|
Ver: #4:12-30-08
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (the "Agreement") is
dated
and is effective as of December 30, 2008, by and among Cal
Alta
Auto Glass, Inc., a Nevada corporation with principal offices
at
#8, 3927 Edmonton Trail, N.E., Calgary, Alberta T2E 6T1 (the
"Buyer") and each of the stockholders who own and hold
certain
shares of the capital stock of Energy One Resource Services,
Inc., a corporation domiciled in the province of Alberta,
Canada
with principal offices at 1000, 888 - 3rd Street, S.W.,
Calgary,
Alberta T2P 5LR and whose names and signatures and number of
shares owned are listed on the signature page of this
Agreement
(all collectively, as the "Sellers") and Energy One Resource
Services, Inc., a corporation domiciled in the province of
Alberta, Canada with principal offices at 1000, 888 - 3rd
Street,
S.W., Calgary, Alberta T2P 5LR (the "Acquired Company" or
"Company"). As used herein, the term "Parties" shall be used
to
identify each of the Sellers, the Buyer, and the Company
jointly.
WHEREAS:
A. The Parties acknowledge and agree that the purpose of
this Agreement is to set forth the terms and conditions upon
which the Buyer will acquire all of the outstanding capital
stock of the Acquired Company so that, upon closing of the
transactions contemplated herein, the Acquired Company shall
become a wholly-owned subsidiary of the Buyer and all of the
Acquired Company's stockholders shall become stockholders of
the
Buyer.
B. Each of the Sellers warrants and represents that they
seek to acquire certain shares of the Buyer's Common Stock
(par
value $0.001) in exchange for certain shares of the Class
"A"
Common Stock of the Acquired Company owned and held by them
in
such amount as is listed on the signature page of this
Agreement.
C. Each of the Sellers warrants and represents that they
are experienced and sophisticated in business, financial,
investment, and tax matters that allows them sufficient
skill
and knowledge to enter into this Agreement, undertake the
transactions contemplated and described in this Agreement,
and
evaluate the risks and merits of acquiring the Buyer's
Common
Stock.
D. Each of the Sellers warrants and represents that they
own and will own at closing, all right, title, and interest
to
the shares of the capital stock of the Acquired Company
registered in their name free of any accrued or contingent
claims, interests, or equitable charges that may be asserted
by
any third party, including, but not limited to any claims
that
may be asserted under applicable marital property or
community
property laws and with a full and unrestricted right to
convey
full and unrestricted title to all said shares of the
capital
stock of the Acquired Company to the Buyer as further set
forth
in this Agreement.
E. Each of the Sellers warrants and represents that they
received, prior to this Agreement, such disclosures
regarding
the Buyer, its corporate and financial affairs, stockholder
information, and such other disclosures that has allowed each
of
them to make an informed investment decision and further
that
each has had a sufficient opportunity to ask questions of
the
Buyer's management and to receive answers from the Buyer's
management regarding all such matters.
F. The Acquired Company warrants and represents that this
Agreement and the transactions contemplated hereby have been
duly approved by the Acquired Company's Board of Directors.
G. Upon the closing of this Agreement, the Parties
understand that it is the plan of the Buyer to sell and
divest
all of the business and assets conducted by the Buyer prior
to
the acquisition of the Seller as described as the
"Divestiture"
in Section 1.1 of this Agreement.
NOW THEREFORE THE PARTIES AGREE AS FOLLOWS:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. The following terms shall have
the following meanings for the purposes of this Agreement.
"Accountants" means the accountants employed by the
Acquired Company to prepare the Acquired Company's financial
statements.
"Acquired Company" or "Company" means Energy One Resource
Services, Inc., a corporation domiciled in the province of
Alberta, Canada with principal offices at 1000, 888 - 3rd
Street,
S.W., Calgary, Alberta T2P 5LR.
"Acquired Company's Capital Stock" shall mean the total
amount of authorized shares of the Acquired Company's
capital
stock (of every class and series) which shall include all
classes of said capital stock as authorized or for which the
Acquired Company has the authority to issue at the Closing.
"Affiliate" means, with respect to any specified Person, a
Person that directly or indirectly, through one or more
intermediaries, controls or is controlled by, or is under
common
control with, the Person specified.
