be unreasonably withheld
or delayed, except that no prior consent shall be required if such disclosure is
required by law, in which case the disclosing party shall provide the other
party with prior notice of such public statement, filing or other communication
and shall incorporate into such public statement, filing or other communication
the reasonable comments of the other party.
Section 11.3 Confidentiality.
(a) Subsequent to the date of this Agreement, the Acquiror
Company the CaliCo Shareholders and CaliCo will maintain in confidence, and will
cause their respective directors, officers, employees, agents, and advisors to
maintain in confidence, any written, oral, or other information obtained in
confidence from another party in connection with this Agreement or the
transactions contemplated by this Agreement, unless (i) such information is
already known to such party or to others not bound by a duty of confidentiality
or such information becomes publicly available through no fault of such party,
(ii) the use of such information is necessary or appropriate in making any
required filing with the Commission, or obtaining any consent or approval
required for the consummation of the transactions contemplated by this
Agreement, or (iii) the furnishing or use of such information is required by or
necessary or appropriate in connection with legal proceedings.
(b) In the event that any party is required to disclose any
information of another party pursuant to Section (ii) or (iii) of Section
11.3(a), the party requested or required to make the disclosure (the "disclosing
party") shall provide the party that provided such information (the "providing
party") with prompt notice of any such requirement so that the providing party
may seek a protective order or other appropriate remedy and/or waive compliance
with the provisions of this Section 11.3. If, in the absence of a protective
order or other remedy or the receipt of a waiver by the providing party, the
disclosing party is nonetheless, in the opinion of counsel, legally compelled to
disclose the information of the providing party, the disclosing party may,
without liability hereunder, disclose only that portion of the providing party's
information which such counsel advises is legally required to be disclosed,
provided that the disclosing party exercises its reasonable efforts to preserve
the confidentiality of the providing party's information, including, without
limitation, by cooperating with the providing party to obtain an appropriate
protective order or other relief assurance that confidential treatment will be
accorded the providing party's information.
(c) If the transactions contemplated by this Agreement are not
consummated, each party will return or destroy as much of such written
information as the other party may reasonably request.
27
Section 11.4 Notices. All notices, consents, waivers, and other
communications under this Agreement must be in writing and will be deemed to
have been duly given when (a) delivered by hand (with written confirmation of
receipt), (b) sent by telecopier (with written confirmation of receipt), or (c)
when received by the addressee, if sent by a nationally recognized overnight
delivery service (receipt requested), in each case to the appropriate addresses
and telecopier numbers set forth below (or to such other addresses and
telecopier numbers as a party may designate by written notice to the other
parties):
If to Acquiror Company:
▇▇▇▇▇▇▇ International Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ of America
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Telephone/Facsimile No.: ▇▇-▇▇▇-▇▇▇-▇▇▇▇
with a copy to
▇▇▇▇▇ Law Group
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ of America
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇
Telephone No.: + ▇-▇▇▇-▇▇▇-▇▇▇▇
Facsimile No.: + ▇-▇▇▇-▇▇▇-▇▇▇▇
If to CaliCo or the CaliCo Shareholders
CaliCo Entertainment Group, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone No.: ▇▇-▇▇▇-▇▇▇-▇▇▇▇
Facsimile No.: ▇▇-▇▇▇-▇▇▇-▇▇▇▇
with a copy to
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
Los Angeles, California 90067
United States of America
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telephone No.: ▇▇-▇▇▇-▇▇▇-▇▇▇▇
Facsimile No.: ▇▇-▇▇▇-▇▇▇-▇▇▇▇
28
Further Assurances. The parties agree (a) to furnish upon request to
each other such further information, (b) to execute and deliver to each other
such other documents, and (c) to do such other acts and things, all as the other
party may reasonably request for the purpose of carrying out the intent of this
Agreement and the documents referred to in this Agreement.
