UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 8-K/A-1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 20, 2019
___________ TORTEC GROUP CORPORATION . ___________
(Exact name of registrant as specified in its charter)
______ Nevada _________ _____ 000-55150 ______ __________ 45-5593622 ________
(State or other jurisdiction (Commission file number) (I.R.S. Employer Identification No.)
of incorporation)
30 N. Gould Street, Suite 2489, Sheridan, Wyoming 82801
(Address of principal executive offices, zip code)
______________( 307) 248-9177 ______________
(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
[ ]
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (Sec. 230.405 of this chapter) of Rule 12b-2 of the Securities Exchange Act of 1934 (Sec. 240.12b-2 of this chapter.
Emerging growth company [X]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
1
Explanatory Note
The Companys Current Report on Form 8-K filed on May 29, 2019 is being amended for the following purposes: (1) to state that the Company seeks to acquire one hundred percent (100%) of the issued and outstanding shares of Si-Tech GmbH, a German company (not Ecotor Technology S.A.R.L. a Swiss Company, as previously stated in error); (2) to add a Stock Purchase Agreement with IKR BABOLNA FZE dated May 20, 2019 as an additional Material Definitive Agreement under Item 1.01; and (3) to add a copy of the Stock Purchase Agreement with IKR BABOLNA FZE as Exhibit 10.02.
Forward-Looking Statements
This Current Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act). In some cases, you can identify forward-looking statements by the following words: anticipate, believe, continue, could, estimate, expect, intend, may, ongoing, plan, potential, predict, project, should, will, would, or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. Forward-looking statements are not a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on information available at the time the statements are made and involve known and unknown risks, uncertainties and other factors that may cause our results, levels of activity, performance or achievements to be materially different from the information expressed or implied by the forward-looking statements in this Current Report. These factors include, among others, economic conditions generally in the United States and internationally, and in the industry and markets in which we have and may participate in the future, competition within our chosen industry or industries, our current and intended business, our assets and plans, the effect of applicable United States and foreign laws, rules and regulations on our business and the possibility we may fail to successfully develop, compete in and finance our current and intended business operations.
You should read any other cautionary statements made in this Current Report as being applicable to all related forward-looking statements wherever they appear in this Current Report. We cannot assure you that the forward-looking statements in this Current Report will prove to be accurate, and therefore, prospective investors are encouraged not to place undue reliance on forward-looking statements. You should read this Current Report completely, and it should be considered in light of all other information contained in the reports or registration statement that we file with the Securities and Exchange Commission (the SEC), including all risk factors outlined therein. Other than as required by law, we undertake no obligation to update or revise these forward-looking statements, even though our situation may change in the future.
Section 1 Registrants Business and Operations
Item 1.01 Entry into a Material Definitive Agreement
2
Share Exchange Agreement with TORtec Central Asia
On May 22, 2019, the Company entered into a Share Exchange Agreement with TORtec Central Asia, a Wyoming corporation, and the sole shareholder of TORtec Central Asia pursuant to which the Company has agreed to acquire 100% ownership of the outstanding shares of TORtec Central Asia stock in exchange for issuing 2,000,000 shares of the Companys common stock to be issued to the sole shareholder of TORtec Central Asia. Merdan Atayev is the President, sole director and sole shareholder of TORtec Central Asia, a newly formed Wyoming corporation. The Share Exchange Agreement is subject to certain terms and conditions, including the transfer of: (a) a 99 year Lease Agreement to a new office and warehouse facility in Ashgabat, Turkmenistan (Target Land); and (b) any furniture, tools, machinery and equipment for maintenance and lifting located at the facility (Target Assets). TORtec Central Asia must first have acquired leasehold ownership to the Target Land based on a ninety-nine year lease from the government of Turkmenistan, free and clear from all mortgages, trust deeds, liens or other encumbrances, and TORtec Central Asia shall have acquired undisputed ownership of the Target Assets free and clear from all security interests, liens or other encumbrances. The Share Exchange Agreement also provides that the Company will elect Merdan Atayev as a Vice President of the Company as a condition to the Closing of the proposed acquisition.
The property to which the Lease Agreement pertains includes an industrial building and office of approximately 7,300 square meters including a warehouse and plant facility of 1,535.55 square meters and an office building of approximately 1,205 square meters which is located in the Ak-bugday District industrial free zone. The lease payments total approximately USD$500 per year. The Company intends to use the property for the following purposes: Collect and prepare bio material, including plants, herbs and minerals for shipment to the Companys facilities in Murg, Germany for further processing into valuable products with the Companys TOR-technologies. Later, the Company plans to process soil substrates for sale in Central Asia and the Middle East. The Share Exchange Agreement provides that the Company will elect Merdan Atayev as a Vice President of the Company as a condition to the Closing of the proposed acquisition.
A copy of the Share Exchange Agreement (without Annexes) is attached to this Current Report as Exhibit 10.1.
Stock Purchase Agreement with IKR BABOLNA FZE
On May 20, 2019, the Company entered into a Stock Purchase Agreement with IKR BABOLNA FZE, a UAE Ajman Free Zone Limited Company, pursuant to which IKR BABOLNA FZE agreed to purchase from the Company One Hundred and Sixty Eight Thousand (168,000) shares of the Companys common stock for One Million Five Hundred Thousand Euros, or approximately USD$1,680,000. For additional information concerning the Stock Purchase Agreement refer to Item 5.02 below.
A copy of the Stock Purchase Agreement is attached to this Current Report as Exhibit 10.2.
3
Section 5 Corporate Governance and Management
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
Effective May 23, 2019, the Board of Directors of TORtec Group Corporation (the Company) appointed Mayrbek Artsuev as a Director of the Company and Merdan Atayev as a Vice President of the Company.
Mayrbek Artsuev, age 51, has a degree in engineering and has been an international consultant and trade specialist for the past 25 years and specializes in technology development. Mr. Artsuev introduced TOR-technologies to the Company in 2017 and has been influential in negotiating the agreements on behalf of the Company with Merdan Atayev. Mr. Artsuev has never held other positions in a US publicly-held company as either a director or officer. Mr. Artsuev has no family relationship with any other director or executive officer of the Company.
Mr. Artsuev was a principal shareholder in TORtec Group, a Wyoming corporation, which was acquired by the Company on December 4, 2017. Mr. Artsuev became a principal shareholder of the Company when the Company acquired TORtec acquired ownership Group, a Wyoming corporation, as a wholly-owned subsidiary. Mr. Artsuev directly owns 6,750,000 shares of the Companys common stock and he indirectly owns 6,750,000 shares as a 50% owner of TOR Biologos GmbH (which directly holds 13,500,000 shares). He disclaims ownership of the remaining shares held TOR Biologos GmbH.
Merdan Atayev, age 39, is an attorney specializing in business law in Turkmenistan. Mr. Atayev has been involved in international trade with his family owned enterprises for over 10 years and owns many companies, including construction, real estate development and trading companies. Mr. Artsuev has never held other positions in a US publicly-held company as either Director or Officer and has no family relationship with any other director or executive officer of the Company.
As described above in Item 1.01, Merdan Atayev is the President, sole director and sole shareholder of TORtec Central Asia, a newly formed Wyoming corporation. On May 22, 2019, the Company entered into a Share Exchange Agreement with TORtec Central Asia, a Wyoming corporation, and the sole shareholder of TORtec Central Asia pursuant to which the Company has agreed to acquire 100% ownership of the outstanding shares of TORtec Central Asia stock in exchange for issuing 2,000,000 shares of the Companys common stock to Merdan Atayev who is the sole shareholder of TORtec Central Asia.
On May 20, 2019, the Company entered into a Stock Purchase Agreement with IKR BABOLNA FZE, a UAE Ajman Free Zone Limited Company, pursuant to which IKR BABOLNA FZE agreed to purchase from the Company One Hundred and Sixty Eight Thousand (168,000) shares of the Companys common stock for One Million Five Hundred Thousand Euros, or approximately USD$1,680,000. IKR BABOLNA FZE is a company which is owned and controlled by Merdan Atayev and other family members of Merdan Atayev. The Company is
4
seeking to acquire one hundred percent (100%) of the issued and outstanding shares of Si-Tech GmbH, a German company of Gewerbestraße 7, 79730 Murg-Hänner, Germany (Si-Tech) from Ecotor Technology S.A.R.L. a Swiss Company of Alpenstrasse 15, 6302 Zug, Switzerland (Ecotor) . The Stock Purchase Agreement with IKR BABOLNA FZE provides that the One Million Five Hundred Thousand Euros ( € 1,500,000) received from the STOCK PURCHASE AGREEMENT will be distributed as follows:
Approximately Euros 700,000 to be paid to Ecotor for one hundred percent (100%) of the total and issued and outstanding shares of Si-Tech GmbH . This payment will eliminate all debts of Ecotor to its creditors.
Approximately Euros 800,000 to be transferred to Si-Tech as additional paid-up capital from both the Company and IKR BABOLNA FZE as fifty-fifty (50/50) owners in Si-Tech.
Upon receipt of the above payment from IKR BABOLNA FZE, the Company will cause the transfer of fifty percent (50%) of the ownership of Si-Tech to IKR BABOLNA FZE from Ecotor as soon as the official registration and approvals from German & Swiss government entities will permit.
All decisions regarding further capitalization of Si-Tech will be made upon mutually acceptable terms between the Company and IKR BABOLNA FZE.