"Agreement" means this Securities Purchase Agreement,
including all exhibits hereto, as it may be amended from time
to
time.
"Authority" means any governmental regulatory or
administrative body, governmental agency, governmental
subdivision or authority, any court or judicial authority,
any
public, private or industry governmental regulatory
authority,
whether foreign, national, federal, state or local or
otherwise,
or any Person lawfully empowered by any of the foregoing to
enforce or seek compliance with any regulation.
"Business" means with respect to the Acquired Company it
current business operations.
"Buyer" has the meaning set forth in the preface above.
"Buyer's Common Stock" shall mean shares of the Buyer's
Common Stock (par value $0.001).
"Buyer's Stock Transfer Agent" shall mean Holliday Stock
Transfer with principal offices at 2939 North 67th Place,
Scottsdale, Arizona 85251.
"Calculated Amount" shall mean the pro rata number of the
Buyer's Common Stock owned by each Seller, which pro rata
number shall be determined by multiplying the fraction with
each
Seller's Common Stock as the numerator and the total number
of
Sellers' Common Stock as the denominator outstanding as of
the
Closing times the Purchase Price.
"Closing" has the meaning set forth in Section 2.5 below.
"Closing Date" has the meaning set forth in Section 2.5
below.
"Closing Financial Statements" has the meaning set forth in
Section 6.6 below.
"Code" means the Internal Revenue Code of 1986, as amended.
"Competitive Business" has the meaning set forth in Section
5.14(a) below.
"Confidential Information" means any information concerning
the Business and affairs of each of the Acquired Company that
is
not already generally available to the public.
"Contract" means any contract, lease, commitment,
understanding, sales order, purchase order, agreement,
indenture, mortgage, note, bond, right, warrant, instrument,
plan, permit or license, whether written or oral, which is
intended or purports to be binding and enforceable.
"Directors" shall mean all of the members of the Board of
Directors of the Acquired Company.
"Divestiture" shall mean the planned sale and divestiture
of all of the asset's and business of the Buyer to the
Buyer's
two existing officers and directors immediately following
the
close of this Transaction. Under the terms of the
Divestiture,
the Buyer intends to sell and transfer all of its existing
assets and business to its two existing officers and
directors
in exchange for the return to the Buyer, of certain shares
of
the Buyer's common stock previously issued and owned by an
the
Buyer's President and Chairman, Frank Aiello.
"Environmental Laws" mean all federal, state, local and
foreign statutes, regulations, ordinances and other
provisions
having the force or effect of law, all judicial and
administrative orders and determinations, all contractual
obligations and all common law concerning public health and
safety, worker health and safety, and pollution or protection
of
the environment including, without limitation, all those
relating to the presence, use, production, generation,
handling,
transportation, treatment, storage, disposal, distribution,
labeling, testing, processing, discharge, release,
threatened
release, control, or cleanup of any Hazardous Substances,
materials or wastes, chemical substances or mixtures,
pesticides, pollutants, contaminants, toxic chemicals,
petroleum
products or byproducts, asbestos, polychlorinated biphenyls,
noise or radiation, each as amended and as now or hereafter
in
effect, including (but not limited to) Canadian
Environmental
Protection Act, R.S.C. 1985, c. 16 (4th Supp.), as amended
from
time to time
"Financial Statements" means the financial statements
delivered to the Buyer for the fiscal year ending
immediately
prior to the date of this Agreement and the financial
statements
delivered to the Buyer for the financial period immediately
preceding the date of this Agreement each of which is
attached
to Exhibit A hereto.
"GAAP" means Canadian generally accepted accounting
principles as in effect from time to time as consistently
applied by the Acquired Company.
"Hazardous Substance" means any material or substance which
(i) constitutes a hazardous substance, toxic substance or
pollutant (as such terms are defined by or pursuant to any
Environmental Laws) or (ii) is regulated or controlled as a
hazardous substance, toxic substance, pollutant or other
regulated or controlled material, substance or matter
pursuant
to any Environmental Laws.
"Indemnified Party" has the meaning set forth in Article
VIII.
"Indemnifying Party" has the meaning set forth in Article
VIII below.
