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000-24477
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86-0776876
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(Commission
File Number)
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(I.R.S.
Employer Identification No.)
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8439
Sunset Boulevard, 3rd Floor, West Hollywood, CA
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90069
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(Address
of Principal Executive Offices)
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(Zip
Code)
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Written
communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425).
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12).
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act
(17 CFR 240.14d-2(b)).
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act
(17 CFR 240.13e-4(c)).
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Exhibit
No.
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Description
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2.1
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Share
Purchase Agreement dated July 27, 2008, by and among Stratus Media
Group,
Inc., on the one hand, and all of the shareholders of Exclusive Events
S.A.
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| STRATUS MEDIA GROUP, INC. | ||
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Date: August
8, 2008
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By: | /s/ PAUL FELLER |
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Paul
Feller, Chief Executive Officer
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DATED 2008-07-27
Emanuele ROSSI
Vincenzo PETRETTI
Giuseppe SCIRETTA
Philippe FAVRE
Nicolas PELLOLIO
Paul SANCHEZ
Pierangelo BOTTINELLI
Michel SCALEA
Arnaud LIGUER-LAUBHOUET
Gennaro PETRETTI
PHOENIX VERMOGENSVERWALTUNG [.]
-and-
Nicola SAVORETTI
(hereafter the "Vendors")
-and-
STRATUS MEDIA GROUP, Inc.
(hereafter the "Purchaser")
-------------------------------
SHARE PURCHASE AGREEMENT
(in respect of the shares in Exclusive Events S.A.)
------------------------------
THIS SHARE PURCHASE AGREEMENT is made the 27th day of July 2008,
BETWEEN
(1) Emanuele ROSSI, Route du Rawyl 35, 3596 Montana, Switzerland Vincenzo
PETRETTI, Rue du Perron 39, 1196 Gland, Switzerland Giuseppe SCIRETTA,
Chemin des Tuileries 20, 1212 Grand Lancy, Switzerland Philippe FAVRE,
Route de Soral 121, 1233 Lully, Switzerland Nicolas PELLOLIO, Chemin de la
Grange 11, 1273 Le Muids, Switzerland Paul SANCHEZ, Rue de Pelaz 33, 1269
Bassins, Switzerland Pierangelo BOTTINELLI, Immeuble Victoria A/23, 3963
Montana, Switzerland Michel SCALEA, Route d'Hermance 241G, 1246 Corsier,
Switzerland Arnaud LIGUER-LAUBHOUET, Au Village, 1195 Bursinel,
Switzerland Gennaro PETRETTI, Route de Chancy 168, 1232 Confignon,
Switzerland PHOENIX VERMOGENSVERWALTUNG, Vanterpool Plaza, PO BOX 873
Wickhamx cay n1, Road Town, Tortola, BVI -and- Nicola SAVORETTI, York
Mansions 30, Prince of Wales Drives, SW11 London, UK (collectively, the
"Vendors");
(2) Stratus Media Group, Inc. a company incorporated under the laws of
California whose registered office is [.], Los Angeles, CA [.] (the
"Purchaser")
RECITALS
A. (1) EXCLUSIVE EVENTS S.A. is a corporation limited by shares incorporated
in Nyon / Switzerland under the laws of Switzerland (the "Company").
(2) Further details relating to the Company are set out in Part 2 of the
First Schedule to this Agreement.
B. The Vendors are and will at Completion be the legal and beneficial owners
free from all liens, charges and encumbrances of the shares in the
Company, as set out in Part 1 of the First Schedule.
2
C. The Vendors and the Purchaser (further details relating to the Purchaser
are set out in the Second Schedule) have agreed that the Purchaser shall
purchase and the Vendors shall sell the shares in the Company upon and
subject to the terms and conditions of this Agreement.
IT IS HEREBY AGREED as follows:
1. INTERPRETATION
1.1 In this Agreement:
(i) The following words and expressions shall (save where the context
otherwise requires) have the meanings set against them below:
"2008 Shortfall" has the meaning provided in clause 3.2 of this
Agreement;
"Agreed Form" means in the form agreed by and signed by or on behalf
of the Parties;
"Auditors" means the Auditors for the time being of each of the
Company and Purchaser;
"Business" means the business and operations of the Company as
presently conducted.
"Business Day" means a day when banks are open for business in
Switzerland;
"Catch-Up Payment" has the meaning provided in clause 3.2 of this
Agreement;
"CHF" means the currency having legal tender in Switzerland;
3
"Claim" means any a claim, notice, demand, action, proceeding,
litigation, investigation, judgment, damage, loss, cost, expense or
liability however arising, whether present, unascertained,
immediate, future or contingent, whether based in contract, tort or
statute and whether involving a third party or a party to this
Agreement.
"Client Entities" means clients with which the Company has worked as
of the date of this Agreement, and future clients of the Company.
"Companies Acts" means the provisions of the Swiss Code of
Obligations pertaining to corporations (societe anonyme or
Aktiengesellschaft);
"Company" means Exclusive Events S.A., a company, further details of
which are set out in Part 2 of the First Schedule;
"Company Financial Statements" means (i) the audited consolidated
balance sheet of the Company as of each of December 31, 2006,
December 31, 2007, and the audited consolidated profit and loss
statement and consolidated statement of cash flows of the Company
for each of the foregoing periods; and (ii) the consolidated balance
sheet of the Company as of and June 30, 2008, and the consolidated
profit and loss statement and consolidated statement of cash flows
of the Company for the same period.
"Company Financial Statement Date" means June 30, 2008;
"Completion" means the date on which completion of the sale and
purchase of the Shares takes place;
"Directors" means the persons listed in Part 2 of the First Schedule
as the directors of the Company;
"Employed Vendors" means, collectively, Mr. Emanuele Rossi, Mr.
Vincenzo Petretti, Mr. Nicolas Pellolio and Mr. Philippe Favre.
"Employment Agreements" means the employment contracts in the Agreed
Form between Exclusive Events S.A. and: Mr. Emanuele Rossi, Mr.
Vincenzo Petretti, Mr. Nicolas Pellolio and Mr. Philippe Favre;
"Encumbrances" means any interest or equity of any person (including
any right to acquire, option or right of pre-emption or conversion)
or any mortgage, charge, pledge, lien, assignment, hypothecation,
security interest, title retention or any other security agreement
or arrangement or any agreement to create any of the above;
"Initial Consideration" means the initial sum payable for the Shares
determinable and payable in accordance with clause 3.1;
"Intellectual Property Rights" means all rights conferred under
statute, common law or equity in relation to: (i) patents,
copyright, registered and unregistered designs, trademarks, domain
names, business names and confidential information; and (ii) any
application or right to apply for registration of any of the rights
referred to in (i) above;
"Material Contract" means either (i) any contract that relates to,
or is likely to relate to, revenue or costs in any financial year of
CHF 2,000.00 or more; or (ii) any contract which (irrespective of
quantitative value), might reasonably be expected to be material to
a prudent intending purchaser of the Shares or the Business,
including any contract between a Vendor on the one hand, and the
Company on the other hand;
"Notary Public" has the meaning provided in clause 3.4 of this
Agreement;
"Operational Margin" means the Company's turnover less direct sales
cost.