The Company will also cause, through its wholly-owned subsidiary TORtec Titan+, the granting of a Territorial License to Si-Tech to the following territory: The Federal Republic of Germany
Payment for this license shall be made to TORtec Titan+ under the terms and conditions to be outlined in the License Agreement.
Section 9 Financial Statements and Exhibits
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
10.01 Share Exchange Agreement between the TORtec Group Corporation, TORtec Central Asia and the Sole Shareholder of TORtec Central Asia dated May 22, 2019.
1 0.02 Stock Purchase Agreement between TORtec Group Corporation and IKR BABOLNA FZE dated May 20, 2019.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
5
TORTEC GROUP CORPORATION
Date: May 31, 2019
/s/ Stephen H. Smoot _______________
Stephen H. Smoot, President and CEO
SEC/1264.1
6
SHARE EXCHANGE AGREEMENT
This Share Exchange Agreement ("the Agreement"), dated as of the 22nd day of May, 2019, by and between:
Party-1: TORTEC GROUP CORPORATION, a NEVADA corporation (the Company); and
Party-2: TORTEC CENTRAL ASIA, a WYOMING corporation (the Target), owned by the companies and individuals listed and described in Annex HH attached hereto and made a part hereof (Participant 1). In this Agreement any reference to any or all members of Party-2 shall correspond to the whole and Party-2 and all members of Party-2 shall act in this Agreement as one Party.
Party-1 and Party-2 are referred to individually and jointly in the Agreement as a Party or Parties with reference to the following:
RECITALS:
A. The Company is prepared to acquire 100% of the issued and outstanding shares of capital stock in the Target from Participant 1;
B. The Target is 100% owned by Participants listed in Annex HH;
C. The Company has authorized capital stock of (i) 200,000,000 shares of $0.001 par value common stock; and (ii) at the time of closing, the Company will have 100,000,000 shares of issued and outstanding common stock. The shares of common stock of the Company are registered under Section 12(g) of the Securities Exchange Act of 1934, as amended (the Exchange Act) and are publicly-traded on the OTCQX of the Financial Industry Regulatory Authority (FINRA) under the symbol TRTK. Upon the Closing (as defined below in Section 2.01), the Company will issue 2,000,000 additional shares of its common stock as outlined herein;
D. All $ mean United States Dollars herein, unless specifically indicated otherwise;
E. It is the intention of the Parties that: (i) the issuance and exchange of the respective shares of the Parties hereunder shall qualify as a tax-free reorganization under Section 368(a) of the Internal Revenue Code of 1986, as amended (the Code); and (ii) that said exchange shall qualify as a transaction in securities exempt from registration or qualification under the United States Securities Act of 1933, as amended and in effect on the Closing of this Agreement (the Securities Act); and
F. The Parties agree that the Annexes hereto shall be Exhibits to this Agreement, and though the documents or information mentioned in the Annexes shall not be Exhibits to the Agreement, they shall be integral to the representations and warranties of the respective Parties in all respects and made a part hereof for all such purposes.
NOW, THEREFORE, the Parties hereto agree as follows:
ARTICLE 1
THE TRANSACTION
1.01 At the Closing, 100% of the 1,000 issued and outstanding shares of capital stock of the Target shall be acquired by the Company in exchange for 2,000,000 newly issued restricted common shares of the Company to be issued to Participant 1, on a Two Thousand (2,000) shares of Company common stock for each one (1) share of Target common stock basis, and which shall represent the full and complete consideration paid under this Agreement for the acquisition of Target (the "Consideration").
1
1.02 At the Closing, the Target will become a wholly-owned subsidiary of the Company, and the Company will effectively acquire all business and assets of the Target as now or hereafter existing.
1.03 At the Closing, each of the Participant 1 will transfer to the Company all of the shares of stock in the Target that each of them owns as described on Annex HH, and all of such shares shall be transferred to the Company free and clear from all security interests, liens, judgments or other encumbrances, such that the Company shall then become the sole 100% owner of all issued and outstanding shares of the Target. Participant 1 shall exchange their certificates representing the Target shares for the Company Shares by delivering such stock certificates to the Company duly executed and endorsed in blank (or accompanied by duly executed stock powers duly endorsed in blank), in each case in proper form for transfer, with signatures guaranteed (unless waived by the Company), and, if applicable, with all stock transfer and any other required documentary stamps affixed thereto with appropriate instructions to authorize the Companys transfer agent to exchange Company Shares for the Target Shares.
1.04 At the Closing, Participant 1 will arrange for signing and delivery of all auxiliary documents substantially similar to those described in the Closing Memorandum (Annex A) of this Agreement, and other legal documents as may become needed to conclude the transaction in the State of Wyoming and perfect it in such other jurisdictions where the Company may have its interests in, including but not limited to, other states in the United States of America and elsewhere.
1.05 At the Closing, the Company shall deliver the Consideration in accordance with this Agreement to Participant 1, as listed and described in Annex (HH), such that each of the Participant 1 shall receive Two Thousand (2,000) shares of the Companys common stock for each one (1) share of the Targets stock exchanged.
1.06 The Company Shares issued and delivered to Participant 1 shall be subject to resale restrictions imposed pursuant to the Securities Act and thus restricted for a period of at least six (6) months from the date of issuance.
1.07 Participant 1 acknowledge that the Company Shares are being issued pursuant to an exemption from the registration requirements promulgated by the U.S. Securities and Exchange Commission and agree to abide by all applicable resale restrictions and hold periods imposed by applicable securities legislation.
1.08 At the Closing, the Company will cause its Board of Directors to nominate and appoint Merdan Atayev to the Company's management as Vice President in accordance with this Agreement.
ARTICLE 2
THE CLOSING
2.01 The Closing of the Agreement (the Closing) shall take place at 10:00 a.m. MDT on the day when the conditions to the Closing set forth in this Agreement have been satisfied or waived, or at such other time and date as the Parties hereto shall agree in writing (the "Closing Date"), simultaneously at the offices of Anderson Call & Wilkinson, P.C., 110 South Regent Street, Suite 200, Salt Lake City, UT 84111. The parties will use their good faith efforts to attempt to close the transactions on or before June 30, 2019.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Party 2 that:
3.01 The Company shall deliver to Party 2 on or before the Closing, each of the following:
(a) Annual and Quarterly Reports and Financial Statements. The Companys Annual Report for the fiscal year ended March 31, 2018 and the Companys Quarterly Report for the Quarter ended December 31, 2018. The Quarterly Report contains reviewed (unaudited) financial statements for the
2
nine month period ended December 31, 2018, and the Annual Report contains audited financial statements of the Company for the fiscal years ended March 31, 2018, and 2017, including, but not limited to, balance sheets and profit and loss statements, prepared in accordance with United States generally accepted accounting principles and which fairly present the financial condition of the Company at the date or dates thereof. (Annex B)
(b) Property. An accurate list and description of all property, real or personal, owned by the Company, of a value equal to or greater than $100,000 (Annex C).
(c) Liens and Liabilities. A complete and accurate list of all material liens, encumbrances, easements, security interests or similar interests in or on any of the assets of the Company, which assets are listed on Annex C (Annex C.1). A complete and accurate list of all debts, liabilities and obligations of the Company incurred or owing as of the date of this Agreement (Annex C.2).
(d) Leases and Contracts. A complete and accurate list describing all material terms of each lease (whether of real or personal property) and each contract, promissory note, mortgage, license, franchise, or other written agreement to which the Company is a party which involves or can reasonably be expected to involve aggregate future payments or receipts by the Company (whether by the terms of such lease, contract, promissory note, license, franchise or other written agreement or as a result of a guarantee of the payment of or indemnity against the failure to pay same) of $100,000 or more annually during the three-month period ended December 31, 2018, and the 12-month period ended March 31, 2018, or any consecutive twelve-month period thereafter, except any of said instruments which terminate or are cancelable without penalty during such three-month or 12-month period (Annex D).
(e) Loan Agreements and Debt Notes. Complete and accurate copies of all loan agreements and other documents with respect to obligations of the Company for the repayment of borrowed money (Annex E).
(f) Consents Required. A complete list of all agreements wherein consent to the transaction herein contemplated is required to avoid default thereunder; or where notice of such transaction is required at or subsequent to the Closing, or where consent to an acquisition, consolidation or sale of all or substantially all of the assets is required to avoid a default thereunder (Annex F).
(g) Articles and Bylaws. Complete and accurate copies of the Certificate and Articles of Incorporation and Bylaws of the Company, together with all amendments thereto to the date hereof (Annex G).
(h) Officers and Directors. A complete and current list of all Officers and Directors of the Company (Annex H).
(i) Litigation. A complete and accurate list (in all material respects) of all material civil, criminal, administrative, arbitration or other such proceedings or investigations (including without limitations unfair labor practice matters, labor organization activities, environmental matters and civil rights violations) pending or, to the knowledge of the Company, threatened, which may materially and adversely affect the Company (Annex I).
3.02 Organization, Standing and Power. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada with all requisite corporate power to own or lease its properties and carry on its businesses as are now being conducted.
3.03 Qualification. The Company is duly qualified and is licensed as a foreign corporation authorized to do business in each jurisdiction wherein it conducts its business operations. Such jurisdictions, which are the only jurisdictions in which the Company is duly qualified and licensed as a foreign corporation, are reflected in Annex J.