"Intellectual Property" means (a) all inventions (whether
patentable or unpatentable and whether or not reduced to
practice), all improvements thereto, and all patents, patent
applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part,
revisions,
extensions, and reexaminations thereof, (b) all trademarks,
service marks, trade dress, logos, trade names, and
corporate
names, together with all translations, adaptations,
derivations,
and combinations thereof and including all goodwill
associated
therewith, and all applications, registrations, and renewals
in
connection therewith, (c) all copyrightable works, all
copyrights, and all applications, registrations, and renewals
in
connection therewith, (d) all mask works and all
applications,
registrations, and renewals in connection therewith, (e) all
trade secrets and confidential business information
(including
ideas, research and development, know-how, formulas,
compositions, manufacturing and production processes and
techniques, technical data, designs, drawings,
specifications,
customer and supplier lists, pricing and cost information,
and
business and marketing plans and proposals), (f) all
computer
software (including data and related documentation), (g) all
other proprietary rights, and (h) all copies and tangible
embodiments thereof (in whatever form or medium).
"Irrevocable Instructions" shall mean the irrevocable
instructions approved by the Buyer and the Acquired Company
and
to be given, at Closing to the Buyer's Stock Transfer Agent
instructing the Buyer's Stock Transfer Agent to issue one
(1)
share of the Buyer's Common Stock to each Seller for each
share
of the Seller's Common Stock received and delivered by each
Seller at Closing.
"Knowledge" means what is known or should have been known
after reasonable investigation.
"Latest Balance Sheet" means the unaudited balance sheet of
the Acquired Company delivered to the Buyer for the
financial
period immediately preceding the date of this Agreement as
attached to Exhibit A hereto.
"Law" means any law, statute, regulation, ordinance, rule,
order, decree, judgment, consent decree, settlement agreement
or
governmental requirement enacted, promulgated, entered into,
agreed or imposed by any Authority.
"Liability" means any liability (whether known or unknown,
whether asserted or unasserted, whether absolute or
contingent,
whether accrued or unaccrued, whether liquidated or
unliquidated, and whether due or to become due), including
any
liability for Taxes.
"Lien" means any mortgage, lien (except for any lien for
Taxes not yet due and payable), charge, restriction, pledge,
security interest, option, lease or sublease, claim, right
of
any third party, easement, encroachment or encumbrance.
"Material Adverse Effect" shall mean any adverse
circumstances, developments or matters whose effect on the
Business or any of the Acquired Company, properties, assets,
results, operations, condition (financial and other) and
prospects, either alone or in the aggregate, is or would
reasonably expected to exceed $100,000.00..
"Ordinary Course of Business" means the ordinary course of
business consistent with past custom and practice (including
with respect to quantity and frequency).
"Owned Property" has the meaning set forth in Article III
below.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permits" has the meaning set forth in Article III below.
"Permitted Encumbrances" means those charges as set forth
in Exhibit "G"
"Person" means an individual, a partnership, a
corporation, an association, a joint stock company, a trust,
a
joint venture, an unincorporated organization, or a
governmental
entity (or any department, agency, or political subdivision
thereof).
"Purchase Price" means fourteen million eight hundred
thirty-nine thousand (14,839,000) shares of the Buyer's
Common
Stock.
"Schedules" means the disclosure schedules accompanying
this Agreement.
"Securities Act" means the Securities Act of 1933, as
amended.
"Securities Exchange Act" means the Securities Exchange Act
of 1934, as amended.
"Sellers" has the meaning set forth in the preface above.
"Seller's Common Stock" means all of the Class "A" Common
Stock of the Acquired Company.
"Subsidiary" means any corporation, partnership or limited
liability company with respect to which a specified Person (or
a
Subsidiary thereof) owns a majority of the common stock or
has
the power to vote or direct the voting of sufficient
securities
to elect a majority of the directors.
"Tax" means any federal, provincial, local, or foreign
income, gross receipts, license, payroll, employment,
excise,
severance, stamp, occupation, premium, windfall profits, ,
customs duties, capital stock, franchise, profits,
withholding,
social security (or similar), unemployment, disability, real
property, personal property, sales, use, transfer,
registration,
value added, alternative or add-on minimum, estimated, or
other
tax of any kind whatsoever, including any interest, penalty,
or
addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim
for refund, or information return or statement relating to
Taxes, including any schedule or attachment thereto, and
including any amendment thereof.