"Parties" means either of the Vendors, collectively, or the
Purchaser and "Party" shall be construed accordingly;
"Person" means any individual, corporation, partnership, joint
venture, limited liability company, estate, trust, unincorporated
association, any federal, state, county or municipal government or
any bureau, department or agency thereof and any fiduciary acting in
such capacity on behalf of any of the foregoing, or other entity;
4
"Pledge Agreement" means the pledge agreement in the Agreed Form in
respect of the Shares pledged under Clause 6 of this Agreement.
"Purchaser Common Stock" means shares of common stock in Stratus
Media Group, Inc. serving as part of the consideration for the
acquisition of 100% of the Shares in the Company and shall be
unrestricted common stock free from any and all incumbencies and
from any and all third parties' rights, except as expressly noted in
this Agreement;
"Purchaser's Lawyers" means TroyGould PC in Los Angeles
"Rented Premises" means the Company's offices at 13, route de
Champ-Collin, 1260 Nyon, Switzerland;
"SEC" means the Securities and Exchange Commission, or any other
federal agency at the time administering the Securities Act ;
"SEC Document" means that Current Report on Form 8-K filed by the
Purchaser with the SEC on March 14, 2008;
"Second Consideration" means a further sum payable for the Shares
determinable and payable in accordance with clause 3.2;
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations of the SEC promulgated thereunder;
"Shares" means the shares (or equity interests) in the Company;
"Tax" means all forms of taxes, duties, imposts, charges,
withholdings, rates, levies or other governmental impositions of
whatever nature and by whatever authority imposed, assessed or
charged together with all costs, charges, interest, penalties,
fines, expenses and other additional statutory charges, incidental
or related to the imposition;
"Third Consideration" means a further sum payable for the Shares
determinable and payable in accordance with clause 3.3;
"Transactions" means all of the transactions contemplated by this
Agreement ;
"USD" means the currency having legal tender in the United States;
"Vendors' Lawyers" means Budin & Partners in Geneva, Switzerland;
and
"Warranty Claim" has the meaning provided in clause 5.6 of this
Agreement.
5
(ii) Words and phrases defined in the relevant Companies Acts bear the
same respective meanings when used in this Agreement.
(iii) Any reference to any clause or schedule (other than to a schedule to
a statutory provision) is a reference to a clause or schedule to
this Agreement and the schedules form part of and are deemed to be
incorporated in this Agreement.
(iv) The masculine gender shall include the feminine and neuter and the
singular number shall include the plural and vice versa.
(v) Headings and titles are inserted for convenience only and shall not
affect the construction of the document.
(vi) Any reference to the provisions of any legislation or to things done
or falling to be done under the provisions of any legislation shall
if and so far as the nature of the reference permits be construed as
including in relation to the times, years, periods, circumstances or
purposes in relation to which a corresponding provision in any
repealed enactments or in any subsequent enactments has or had or
will have effect a reference to or as the case may be to things done
or falling to be done under or for the purposes of that
corresponding provision.
(vii) References to statutory provisions shall be construed as references
to those provisions as amended, replaced or re-enacted from time to
time whether before or after the date of this Agreement and shall
include any provisions of which they are re-enactments (whether with
or without modification).
(viii) The expressions "Vendors" and "Purchaser" include the respective
successors in title and heirs of such parties.
(ix) Any reference to persons includes a reference to firms, corporations
or unincorporated associations.
2. SALE OF SHARES
2.1 Subject to the terms and conditions of this Agreement, the Vendors shall
sell or procure the sale as legal and beneficial owner and the Purchaser
shall purchase the Shares at Completion free from all Encumbrances but
including all rights attaching to them including any dividends or
distributions declared or paid on the Shares after the date of this
Agreement.
2.2 The Purchaser shall not be obliged to complete the purchase of any of the
Shares unless the purchase of all of the Shares are simultaneously
completed.
2.3 The Vendors hereby waive any pre-emption rights they may have in relation
to any of the Shares under the Articles of Association of the Company or
otherwise.
3. CONSIDERATION
3.1 The Initial Consideration shall be the sum of USD 1,612,000.00 to be
delivered at Completion. The figure of USD 1,612,000.00 comprises a cash
amount of USD 1,128,000.00 and the equivalent of USD 484,000.00 in
Purchaser Common Stock, based on a stock trading price corresponding to
the average closing price of such Purchaser Common Stock for the 30
trading days preceding the date of Completion.
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3.2 The Second Consideration shall be calculated and paid as follows:
- If the Company's Operational Margin for the business year 2008 is
equal to CHF 1,033,000.00, the Second Consideration shall be the sum
of USD 806,000.00 to be paid on the day of the twelve-month
anniversary of Completion (or the closest Business Day following
that date if that date is a Saturday, a Sunday or an official
holiday in Switzerland). The figure of USD 806,000.00 comprises a
cash amount of USD 242,000.00 and the equivalent of USD 564,000.00
in Purchaser Common Stock, based on a stock trading price
corresponding to the average closing price of such Purchaser Common
Stock for the 30 trading days preceding the day of the twelve-month
anniversary of Completion.
- If the Company's Operational Margin for the business year 2008 is
higher than CHF 1,033,000.00, the Second Consideration shall be:
1. The sum of USD 806,000.00 to be paid on the day of the
twelve-month anniversary of Completion (or the closest
Business Day following that date if that date is a Saturday, a
Sunday or an official holiday in Switzerland). The figure of
USD 806,000.00 comprises a cash amount of USD 242,000.00 and
the equivalent of USD 564,000.00 in Purchaser Common Stock,
based on a stock trading price corresponding to the average
closing price of such Purchaser Common Stock for the 30
trading days preceding the day of the twelve-month anniversary
of Completion; and 2. Stock options for the Employed Vendors,
which such stock options shall be issued on the day of the
twelve-month anniversary of Completion (or the closest
Business Day following that date if that date is a Saturday, a
Sunday or an official holiday in Switzerland), subject to
approval of the Board of Directors of Purchaser, and the
amount of which shall be determined in accordance with the
Employment Agreements.
- If the Company's Operational Margin for the business year 2008 is
lower than CHF 1,033,000.00 (such shortfall, the "2008 Shortfall"),
the Second Consideration shall be paid on the day of the
twelve-month anniversary of Completion (or the closest Business Day
following that date if that date is a Saturday, a Sunday or an
official holiday in Switzerland) and calculated as follows:
Operational Margin
Total Second Consideration = ___________________ x USD 806,000.00
1,033,000
The Second Consideration comprises a cash amount equal to 242/806 of
the Second Consideration, and the equivalent of 564/806 of the
Second Consideration in Purchaser Common Stock, based on a stock
trading price corresponding to the average closing price of such
Purchaser Common Stock for the 30 trading days preceding the day of
the twelve-month anniversary of Completion.
