REORGANIZATION AND STOCK PURCHASE AGREEMENT
This REORGANIZATION
AND STOCK PURCHASE
AGREEMENT dated as of February 28, 2007
(this "Agreement")
is by and between Sorell, Inc., a Nevada corporation
("Sorell"), and
Tojen. Ltd., a company incorporated pursuant to
the laws of
England and
Wales ("Tojen").
RECITALS
A:
WHEREAS, Sorell
desires to acquire directly or indirectly
100% of the
equity of Tojen;
B:
WHEREAS, the
parties hereto intend that the transaction
contemplated
hereby shall
be completed as a tax-free exchange of stock.
NOW, THEREFORE,
the respective Boards
of Directors of Sorell and Tojen deem it
advisable and
in the best interests of their
corporations and the respective
shareholders of their corporations that Sorell acquire 100% of the
securities of
Tojen, in accordance with the terms and conditions of
this Reorganization and
Stock Purchase
Agreement.
1.
Pre-Closing Actions
ofSorell. Immediately upon execution of this
Agreement and
prior to any Closing
as set forth herein, Sorell shall undertake
the following
actions:
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(a)
The Board of Directors of Sorell shall
unanimously approve and deliver
to Cutler Law Group (the "Escrow Agent") in
escrow (the "Escrow") resolutions
with respect
to (a) approving all of the transactions set forth
herein; (b)
directing the size of the Board of Directors to be two (2) members;
(c) electing
Tom Adams (Chairman) and Mark Cockshutt to the board of
directors of Sorell
designated by
Tojen, (d) appointing Tom Adams as Chief Executive
Officer of
Sorell and
Mark Cockshutt as Chief Operation Officer of Sorell; and (d)
approving a
name change of the corporation to "Tojen Holdings, Inc." (the
"Sorell Board
Resolutions").
(b)
Sorell shall
deliver or cause to be delivered to Escrow a total
of
75,000,000 shares
of Sorell for delivery
to shareholders or other designees of
Tojen as advised to Escrow prior to closing (the "Escrowed
Sorell Shares").
(c)
Sorell shall use its reasonable best efforts to prepare and
complete the
documents necessary
to be filed with local, state and
federal authorities to
consummate the
transactions
contemplated
hereby.
(d)
During the
Due Diligence Period, Sorell shall
make available to Tojen
and Tojen's
employees,
attorneys,
accountants, financial advisors, agents and
representatives during
normal business hours all information concerning the
operation, business
and prospects of Sorell as may be
reasonably requested by
Tojen. Sorell
will cooperate with
Tojen for the purpose of permitting Tojen to
discuss Sorell's business and prospects with customers, creditors,
suppliers and
other persons
having business dealings with such party, including without
limitation providing
access to all
employees, consultants, assets, properties,
books, accounts,
records, tax returns, contracts and other documents of Sorell,
provided that such access will not materially interfere with the
normal business
operations of
Sorell.
2.
Pre-Closing Action ofTojen. Immediately upon execution of this
Agreement
and prior to the Closing as set forth herein, Tojen shall undertake the
following actions:
(a)
The Board of Directors of Tojen shall execute
and deliver resolutions
unanimously approving
all of the transactions set forth herein.
(b)
The shareholders
of Tojen shall deliver to Cutler Law
Group in escrow
certificates
representing 200
shares of common stock of Tojen (the
"Escrowed
Tojen Shares"), representing 100% of the issued and outstanding
equity of Tojen,
for delivery
to Sorell at Closing.
(c)
During the
Due Diligence Period, Tojen shall make
available to Sorell
and Sorell's
employees, attorneys,
accountants, financial advisors, agents and
representatives during
normal business hours all information concerning the
operation, business
and prospects of Tojen as may be reasonably
requested by
Sorell. Tojen
will cooperate with Sorell for the
purpose of permitting Sorell
to discuss
Tojen's business and
prospects with customers, creditors, suppliers
and other persons having business dealings with such
party, including without
limitation providing
access to all
employees, consultants, assets, properties,
books, accounts,
records, tax returns,
contracts and other documents of Tojen,
provided that such access will not materially interfere with the
normal business
operations of
Tojen.
3.