"Transaction" means the acquisition by the Buyer of all of
the Acquired Company's Capital Stock under the terms of this
Agreement.
ARTICLE II
PURCHASE AND SALE OF SHARES
SECTION 2.1. Basic Transaction. On and subject to the terms
and conditions of this Agreement, the Buyer agrees to
purchase
from each of the Sellers, and each of the Sellers agrees to
sell, or cause to be sold, to the Buyer, all of the Seller's
Common Stock owned and held by them in consideration of the
Buyer's issuance of the Calculated Amount to each Seller
which,
in the aggregate, represents the Purchase Price specified
herein.
SECTION 2.2. Payment of Purchase Price. On the Closing
Date, in consideration for the delivery of good and
marketable
title of the Seller's Stock owned by each of the Sellers,
the
Buyer shall pay to each of the Sellers and in payment of the
Purchase Price, the Calculated Amount. The aggregate number
of
the Buyer's Common Stock to be issued shall not exceed the
Purchase Price and the Parties agree that the Buyer shall
reasonably rely upon the information provided by the Company
and
each Seller in determining the number of shares of the
Buyer's
Common Stock to be issued to each Seller. All of the shares
of
the Buyer's Common Stock issued pursuant to this Agreement
shall
bear a restricted securities legend. Each of the Sellers
acknowledges and agrees that he, she, or it is acquiring the
Buyer's Common Stock for investment purposes only and each
further agrees that each stock certificate so issued shall
carry
such customary language restricting the sale or transfer of
the
Buyer's Common Stock to reasonably ensure that the Buyer can
claim an exemption under Section 4(2) of the Securities Act
of
1933 and each Seller further agrees to execute and deliver
any
additional documents or agreements as reasonably requested
by
the Buyer and to assist the Buyer with claiming said
exemption.
SECTION 2.3. The Closing. The closing of this Transaction
(the "Closing") shall take place at the offices of the
Buyer,
#8, 3927 Edmonton Trail, N.E., Calgary, Alberta T2E 6T1,
commencing at 11:00 a.m. local time on December 30, 2008
(the
"Closing Date"). It is the intent of the parties that the
Buyer
shall assume control of the Acquired Company immediately
after
the Closing.
SECTION 2.6. Closing Deliveries by each Seller. To effect
the transfer referred to in Section 2.1 hereof and the
delivery
of the Purchase Price, each Seller shall deliver the
following
at the Closing:
(a) certificates evidencing the Seller's Stock, free
and clear of any and all Liens, duly endorsed in blank by
the Seller whose name is registered as the registered
holder of the stock certificate representing the Seller's
Common Stock thereon for transfer or accompanied by stock
powers duly executed in blank;
(b) all consents, approvals, releases and waivers from
any governmental Authorities and other third parties
required or necessary to consummate this Transaction
satisfactory in form and substance to the Buyer and its
counsel;
All instruments and documents executed and delivered to the
Buyer pursuant hereto shall be in form and substance and
shall
be executed in a manner satisfactory to the Buyer and its
counsel.
SECTION 2.7. Closing Deliveries by the Buyer. To effect the
transfer referred to in Section 2.1 hereof and the delivery
of
the Purchase Price, the Buyer shall deliver the following at
the
Closing:
(a) irrevocable instructions to the Buyer's Stock
Transfer Agent instructing the Buyer's Stock Transfer Agent
to issue the Calculated Amount of the Buyer's Common Stock
to each Seller for the Seller's Common Stock received and
delivered by each Seller at Closing in accordance with
Section 2.6 of this Agreement (the "Irrevocable
Instructions"). The aggregate total number of shares of the
Buyer's Common Stock set forth in the Irrevocable
Instructions shall not exceed the Purchase Price and in the
event that the Buyer reasonably believes that one or more
shares of the Seller's Common Stock are not received and
delivered at Closing in accordance with Section 2.6 of this
Agreement, the Parties agree that the Purchase Price shall
be reduced by the Calculated Amount for said shares.
All instruments and documents executed and delivered by each
of
the Sellers pursuant hereto shall be in form and substance,
and
shall be executed in a manner, reasonably satisfactory to
the
Buyer and its counsel.