3.04 Capitalization of the Company. On the Closing Date, immediately before the Closing, the Company shall have authorized (a) at least 200,000,000 shares of common stock, $0.001 par value per share, and 10,000,000 shares of preferred stock, $0.001 par value per share; and (b) 100,000,000 shares
3
of common stock issued and outstanding, all of which are duly authorized, validly issued and fully paid and non-assessable. Immediately following the Closing, the Company shall have issued and outstanding 102,000,000 shares of common stock issued and outstanding, all of which shall be duly authorized, validly issued and fully paid and non-assessable. No additional shares, options or convertible securities of the Company shall be issued prior to the Closing.
3.05 Authority. The execution and delivery of this Agreement and consummation of the transactions contemplated herein have been duly authorized by all necessary corporate action, including, but not limited to duly and validly authorized action and approval by the Board of Directors, on the part of the Company. This Agreement constitutes the valid and binding obligation of the Company and is enforceable against it in accordance with its terms, subject to the principles of equity applicable to the availability of the remedy of specific performance. This Agreement has been duly executed by the Company, and the execution and delivery of this Agreement and the consummation of the transactions contemplated by this Agreement shall not result in any breach of any terms or provisions of the Company's Certificates and Articles of Incorporation or Bylaws or of any other document of organization, agreement, court order or instrument to which the Company is a party or bound by.
3.06 Absence of Undisclosed Liabilities. The Company has no material liabilities of any nature, whether fixed, absolute, contingent or accrued, which were not reflected on the financial statements set forth in Annex A or otherwise disclosed in this Agreement or any of the Annexes delivered hereunder or Exhibits attached hereto.
3.07 Absence of Changes. Since the period ended December 31, 2018, there has not been any material adverse change in the condition (financial or otherwise), assets, liabilities, earnings or business of the Company, except for changes occurring in the ordinary course of business and those changes contemplated by this Agreement.
3.08 Tax Matters. All taxes and other assessments and levies which the Company is required by applicable law to withhold or to collect have been duly withheld and collected, and have been paid over to the proper government authorities or are held by the Company in separate bank accounts for such payment or are represented by depository receipts, and all such withholdings and collections and all other payments due in connection therewith (including, without limitation, employment taxes, both the employee's and employer's share) have been paid over to the government or placed in a separate and segregated bank account for such purpose. There are no known deficiencies in income taxes for any periods and further, the representations and warranties as to absence of undisclosed liabilities contained in Section 3.06 includes any and all tax liabilities of whatsoever kind or nature (including, without limitation, all United States federal, state or local, and foreign, income, profit, franchise, sales, use and property taxes) due or to become due, incurred in respect of or measured by the Company income or business prior to the Closing Date.
3.09 Options, Warrants, Etc. Except as otherwise described in Section 3.04 and Annex K, there are no outstanding options, warrants, calls, commitments or agreements of any character to which the Company is a party or by which the Company is bound, or is a party, calling for the issuance of shares of capital stock of the Company or any securities representing the right to purchase or otherwise receive any such capital stock of the Company.
3.10 Title to Assets. Except for liens set forth in Annex C.1, the Company is the sole unconditional owner of, with good and marketable title to, all assets listed in the Annexes as owned by it and all other property and assets are free and clear of all mortgages, liens, pledges, charges or encumbrances of any nature whatsoever, excepting such charges listed in the Annexes.
3.11 Agreements in Force and Effect. Except as set forth in Annex D and E, all material contracts, agreements, plans, promissory notes, mortgages, leases, policies, licenses, franchises or similar instruments to which the Company is a party are valid and in full force and effect on the date hereof, and the Company has not breached any material provision of, and is not in default in any material respect under the terms of, any such contract, agreement, plan, promissory note, mortgage, lease, policy, license, franchise or similar instrument which breach or default would have a material adverse effect upon the business, operations or financial condition of the Company.
4
3.12 Legal Proceedings, Etc. Except as set forth in Annex I, there are no civil, criminal, administrative, arbitration or other such proceedings or investigations pending or, to the knowledge of either the Company, threatened, in which, individually or in the aggregate, an adverse determination would materially and adversely affect the assets, properties, business or income of the Company. The Company has substantially complied with, and is not in default in any material respect under, any laws, ordinances, requirements, regulations or orders applicable to its businesses.
3.13 Governmental Regulation. To the knowledge of the Company and except as set forth in Annex L, the Company is not in violation of or in default with respect to any applicable law or any applicable rule, regulation, order, writ or decree of any court or any governmental commission, board, bureau, agency or instrumentality, or delinquent with respect to any report required to be filed with any governmental commission, board, bureau, agency or instrumentality which violation or default could have a material adverse effect upon the business, operations or financial condition of the Company.
3.14 Brokers and Finders. The Company shall be solely responsible for payment to any broker or finder retained by the Company for any brokerage fees, commissions or finders' fees in connection with the transactions contemplated herein.
3.15 Accuracy of Information. No representation or warranty by the Company contained in this Agreement and no statement contained in any certificate or other instrument delivered or to be delivered to Party 2 pursuant hereto or in connection with the transactions contemplated hereby (including without limitation all Annexes and Exhibits hereto) contains or will contain any untrue statement of material fact or omits or will omit to state any material fact necessary in order to make the statements contained herein or therein not misleading.
3.16 Consents. Except as listed in Annex F, no consent or approval of, or registration, qualification or filing with, any governmental authority or other person is required to be obtained or accomplished by the Company or any shareholder thereof in connection with the consummation of the transactions contemplated hereby.
3.17 Improper Payments. Neither the Company, nor any person acting on behalf of the Company has made any payment or otherwise transmitted anything of value, directly or indirectly, to (a) any official or any government or agency or political subdivision thereof for the purpose of influencing any decision affecting the business of the Company (b) any customer, supplier or competitor of the Company or employee of such customer, supplier or competitor, for the purpose of obtaining, retaining or directing business for the Company or (c) any political party or any candidate for elective political office nor has any fund or other asset of the Company been maintained that was not fully and accurately recorded on the books of account of the Company.
3.18 Copies of Documents. The Company has made available for inspection and copying by Party 2 and its or his duly authorized representatives, and will continue to do so at all times, true and correct copies of all documents which it has filed with the U.S. Securities and Exchange Commission (SEC) and all other governmental agencies which are material to the terms and conditions contained in this Agreement. Furthermore, all filings by the Company with the SEC, and all other governmental agencies, including, but not limited to the United States Internal Revenue Service, have contained information which is true and correct, to the best knowledge of the Board of Directors of the Company, in all material aspects and did not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements made therein not misleading or which could have any material adverse effect upon the financial condition or operations of the Company or adversely affect the objectives of this Agreement with respect to Target including, but not limited to, the issuance and subsequent trading of the shares of common stock of the Company to be received hereby, subject to compliance by the shareholders with applicable securities laws, rules and regulations.
3.19 Environmental Compliance. Except in compliance with Environmental Laws, the Company has not caused or permitted, and the Company has no knowledge of, any material release or disposal by any person of any hazardous substance on or from any premises formerly or presently used in the business. All hazardous substances generated, handled, stored, treated, processed, transported or disposed of in
5
the course of the business have been generated, handled, stored, treated, processed, transported or disposed of in all material respects, in compliance with applicable Environmental Laws and any environmental permits.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE TARGET AND PARTICIPANT 1
Party 2, acting jointly and severally and on behalf of each other and Target and any beneficial or nominal owner of Target, in all material respects and as may be applicable to complete the acquisition of Target by the Company, hereby represent and warrant to the Company as follows:
4.01 Party 2 shall deliver to the Company, on or before the Closing, the following, accompanied by English language translation:
(a) Financial Statements. Unaudited financial statements of Target for the period from inception through March 31, 2019, if available, prepared in accordance with U.S. generally accepted accounting principles and which fairly present the financial condition of the Target at the dates thereof (Annex AA).
(b) Property. An accurate list and description of all property, real or personal owned by the Target of a value equal to or greater than $100,000 (Annex BB).
(c) Liens and Liabilities. A complete and accurate list of all material liens, encumbrances, easements, security interests or similar interests in or on any of the assets listed on Annex BB (Annex CC). A complete and accurate list of all debts, liabilities and obligations of Target incurred or owing as of the date of this Agreement (Annex CC.1).
(d) Leases and Contracts. A complete and accurate list describing all material terms of material leases (whether of real or personal property) and each contract, promissory note, mortgage, license, franchise, or other written agreement to which Target is a party which involves or can reasonably be expected to involve aggregate future payments or receipts by Target (whether by the terms of such lease, contract, promissory note, license, franchise or other written agreement or as a result of a guarantee of the payment of or indemnity against the failure to pay same) of $1,000 or more annually during other than in the ordinary course of business, or any consecutive 12-month period thereafter, except any of said instruments which terminate or are cancelable without penalty during such 12-month period (Annex DD).
(e) Loan Agreements and Debt Notes. Complete and accurate copies of all loan agreements and other documents with respect to obligations of Target for the repayment of borrowed money (Annex EE).
(f) Consents Required. A complete list of all agreements wherein consent to the transaction herein contemplated is required to avoid a default thereunder; or where notice of such transaction is required at or subsequent to closing, or where consent to an acquisition, consolidation, or sale of all or substantially all of the assets is required to avoid a default thereunder (Annex FF).
(g) Articles and Bylaws. Complete and accurate copies of the Articles of Incorporation and Bylaws of Target, together with all amendments thereto to the date hereof (Annex GG).
(h) Shareholders. A complete list of all persons or entities holding capital stock or participatory interest of Target or any rights to subscribe for acquire, or receive shares of the capital stock of Target (whether warrants, calls, options, or conversion rights), including copies of all stock option plans whether qualified or nonqualified, and other similar agreements (Annex HH).