Conditions to
Closing
The parties'
obligation
to close the proposed Acquisition
will be subject to
specified conditions
precedent including, but not limited to, the
following:
(a)
the representations
and warranties of
Sorell as set forth in Section 6
herein shall
remain true and correct as of the Closing Date and
no material
adverse change
to the financial condition of Sorell shall have occurred;
(b)
the representations
and warranties of Tojen as set forth
in Section 7
herein shall
remain true and correct as of the Closing Date and
no material
adverse change
in the business or financial condition of Tojen shall have
occurred;
(c)
all the documents necessary to be filed with local,
state and federal
authorities (including the Securities and Exchange Commission) are
prepared, and
to the extent applicable, filed.
(d)
Sorell shall have
provided the board resolutions and any other approval
required to
complete the board election; and board
resolutions approving the
name change;
(e)
Sorell shall retain its good standing as a publicly traded company
under
the Securities
Exchange Act of 1934, trading on the
over-the-counter bulletin
board under
the symbol "SLLI.OB";
(f)
Sorell shall
have prepared and
delivered to Tojen within sixty days of
Closing audited
and unaudited financial statements
which if filed at the time
received would
be complete and compliant with Regulation S-X, Section
310,
sufficient for the combined entities to file any and all filings
required by the
US Securities
and Exchange Commission (the "Sorell Financial
Statements");
(g)
Tojen shall
have prepared and
delivered to Sorell within sixty days of
closing audited
and unaudited financial statements
which if filed at the time
received would
be complete and compliant with Regulation S-X, Section
310,
sufficient for the combined entities to file any and all filings
required by the
US Securities
and Exchange Commission (the "Tojen Financial Statements");
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(h)
Sorell shall have
completed an Assignment and Assumption Agreement with
Bon Kwan Koo pursuant to which it shall have divested
itself of any and all
assets and/or
obligations
of S-Cam Co., Ltd., its prior subsidiary (the
"Spin-off")[note: I
think that this needs to be done simultaneous with
the
closing; otherwise,
Sorrel would be a "shell" at the closing;
let me know you
thoughts.]
(i)
On or prior to Closing, Sorell shall have
completed the conversion of
$2,000,000 original principal amount of Convertible Debentures (the
"Convertible
Debentures") into
a total of 4,000,000
shares of common stock, and except with
respect to certain
warrants outstanding (described in more detail below), there
shall be no further obligations to the
holders of such Convertible Debentures.
4.
At the Closing.
(a)
At the Closing, Cutler Law Group shall release
from escrow the Sorell
Board Resolutions
effectuating
the election of
members designated by Tojen to
the Sorell Board of
Directors. The members
of the Board of Directors of Sorell
prior to Closing shall submit resignations at Closing.
(b)
At the Closing, Cutler Law Group shall release the Escrowed
Sorell
Shares to the shareholders or designees of Tojen.
(c)
At the Closing, Cutler Law Group shall release the Escrowed Tojen
Shares
to Sorell.
(d)
At the Closing, the existing officers of Sorell shall resign
and be
replaced by
those officers appointed by the new Board of Directors.
5.
Timing ofClosing.
The closing of the transactions
contemplated by this
Agreement ((the
"Closing") shall occur
upon the satisfaction of the conditions
set forth in this Agreement and upon instructions from the parties
hereto to the
Escrow Agent.
The closing date shall occur on February 28,
2007 in the event
such conditions are met, unless the Escrow Agent receives
instructions otherwise
from the parties or notice from a party that the
conditions set forth herein
have not occurred (the
"Closing Date").
Unless otherwise advised in writing by
the parties,
in the event the Closing does not occur on or
before March 31,
2007, (i) the Escrow Agent shall return the Escrowed Sorell Shares
and the
Sorell Board
Resolutions to Sorell;
and (ii) the Escrow Agent shall return the
Escrowed Tojen
Shares to the shareholders of Tojen.
6.
Representations
ofSorell andS-Cam Co.,
Ltd (the "Subsidiary"). Each of
Sorell and
the Subsidiary, jointly and severally, represents
and warrants as
follows:
(a)
Ownership of Shares.
As of the Closing
Date, the shareholders of Tojen
will become
the owners of the Escrowed Sorell Shares.