Section 11.5 Waiver. The rights and remedies of the parties to this
Agreement are cumulative and not alternative. Neither the failure nor any delay
by any party in exercising any right, power, or privilege under this Agreement
or the documents referred to in this Agreement will operate as a waiver of such
right, power, or privilege, and no single or partial exercise of any such right,
power, or privilege will preclude any other or further exercise of such right,
power, or privilege or the exercise of any other right, power, or privilege. To
the maximum extent permitted by applicable law, (a) no claim or right arising
out of this Agreement or the documents referred to in this Agreement can be
discharged by one party, in whole or in part, by a waiver or renunciation of the
claim or right unless in writing signed by the other party; (b) no waiver that
may be given by a party will be applicable except in the specific instance for
which it is given; and (c) no notice to or demand on one party will be deemed to
be a waiver of any obligation of such party or of the right of the party giving
such notice or demand to take further action without notice or demand as
provided in this Agreement or the documents referred to in this Agreement.
Section 11.6 Entire Agreement; Modification. This Agreement supersedes
all prior agreements between the parties with respect to its subject matter and
constitutes (along with the documents referred to in this Agreement) a complete
and exclusive statement of the terms of the agreement between the parties with
respect to its subject matter. This Agreement may not be amended except by a
written agreement executed by the party against whom the enforcement of such
amendment is sought.
Section 11.7 Assignment; Successors; and Third Party Beneficiaries. No
party may assign any of its rights under this Agreement without the prior
consent of the other parties. Subject to the preceding sentence, this Agreement
will apply to, be binding in all respects upon, and inure to the benefit of and
be enforceable by the respective successors and permitted assigns of the
parties. Except as set forth in Section 7.1 and Section 10.3, nothing expressed
or referred to in this Agreement will be construed to give any Person other than
the parties to this Agreement any legal or equitable right, remedy, or claim
under or with respect to this Agreement or any provision of this Agreement. This
Agreement and all of its provisions and conditions are for the sole and
exclusive benefit of the parties to this Agreement and their successors and
assigns.
Section 11.8 Severability. If any provision of this Agreement is held
invalid or unenforceable by any court of competent jurisdiction, the other
provisions of this Agreement will remain in full force and effect. Any provision
of this Agreement held invalid or unenforceable only in part or degree will
remain in full force and effect to the extent not held invalid or unenforceable.
Section 11.9 Section Headings; Construction. The headings of Sections
in this Agreement are provided for convenience only and will not affect its
construction or interpretation. All references to "Section" or "Sections" refer
to the corresponding Section or Sections of this Agreement . All words used in
this Agreement will be construed to be of such gender or number as the
circumstances require. Unless otherwise expressly provided, the word "including"
does not limit the preceding words or terms.
29
Section 11.10 Governing Law. This Agreement will be governed by the
laws of the State of Nevada without regard to conflicts of laws principles.
Section 11.11 Counterparts. This Agreement may be executed in one or
more counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
IN WITNESS WHEREOF, the parties have executed and delivered this Share
Exchange Agreement as of the date first written above.
ACQUIROR COMPANY:
▇▇▇▇▇▇▇ INTERNATIONAL INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
____________________________
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
President
CALICO ENTERTAINMENT GROUP, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
____________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇
Chief Executive Officer
CALICO SHAREHOLDERS:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇
PRODIGY PICTURES INC.
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇▇▇
____________________________
(Duly Authorized)
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ LTD.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
____________________________
(Duly Authorized)
30
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
________________________________
▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇
________________________________
▇▇▇▇ ▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇
________________________________
▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
________________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
31
EXHIBIT A
SCHEDULES
Schedule 5.1 CaliCo Organization and Qualification
Schedule 5.2 CaliCo Subsidiaries
Schedule 6.1 Company Organization and Qualification
32
EXHIBIT B
SHARES AND ACQUIROR COMPANY SHARES TO BE EXCHANGED
CaliCo Shareholder Name CaliCo Shares Exchange Shares
and Address
▇▇▇▇ ▇▇▇▇▇▇▇▇ 75,000 75,000
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ 30,000 30,000
▇▇▇ ▇▇▇▇▇▇▇ ▇▇.