(i) Officers and Directors. A complete and current list of all Officers, Directors and Members of the audit committee of Target (Annex II).
6
(j) Salary Annex. A complete and accurate list (in all material respects) of the names and the current salary rate or each present employee of Target who received $1,000 or more in aggregate compensation from Target whether in salary, bonus or otherwise, during the period from inception through the Closing Date, or who is presently scheduled to receive from Target a salary in excess of $1,000 during any fiscal year, including in each case the amount of compensation received or expected to be received, along with the hourly rates of all other employees listed according to departments (Annex JJ).
(k) Litigation. A complete and accurate list (in all material respects) of all material civil, criminal, administrative, arbitration or other such proceedings or investigations (including without limitations unfair labor practice matters, labor organization activities, environmental matters and civil rights violations) pending or, to the knowledge of Target threatened, which may materially and adversely affect Target (Annex KK).
(l) Tax Returns. Accurate copies of all tax returns of Target filed with the Internal Revenue Service and in the State of Wyoming or any other jurisdiction through the Closing Date (Annex LL).
(m) Agency Reports. Copies of all material reports or filings (and a list of the categories of reports or filings made on a regular basis) made by Target with any governmental agencies (Annex MM).
(n) A true and complete list (in all material respects), as of the date of this Agreement, showing (1) the name of each bank in which Target has an account or safe deposit box, and (2) the names and addresses of all signatories (Annex NN).
(o) Jurisdictions Where Qualified. A list of all jurisdictions wherein Target is qualified to do business and is in good standing (Annex OO).
(p) Subsidiaries. A complete list of all subsidiaries of Target (Annex PP). The term "Subsidiary" or "Subsidiaries" shall include corporations, unincorporated associations, partnerships, joint ventures or similar entities in which Target has an interest, direct or indirect.
(q) Union Matters. An accurate list and description (in all material respects) of union contracts and collective bargaining agreements of Target, if any (Annex QQ).
(r) Employee and Consultant Contracts. A complete and accurate list of all employee and consultant contracts which Target may have, other than those listed in the Annex on Union Matters (Annex RR).
(s) Employee Benefit Plans. Complete and accurate copies of all salary, stock option, bonus, incentive compensation, deferred compensation, profit sharing, retirement, pension, group insurance, disability, death benefit or other benefit plans, trust agreements or arrangements of Target in effect on the date hereof or to become effective after the date thereof, together with copies of any determination letters issued by any governmental agency with respect thereto (Annex SS).
(t) Insurance Policies. A complete and accurate list (in all material respects) and description of all material insurance policies naming Target as an insured or beneficiary or as a loss payable payee or for which Target is paid all or part of the premium in force on the date hereof, specifying any notice or other information possessed by Target regarding possible claims thereunder, cancellation thereof or premium increases thereon, including any policies now in effect naming Target as beneficiary covering the business activities of Target (Annex TT).
(u) Customers. A complete and accurate list (in all material respects) of the customers of Target, including all presently effective contracts of Target to be assigned to Target, accounting for the principle revenues of Target, indicating the dollar amounts of gross revenues of each such customer for the three-month period from inception through the Closing Date (Annex UU).
(v) Licenses and Permits. A complete list of all licenses, permits and other authorizations of Target (Annex VV).
7
4.02 Organization, Standing and Power. Target is a corporation duly organized, validly existing and in good standing under the laws of the State of Wyoming with all requisite corporate power to own or lease its properties and carry on its business as is now being conducted.
4.03 Qualification. Target is duly qualified and licensed as a foreign corporation authorized to do business in each jurisdiction wherein it conducts business operations. Such jurisdictions, which are the only jurisdictions in which Target is duly qualified and licensed as a foreign corporation, are shown in Annex OO.
4.04 Capitalization and Ownership of Target. The charter capital of the Target consists of One Thousand (1,000) shares of authorized common stock, par value $0.001 per share, of which One Thousand (1,000) shares are issued and outstanding, and no shares of authorized preferred stock. All issued and outstanding shares of capital stock of the Target have been paid in full and are duly authorized, validly issued and fully paid and non-assessable. All preemptive rights with respect to the Targets participating interest or stock have been waived. All shares of Targets capital stock are owned as indicated in Annex HH, free and clear of any liens or encumbrances of any kind or nature whatsoever, whether by contract, operation of applicable law or otherwise and can be conveyed or otherwise exchanged under this Agreement, all as of the Closing Date. No additional shares, options or convertible securities of Target shall be issued prior to the Closing.
4.05 Authority. The execution and delivery of this Agreement and consummation of the transactions contemplated herein have been duly authorized by all necessary corporate action, including but not limited to duly and validly authorized action and approval by the Board of Directors or other required persons on behalf of Target, and by each of the Participant 1. This Agreement constitutes the valid and binding obligation of Target and each of Participant 1, enforceable against Target and each Participant 1 in accordance with its terms, subject to the principles of equity applicable to the availability of the remedy of specific performance. This Agreement has been duly executed, as applicable, by Target and Participant 1 and the execution and delivery of this Agreement and the consummation of the transactions contemplated by this Agreement shall not result in any breach of any terms or provisions of Target's Articles of Incorporation or Bylaws or of any other agreement, court order or instrument to which Target or any of Participant 1 is a party or bound.
4.06 Absence of Undisclosed Liabilities. Target has no material liabilities of any nature, whether fixed, absolute, contingent or accrued, which were not reflected on the financial statements set forth in Annex AA or otherwise disclosed in this Agreement or any of the Annexes or Exhibits attached hereto.
4.07 Absence of Changes. Since the most recent date of the financial statements provided by Target, and to the date hereof, there has not been any material adverse change in the condition (financial or otherwise), assets, liabilities, earnings or business of Target, except for changes resulting from completion of those transactions described in Section 5.01.
4.08 Tax Matters. All taxes and other assessments and levies which Target is required by applicable law to withhold or to collect have been duly withheld and collected, and have been paid over to the proper government authorities or are held by Target in separate bank accounts for such payment or are represented by depository receipts, and all such withholdings and collections and all other payments due in connection therewith (including, without limitation, employment taxes, both the employee's and employer's share) have been paid over to the government or placed in a separate and segregated bank account for such purpose. There are no known deficiencies in income taxes for any periods and further, the representations and warranties as to absence of undisclosed liabilities contained in Section 4.06 includes any and all tax liabilities of whatsoever kind or nature (including, without limitation, all federal, provincial, local and foreign income, profit, franchise, sales, use and property taxes) due or to become due, incurred in respect of or measured by Target income or business prior to the Closing Date.
4.09 Options, Warrants, etc. Except as otherwise described in Annex HH, there are no outstanding options, warrants, calls, commitments or agreements of any character to which Target or its shareholders are a party or by which Target or its shareholders are bound, or are a party, calling for the issuance of shares of capital stock of Target or any securities representing the right to purchase or otherwise receive any such capital stock of Target.
8
4.10 Title to Assets. Except for liens set forth in Annex CC, Target is the sole and unconditional owner of, with good and marketable title to all the assets and patents listed in the Annexes as owned by them and all other property and assets are free and clear of all mortgages, liens, pledges, charges or encumbrances of any nature whatsoever.
4.11 Agreements in Force and Effect. Except as set forth in Annexes DD and EE, all material contracts, agreements, plans, promissory notes, mortgages, leases, policies, licenses, franchises or similar instruments to which Target is a party are valid and in full force and effect on the date hereof, and Target has not breached any material provision of, and is not in default in any material respect under the terms of, any such contract, agreement, plan, promissory note, mortgage, lease, policy, license, franchise or similar instrument which breach or default would have a material adverse effect upon the business, operations or financial condition of Target.
4.12 Legal Proceedings, Etc. Except as set forth in Annex KK, there are no civil, criminal, administrative, arbitration or other such proceedings or investigations pending or, to the knowledge of the Parties, threatened, in which, individually or in the aggregate, an adverse determination would materially and adversely affect the assets, properties, business or income of Target. Target has substantially complied with, and is not in default in any material respect under, any laws, ordinances, requirements, regulations or orders applicable to its businesses.
4.13 Governmental Regulation. To the knowledge of the Parties and except as set forth in Annex KK, Target is not in violation of or in default with respect to any applicable law or any applicable rule, regulation, order, writ or decree of any court or any governmental commission, board, bureau, agency or instrumentality, or delinquent with respect to any report required to be filed with any governmental commission, board, bureau, agency or instrumentality which violation or default could have a material adverse effect upon the business, operations or financial condition of Target.
4.14 Broker and Finders. Party 2 shall be solely responsible for payment to any broker or finder retained by Party 2 for any brokerage fees, commissions or finders' fees in connection with the transactions contemplated herein.
4.15 Accuracy of Information. No representation or warranty by Participant 1 contained in this Agreement and no statement contained in any certificate or other instrument delivered or to be delivered to the Company pursuant hereto or in connection with the transactions contemplated hereby (including without limitation all Annexes and Exhibits hereto) contains or will contain any untrue statement of a material fact or omits or will omit to state any material fact necessary in order to make the statements contained herein or therein not misleading.
4.16 Subsidiaries. Except as listed in Annex PP, Target does not have any other subsidiaries or own capital stock representing ten percent (10%) or more of the issued and outstanding stock of any other corporation.
4.17 Consents. Except as listed in Annex FF, no consent or approval of, or registration, qualification or filing with, any other governmental authority or other person is required to be obtained or accomplished by Target in connection with the consummation of the transactions contemplated hereby.