- To the extent that the Company's Operational Margin for the business
year 2008 is lower than CHF 1,033,000.00, but its Operational Margin
for the business year 2009 exceeds CHF 1,188,000.00 by an amount
equal to at least the 2008 Shortfall, the Vendors shall be entitled
to the difference between (i) the entire amount of the Second
Consideration to which they would have been entitled if the
Operational Margin for the business year 2008 was equal to CHF
1,033,000.00, and (ii) the actual Second Consideration paid by
Purchaser with respect to the business year 2008 (the "Catch-Up
Payment"). The Catch-Up Payment shall be paid by Purchaser to
Vendors on the day of the twenty-four month anniversary of
Completion (or the closest Business Day following that date if that
date is a Saturday, a Sunday or an official holiday in Switzerland)
as follows: a cash amount equal to 242/806 of the Catch-Up Payment,
and the equivalent to 564/806 of the Catch-Up Payment in Purchaser
Common Stock, based on a stock trading price corresponding to the
average closing price of such Purchaser Common Stock for the 30
trading days preceding the day of the twelve-month anniversary of
Completion.
3.3 The Third Consideration shall be calculated and paid as follows: - If the
Company's Operational Margin for the business year 2009 is equal to CHF
1,188,000.00, the Third Consideration shall be the sum of USD 806,000.00
to be paid on the day of the twenty four-month anniversary of Completion
(or the closest Business Day following that date if that date is a
Saturday, a Sunday or an official holiday in Switzerland). The figure of
USD 806,000.00 comprises a cash amount of USD 242,000.00 and the
equivalent of USD 564,000.00 in Purchaser Common Stock, based on a stock
trading price corresponding to the average closing price of such Purchaser
Common Stock for the 30 trading days preceding the day of the twenty-four
month anniversary of Completion.
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- - If the Company's Operational Margin for the business year 2009 is higher
than CHF 1,188,000.00, the Third Consideration shall be:
1. The sum of USD 806,000.00 to be paid on the day of the
twenty-four month anniversary of Completion (or the closest
Business Day following that date if that date is a Saturday, a
Sunday or an official holiday in Switzerland). The figure of
USD 806,000.00 comprises a cash amount of USD 242,00.00 and
the equivalent of USD 564,000.00 in Purchaser Common Stock,
based on a stock trading price corresponding to the average
closing price of such Purchaser Common Stock for the 30
trading days preceding the day of the twenty-four month
anniversary of Completion; and
2. Stock options for the Employed Vendors, which such stock
options shall be issued on the day of the twenty-four month
anniversary of Completion (or the closest Business Day
following that date if that date is a Saturday, a Sunday or an
official holiday in Switzerland), subject to approval of the
Board of Directors of Purchaser, and the amount of which shall
be determined in accordance with the Employment Agreements.
- - If the Company's Operational Margin for the business year 2009 is lower
than CHF 1,188,000.00, the Third Consideration shall be paid on the day of
the twenty-four month anniversary of Completion (or the closest Business
Day following that date if that date is a Saturday, a Sunday or an
official holiday in Switzerland) and calculated as follows:
Operational Margin
Total Third Consideration = ___________________ x USD 806,000.00
1,188,000
The Third Consideration comprises a cash amount equal to 242/806 of the
Third Consideration, and the equivalent of 564/806 of the Third
Consideration in Purchaser Common Stock, based on a stock trading price
corresponding to the average closing price of such Purchaser Common Stock
for the 30 trading days preceding the day of the twenty-four month
anniversary of Completion.
3.4 Each cash element of the consideration referred to in clauses 3.1 to 3.3
(inclusive) shall be discharged, when due, by means of wire transfers to a
trust account held by a Swiss Notary Public (the "Notary Public") to be
notified in writing by the Vendors to the Purchaser. At or before
Completion, the Vendors shall deliver to the Notary Public the share
certificates representing all the Shares in the Company in order to allow
Purchaser to become the rightful owner of the Shares upon payment of the
aggregate consideration under this Agreement (i.e., the aggregate of the
Initial Consideration, the Second Consideration and the Third
Consideration). The Notary Public shall hold the share certificates
representing the Shares, which shall be pledged in favour of Vendors under
Clause 6 of this Agreement, and release them to Purchaser in accordance
with the terms of the Pledge Agreement.
3.5 At Completion, Purchaser shall deliver, or cause to be delivered to the
Vendors, share certificates representing that portion of the Initial
Consideration payable in shares of the Purchaser Common Stock. Purchaser
shall also deliver, or cause to be delivered, to Vendors share
certificates representing that portion of the Second Consideration and the
Third Consideration payable in shares of Purchaser Common Stock pursuant
to clauses 3.2 and 3.3 of this Agreement, if any.
3.6 It is the Parties opinion that no tax is due in connection with the
purchase of the Shares. Should any acts, like administrative formalities,
be necessary to avoid or reduce taxes in connection with this purchase,
the Parties undertake to cooperate to the extent that such cooperation may
reasonably be required. Should any tax in connection with the purchase of
the Shares, such as VAT or stamp duty, be due, the Purchaser undertakes to
settle them and Vendors shall cooperate in good faith for the purpose of
reducing such tax to the extent possible.
4. COMPLETION
4.1 Subject to the provisions of this clause 4, Completion of the sale and
purchase of the Shares shall take place at the offices of TroyGould PC
located at 1801 Century Park East, 16th Floor, Los Angeles, California
90067, or such other place as the Parties may mutually agree, on December
15, 2008, or at any earlier date as shall be agreed in writing by the
Parties.
8
4.1.1 The Vendors shall deliver or procure the delivery to the Purchaser
of:
(i) all the original share certificates representing all the
Shares, endorsed since nominative;
(ii) Original registry of Shares of the Company; and
(iii) Original and up-to-date certificates from the competent
Bankruptcy Office and the Debt Collection Office that Company
is not subject to bankruptcy proceedings or to debt collection
proceedings.
4.1.2 The Vendors shall deliver to the Purchaser for itself and as agent
for the Company:
(i) the appropriate forms to amend the mandates given by the
Company to its bankers; and
(iv) all cash book balances of the Company as at Completion and
bank statements in relation thereto as at the close of
business five Business Days before Completion and certificates
from each banker to the Company confirming the balance on each
bank account of the Company five Business Days before
Completion.
4.1.3 The Vendors shall repay all money then owing by them to the Company
whether due for payment or not.
4.1.4 The Vendors confirm that all corporate records relating to the
Company (namely the Act of Incorporation, the Articles of
Association (Statuts or Statuten), all balance sheets for the last 2
years, all bills and other accounting documents for the last 2
years, all documents filed with the tax authorities for the last 2
years, all post and bank statement pertaining to all bank or post
accounts previously or currently held by Company, all contracts
entered into by Company, the register of Shares of Company and any
and all documents necessary to carry out the business of Company are
held at the Rented Premises.
5. REPRESENTATIONS WARRANTIES AND UNDERTAKINGS
5.1 The Vendors exclude any warranty, representation and undertakings except
as expressly provided in Part 1 and Part 2 of the Third Schedule to this
Agreement. In other words, the Vendors do not give any warranty,
representation or undertakings to Purchaser as to the Shares in the
Company, as to the Company itself or as to any fact, assumption or
statement made in connection with the purchase of the Shares in the
Company, except as provided in Part 1 and Part 2 of the Third Schedule.
5.2 Purchaser waives all its rights to initiate proceedings against each
Vendor for any breach of warranty, representation or undertakings, except
as provided in Part 1 and Part 2 of the Third Schedule.
5.3 Purchaser excludes any warranty, representation and undertakings except as
expressly provided in Part 3 of the Third Schedule to this Agreement. In
other words, Purchaser does not give any warranty, representation or
undertakings to the Vendors as to any fact, assumption or statement made
in connection with the purchase of the Shares in the Company, except as
provided in Part 3 of the Third Schedule.