The Escrowed
Sorell
Shares will be free from claims, liens or other encumbrances,
except as provided
under applicable
federal and state securities laws;
(b)
Fully paid
and Nonassessable. The Escrowed Sorell Shares
constitute
duly and validly
issued shares of Sorell, and are fully paid and nonassessable,
and Sorell further represents that it has the power and the
authority to execute
this Agreement
and to perform the obligations contemplated hereby;
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(c)
Organization of
Sorell; Authorization. Sorell is a corporation duly
organized, validly
existing and in good
standing under the laws of Nevada with
full corporate power
and authority to execute and deliver this Agreement and to
perform its
obligations
hereunder. The
execution, delivery and performance of
this Agreement
have been duly authorized by all
necessary corporate action of
Sorell and this
Agreement constitutes a valid and binding obligation of Sorell;
enforceable against
it in accordance with its terms. Subsequent to the
Spin-off, Sorell
has no subsidiaries.
(d)
Capitalization. The
authorized
capital stock of Sorell consists of
100,000,000 shares of common stock, par value $0.001 per share, and
no shares of
preferred stock.
As of the Closing Date, Sorell will have
a total of no more
than 15,163,877
shares of common stock issued and
outstanding (including the
issuance of
common stock in connection with the
conversion of the Convertible
Debt) and no shares of preferred stock issued and outstanding.
As of the
Closing Date, all of the issued and outstanding shares of common
stock of Sorell
are validly
issued, fully paid and non-assessable. Except for 4,000,000
warrants to purchase
shares at an exercise price of $0.75 per share held by the
holders of the Convertible Debentures and 800,000 warrants to
purchase shares at
an exercise
price of $0.50 per share held by the placement agent for the
Convertible
Debentures, there is not and as of the Closing Date, there will
not
be outstanding
any warrants, options
or other agreements on the part of Sorell
obligating Sorell to issue any additional shares of common or
preferred stock or
any of its securities
of any kind. Sorell
will not issue any shares of capital
stock from
the date of this Agreement through the Closing
Date. The Common
Stock of Sorell is presently trading on the over-the-counter
bulletin board
maintained by
Nasdaq under the symbol "SLLI.OB".
Ownership of
Sorell Shares. The delivery of
certificates provided herein
for the Escrowed Sorell Shares will result in the shareholders of Tojen
immediate acquisition
of record and beneficial ownership of the Escrowed Sorell
Shares, free
and clear of all encumbrances.
(e)
No Conflict as to
Sorell and its Subsidiary. Neither the execution and
delivery of
this Agreement nor the consummation of
the exchange of the Sorell
Shares will
(a) violate any provision of the certificate
of incorporation or
by-laws (or
other governing instrument) of Sorell or (b) violate, or be
in
conflict with, or
constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under, or result in
the termination
of, or accelerate the performance required by, or excuse performance
by any
Person of any of its obligations under, or cause the acceleration of the
maturity of
any debt or obligation pursuant to, or
result in the creation or
imposition of
any encumbrance upon
any property or assets of Sorell under, any
material agreement
or commitment to which Sorell is a party or by
which its
property or assets is bound, or to which any of the property or
assets of Sorell
is subject,
or (c) violate any statute or law or
any judgment, decree, order,
regulation or rule of Governmental Body applicable to Sorell
except, in the case
of violations,
conflicts, defaults, terminations, accelerations or
encumbrances
described in clause (b) of this Section for such matters which are
not likely to
have a material adverse effect on the business or financial
condition of Sorell.
The term "Governmental Body" shall mean any government, municipality or
political subdivision
thereof, whether federal, state, local or foreign, or any
governmental or quasi-governmental agency, authority, board,
bureau, commission,
department,
instrumentality or
public body, or any court, arbitrator,
administrative
tribunal or
public utility.
(g)
Consents and
Approvals of Governmental Authorities. Except for the
filing of a Form 8-K with the Securities and Exchange
Commission and a Form
8-K/A (filed
within 71 days which will include the financials
and pro-forma
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financials of
each of Sorell and
Tojen), no consent, approval or authorization
of, or declaration, filing or registration with, any Governmental Body is
required to
be made or obtained by Sorell in connection
with the execution,
delivery and
performance of this Agreement by Sorell or the consummation of
the
sale of the Escrowed Sorell Shares.
(h)
Other Consents.