4.18 Improper Payments. No person acting on behalf of Target has made any payment or otherwise transmitted anything of value, directly or indirectly, to (a) any official or any government or agency or political subdivision thereof for the purpose of influencing any decision affecting the business of Target, or (b) any political party or any candidate for elective political office, nor has any fund or other asset of Target been maintained that was not fully and accurately recorded on the books of account of Target.
4.19 Copies of Documents. Target has made available for inspection and copying by the Company and its duly authorized representatives, and will continue to do so at all times, true and correct copies of all documents which it has filed with any governmental agencies which are material to the terms and conditions contained in this Agreement. Furthermore, all filings by Target with governmental agencies, including but not limited to any taxing authority, have contained information which is true and correct in all
9
material respects and did not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements made therein not misleading or which could have any material adverse effect upon the financial condition or operations of Target or adversely affect the objectives of this Agreement.
4.20 Investment Intent of Shareholders. Each shareholder of Target represents and warrants to the Company that the shares of the Company being acquired pursuant to this Agreement are being acquired for its own account and for investment purposes and not with a view to the public resale or distribution of such shares and further acknowledges that the shares being issued have not been registered under the Securities Act and are "restricted securities" as that term is defined in SEC Rule 144 promulgated under the Securities Act and must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available; that each understands the meaning of the term restricted securities; that each has had access to the reports and registration statements filed by the Company with the SEC at www.sec.gov or otherwise; and that each is an accredited investor as that term is defined in United States securities laws, rules and regulations, and specifically, in SEC Rule 501.
4.21 Status of Targets Shares. Each of Participant 1 represents individually as to all of the shares of Target capital stock owned by said shareholder, that the shares are owned free and clear of all security interests, liens, judgments and other encumbrances, and will be transferred to the Company at the Closing free and clear from all security interests, liens, judgments and other encumbrances.
4.22 Sophisticated Investors. Each of the Participant 1 is a sophisticated investor, able to understand the merits and risks of entering into this Agreement and consummating the transactions contemplated herein, and has had access to all information concerning the Company, its assets, liabilities and business that Participant 1 believe is material to their respective investment decisions.
4.23 Environmental Compliance. Except in compliance with Environmental Laws, Target has not caused or permitted, and Target has no knowledge of, any material release or disposal by any person of any hazardous substance on or from any premises formerly or presently used in the business. All hazardous substances generated, handled, stored, treated, processed, transported or disposed of in the course of the business have been generated, handled, stored, treated, processed, transported or disposed of in all material respects, in compliance with applicable Environmental Laws and any environmental permits.
ARTICLE 5
CONDUCT AND TRANSACTIONS PRIOR TO THE
EFFECTIVE TIME OF THE SHARE EXCHANGE
5.01 Parties Conduct and Transactions. During the period from the date hereof to the date of Closing, the Parties shall cause the Company and the Target to:
(a) Conduct their operations in the ordinary course of business, including but not limited to, paying all obligations as they mature, complying with all applicable tax laws, filing all tax returns required to be filed and paying all taxes due;
(b) Maintain their records and books of account in a manner that fairly and correctly reflects its income, expenses, assets and liabilities;
5.02 The Company Conduct and Transactions. The Company shall not during such period, except in the ordinary course of business, without the prior written consent of Participant 1:
(a) Except as otherwise contemplated or required by this Agreement, sell, dispose of or encumber any of its properties or assets;
(b) Declare or pay any dividends on shares of its capital stock or make any other distribution of assets to the holders thereof;
10
(c) Issue, reissue or sell, or issue options or rights to subscribe to, or enter into any contract or commitment to issue, reissue or sell, any shares of its capital stock or acquire or agree to acquire any shares of its capital stock;
(d) Except as otherwise contemplated and required by this Agreement, amend its Articles of Incorporation or merge or consolidate with or into any other corporation or sell all or substantially all of its assets or change in any manner the rights of its capital stock or other securities;
(e) Except as contemplated or required by this Agreement, pay or incur any obligation or liability, direct or contingent, of more than $1,000, other than in the ordinary course of business, excluding such payment as may be required for the purposes of completion and the closing of the transactions described in this Agreement;
(f) Incur any indebtedness for borrowed money, assume, guarantee, endorse or otherwise become responsible for obligations of any other party, or make loans or advances to any other party, excluding the transactions contemplated by this Agreement;
(g) Make any material change in its insurance coverage;
(h) Increase in any manner the compensation, direct or indirect, of any of its officers or executive employees; except in accordance with existing employment contracts;
(i) Enter into any agreement or make any commitment to any labor union or organization;
(j) Make any capital expenditures, excluding the transactions contemplated by this Agreement.
5.03 Conduct and Transactions of Target. During the period from the date hereof to the date of Closing, Target shall:
(a) Obtain an Investment Letter from each of the beneficiary shareholders or owners of Target in a form substantially like that attached hereto as Exhibit B.
(b) Conduct the operations of Target in the ordinary course of business.
5.04 Target shall not during such period, except in the ordinary course of business, without the prior written consent of the Company:
(a) Except as otherwise contemplated or required by this Agreement, sell, dispose of or encumber any of the properties or assets of Target;
(b) Declare or pay any dividends on shares of its capital stock or make any other distribution of assets to the holders thereof;
(c) Issue, reissue or sell, or issue options or rights to subscribe to, or enter into any contract or commitment to issue, reissue or sell, any shares of its capital stock or acquire or agree to acquire any shares of its capital stock;
(d) Except as otherwise contemplated and required by this Agreement, amend its Articles of Incorporation or merge or consolidate with or into any other corporation or sell all or substantially all of its assets or change in any manner the rights of its capital stock or other securities;
(e) Except as otherwise contemplated and required by this Agreement, pay or incur any obligation or liability, direct or contingent, of more than $1,000, other than in the ordinary course of business;
(f) Except as otherwise contemplated and required by this Agreement, incur any indebtedness for borrowed money, assume, guarantee, endorse or otherwise become responsible for obligations of any other party, or make loans or advances to any other party, other than in the ordinary course of business;
11
(g) Make any material change in its insurance coverage;
(h) Increase in any manner the compensation, direct or indirect, of any of its officers or executive employees; except in accordance with existing employment contracts;
(i) Enter into any agreement or make any commitment to any labor union or organization;
(j) Make any material capital expenditures.
(k) Unless contemplated by this Agreement, allow any of the foregoing actions to be taken by any subsidiary of Target.
ARTICLE 6
RIGHTS OF INSPECTION
6.01 During the period from the date of this Agreement to the Closing Date, the Company and Target agree to use their best efforts to give the other Party, including its representatives and agents, full access to the premises, books and records of each of the Parties, and to furnish the other with such financial and operating data and other information including, but not limited to, copies of all legal documents and instruments referred to on any Annex or Exhibit hereto, with respect to the business and properties of the Company or Target or otherwise as may be necessary for the completion of the transactions contemplated hereby, as the case may be, as the other shall from time to time request; provided, however, if there are any such investigations: (1) they shall be conducted in such manner as not to unreasonably interfere with the operation of the business of the other Parties and (2) such right of inspection shall not affect in any way whatsoever any of the representations or warranties given by the respective Parties hereunder. In the event of termination of this Agreement, the Company and Target will each return to the other all documents, work papers and other materials obtained from the other Party in connection with the transactions contemplated hereby, and will take such other steps necessary to protect the confidentiality of such material.
ARTICLE 7
CONDITIONS TO CLOSING
7.01 Conditions to Obligations of the Target. The obligations of the Target to perform this Agreement are subject to the satisfaction of the following conditions on or before the Closing unless waived in writing.
(a) Representations and Warranties. There shall be no information disclosed in the Annexes delivered by the Company, which in the opinion of Participant 1 would materially adversely affect the proposed transaction and intent of the Parties as set forth in this Agreement. The representations and warranties of the Company set forth in Article 3 hereof shall be true and correct in all material respects as of the date of this Agreement and as of the Closing as though made on and as of the Closing, except as otherwise permitted by this Agreement.
(b) Performance of Obligations. The Company shall have in all material respects performed all agreements required to be performed by it under this Agreement and shall have performed in all material respects any actions contemplated by this Agreement prior to or on the Closing and the Company shall have complied in all material respects with the course of conduct required by this Agreement.
(c) Corporate Action. The Company shall have furnished minutes, certified copies of corporate resolutions and/or other documentary evidence satisfactory to the Target that the Company has submitted with this Agreement and any other documents required hereby to such Parties for approval as provided by applicable law.
(d) Consents. Execution of this Agreement by the shareholders of Target and any consents necessary for or approval of any Party listed on any Annex delivered by the Company whose consent or approval is required pursuant thereto shall have been obtained.
12
(e) Annual and Quarterly Reports and Financial Statements. Participant 1 shall have been furnished with the Annual Report of the Company on Form 10-K for the fiscal year ended March 31, 2018 and the Quarterly Report on Form 10-Q for the period ended December 31, 2018 with related financial statements, including, but not limited to, balance sheets and profit and loss statements. Such financial statements shall have been prepared in conformity with United States generally accepted accounting principles on a basis consistent with those of prior periods and fairly present the financial position of the Company as of the periods stated.
(f) Statutory Requirements. All statutory requirements for the valid consummation by the Company of the transactions contemplated by this Agreement shall have been fulfilled.
(g) Governmental Approval. All authorizations, consents, approvals, permits and orders of all federal and state governmental agencies required to be obtained by the Company for consummation of the transactions contemplated by this Agreement shall have been obtained.