5.4 Each Vendor waives all its rights to initiate proceedings against
Purchaser for any breach of warranty, representation or undertakings,
except as provided in Part 3 of the Third Schedule.
5.5 Limitation of Liability
5.5.1 The provisions of this clause 5.5 shall limit the liability of the
parties hereto in respect of the representations, warranties and
undertakings given under clauses 5.1 and 5.3.
5.5.2 For the purpose of calculating the liability of the Vendors or
Purchaser in respect of any Warranty Claim hereunder:
9
(i) there shall be no liability unless and until the aggregate sum
of the amounts claimed against either of the Vendors or
Purchaser (as the case may be) exceeds CHF 10,000 provided
that this limitation shall cease to apply (and the whole of
the amounts claimed shall be recoverable) in the event of such
aggregate sum exceeding CHF 10,000;
(ii) the aggregate liability of the Vendors in respect of all or
any Warranty Claims shall not exceed the total Consideration
paid by Purchaser hereunder (i.e., the aggregate of the
Initial Consideration, the Second Consideration and the Third
Consideration);
(iii) the aggregate liability of Purchaser in respect of all or any
Warranty Claims shall not exceed the aggregate value of the
Shares of the Company acquired by Purchaser hereunder as of
the date of this Agreement; provided, that such aggregate
liability shall not exceed the total Consideration paid by
Purchaser hereunder.
(iv) no claim by either Party in respect of any breach or alleged
breach of warranty shall be enforceable unless written notice
of it incorporating a brief statement of the grounds on which
it is based has been given to the other Party(s) by the Party
entitled to make such claim;
(v) if a Party hereto shall pay to the other Party an amount in
respect of a Warranty Claim and the receiving Party
subsequently recovers from a third party a sum which
compensates the same damage, then such receiving Party shall
forthwith repay to the other Party the sum so recovered (after
deducting all costs, charges and expenses incurred by
receiving Party in recovering such sum from the third party,
together with any costs charges and expenses incurred by it in
obtaining the payment from other Party and all other sums (if
any) then owing by receiving Party to the other Party) up to a
maximum of the total amount paid by the other Party to, and
received by receiving Party, in respect of such Warranty
Claim;
(v) no claim shall be made in respect of any warranty matter to
the extent that the subject matter of the claim occurs as a
result of or is otherwise directly attributable to any
voluntary act of Company instigated after Completion;
5.6 If either Party shall become aware of a claim in respect of a breach or
alleged breach of warranty (a "Warranty Claim") or of a circumstance which
may give rise to a Warranty Claim under this Agreement:
(a) it shall promptly give written notice to the other Party and shall
consult fully with such other Party before incurring substantial
expense in relation thereto;
(b) it shall give other Party reasonable opportunity to investigate and
make representations regarding any such Warranty Claim; and
(c) it shall at other Party's option (to be exercised by written notice)
and at the other Party's expense take such action as other Party may
reasonably request to avoid, resist or compromise the Warranty Claim
and to mitigate any liability in respect of which a Warranty Claim
is or may be made.
5.7 Where either Party has any claim against any third party in relation to
any matter in respect of which there shall have been a breach or alleged
warranty breach or where the either Party receives any claim from a third
party which may result in the Party having a Warranty Claim against the
other Party, the other Party shall be entitled to take any reasonable
action and to require any action they may reasonably request to prosecute
or resist such claim (as the case may be) at the expense of such other
Party, and such other Party shall further be entitled at its own expense
but only in its own name(s) and not in the name of the Party with such
claim, to have the conduct of any appeal, dispute, application for
deferment and other forms of objection, compromise or defence thereof and
of any incidental negotiations and the Party with such a claim shall give
the other Party all reasonable co-operation, access and assistance at such
other Party's request for the purpose of considering, prosecuting or
resisting (as the case may be) such claim as such other Party may
reasonably require, provided that nothing in this clause 5.7 shall entitle
the Vendors to raise any action or require the Purchaser to take any
action if this could result in damaging the goodwill or business of the
Purchaser.
10
6. Pledge Agreement
6.1 In order to secure the payment of the Second and Third Consideration,
Purchaser undertakes to pledge the Shares in favour of the Vendors until
all amounts due by Purchaser to Vendors under this Agreement are settled.
The Notary Public which will receive the consideration due by Purchaser
under Clause 3 shall keep in trust for Purchaser all the share
certificates representing the Shares in the Company until all amounts due
by Purchaser to Vendors under this Agreement are settled.
6.2 The Parties to this Agreement undertake to enter on Completion into a
Pledge Agreement in respect of the Shares. The execution of this Pledge
Agreement shall be a condition precedent to the entry into force if this
Agreement.
7. POST-COMPLETION OBLIGATIONS
7.1 Each of the Vendors hereby undertakes and covenants with the Purchaser on
a joint and several basis by way of a further consideration for the
obligations of the Purchaser under this Agreement, for the purpose of
assuring to the Purchaser the full benefit and value of the goodwill and
connections of the Companies, as separate and independent agreements and
as a constituent part of this Agreement that:
7.1.1 for the period of 2 years after Completion, he will not without the
prior written consent of the Purchaser, directly or indirectly,
either on his own behalf or in conjunction with or on behalf of any
person, firm or company carry on, be engaged, interested or
concerned in carrying on, in any jurisdiction in which the Purchaser
(or the Company) operates, a similar business to that of the
Company, or operate any business which competes or seeks to compete
with any business presently carried on by Company (Purchaser is
entitled to seek an order whereby either Vendors must refrain from
breaching the present clause);
7.1.2 for the period of 2 years after Completion, he will not either on
his own account or in conjunction with or on behalf of any other
person, firm or company, directly or indirectly solicit, interfere
with or endeavour to entice or entice away from either Company any
person who is now or has during the five years preceding the date of
this Agreement been a client, customer, employee, officer, manager
or servant, whether or not such person will commit a breach of his
contract of employment by reason of leaving service nor shall he
knowingly employ or aid or assist in or procure the employment by
any other person, firm or company of any such person (Purchaser is
entitled to seek an order whereby either Vendors must refrain from
breaching the present clause);
7.1.3 he shall not at any time after Completion without the consent in
writing of the Purchaser disclose or reveal to any person, persons,
company or firm or himself use for any purpose and shall use his
best endeavours to prevent the publication or disclosure of any of
the confidential information concerning the organisation, business,
finances, transactions or affairs of the Company or any of its
clients' or customers' transactions or affairs which may or may have
come to his knowledge or control;
7.1.4 he shall assist the Company for any tax issue which may arise before
or after Completion, but as to the period preceding Completion plus
2 years thereafter.
7.2 The restrictions contained in clause 7.1 are considered reasonable by the
Parties to them but in the event that any such restriction is held to be
invalid and would become valid if some part of it were deleted or the
period or area of application were reduced, such restriction shall apply
with such modification as may be necessary to make it valid and effective.
7.3 The restrictions contained in the clause 7.1 shall be construed as
separate and individual restrictions and shall each be capable of being
severed without prejudice to the other restrictions or to the remaining
provisions of this Agreement.