ARTICLE III-A
REPRESENTATIONS OF EACH OF THE SELLERS
Each of the Sellers hereby represents and warrants to the
Buyer that the statements contained in this Article III-A
are
correct and complete as of the date of this Agreement, and
will
be correct and complete as of the Closing Date (as though
made
then and as though the Closing Date were substituted for the
date of this Agreement throughout this Article III-A), except
as
set forth in the Schedules hereto.
SECTION 3.1A. Authorization of Transaction. Each of the
Sellers has full power and authority to execute and deliver
this
Agreement and to perform his, her, or its obligations
hereunder.
This Agreement constitutes the valid and legally binding
obligation of each of the Sellers, enforceable in accordance
with its terms and conditions. Each of the Sellers need not
give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or
governmental agency in order to consummate this Transaction.
SECTION 3.2.A. Brokers' Fees. Each of the Sellers has no
Liability or obligation to pay any fees or commissions to
any
broker, finder, or agent with respect to this Transaction
for
which the Buyer could become liable or obligated.
SECTION 3.3A. Seller's Common Stock. Each of the Sellers
holds of record and owns beneficially all of the Seller's
Common
Stock, free and clear of any restrictions on transfer (other
than any restrictions under the Securities Act and
applicable
securities Laws), Taxes, Liens, options, warrants, purchase
rights, Contracts, commitments, equities, claims, and
demands.
Each of the Sellers is not a party to any option, warrant,
purchase right, or other Contract or commitment that could
require said Seller to sell, transfer, or otherwise dispose
of
any of the Seller's Common Stock (other than this
Agreement).
Each of the Sellers is not a party to any voting trust,
proxy,
or other agreement or understanding with respect to the
voting
of any of the Seller's Common Stock.
SECTION 3.4A. Understanding RE: Tax Matters. Prior to
entering into this Agreement, each of the Sellers warrant
and
represent that they have consulted with and relied upon a
tax
advisor of their own choosing and in so doing that they are
aware and understand the following special tax risks and
considerations related to the acquisition of the Buyer's
Common
Stock as contemplated by this Agreement:
SECTION 3.4A.1. Share Exchange & Tax Issues for
Canadians
Holding the Seller's Common Stock. The Canadian Income Tax
Act
does not provide for any income tax deferral on a transfer
by
way of share for share exchange where the taxpayer is
receiving
securities from a non-resident corporation. Therefore each
Canadian resident taxpayer must report the disposition of
their
shares in Energy One Resource Services, Inc. in the taxation
year that they disposed of their shares in Energy One
Resource
Services, Inc. The proposed closing date is December 30,
2008
and therefore the Energy One Resources Services, Inc.
shareholders that effect the share exchange must report the
disposition of their Energy One Resource Services, Inc.
shares
in the fiscal year that includes December 30, 2008.
SECTION 3.4A.2. Dividends. Upon the issuance of the shares
of
Buyer's Common Stock to each Seller, each Seller may have
rights
to receive stock dividends if and when any such dividends
are
every declared and paid by the Buyer to its stockholders If
any dividends are declared by the Buyer, such dividends will
be
paid out from the jurisdiction of the Buyer. This means that
each Canadian resident shareholder will be subject to United
States withholding tax on the dividend as well as the
dividend
will be required to be reported (and tax to be paid) on the
Canadian Income Tax return in the fiscal year that it is
declared to be paid. The Canada-US Income Tax Convention
does
provide relief from the double taxation by providing a
credit
for the withholding tax paid by the Canadian taxpayer.
SECTION 3.4A.3. US Income and Estate Tax Issues
Additionally,
since the Buyer is a corporation domiciled in the United
States,
each Seller may be exposed to liability for United States
income
and estate taxes. We recommend that you obtain independent
legal
and tax advice on this matter.
NO OPINION OF COUNSEL OR RULING FROM ANY GOVERNMENTAL
AUTHORITY WILL BE REQUESTED WITH RESPECT TO ANY TAX
MATTER CONCERNING THIS TRANSACTION. HOLDERS OF THE
SELLER'S COMMON STOCK ARE URGED TO CONSULT THEIR OWN
TAX ADVISORS, ATTORNEYS OR ACCOUNTANTS CONCERNING
THEIR OWN TAX SITUATION AND POTENTIAL CHANGES IN THE
APPLICABLE LAW.