(h) Changes in Financial Condition of the Company. There shall not have occurred any material adverse change in the financial condition or in the operations of the business of the Company, except expenditures in the ordinary course of business and expenditures in furtherance of this Agreement.
(i) Absence of Pending Litigation. The Company is not engaged in or threatened with any suit, action, or legal, administrative or other proceedings or governmental investigations pertaining to this Agreement or the consummation of the transactions contemplated hereunder.
(j) Authorization for Issuance of Stock. Participant 1 shall have received in form and substance satisfactory to them a letter instructing and authorizing the Registrar and Transfer Agent for the shares of common stock of the Company to issue stock certificates representing ownership of the Company common stock to Participant 1 in accordance with the terms of this Agreement, subject to the satisfaction of the conditions to be satisfied by Target and Participant 1.
(k) Conditional Subsequent Exchange. The Closing of the proposed acquisition of the Target as contemplated by this Agreement, shall occur as soon as all conditions have been satisfied or waived following execution of this Agreement, and the parties shall use their good faith efforts to close the transactions on or before June 30, 2019.
(l) Officers and Directors. The directors of the Company immediately prior to the Closing Date shall appoint Merday Atayev to the Companys Management as Vice President.
7.02 Conditions to Obligations of the Company. The obligation of the Company to perform this Agreement is subject to the satisfaction of the following conditions on or before the Closing unless waived in writing by the Company.
(a) Representations and Warranties. There shall be no information disclosed in the Annexes delivered by Target which in the opinion of the Company, would materially adversely affect the proposed transaction and intent of the Parties as set forth in this Agreement. The representations and warranties of the Target and Participant 1 set forth in Article 4 hereof shall be true and correct in all material respects as of the date of this Agreement and as of the Closing as though made on and as of the Closing, except as otherwise permitted by this Agreement.
(b) Performance of Obligations. Target shall have in all material respects performed all agreements required to be performed by it under this Agreement and shall have performed in all material respects any actions contemplated by this Agreement prior to or on the Closing and Target shall have complied in all respects with the course of conduct required by this Agreement.
(c) Corporate Action. Target shall have furnished minutes, certified copies of corporate resolutions and/or other documentary evidence satisfactory to Counsel for the Company that Target has submitted with this Agreement and any other documents required hereby to such Parties for approval as provided by applicable law.
13
(d) Consents. Any consents necessary for or approval of any party listed on any Annex delivered by Target, whose consent or approval is required pursuant thereto, shall have been obtained.
(e) Financial Statements. The Company shall have been furnished with unaudited financial statements of Target for the period from inception up through March 31, 2019, including balance sheet and profit and loss statement. Such financial statements shall have been prepared in conformity with U.S. generally accepted accounting principles on a basis consistent with those of prior periods and fairly present the financial position of Target as of the periods stated.
(f) Statutory Requirements. All statutory requirements for the valid consummation by Target and of the transactions contemplated by this Agreement shall have been fulfilled.
(g) Governmental Approval. All authorizations, consents, approvals, permits and orders of all federal and state governmental agencies required to be obtained by Target for consummation of the transactions contemplated by this Agreement shall have been obtained.
(h) Employment Agreements. Existing Target employment agreements will have been delivered to the Company.
(i) Changes in Financial Condition of Target. There shall not have occurred any material adverse change in the financial condition or in the operations of the business of Target, except expenditures in furtherance of this Agreement.
(j) Absence of Pending Litigation. Target is not engaged in or threatened with any suit, action, or legal, administrative or other proceedings or governmental investigations pertaining to this Agreement or the consummation of the transactions contemplated hereunder.
(k) Shareholder Approval. The Targets Participant 1 shall have signed, executed and delivered this Agreement. The Target participants shall have approved a waiver of any preemptive rights of the Target or its shareholders as may be required for consummation of the transactions contemplated by this Agreement.
(l) Conditional Subsequent Exchange. The Closing of the proposed acquisition of the Target by the Company as contemplated by this Agreement, shall occur as soon as all conditions have been satisfied or waived following execution of this Agreement, and the parties shall use their good faith efforts to close the transactions on or before June 30, 2019.
(m) Satisfaction of Creditors. Repayment and/or retiring of all debts or obligations specifically identified in Annex EE, Targets loans, debts, and purchase money guarantees related to the transaction contemplated by this Agreement respectively by the Company and Target.
(n) Documents Described in Annex A. Target and Participant 1 shall deliver all documents to the Company which are described in Annex A.
(o) Transfer of Land and other Assets to Target. Participant 1 shall have caused the following described land and the following assets to be transferred to Target: (a) a new office and warehouse facility in Ashgabat, Turkmenistan as described in Annex BB of this Agreement (the Target Land); and (b) any furniture, tools, machinery and equipment for maintenance and lifting (the Target Assets). The Target shall have acquired ownership to the Target Land based on a ninety-nine year lease from the government of Turkmenistan, free and clear from all mortgages, trust deeds, liens or other encumbrances, and the Target shall have acquired undisputed ownership of the Target Assets free and clear from all security interests, liens or other encumbrances.
(p) Participant 1 will cause the title of the land and buildings to be transferred on the official governmental registries of Turkmenistan in the name of the Target and show proof of the same before the Closing.
14
ARTICLE 8
MATTERS SUBSEQUENT TO CLOSING
8.01 Covenant of Further Assurance. The Parties covenant and agree that they shall, from time to time, execute and deliver or cause to be executed and delivered all such further instruments of conveyance, transfer, assignments, receipts and other instruments, and shall take or cause to be taken such further or other actions as the other Party or Parties to this Agreement may reasonably deem necessary in order to carry out the purposes and intent of this Agreement.
ARTICLE 9
NATURE AND SURVIVAL OF REPRESENTATIONS
9.01 All statements contained in any written certificate, Annex, exhibit or other written instrument delivered by the Company, Target or Participant 1 or otherwise pursuant hereto, or otherwise adopted by the Company, by its written approval, or by Target by its written approval, or in connection with the transactions contemplated hereby, shall be deemed representations and warranties by the Company, Target or Participant 1, as the case may be. All representations, warranties and agreements made by either Party shall survive for a period of two years, or until the discovery of any claim, loss, liability or other matter based on fraud, if longer, but not longer than three years from the date hereof.
ARTICLE 10
TERMINATION OF AGREEMENT AND ABANDONMENT OF ACQUISITION
10.01 Termination. Anything herein to the contrary notwithstanding, this Agreement and any agreement executed as required hereunder and the acquisition contemplated hereby may be terminated at any time before the Closing as follows:
(a) By mutual written consent of the Parties.
(b) By the Board of Directors of the Company if any of the conditions set forth in Section 7.02 shall not have been satisfied by the Closing Date.
(c) By Participant 1 if any of the conditions set forth in Section 7.01 shall not have been satisfied by the Closing Date.
10.02 Termination of Obligations and Waiver of Conditions; Payment of Expenses. In the event this Agreement and the acquisition are terminated and abandoned pursuant to this Article 10 hereof, this Agreement shall become void and of no force and effect, and there shall be no liability on the part of any of the Parties hereto, or their respective directors, officers, shareholders or controlling persons to each other. Each Party hereto will pay all costs and expenses incident to its or his negotiation and preparation of this Agreement and any of the documents evidencing the transactions contemplated hereby, including fees, expenses and disbursements of counsel.
ARTICLE 11
EXCHANGE OF SHARES
11.01 Exchange of Shares. At the Closing, the Company shall issue a letter to the transfer agent of the Company with a copy of the resolution of the Board of Directors of the Company authorizing and directing the issuance of the Company shares as contemplated by this Agreement. At the Closing, each of Participant 1 shall deliver his/her/its share certificate representing all of the shares of Targets capital shares being transferred to the Company (as described on Annex HH), duly endorsed in blank.
11.02 Restrictions on Shares Issued to Party 2. Due to the fact Participant 1 will receive shares of the Companys common stock in connection with the acquisition which have not been registered under the Securities Act by virtue of the exemption provided in Section 4(2) of the Securities Act and SEC Rule
15
506 or SEC Regulation S, stock certificates representing those shares of the Company will contain substantially the following legend or a reasonable facsimile thereof:
The shares represented by this certificate have not been registered under the Securities Act of 1933, as amended. The shares have been acquired for investment and may not be sold or offered for sale in the absence of an effective registration statement for the shares under the Securities Act of 1933, as amended, or an opinion of counsel to the Company that such registration is required.
ARTICLE 12
MISCELLANEOUS
12.01 Construction. This Agreement shall be construed and enforced in accordance with the laws of the State of Nevada excluding the conflicts of laws.
12.02 Notices. All notices necessary or appropriate under this Agreement shall be effective when personally delivered or deposited in the United States mail, postage prepaid, certified or registered, return receipt requested, and addressed to the Parties last known addresses which currently located at:
(1) TORTEC GROUP CORPORATION: Attn: Mr. Stephen Smoot, 30 N Gould St., Suite 2489, Sheridan, WY 82801 USA;
(2) TORTEC CENTRAL ASIA: Attn: Merdan Atayev, Garashsyzlyk 49/13, Ashgabat, Turkmenistan 744333
12.03 Amendment and Waiver. The Parties hereby may, by mutual agreement in writing signed by each Party, amend this Agreement in any respect. Any term or provision of this Agreement may be waived in writing at any time by the Party which is entitled to the benefits thereof, such waiver right shall include, but not be limited to, the right of either Party to:
(a) Extend the time for the performance of any of the obligations of the other;
(b) Waive any inaccuracies in representations by the other contained in this Agreement or in any document delivered pursuant hereto;
(c) Waive compliance by the other with any of the covenants contained in this Agreement, and performance of any obligations by the other; and
(d) Waive the fulfillment of any condition that is precedent to the performance by the Party so waiving of any of its obligations under this Agreement. Any writing on the part of a Party relating to such amendment, extension or waiver as provided in this Section 12.03 shall be valid if authorized or ratified by the Board of Directors of such Party.