7.4 The Purchaser hereby covenants with each of the Vendors by way of further
consideration for the obligations of the Vendors under this Agreement as
separate and independent agreements and as a constituent part of this
Agreement that:
11
7.4.1 until 31 December 2009, the Company shall have sufficient resources
and personnel to enable each Company to properly and efficiently
service the Company's Client Entities;
7.4.2 until 31 December 2009, it will not alter, or allow to be altered,
the registered office of the Company as at the date of this
Agreement without the prior written permission of the Vendors;
7.4.3 until 31 December 2009, it will not alter, or allow to be altered,
the registered name of the Company as registered in the commercial
registry of the Canton of Vaud as at the date of this Agreement
without the prior written permission of the Vendors;
7.4.4 until 31 December 2009, in respect of any business originated from
the Vendors and handled by Purchaser or any of its affiliated
companies ("Vendors' Business"), 10 per cent of the relevant
company's net income received by the relevant company shall be
included in the calculation of the Company's Operational Margin for
the business years 2008 and 2009.
7.4.5 until payment of the Third Consideration in full it will not alter,
or allow to be altered, the terms of the Employment Agreements
unless such alteration is made in accordance with the terms of the
Employment Agreements; and
7.4.6 until 31 December 2009 no clients of Company shall be taken over by
or transferred to any other company, unless otherwise agreed in
writing with Vendors.
7.5 Indirect Partial Liquidation
7.5.1 Without intending to give any representation or warranty to that
effect, the Parties assume that the sale of the Shares will not
trigger any income tax consequences for the Vendors.
7.5.2 The Purchaser is aware of the concept known in Switzerland as
indirect partial liquidation (indirekte Teilliquidation/liquidation
partielle indirecte, "Indirect Partial Liquidation"), of related
statutory provisions, including in particular Art 20a of the Federal
Act on Direct Federal Tax and Art 7a of the Federal Act on Tax
Harmonisation, and of relevant case law.
7.5.3 The Purchaser undertakes, within five years from Completion, not to
take any disposition or measure in connection with either Company
which causes the application by the competent Swiss tax authorities
of the Indirect Partial Liquidation doctrine; for the avoidance of
doubt, this shall include any disposition or measure taken by a
possible subsequent purchaser of the Company.
7.5.4 Should the Purchaser breach this undertaking, it shall hold harmless
the Vendors for any tax in connection with either Company imposed on
Vendors by the competent Swiss tax authorities on grounds of
Indirect Partial Liquidation.
7.5.5 Either Vendor shall upon the request of the Purchaser and at the
Purchaser's cost appeal any decision rendered by tax authorities in
this respect.
7.5.6 The Parties shall make available to each other all relevant
information and documentation relating to this Agreement which may
assist either party in mitigating tax consequences.
8. MISCELLANEOUS PROVISIONS
8.1 Confidentiality
No Party, whether before or after Completion, shall issue or permit to be
issued any press release or make any statement to the public relating to
or in respect of any of the matters contained in this Agreement without
the prior consent of the other Party being obtained (such consent not to
be unreasonably withheld), save that the Purchaser may make such
announcement(s) as are required the applicable United States laws.
However, Purchaser is allowed to disclose this agreement for the purpose
of its "road show" it intends to carry out to raise new capital.
8.2 Provision of Information
The Vendors shall, following the date hereof and up to Completion, upon
the request of the Purchaser, supply to the Purchaser and its professional
advisers with such information concerning the Companies as the Purchaser
may reasonably require for the purpose of complying with its legal
obligations and any requirements (whether legally enforceable or not) of
any regulatory body.
12
The Purchaser shall, following the date hereof and up to Completion, upon
the request of the Vendors, supply to the Vendors and their professional
advisers with such information concerning the Companies as the Vendors may
reasonably require for the purpose of complying with their legal
obligations and any requirements (whether legally enforceable or not) of
any regulatory body.
8.3 Prohibition of Assignment
This Agreement shall be binding upon and enure for the benefit of the
successors of the Parties, but shall not be assignable.
8.4 Entire Agreement
This Agreement (together with any document referred to herein) constitutes
the whole agreement between the Parties with respect to the subject matter
of this Agreement.
8.5 Variations
It is expressly agreed and declared that no variations hereof shall be
effective unless made in writing and signed by each of the Vendors and by
Purchaser.
8.6 Rescission
Any right of rescission conferred upon the Purchaser or the Vendors hereby
shall be in addition to and without prejudice to all other rights and
remedies available to it or them and no exercise or failure to exercise
such a right shall constitute a waiver by the Purchaser or the Vendors of
any such right or remedy.
8.7 Continuation
The provisions of this Agreement in so far as the same shall not have been
performed on completion of this Agreement shall remain in full force and
effect notwithstanding such completion.
8.8 Waiver
(i) The failure of the Parties at any time or times to require
performance of any provision hereof shall in no manner affect their
right to enforce such provisions at a later time.
(ii) No waiver by the Parties of any condition nor the breach of any
term, covenant, representation, warranty or undertaking contained in
this Agreement, whether by conduct or otherwise in any one or more
instance, shall be deemed to be or construed as a further or
continuing waiver of any such condition or breach or a waiver of any
condition or breach or a waiver of any other condition or deemed to
be or construed as the breach of any other term, covenant,
representation, warranty or undertaking in this Agreement.
8.9 Further Assurance
At the request of the Purchaser, the Vendors shall (and so far as they are
able shall procure that any other necessary party shall), before, at or
after Completion, execute and do all such documents, acts and things as
may reasonably be required subsequent to Completion by the Purchaser for
assuring to or vesting in the Purchaser (including its nominee or
nominees) the legal and beneficial ownership of the Shares in accordance
with the provisions of this Agreement.
At the request of Vendors, Purchaser shall (and so far as it is able shall
procure that any other necessary party shall), before, at or after
Completion, execute and do all such documents, acts and things as may
reasonably be required subsequent to Completion by the Vendors for
assuring to or vesting in the Vendors the legal and beneficial ownership
of the shares in Stratus Media Group, Inc. in accordance with the
provisions of this Agreement.
13
8.10 Costs
Each Party to this Agreement shall pay its own costs, expenses and fees on
and incidental to this Agreement and the sale and purchase of the Shares
except as may otherwise be provided by this Agreement.
8.11 Set-Off
The Parties undertake not to set-off any of their mutual claims.
8.12 Interpretation
Nothing in this Agreement shall be construed as to create a partnership or
join venture, in particular a societe simple under Articles 530 et seq.
CO, between the Parties or any of them.
8.13 Notices
Any notice required to be given by one Party hereto to the other shall be
deemed validly served if delivered by hand or sent by pre-paid registered
letter through the post to either Party to its address given herein or
such other address or number as may from time to time be notified for this
purpose and any notice so served shall be deemed to have been served if
delivered upon delivery and if posted forty-eight hours after the time at
which it was posted and in proving such service it shall be sufficient to
prove that the notice was properly addressed and posted or delivered.
Notice to Messrs. Emanuele Rossi and Vincenzo Petretti shall be deemed to
constitute valid notice to all the Vendors.