Except for consents from the holders of the
Escrowed
Sorell Shares, no
consent of any Person is required to be obtained by Sorell to
the execution, delivery and performance of this Agreement or the
consummation of
the sale of the Sorell Shares, including, but not limited
to, consents from
parties to
leases or other agreements or commitments,
except for any consent
which the failure to obtain would not be likely to have a material
adverse
effect on the business and financial condition of Sorell.
(i)
Litigation. There
is no action, suit, inquiry, proceeding or
investigation by
or before any Governmental body pending or threatened in
writing against
or involving Sorell, or which questions or challenges the
validity of
this Agreement. Sorell is not subject to any judgment,
order or
decree that
is likely to have a material adverse effect on the
business or
financial condition
of Sorell.
(j)
Absence of Certain
Changes. From December 31, 2006, to the date hereof,
Sorell has
not:
1.
suffered damage
or destruction of any of its properties or assets
(whether or
not covered by insurance) which is materially adverse to the
financial condition
of Sorell, or made any disposition of
any of its material
properties or
assets other than in the ordinary course of business;
2.
made any change or amendment in its certificate of incorporation
or
by-laws, or
other governing instruments, except as contemplated hereby or
required to
effect the transactions set forth herein;
3.
other than the Sorell
Escrowed Shares or other than the total issued and
outstanding shares set forth in paragraph 6(d) hereto, issued or
sold any equity
securities or other
securities, acquired, directly or indirectly, by redemption
or otherwise,
any such securities,
reclassified, split-up or otherwise changed
any such security, or granted or entered into any
options, warrants, calls or
commitments of
any kind with respect thereto;
4.
organized any new
subsidiary or acquired any securities of any Person or
any equity
or ownership interest in any business;
5.
borrowed any funds or
incurred, or assumed or become subject to, whether
directly or
by way of guarantee or
otherwise, any obligation or liability with
respect to
any such indebtedness for borrowed money;
6.
paid, discharged or satisfied any material claim, liability or
obligation
(absolute, accrued,
contingent
or otherwise), other than the Spin-off or
otherwise in
the ordinary course of business;
7.
prepaid any
material obligation having a maturity of
more than 90 days
from the date such obligation was issued or incurred;
8.
cancelled any
material debts or waived any material claims or
rights,
except for
the Spin-off or otherwise in the ordinary course of business;
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9.
disposed of
or permitted to lapse
any rights to the use of any material
patent or registered trademark or copyright or other intellectual
property owned
or used by it;
9.
granted any general increase in the compensation of officers or
employees
(including any
such increase pursuant to any employee benefit plan);
10.
purchased or
entered into any contract or commitment to
purchase any
material quantity
of raw materials or supplies, or sold or entered
into any
contract or
commitment
to sell any material quantity of property
or assets;
11.
made any capital expenditures or additions to property, plant or
equipment or
acquired any other property or assets;
12.
written off
or been required to write off any notes or accounts
receivable;
13.
written down
or been required to write down any inventory;
14.
entered into
any collective
bargaining or union contract or agreement;
and
15.
incurred any
liability (in excess of $2,000.00) or other
obligation.
(k)
Contracts and
Commitments.
Sorell is not a party to any:
1.
Contract or
agreement (except for this Agreement) involving any
liability, obligation
or covenant on the part of Sorell.
2.
Lease of personal property;
3.
Employee bonus,
stock option or stock purchase, performance unit,
profit-sharing,
pension, savings,
retirement,
health, deferred or incentive
compensation,
insurance or other
material employee benefit plan (as defined in
Section 2(3) of ERISA)
or program for any of the employees, former employees or
retired employees
of Sorell;
4.
Commitment, contract
or agreement that is currently expected by the
management of
Sorell to result in any material loss upon completion or
performance
thereof;
5.
Contract, agreement
or commitment with any officer, employee, agent,
consultant, advisor,
salesman, sales representative, value added reseller,
distributor or dealer, except for a management contract with
Sorell's president;
or
6.
Employment agreement
or other similar agreement.
(l)
Compliance with
Law. The operations of Sorell have been
conducted in
accordance with
all applicable laws
and regulations of all Governmental Bodies
having jurisdiction
over them, except for violations thereof which are
not
likely to have a
material adverse effect on the business or financial condition
of Sorell.
Sorell has not
received any notification of any asserted present or
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past failure
by it to comply with any such applicable laws or
regulations.