▇▇▇# ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ Ltd. 150,000 150,000
4 Demosthenous Street
Nicosis, Cypress 1101
▇▇▇▇ ▇▇▇▇ 100,000 100,000
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 1,090,000 1,090,000
▇▇▇▇▇ ▇▇▇▇▇▇▇ # ▇▇ ▇-▇
▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇
Prodigy Pictures Inc. 1,500,000 1,500,000
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇ 505,000 505,000
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇.
▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
33
EXHIBIT C
DEFINITION OF "US PERSON"
1. "United States person" (as defined in Regulation S) means:
(i) Any natural person resident in the United States;
(ii) Any partnership or corporation organized or incorporated under
the laws of the United States;
(iii) Any estate of which any executor or administrator is a United
States person;
(iv) Any trust of which any trustee is a United States person;
(v) Any agency or branch of a foreign entity located in the United
States;
(vi) Any non-discretionary account or similar account (other than an
estate or trust) held by a dealer or other fiduciary for the benefit or
account of a United States person;
(vii) Any discretionary account or similar account (other than an
estate or trust) held by a dealer or other fiduciary organized,
incorporated, or (if an individual) resident in the United States; and
(viii) Any partnership or corporation if: (A) organized or
incorporated under the laws of any foreign jurisdiction; and (B) formed by
a United States person principally for the purpose of investing in
securities not registered under the Securities Act, unless it is organized
or incorporated, and owned, by accredited investors (as defined in Rule
501(a)) who are not natural persons, estates or trusts.
2. Notwithstanding paragraph (1) above, any discretionary account or
similar account (other than an estate or trust) held for the benefit or account
of a non-United States person by a dealer or other professional fiduciary
organized, incorporated, or (if an individual) resident in the United States
shall not be deemed a "United States person."
3. Notwithstanding paragraph (1), any estate of which any professional
fiduciary acting as executor or administrator is a United States person shall
not be deemed a United States person if:
(i) An executor or administrator of the estate who is not a United
States person has sole or shared investment discretion with respect to the
assets of the estate; and
(ii) The estate is governed by foreign law.
4. Notwithstanding paragraph (1), any trust of which any professional
fiduciary acting as trustee is a United States person shall not be deemed a
United States person if a trustee who is not a United States person has sole or
34
shared investment discretion with respect to the trust assets, and no
beneficiary of the trust (and no settlor if the trust is revocable) is a United
States person.
5. Notwithstanding paragraph (1), an employee benefit plan established and
administered in accordance with the law of a country other than the United
States and customary practices and documentation of such country shall not be
deemed a United States person.
6. Notwithstanding paragraph (1), any agency or branch of a United States
person located outside the United States shall not be deemed a "United States
person" if:
(i) The agency or branch operates for valid business reasons; and
(ii) The agency or branch is engaged in the business of insurance or
banking and is subject to substantive insurance or banking regulation,
respectively, in the jurisdiction where located.
7. The International Monetary Fund, the International Bank for
Reconstruction and Development, the Inter-American Development Bank, the Asian
Development Bank, the African Development Bank, the United Nations, and their
agencies, affiliates and pension plans, and any other similar international
organizations, their agencies, affiliates and pension plans shall not be deemed
"United States persons."
35
EXHIBIT D
NON US PERSON REPRESENTATIONS
Each CaliCo Shareholder indicating that it is not a United States
person, severally and not jointly, further represents and warrants to the
Acquiror Company as follows:
1. At the time of (a) the offer by the Acquiror Company and (b) the acceptance
of the offer by such CaliCo Shareholder, of the Acquiror Company Shares, such
CaliCo Shareholder was outside the United States.
2. No offer to acquire the Acquiror Company Shares or otherwise to participate
in the transactions contemplated by this Agreement was made to such CaliCo
Shareholder or its representatives inside the United States.
3. Such CaliCo Shareholder is not purchasing the Acquiror Company Shares for the
account or benefit of any United States person, or with a view towards
distribution to any United States person, in violation of the registration
requirements of the Securities Act.