8.14 Conditions precedent
This Agreement and its Clauses shall enter into force only if and when the
two following conditions are fulfilled by Completion date:
1. Written Employment Agreements are executed; and
2. The Pledge Agreement in respect of the Shares is executed.
Notwithstanding the fulfilment of the two above-mentioned conditions,
Clauses 8.1 to 8.6, 8.10, 8.12 - 8.16 shall bind the Parties as from the
day of execution of this Agreement.
8.15 Arbitration
Any dispute, controversy or claim arising out of or in relation to this
contract, including the validity, invalidity, breach or termination
thereof, shall be resolved by arbitration in accordance with the Swiss
Rules of International Arbitration of the Swiss Chambers of Commerce in
force on the date when the Notice of Arbitration is submitted in
accordance with these Rules. The numbers of arbitrator shall be one. The
seat of the arbitration shall be Geneva, Switzerland. The arbitration
shall be conducted in the English language.
8.16 Choice of Law
This Agreement shall exclusively be governed and construed in accordance
with the laws of Switzerland.
14
IN WITNESS WHEREOF this Agreement has been entered into the day and year first
herein written.
/s/ EMMANUELE ROSSI /s/ VINCENZI PETRETTI
- --------------------------- -------------------------------
Mr. Emanuele Rossi Mr. Vincenzo Petretti
/s/ GIUSEPPE SCIRETTA /s/ PHILIPPE FAVRE
- ---------------------------- -------------------------------
Mr. Giuseppe Sciretta Mr. Philippe Favre
/s/ NICOLAS PELLOLIO /s/ PAUL SANCHEZ
- ----------------------------- -------------------------------
Mr. Nicolas Pellolio Mr. Paul Sanchez
/s/ PIERANGELO BOTTINELLI /s/ MICHEL SCALEA
- ---------------------------- -------------------------------
Mr. Pierangelo Bottinelli Mr. Michel Scalea
/s/ ARNAUD LIGUER-LAUBHOUET /s/ GENNARO PETRETTI
- --------------------------- -------------------------------
Mr. Arnaud Liguer-Laubhouet Mr. Gennaro Petretti
/s/ PHOENIX VERMOGENSVERWALTUNG /s/ NICOLA SAVORETTI
- ------------------------------- -------------------------------
Phoenix Vermogensverwaltung Mr. Nicola Savoretti
/s/ PAUL FELLER
- ---------------
Stratus Media Group, Inc.
by Paul Feller, Chief Executive Officer
15
FIRST SCHEDULE
Part 1
The Vendors & the Shares
Exclusive Events S.A.
Name of Vendor No. of Exclusive Events S.A. Shares
- -------------- -----------------------------------
Emanuele ROSSI 2,400.00
Vincenzo PETRETTI 5,960.00
Giuseppe SCIRETTA 560.00
Philippe FAVRE 2,400.00
Nicolas PELLOLIO 1,400.00
Paul SANCHEZ 560.00
Pierangelo BOTTINELLI 1,400.00
Michel SCALEA 560.00
Arnaud LIGUER-LAUBHOUET 1,400.00
Gennaro PETRETTI 560.00
PHOENIX VERMOGENSVERWALTUNG 1,400.00
Nicola SAVORETTI 1,400.00
16
FIRST SCHEDULE
Part 2
Particulars of Exclusive Events S.A.
Registered Number: CH-550.1.028.962-3
Registered in Switzerland under: the Swiss Companies Law
Registered Office: Route de Champ-Colin 13, 1260 Nyon
Accounting Period: year to 31st December
Capital CHF Shares Class Nominal Value
Authorised Share Capital 200'000.00 20'000 nominative CHF 10 each
Issued Share Capital 200'000.00 20'000 nominative CHF 10 each
Directors:
- ----------
Name & Address Executive Post Alternate
(if applicable) (if applicable)
Petretti Vincenzo, in Gland, Switzerland CEO &
Managing Director
Favre Philippe, in Bernex, Switzerland Technical Manager
Sciretta Giuseppe, in Lancy, Switzerland
Auditors:
- ---------
Name & Address
Orgafid S.A., Lausanne, Switzerland
17
SECOND SCHEDULE
Particulars of Stratus Media Group, Inc.
Registered Number: C144-1995
Jurisdiction of Incorporation: Nevada
Registered Office: 375 N Stephanie Street, Ste. 1411, Henderson, Nevada 89074
Accounting Period: December 31
Capital Shares Class Nominal Value
Authorised Share Capital 200,000,000 Common Stock USD 0.001
5,000,000 Preferred Stock USD 0.001
Issued Share Capital 51,000,000 Common Stock USD 0.001
Directors:
Name & Address Executive Post Alternate
(if applicable) (if applicable)
Paul Feller Chief Executive Officer,
Stratus Media Group, Inc. Director
8439 West Sunset Boulevard, 3rd Floor
West Hollywood, California 90069
Auditors:
Name & Address
Goldman Parks Kurland Mohidin, LLP
Certified Public Accountants and Advisors
18
THIRD SCHEDULE
Part I
Vendor Representations and Warranties
- --------------------------------------------------------------------------------
1. Each Vendor has full power, capacity, authority and all necessary consents
to enter into and perform his or her obligations under this deed.
2. This Agreement will, when executed by the Vendors, constitute binding
obligations of each Vendor in accordance with its terms.
3. The execution, delivery and performance by each of the Vendors of this
deed will not result in a breach of, or constitute a default under, any
instrument to which a Vendor is a party or by which a Vendor is bound and
which is material in the context of the transactions contemplated by this
Agreement.
4. Each Vendor warrants that it is the registered holder and the sole legal
owner of the Shares set out opposite its name Part 1 of the First
Schedule.
5. Each Vendor warrants that there is no option, right to acquire or
Encumbrance over or affecting such Shares held by any of them, and such
Shares are free from any security or third party interest.
6. Each Vendor warrants and represents as follows:
(a) Such Vendor is an "accredited investor" as defined in Rule 501(a) of
Regulation D, promulgated under the Securities Act;
(b) Such Vendor has sufficient knowledge and experience in investing in
companies similar to the Purchaser so as to be able to evaluate the
risks and merits of its investment in the Purchaser and it is able
financially to bear the risks thereof, has adequate means of
providing for his, her or its current financial needs and possible
contingencies that may face it and has no need for liquidity in its
investment in the Purchaser;
(c) It is the present intention that shares of Common Stock of the
Purchaser being acquired by such Vendor pursuant to the transactions
contemplated by this Agreement are being acquired for investment and
not with a present view to or for sale in connection with any
distribution thereof; and
(d) Such Vendor further represents that he, she or it does not presently
have any contract, undertaking, agreement or arrangement with any
person to sell, transfer or grant participations to such person or
any third person with respect to the shares of Common Stock of
Purchaser being acquired under this Agreement.
7. Each Vendor hereby acknowledges and understands that the shares of Common
Stock of Purchaser issuable to such Vendor, as contemplated in this
Agreement, shall be restricted securities and agrees that such restricted
securities may not be sold, offered for sale, transferred, pledged,
hypothecated or otherwise disposed of except in compliance with the
Securities Act, and all other applicable securities laws and regulations.
19
THIRD SCHEDULE
Part 2
Company Representations and Warranties
- --------------------------------------------------------------------------------
Warranty 1 - Organization; Due Authorization; Non-Contravention
1.1 The Company is duly incorporated and validly exists under the laws of the
jurisdiction in which it was incorporated.