12.04 Remedies not Exclusive. No remedy conferred by any of the specific provisions of this Agreement is intended to be exclusive of any other remedy, and each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute or otherwise. The election of any one or more remedies by the Company or Target shall not constitute a waiver of the right to pursue other available remedies.
12.05 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
12.06 Benefit. This Agreement shall be binding upon, and inure to the benefit of, the respective successors and assigns of the Company and Target and its participants and shareholders.
12.07 Entire Agreement. This Agreement and the Annexes and Exhibits attached hereto, represent the entire agreement of the undersigned regarding the subject matter hereof, and supersedes all prior written or oral understandings or agreements between the Parties; provided, however, the Annexes shall not be considered Exhibits to this Agreement.
16
12.08 Each Party to Bear its Own Expense. The Company and Target shall each bear their own respective expenses incurred in connection with the negotiation, execution, closing, and performance of this Agreement, including counsel fees and accountant fees.
12.09 Captions and Section Headings. Captions and section headings used herein are for convenience only and shall not control or affect the meaning or construction of any provision of this Agreement.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date first above written.
Party-1: TORTEC GROUP CORPORATION
/s/ Stephen H. Smoot _______________________
By: Stephen H. Smoot, President and CEO
Party-2: TORTEC CENTRAL ASIA
/s/ Merdan Atayev __________________________
BY: Merdan Atayev, President and CEO
Participant 1 (Part of Party-2)
/s/ Merdan Atayev __________________________
Merdan Atayev
17
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ( Agreement ) is made as of the 20 day of May, 2019, by and between TORtec Group Corporation, a Nevada corporation (the Company ); and IKR BABOLNA FZE, a UAE Ajman Free Zone Limited Company (IKR BABOLNA FZE).
RECITALS
A.
The Company desires to sell to IKR BABOLNA FZE 168,000 shares of the Companys common stock (the Shares ), which Shares will represent approximately 0.1677% of the issued and outstanding shares of the Companys common stock at the Closing (as defined below) of this Agreement.
B.
IKR BABOLNA FZE desires to purchase the Company s Shares in exchange for One Million Five Hundred Thousand Euros ( 1,500,000).
C.
IKR BABOLNA FZE desires to receive the transfer of fifty percent (50%) ownership interest in Si-Tech GmbH, a German private company (see attached Addendum B).
AGREEMENT
In consideration of the mutual agreements contained herein, the parties hereby agree as follows:
PURCHASE AND SALE OF SHARES.
1.1
Purchase and Sale of Shares . In reliance upon the representations and warranties contained herein and subject to the terms and conditions set forth herein, at Closing, the Company shall sell, assign, transfer, convey and deliver to IKR BABOLNA FZE, and IKR BABOLNA FZE shall purchase from the Company, good and marketable title to the Companys Shares, free and clear of all mortgages, Liens (as hereinafter defined), encumbrances, claims, equities and obligations to other persons of every kind and character.
1.2
Consideration.
The consideration for the Shares shall be the payment of One Million Five Hundred Thousand Euros ( 1,500,000) on the Closing Date (as defined below) (the Purchase Price ).
CLOSING .
Date and Time . The Closing of the sale of Shares contemplated by this Agreement (the Closing ) shall take place as promptly as practicable, but no later than two (2) business days following the satisfaction or waiver of the conditions set forth in Section 6, at such place as the Company and IKR BABOLNA FZE shall agree in writing, or via facsimile and/or email. The date on which the Closing actually occurs shall be the Closing Date .
Deliveries by Company . At the Closing, the Company shall deliver to IKR BABOLNA FZE a certificate registered in the name of IKR BABOLNA FZE.
2.3
Deliveries by IKR BABOLNA FZE . Before the Closing, IKR BABOLNA FZE shall deliver good clean funds in the amount of One Million Five Hundred Thousand Euros ( 1,500,000) into the Company s account with Bank of Idaho at 1800 Channing Way, Idaho Falls, Idaho 83403 (see attached Addendum A attached).
REPRESENTATIONS AND WARRANTIES OF THE COMPANY .
As a material inducement to IKR BABOLNA FZE to enter into this Agreement and to purchase the Shares, the Company represents and warrants that the following statements are true and correct in all material respects as of the date hereof and will be true and correct in all material respects at Closing, except as expressly qualified or modified herein.
Organization and Good Standing . The Company is a corporation duly organized, validly existing, and in good standing under the laws of the State of Nevada and has full corporate power and authority to enter into and perform its obligations under this Agreement, and to own its properties and to carry on its business as presently conducted and as proposed to be conducted. The Company is duly qualified to do business as a foreign corporation in every jurisdiction in which the failure to so qualify would have a material adverse effect upon the Company.
Capitalization . The Company is authorized to issue an aggregate total of 210,000,000 shares, comprised of 10,000,000 shares of $0.001 par value preferred stock, none of which are issued or outstanding; and 200,000,000 shares of $0.001 par value common stock, of which, as of the date hereof and the Closing, 100,000,000 shares are issued and outstanding. All outstanding shares of common stock have been duly authorized and validly issued, and are fully paid, non-assessable, and free of any preemptive rights. There are no options, warrants or other derivative securities issued and outstanding to purchase shares of the Company common stock. There is no right of first refusal, co-sale right, right of participation, right of first offer, registration right option or other restriction on transfer applicable to any shares of the Company common stock.
Validity of Transactions . The Company has the requisite power to enter into this Agreement, to sell the Shares hereunder, and to carry out and perform its obligations under the terms of this Agreement. This Agreement has been duly authorized by the Company, and, upon due execution and delivery by the Company, this Agreement and the documents contemplated hereby will be valid and binding agreements of the Company.
3.4
(a)
The Company owns all of the legal and beneficial interests in the Shares, free and clear of any pledge, security interest, Liens, encumbrance, restriction, claim or other charge of any kind, and at the Closing, IKR BABOLNA FZE shall receive title to the Shares, free and clear of any pledge, Lien, encumbrance, restriction, claim or other charge of any kind. Except for any restrictions imposed by applicable United States and states of the United States
2
securities laws, rules and regulations, there is no right of first refusal, co-sale right, right of participation, right of first offer, registration right option or other restriction on transfer applicable to the Shares.
(b)
For purposes of this Agreement, Liens means, collectively, any mortgages, liens, security interests, claims, pledges, licenses, equities, options, conditional sales contracts, assessments, levies, easements, covenants, reservations, restrictions, rights of way, exceptions, limitations, charges, liabilities, or encumbrances of any nature whatsoever.
3.5
No Violation/Consents . The execution, delivery and performance of this Agreement will not violate any law or any order of any court or government agency applicable to the Company, as the case may be, or the Articles of Incorporation or Bylaws of the Company, and will not result in any breach of or default under, or, except as expressly provided herein, result in the creation of any encumbrance upon any of the assets of the Company pursuant to the terms of any agreement or instrument by which the Company or any of its assets may be bound. The execution, delivery and performance by the Company of this Agreement, the other documents contemplated hereby, and the offer and sale of the Shares requires no consent of, action by or in respect of, or filing with, any person, governmental body, agency, or official other than filings that have been made pursuant to applicable state securities laws and post-sale filings pursuant to applicable state and federal securities laws.
Reporting Company/SEC Reports and Financial Statements .
(a)
The Companys common stock is registered pursuant to Section 12(g) of the Exchange Act, and the Company has taken no action designed to terminate the registration of its common stock under the Exchange Act nor has the Company received any notification that the United States Securities and Exchange Commission ( SEC ) is contemplating terminating such registration. Except as specifically disclosed in the SEC Reports (as hereinafter defined), the Company has not, in the twelve (12) months preceding the date hereof, received written notice from the principal market on which its common stock is listed or quoted to the effect that the Company is not in compliance with the listing or maintenance requirements of such principal market. The Company is in compliance with all listing and maintenance requirements of the principal market on the date hereof. There are no unanswered comments from the SEC or the Financial Industry Regulatory Authority ( FINRA ).
(b)
The Company has electronically delivered to IKR BABOLNA FZE its Annual Report on Form 10-K for the fiscal year ended March 31, 2018, along with its Quarterly Reports on Form 10-Q for the quarterly periods ended June 30, September 30 and December 31, 2018, including earlier years, which were filed with the SEC at the following EDGAR webpage:
https://www.sec.gov/cgi-bin/browse-edgar?CIK=0001560905&Find=Search&owner=exclude&action=getcompany
(collectively, the SEC Reports ). The information in the SEC Reports, taken as a whole, is true and correct in all material respects and does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.
3
Subsidiaries . Except as set forth in the SEC Reports, the Company does not own, directly or indirectly, any equity or debt securities of any corporation, partnership, or other entity.
Litigation . Except as set forth in the SEC Reports, there are no suits or proceedings (including without limitation, proceedings by or before any arbitrator, government commission, board, bureau or other administrative agency) pending or, to the knowledge of the Company, threatened against or affecting the Company or any of its subsidiaries which, if adversely determined, would have a material adverse effect on the consolidated financial condition, results of operations, prospects or business of the Company, and neither the Company nor any of its subsidiaries are subject to or in default with respect to any order, writ, injunction or decree of any federal, state, local or other governmental department.