4. Such CaliCo Shareholder will make all subsequent offers and sales of the
Acquiror Company Shares either (x) outside of the United States in compliance
with Regulation S; (y) pursuant to a registration under the Securities Act; or
(z) pursuant to an available exemption from registration under the Securities
Act. Specifically, such CaliCo Shareholder will not resell the Acquiror Company
Shares to any United States person or within the United States prior to the
expiration of a period commencing on the Closing Date and ending on the date
that is one year thereafter (the "Distribution Compliance Period"), except
pursuant to registration under the Securities Act or an exemption from
registration under the Securities Act.
5. Such CaliCo Shareholder is acquiring the Acquiror Company Shares for such
CaliCo Shareholder's own account, for investment and not for distribution or
resale to others.
6. Such CaliCo Shareholder has no present plan or intention to sell the Acquiror
Company Shares in the United States or to a United States person at any
predetermined time, has made no predetermined arrangements to sell the Acquiror
Company Shares and is not acting as a Distributor of such securities.
7. Neither such CaliCo Shareholder, its Affiliates nor any Person acting on such
CaliCo Shareholder's behalf, has entered into, has the intention of entering
into, or will enter into any put option, short position or other similar
instrument or position in the United States with respect to the Acquiror Company
Shares at any time after the Closing Date through the Distribution Compliance
Period except in compliance with the Securities Act.
8. Such CaliCo Shareholder consents to the placement of a legend on any
certificate or other document evidencing the Acquiror Company Shares
substantially in the form set forth in Section 4.2.5(b).
9. Such CaliCo Shareholder is not acquiring the Acquiror Company Shares in a
transaction (or an element of a series of transactions) that is part of any plan
or scheme to evade the registration provisions of the Securities Act.
36
10. Such CaliCo Shareholder has sufficient knowledge and experience in finance,
securities, investments and other business matters to be able to protect such
CaliCo Shareholder's interests in connection with the transactions contemplated
by this Agreement.
11. Such CaliCo Shareholder has consulted, to the extent that it has deemed
necessary, with its tax, legal, accounting and financial advisors concerning its
investment in the Acquiror Company Shares.
12. Such CaliCo Shareholder understands the various risks of an investment in
the Acquiror Company Shares and can afford to bear such risks for an indefinite
period of time, including, without limitation, the risk of losing its entire
investment in the Acquiror Company Shares.
13. Such CaliCo Shareholder has had access to the Acquiror Company's publicly
filed reports with the SEC.
14. Such CaliCo Shareholder has been furnished during the course of the
transactions contemplated by this Agreement with all other public information
regarding the Acquiror Company that such CaliCo Shareholder has requested and
all such public information is sufficient for such CaliCo Shareholder to
evaluate the risks of investing in the Acquiror Company Shares.
15. Such CaliCo Shareholder has been afforded the opportunity to ask questions
of and receive answers concerning the Acquiror Company and the terms and
conditions of the issuance of the Acquiror Company Shares.
16. Such CaliCo Shareholder is not relying on any representations and warranties
concerning the Acquiror Company made by the Acquiror Company or any officer,
employee or agent of the Acquiror Company, other than those contained in this
Agreement.
17. Such CaliCo Shareholder will not sell or otherwise transfer the Acquiror
Company Shares, unless either (A) the transfer of such securities is registered
under the Securities Act or (B) an exemption from registration of such
securities is available.
18. Such CaliCo Shareholder understands and acknowledges that the Acquiror
Company is under no obligation to register the Acquiror Company Shares for sale
under the Securities Act.
19. Such CaliCo Shareholder represents that the address furnished by such CaliCo
Shareholder on its signature page to this Agreement and in Exhibit B is such
CaliCo Shareholder's principal residence if he is an individual or its principal
business address if it is a corporation or other entity.
20. Such CaliCo Shareholder understands and acknowledges that the Acquiror
Company Shares have not been recommended by any federal or state securities
commission or regulatory authority, that the foregoing authorities have not
confirmed the accuracy or determined the adequacy of any information concerning
the Acquiror Company that has been supplied to such CaliCo Shareholder and that
any representation to the contrary is a criminal offense.
21. Such CaliCo Shareholder acknowledges that the representations, warranties
and agreements made by such CaliCo Shareholder herein shall survive the
execution and delivery of this Agreement and the purchase of the Acquiror
Company Shares.
37