1.2 As of Completion:
(a) No meeting has been convened, resolution proposed, petition
presented or order made for the winding up of the Company;
(b) No receiver, receiver and manager, provisional liquidator,
liquidator or other officer of the any court has been appointed in
relation to all or any material assets of the Company; and
(c) The Company is not insolvent, and has not stopped paying its debts
as and when they fall due.
1.3 The Shares:
(a) will, as at Completion, comprise the entire issued share capital of
the Company;
(b) are fully paid; and
(c) were validly issued.
1.4 There are no agreements, arrangements or understandings in force or
securities issued which call for the present or future issue of, or grant
to any person the right to require the issue of, any shares in the
Company.
1.5 The Company does not:
(a) have any subsidiary; and
(b) hold or beneficially own any share or other security of any other
company, other than 10,000 shares of common stock of Bookham Inc., a
Delaware corporation.
1.6 The Company has full power and authority to own its property and assets
and to conduct the Business in all relevant jurisdictions and does not own
property or assets or conduct any business in any place other than all
such relevant jurisdictions.
1.7 The register of members/shareholders of the Company contains a true and
accurate record of its members/shareholders, as of Completion.
20
1.8 All statutory books and records of the Company have been properly kept and
are up to date with true and accurate entries and records.
1.9 The Company:
(a) has complied with all legal requirements for the filing of returns,
particulars, notices and other documents with all government and
regulatory authorities;
(b) has complied with all legal requirements in relation to the conduct
of the Business and operations; and
(c) has conducted the Business and its affairs in accordance with all
applicable laws, orders, regulations, by-laws and other
requirements.
1.10 Since the Company Financial Statement Date, no dividend in respect of any
capital of the Company has been declared or paid nor has there been any
other distribution of property or assets to members/shareholders of the
Company since the Company Financial Statement Date.
1.11. The Company has the requisite power and authority, and has taken all
action necessary, to execute, deliver and perform its obligations under
this Agreement and each other agreement, document, instrument or
certificate contemplated by this Agreement to be executed by the Company
in connection with the consummation of the Transactions, and to consummate
the Transactions. The execution and delivery by the Company of this
Agreement and any other applicable agreement, and the consummation by the
Company of the Transactions, and the performance by the Company of its
obligations hereunder, have been duly and validly authorized by all
necessary corporate or other action on the part of the Company, and no
other action on the part of the Company is required to authorize the
execution, delivery and performance of this Agreement and the consummation
by the Company of the Transactions. This Agreement has been duly and
validly executed and delivered by the Company and constitutes a legal,
valid and binding obligation of the Company enforceable against the
Company in accordance with its terms.
1.12 The execution, delivery and performance of this Agreement does not, and
the consummation of the Transactions will not :
(a) contravene, conflict with, or result in any violation or breach of
any provision of the articles of incorporation, by-laws,
constitution or other organizational or governing document of the
Company;
(b) contravene, conflict with, or result in a violation or breach of any
provision of any law applicable to the Company;
(c) require any consent or other action by any Person under, constitute
a breach of or default under, or cause or permit the termination,
cancellation, acceleration or other change of any right or
obligation or the loss of any benefit to which the Company is
entitled under any provision of any agreement or other instrument
binding upon the Company or any license, franchise, permit,
certificate, approval or other similar authorization affecting, or
relating in any way to, the assets, property of the Company or the
Business; or
21
(d) result in the creation or imposition of any Encumbrance on any of
the assets or properties of the Company.
Warranty 2 - Financial Statements
2.1 The Company Financial Statements give a true and fair view of the
financial position of the Company as at the Company Financial Statement
Date, and of the assets, liabilities and the results of operations of the
Company for the period to which the Company Financial Statements relate.
2.2 The Company Financial Statements were prepared with due and reasonable
care, in accordance with the accounting policies, principles and bases of
preparation stated in those Company Financial Statements.
2.3 There have been no material changes to the financial position of the
Company or of the assets, liabilities or the results of operations of the
Company since the Company Financial Statement Date.
Warranty 3 - Taxation
3.1 The Company has not and will not have any liability for Tax in respect of
the period ending on the date of Completion except for Taxes for which
provision has been made in the Company Financial Statements or Taxes
incurred in the ordinary course of business since the Company Financial
Statement Date.
3.2 The Company has:
(a) complied with all obligations imposed on the Company by any Tax law;
(b) filed, lodged or submitted all Tax returns and information regarding
Tax and Tax matters as and when required by Tax law or requested by
any Tax authority or as agreed with its tax agent with true and full
disclosure of all relevant matters; and
(c) maintained sufficient and accurate records and all other information
required to support all Tax returns and information which has been
or may be filed, lodged or submitted to any Tax authority or is
required to be kept under any Tax law.
Warranty 4 - Litigation
4.1 The Company is not involved in any litigation or arbitration proceedings
and, so far as the Vendors are aware, there are no facts likely to give
rise to any such proceedings.
4.2 There is no unsatisfied judgment, order, arbitral award or decision of any
court, tribunal or arbitrator against the Company or any of the assets of
the Company or the Shares.
Warranty 5 - Employees
5.1 As far as the Vendors are aware, the Company has complied with, and
continues to comply with, all obligations arising under law, equity,
statute (including occupational health and safety, annual leave, long
service leave, tax, superannuation, workers compensation and industrial
laws) and with respect to its current and former employees and
contractors.
22
5.2 The Company has not been served with notice of a Claim, prosecution,
proceedings or dispute by any statutory body, union or any current or
former employee or contractor (including with respect to occupational
health and safety or workers' compensation) nor is any Vendor aware of any
threatened Claim or any facts of circumstances which could give rise to
any such Claim.
5.3 There are no payments due by the Company in connection with the
termination of any employee.
Warranty 6 - Material Contracts
6.1 As far as the Vendors are aware, no substantial reduction in revenue is
likely to occur by reason of the change in control of the Company as a
result of the transactions contemplated by this Agreement.
6.2 As far as the Vendors are aware, the Company is not a party to any
Material Contract of which it or any other party is in default or, but for
the requirements of notice or lapse of time or both, would be in default.
6.3 The Company has duly complied with and fulfilled all the material
obligations and duties that it owes under any Material Contract to which
it is party.
6.4 As far as the Vendors are aware, no event has occurred which may be
grounds for termination of any Material Contract to which the Company is a
party.
Warranty 7 - Equipment
7.1 As at Completion, the Company will own all of the assets, plant and
equipment and fixtures and fittings ("Equipment") that are required to
conduct the Business.
7.2 As far as the Vendors are aware, the Equipment is in a good and reasonable
state of repair and condition and it is in satisfactory working order, has
been regularly maintained and is currently sufficient for the purposes of
conducting the Business.
Warranty 8 - Compliance with laws; Permits
8.1 As far as the Vendors are aware, the Company has complied in all material
respects with all applicable laws.
8.2 As far as the Vendors are aware, the Company holds all necessary licences
(including statutory licences) and consents, planning permissions,
authorisations and permits for the proper carrying on of the Business, and
all of those licences, consents, permissions, authorisations and permits:
23
(a) have been fully paid up;
(b) have been fully complied with;
(c) are in full force and effect; and
(d) are not liable to be revoked or not renewed.