Sorell has
all material licenses, permits, orders or approvals from the
Governmental Bodies
required for the conduct of its business, and is
not in
material violation of any such licenses, permits, orders and
approvals. All such
licenses, permits,
orders and approvals are in full force and
effect, and no
suspension or
cancellation
of any thereof has been threatened.
(m)
Tax Matters.
1.
Sorell (1)
has filed or shall
file prior to Closing all nonconsolidated
and noncombined
Tax Returns and all consolidated or
combined Tax Returns that
include only
Sorell and not Tojen
or its other Affiliates (for the purposes of
this Section,
such tax Returns shall be considered nonconsolidated and
noncombined Tax
Returns) required to be filed through the
date hereof and has
paid any Tax due through the date hereof with respect to the time
periods
covered by such nonconsolidated and noncombined Tax Returns and
shall timely pay
any such Taxes required to be paid by it
after the date hereof with respect to
such Tax Returns and
(2) shall prepare and timely file all such nonconsolidated
and noncombined
Tax Returns required to be filed after the date hereof
and
through the
Closing Date and pay all Taxes required to be paid by it
with
respect to
the periods covered by such Tax Returns; (B)
all such Tax Returns
filed pursuant
to clause (A) after the date hereof shall, in each
case, be
prepared and
filed in a manner consistent in all
material respects (including
elections and
accounting
methods and conventions) with such Tax Return
most
recently filed in the
relevant jurisdiction prior to the date hereof, except as
otherwise required by
law or regulation. Any
such Tax Return filed or required
to be filed after the date hereof shall not reflect
any new elections or the
adoption of
any new accounting methods or
conventions or other similar items,
except to the extent such particular reflection or adoption is required
to
comply with
any law or regulation. "Affiliate" of any person means
any other
person directly
or indirectly through one or more intermediary persons,
controlling,
controlled by
or under common control with such person.
"Tax"
(including, with
correlative
meaning, the terms "Taxes" and "Taxable")
shall
mean: (i)(A)
any net income, gross income, gross receipts, sales, use, ad
valorem, transfer,
transfer gains, franchise, profits, license,
withholding,
payroll, employment,
excise, severance, stamp, rent, recording, occupation,
premium, real
or personal property, intangibles, environmental or windfall
profits tax,
alternative or add-on minimum tax, customs duty or other tax,
fee,
duty, levy,
impost, assessment or
charge of any kind whatsoever (including but
not limited
to taxes assessed to real property and water and sewer rents
relating thereto),
together with; (B) any interest and any penalty, addition to
tax or additional
amount imposed by any Governmental Body (domestic or foreign)
(a "Tax Authority")
responsible for the imposition of any such tax and interest
on such penalties,
additions to tax, fines or additional amounts, in each case,
with respect
to any party hereto, its business or tassets (or the
transfer
thereof); (ii) any liability for the payment of any amount of the
type described
in the immediately preceding clause (i) as a result
of a party hereto being a
member of an affiliated or combined group
with any other person at any time on
or prior to the date of Closing; and (iii)
any liability of a party hereto for
the payment
of any amounts of the type described
in the immediately preceding
clause (i)
as a result of a contractual obligation to
indemnify any other
person. "Tax
Return" shall mean any return or report (including
elections,
declarations,
disclosures,
schedules, estimates
and information returns)
required to
be supplied to any Tax Authority.
2.
Sorell represents that prior to Closing, all consolidated or
combined Tax
Returns (except those
described in subparagraph (1) above) required to be filed
by any person through
the date hereof that are required or permitted to include
the income,
or reflect the activities, operations
and transactions, of Sorell
for any taxable period shall have been timely filed, and the
income, activities,
operations and
transactions
of Sorell shall have been properly included
and
reflected thereon.
Sorell shall prepare and file, or cause
to be prepared and
filed, all
such consolidated or combined Tax Returns that are required or
permitted to
include the income, or reflect the activities, operations
and
transactions, of Sorell, with respect to any taxable year or the
portion thereof
ending on or prior to
the Closing Date, including, without limitation, Sorell's
consolidated federal income tax return for such taxable years.
Prior to Closing,
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Sorell will timely file a consolidated federal income tax return
for the taxable
year ended
December 31, 2006 and such return shall include and
reflect the
income, activities, operations and transactions of Sorell for the
taxable period
then ended,
and hereby expressly covenants and agrees to
file a consolidated
federal