SECTION 3.5A. Receipt of Disclosures RE: The Buyer. Each
of the Sellers expressly warrants and represents that they
have
fully reviewed the risks and merits of acquiring the Buyer's
Common Stock pursuant to this Transaction. In particular,
each
of the Sellers has fully reviewed and evaluated the
following
documents as filed by the Seller with the United States
Securities and Exchange Commission (the "SEC") (as found at
the
SEC's website:
http://idea.sec.gov/cgi-bin/browse
idea?company=Cal+Alta+Auto+Glass&match=&CIK=&filenum=&State=&Country=&SIC=
&owner=exclude&Find=Find+Companies&action=getcompany
which includes the following:
(1) A copy of the Buyer's Form 10-KSB, as filed with the
SEC,
for the year ending December 31, 2006;
(1)(2) A copy of the Buyer's Form 10-KSB, as filed with the
SEC, for the year ending December 31, 2007;
(1)(3) A copy of the Buyer's Form 10-QSB for the First
Quarter 2006, Second Quarter 2006, and Third Quarter 2006
and the Buyer's Form 10-QSB for the First Quarter 2007,
Second Quarter 2007, and Third Quarter 2007, each as
filed with the SEC;
(4) A copy of the following Form 8-Ks, related to this
contemplated Transaction and each as filed with the SEC
on the following dates: May 30, 2007, October 19, 2007,
March 10, 2008, and August 28, 2008.
SECTION 3.6A. Matter of General Risks Associated with the
Purchase of the Buyer's Common Stock. The acquisition of the
Buyer's Common Stock involves a HIGH DEGREE OF RISK and is
suitable only for persons of substantial means who have the
financial capability to make the required investment and
hold
the Buyer's Common Stock for a long period of time and incur
the
loss of their entire investment. A Seller will not likely be
able to resell the Buyer's Common Stock readily. Each Seller
must, therefore, have adequate means of providing for their
current needs and personal contingencies. After the Closing
of
this Transaction, the Buyer plans to divest itself of its
existing business and sell all of its existing assets. As a
result, it may be impossible to evaluate the merits of
acquiring
the Buyer's Common Stock and make any historical comparisons
of
the likely market value of the Buyer's Common Stock after
the
planned divestiture. The Buyer's current and
post-divestiture
business organization and debt obligations on its balance
sheet
all involve elements of substantial risk. In many instances,
these risks arise from factors over which the Buyer will
have
little or no control. Some adverse events may be more likely
than others and the consequence of some adverse events may
be
greater than others. No attempt has been made to rank risks
in
the order of their likelihood or potential harm. In addition
to
these general risks, each of the Sellers should also
consider
the factors set forth in Section 3.7A. below.
SECTION 3.7A. Risks Associated with Buyer's Common Stock.
In addition to those risks set forth in the Buyer's 2007
Form
10-KSB filed with the SEC, the acquisition of the Buyer's
Common
Stock should only be acquired by those persons who can afford
to
lose their entire investment:
(1) The Buyer's Common Stock trades only on a limited and
sporadic basis and no liquid trading market exists or is
likely to exist in the foreseeable future. The Buyer's
Common Stock is deemed a "penny stock" within the meaning
of Rule 3a51-1 of the Securities Exchange Act of 1934. As
a result, any holder of the Buyer's Common Stock will
likely face difficulties in selling or disposing of the
Buyer's Common Stock in the future.
(2) The Buyer had a loss of $1,616,794 and negative cash
flow
during the fiscal year ending December 31, 2007 and there
can be no assurance that the Buyer will achieve
profitability and positive cash flow at any time in the
near future or, if it does achieve profitability and
positive cash flow, that it can be sustained. Further, the
Buyer has not paid any dividends and there is presently no
plans to pay any dividends.
(3) The Buyer plans to sell all of its existing business and
assets immediately after closing of this Transaction. While
the Buyer believes that the Divestiture, will better allow
the Buyer to focus on the business of the Acquired Company,
there can be no assurance that the sale or divestiture of
its existing business will not result in additional and
significant losses to the Buyer with the result that the
Buyer's financial condition will deteriorate further after
the close of this Transaction and the Divestiture.