8.3 As far as the Vendors are aware, there are no facts or circumstances
involving the Company or its affairs which are likely to result in the
revocation of or variation in any material respect of any permit, licence,
authority or consent held by it.
8.4 As far as the Vendors are aware, no permit, licence, authority or consent
held by the Company would be adversely affected by, or liable to be
terminated revoked or varied in any material respect by reason of, a
change in the ownership of the Company.
Warranty 9 - Records
As far as the Vendors are aware, the Records:
(a) are in the physical possession of the Company located on its
properties;
(b) include all records required under, or to comply with or support any
return or claim under, any applicable law (including any Tax law);
(c) have been properly and accurately prepared and maintained in all
material respects in accordance with all applicable laws and are
up-to-date where legally required; and
(d) do not contain material inaccuracies or discrepancies of any kind.
Warranty 10 - Disclosure
10.1 No representation or warranty of the Company in this Agreement and no
statement in any certificate or other agreement furnished or to be
furnished by the Company pursuant to this Agreement contained, contains or
will contain on the date such agreement or certificate was or is
delivered, or on Completion, any untrue statement of a material fact, or
omitted, omits or will omit on such date to state any material fact
necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading.
Warranty 11 - Intellectual Property
11.1 The Company owns and/or uses all right, title and interest in the
Intellectual Property Rights. The Company has not licensed any of the
Intellectual Property Rights to any person and has not assigned, or in any
way disposed of, any right, title or interest in the Intellectual Property
Rights.
11.2 The Intellectual Property Rights are valid and enforceable.
11.3 As far as the Vendors are aware, neither the carrying on of the Business
nor the use of the Intellectual Property Rights:
(a) infringes, or is alleged to infringe, the Intellectual Property
Rights or rights or other rights of any third party;
(b) is, or is alleged to be, in breach of any obligation of confidence
owed to any third party; or
(c) is resulting, or so far as the Vendors are aware, is alleged to be
resulting, in a breach of any obligation that the Company owes to
any third party (including a breach of contract).
Warranty 12 - Real property
12.1 The Company does not own, hold, or is the occupier, lessee or tenant of or
has any interest in any real property.
12.2 Where the interest of the Company in any real property is a leasehold:
(a) the lease is a valid, legal and binding obligation in accordance
with its terms;
(b) the Company has duly complied with and fulfilled all its material
obligations and duties under the lease; and
(c) so far as the Vendors are aware, no event has occurred which may be
grounds for termination of the lease.
Warranty 13 - Conduct of Business
13.1 Prior to the date of Completion, the Company shall conduct its business in
the normal course, and shall not sell, pledge, or assign any assets,
without the prior written approval of the Purchaser, except in the regular
course of business. Except as otherwise provided herein, the Company shall
not amend any articles of incorporation, by-laws, constitution or other
organizational or governing document of the Company, declare dividends,
redeem or sell stock or other securities, acquire or dispose of fixed
assets, change employment terms, enter into any material or long-term
contract, guarantee obligations of any third party, settle or discharge
any material balance sheet receivable for less than its stated amount, pay
more on any liability than its stated amount or enter into any other
transaction other than in the regular course of business.
24
THIRD SCHEDULE
Part 3
Purchaser Representations and Warranties
- --------------------------------------------------------------------------------
Warranty 1 - Organization; Due Authorization; Non-Contravention
1.1 Purchaser is duly incorporated and validly exists under the laws of the
jurisdiction in which it was incorporated, with full power and authority
(corporate and other) to own, lease and operate its properties and conduct
its business as currently conducted and as described in the SEC Document.
1.2 As of Completion:
(a) No meeting has been convened, resolution proposed, petition
presented or order made for the winding up of the Purchaser;
(b) No receiver, receiver and manager, provisional liquidator,
liquidator or other officer of the any court has been appointed in
relation to all or any material assets of the Purchaser; and
(c) The Purchaser is not insolvent, and has not stopped paying its debts
as and when they fall due.
1.3 All statutory books and records of the Purchaser have been properly kept
and are up to date with true and accurate entries and records.
1.4 The Purchaser:
(a) has complied with all legal requirements for the filing of returns,
particulars, notices and other documents with all government and
regulatory authorities;
(b) has complied with all legal requirements in relation to the conduct
of its business and operations; and
(c) has conducted its business, operations and affairs in accordance
with all applicable laws, orders, regulations, by-laws and other
requirements.
1.5 The Purchaser Common Stock issuable to the Vendors pursuant to the terms
of this Agreement, when issued as contemplated hereunder, will be duly
authorized, validly issued, fully paid and non-assessable shares of common
stock of Purchaser.
1.6 The Purchaser has the requisite power and authority, and has taken all
action necessary, to execute, deliver and perform its obligations under
this Agreement and each other agreement, document, instrument or
certificate contemplated by this Agreement to be executed by the Purchaser
in connection with the consummation of the Transactions, and to consummate
the Transactions. The execution and delivery by the Purchaser of this
Agreement and any other applicable agreement, and the consummation by the
Purchaser of the Transactions, and the performance by the Purchaser of its
obligations hereunder, have been duly and validly authorized by all
necessary corporate or other action on the part of the Purchaser, and no
other action on the part of the Purchaser is required to authorize the
execution, delivery and performance of this Agreement and the consummation
by the Purchaser of the Transactions. This Agreement has been duly and
validly executed and delivered by the Purchaser and constitutes a legal,
valid and binding obligation of the Purchaser enforceable against the
Purchaser in accordance with its terms.
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1.7 The execution, delivery and performance of this Agreement does not, and
the consummation of the Transactions will not :
(a) contravene, conflict with, or result in any violation or breach of
any provision of the articles of incorporation, by-laws,
constitution or other organizational or governing document of the
Purchaser;
(b) contravene, conflict with, or result in a violation or breach of any
provision of any law applicable to the Purchaser;
(c) require any consent or other action by any Person under, constitute
a breach of or default under, or cause or permit the termination,
cancellation, acceleration or other change of any right or
obligation or the loss of any benefit to which the Purchaser is
entitled under any provision of any agreement or other instrument
binding upon the Purchaser or any license, franchise, permit,
certificate, approval or other similar authorization affecting, or
relating in any way to, the assets, property of the Purchaser or its
business and operations; or
(d) result in the creation or imposition of any Encumbrance on any of
the assets or properties of the Purchaser.
Warranty 2 - Financial Statements
2.1 The financial statements of the Purchaser included in the SEC Document
give a true and fair view of the financial position, assets, liabilities
and the results of operations of the Purchaser for and as at the periods
to which such financial statements relate, and all such financial
statements were prepared with due and reasonable care, in accordance with
the accounting policies, principles and bases of preparation stated
therein.
2.3 There have been no material changes to the financial position of the
Purchaser or of the assets, liabilities or the results of operations of
the Purchaser since the date of the financial statements of the Purchaser
included in the SEC Document.
Warranty 3 - Litigation
3.1 The Purchaser is not involved in any litigation or arbitration proceedings
and, so far as the Purchaser is aware, there are no facts likely to give
rise to any such proceedings.
3.2 There is no unsatisfied judgment, order, arbitral award or decision of any
court, tribunal or arbitrator against the Purchaser or any of the assets
of Purchaser or Purchaser Common Stock.
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