(3)(4) In the event that all of the stockholders of the
Acquired Company (described herein as the "Sellers"), sell
their Seller's Common Stock to the Buyer in this
Transaction, control over the Buyer will still remain with
its officers and directors. As a result, each Seller will
have little or no ability to influence or control the Buyer
and thereby have little or no control over their
investment.
(3)(5) The Buyer had, as of September 30, 2008, $130,553 in
Total Equity on its Balance Sheet. On the same date, the
Buyer had Total Current Assets of only $167,915 and Total
Current Liabilities of $397,740. While the Buyer's
management believes that its financial policies are prudent
and appropriate to the Buyer's plans and circumstances, the
Buyer's minimal equity when combined with its high level of
Total Current Liabilities relative to its Total Current
Assets, further confirms that the Buyer will need to raise
additional capital in the future. While the Buyer has
expressed an interest in raising as much as $3,000,000
(U.S.D.) in the future, there can be no assurance that the
Buyer will, upon close of this Transaction and the
Divestiture, raise any additional capital or if it does
raise additional capital that it will be able to do so on
terms that reasonable in light of the Buyer's existing
circumstances.
(3)(6) The Buyer has not received any commitment or
expression of interest from any underwriter, broker-dealer,
or other source of capital and there can be no assurance
that the Buyer will be able to raise any additional capital
at any time in the future. However, in the event that the
Buyer is able to raise additional capital, each Seller
should be prepared to incur immediate and substantial
dilution on their current investment.
(3)(7) The terms of this Transaction provides that each
share
of the Seller's Common Stock is to be exchanged for one
share of the Buyer's Common Stock. The terms of this
exchange have been determined on an arbitrary basis and the
terms of this Transaction have not been examined or
evaluated in light of any fair market value or other
customary measurements.
(8) As described in Section 3.4A of this Agreement, each
Seller
will be exposed to certain tax-related risks associated
with the exchange of the Seller's Common Stock for the
Buyer's Common Stock. Each Seller will need to consult and
seek the advice of their own tax advisor prior to entering
into this Agreement.
(9) The Buyer's Common Stock is a HIGH RISK investment and
the
acquisition of the Buyer's Common Stock, as contemplated by
the terms of this Agreement, should only be undertaken by
persons who can afford the total loss of their investment.
SECTION 3.8A. Further Representations of Each Seller. Each
Seller represents and warrants to the Buyer that:
(1) They are an Accredited Investor (as that term is defined
in Rule 501 of Regulation D of the Securities Act of
1933).
(1)(2) They are experienced and sophisticated in purchasing
the securities of small public companies whose securities
are traded on a limited and sporadic basis.
(1)(3) They have had a full and unrestricted opportunity to
ask questions of the Buyer's officers and directors and
to receive answers to all said questions.
(1)(4) They have had access to the Buyer's financial and
corporate books and records for the purpose of assessing
the Buyer and the merits and risks of acquiring the
Buyer's Common Stock.
(1)(5) They have received such disclosures regarding the
Buyer and its corporate and financial affairs equivalent
to that found in a Registration Statement.
(1)(6) The Transaction contemplated by this Agreement is not
the result of any advertising or general solicitation.
(1)(7) The Buyer's Common Stock to be acquired by each
Seller
hereby will be issued with a restricted securities legend
in accordance with the Securities Act of 1933 and the
Seller is acquiring the Buyer's Common Stock for
investment purposes only and not with a view toward
distribution.
(1)(8) They have, at all times hereunder, relied upon their
own business, financial, investment, tax, and legal
advisor in evaluating the terms of this Agreement and the
proposal to acquire the Buyer's Common Stock.
ARTICLE III
REPRESENTATIONS OF THE ACQUIRED COMPANY
The Acquired Company hereby represents and warrants to the
Buyer that the statements contained in this Article III are
correct and complete as of the date of this Agreement, and
will
be correct and complete as of the Closing Date (as though
made
then and as though the Closing Date were substituted for the
date of this Agreement throughout this Article III), except
as
set forth in the Schedules hereto.
SECTION 3.1. Authorization of Transaction. The Acquired
Company has full po
|