Taxes . Federal income tax returns and state and local income tax returns for the Company and its subsidiaries have been filed as required by law; all taxes as shown on such returns or on any assessment received subsequent to the filing of such returns have been paid, and there are no pending assessments or adjustments or any income tax payable for which reserves, which are reasonably believed by the Company to be adequate for the payment of any additional taxes that may come due, have not been established. All other taxes imposed on the Company and its Subsidiaries have been paid and any reports or returns due in connection herewith have been filed.
Securities Law Compliance . Assuming the accuracy of the representations and warranties of Purchaser set forth in Section 4 of this Agreement, the offer, issue, sale and delivery of the Shares will constitute an exempted transaction under the United States Securities Act of 1933, as amended (the Securities Act ), and registration of the Shares thereunder is not required.
3.11
Liabilities . The SEC Reports contain information about the outstanding liabilities of the Company as of their respective dates. The Company maintains and will continue to maintain a standard system of accounting established and administered in accordance with generally accepted accounting principles, subject to the limitations outlined in the SEC Reports, specifically, that the Companys disclosure controls and procedures were not effective to provide reasonable assurance that information the Company is required to disclose in reports that it is required to file or submit under the Securities Exchange Act of 1934, as amended (the Exchange Act ), is recorded, processed, summarized and reported within the time periods specified in the SEC rules, regulations and forms, and that such information is accumulated and communicated to the Companys management, to allow timely decisions regarding required disclosure.
3.12
No Solicitation or Pending Transactions . Except for the transactions contemplated by this Agreement, the Company is not a party to or bound by or the subject of any agreement, undertaking, commitment or discussions or negotiations with any person that could result in the sale of any of the Shares.
4
3.13
Brokers or Finders . The Company has not incurred, nor shall it incur, directly or indirectly, any liability for brokerage or finders fees or agents commissions or any similar charges in connection with this Agreement or the transactions contemplated hereby.
REPRESENTATIONS AND WARRANTIES OF IKR BABOLNA FZE.
As a material inducement to the Company to enter into this Agreement and to issue the Shares, IKR BABOLNA FZE represents and warrants that the following statements are true and correct in all material respects as of the date hereof and will be true and correct in all material respects at Closing, except as expressly qualified or modified herein.
Legal Power . IKR BABOLNA FZE has the requisite power to enter into this Agreement, to purchase the Shares hereunder and to carry out and perform its obligations under the terms of this Agreement.
4.2
Due Execution . This Agreement has been duly authorized and delivered by IKR BABOLNA FZE, and, upon due execution and delivery by IKR BABOLNA FZE, this Agreement will be a valid and binding agreement of IKR BABOLNA FZE.
4.3
Receipt and Review of SEC Report s . IKR BABOLNA FZE represents that it has received and reviewed the SEC Reports and has been given full and complete access to the Company for the purpose of obtaining such information as IKR BABOLNA FZE or its qualified representatives have reasonably requested in connection with the decision to purchase the Shares. IKR BABOLNA FZE represents that it has been afforded the opportunity to ask questions of the directors and the officers of the Company regarding its business prospects and the Shares, all as IKR BABOLNA FZE or IKR BABOLNA FZEs qualified representatives have found necessary to make an informed investment decision to purchase the Shares.
4.4
Restricted Securities . IKR BABOLNA FZE has been advised that the Company Shares have not been registered under the Securities Act or any other applicable securities laws, and that the Shares are being offered and sold to IKR BABOLNA FZE pursuant to exemptions from registration with the SEC under the Securities Act contained in Regulation S of the SEC and Section 4(a)(2) of the Securities Act, and SEC Rule 506(b) promulgated thereunder, and that the Companys reliance upon Regulation S, Section 4(a)(2) and Rule 506(b) is predicated in part on IKR BABOLNA FZEs representations as contained herein, including, but not limited to:
(a)
IKR BABOLNA FZE is an accredited investor as defined under SEC Rule 501 under the Securities Act and a Non-U.S. Person as defined in SEC Regulation S.
(b)
IKR BABOLNA FZE acknowledges that the Shares have not been registered under the Securities Act or the securities laws of any state of the United States and are being offered, and will be sold, pursuant to applicable exemptions from such registration for nonpublic offerings and will be issued as restricted securities as defined by SEC Rule 144 promulgated pursuant to the Securities Act.
5
(c)
IKR BABOLNA FZE is acquiring the Shares for its own account, for investment purposes only and not with a view to, or for sale in connection with, a distribution, as that term is used in Section 2(11) of the Securities Act, in a manner which would require registration under the Securities Act or any United States state securities laws.
(d)
IKR BABOLNA FZE understands and acknowledges that the Shares will be represented by one (1) stock certificate that will bear the following legend or a reasonable facsimile thereof:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD OR TRANSFERRED FOR VALUE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION THEREOF UNDER THE SECURITIES ACT OF 1933 AND/OR THE SECURITIES ACT OF ANY STATE HAVING JURISDICTION OR AN OPINION OF COUNSEL ACCEPTABLE TO THE CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR ACTS.
4.5
Restrictions on Resale of Shares . IKR BABOLNA FZE acknowledges that an investment in the Company Shares is not liquid and is transferable only under limited conditions. IKR BABOLNA FZE acknowledges that such Shares may be required to be held indefinitely unless they are subsequently registered for resale under the Securities Act or an exemption from such registration is available to IKR BABOLNA FZE. IKR BABOLNA FZE is aware of the provisions of SEC Rule 144 promulgated under the Securities Act, which permits limited resale of unregistered securities or restricted securities, subject to the satisfaction of certain conditions.
Sophistication and Ability to Bear Risk of Loss . IKR BABOLNA FZE acknowledges that it is able to protect its interests in connection with the acquisition of the Shares and can bear the economic risk of investment in such Shares without producing a material adverse change in IKR BABOLNA FZEs financial condition. IKR BABOLNA FZE otherwise has such knowledge and experience in financial or business matters that IKR BABOLNA FZE is capable of evaluating the merits and risks of the investment in the Shares.
5.
ADDITIONAL COVENANTS
5.1
Conduct of Business . Except as contemplated by this Agreement, and such other matters, if any, as may be consented to by IKR BABOLNA FZE in writing, which consent shall not be unreasonably withheld or delayed, from the date of this Agreement until the Closing Date, the Company shall conduct or cause to be conducted its business in all material respects in the ordinary course and shall not engage in any material activity or enter into any material transaction outside the ordinary course of business.
5.2
Fulfillment of Conditions and Covenants . No party shall take any course of action inconsistent with satisfaction of the requirements or conditions applicable to it set forth in this Agreement. Each party shall promptly do all such acts and take all such measures as may be appropriate to enable it to perform as promptly and as reasonably possible the obligations herein provided to be performed by it.
6
5.3
Negative Covenants . From the date of this Agreement through the Closing Date, neither the Company nor any director or executive officer shall, without the prior written consent of IKR BABOLNA FZE, which consent shall not be unreasonably withheld or delayed, take or cause to be taken any of the following actions:
(a)
amend its articles of incorporation, bylaws or other organizational documents;
(b)
(i) adjust, split, combine or reclassify any of the Companys outstanding capital stock; declare, set aside or pay any dividends or other distributions (whether payable in cash, property or securities) with respect to its capital stock; (ii) issue, sell or agree to issue or sell any securities or other equity interests, including its capital stock, any rights, options, warrants, or derivative securities, to acquire its capital stock, or securities; (iii) purchase, cancel, retire, redeem or otherwise acquire any of its outstanding capital stock or other securities or other equity interests; (iv) merge or consolidate with, or transfer all or substantially all of its assets to, any other person; (v) liquidate, wind-up or dissolve (or suffer any liquidation or dissolution); or (vi) enter into any contract, agreement, commitment or arrangement with respect to any of the foregoing;
(c)
acquire any corporation, partnership or other business entity or any interest therein (other than interests in joint ventures, joint operation or ownership arrangements or tax partnerships acquired in the ordinary course of business);
(d)
(i) incur any indebtedness for borrowed money other than minimal ongoing operational debt for legal and accounting requirements for SEC filings; (ii) assume, endorse (other than endorsements of negotiable instruments in the ordinary course of business), guarantee or otherwise become liable or responsible (whether directly, contingently or otherwise) for the liabilities or obligations of any other person; or (iii) enter into any contract, agreement, commitment or arrangement with respect to any of the foregoing;
(e)
knowingly engage in any practice, knowingly take any action or knowingly permit by inaction any of the representations and warranties contained in Section 3 to become untrue; or
(f)
(i) enter into, or otherwise become liable or obligated under or pursuant to: (1) any employee benefit, pension or other plan (whether or not subject to ERISA), (2) any other stock option, stock purchase, incentive or deferred compensation plan or arrangement or other fringe benefit plan, or (3) any consulting, employment, severance, termination or similar agreement with any person; (ii) amend or extend any such plan, arrangement or agreement referred to in clauses (1), (2) or (3) of clause (i); (iii) grant, or otherwise become liable for or obligated to pay, any severance or termination payment, bonus or increase in compensation or benefits to, or forgive any indebtedness of, any employee or consultant of any of the Company; or (iv) enter into any contract, agreement, commitment or arrangement to do any of the foregoing.
7
CONDITIONS TO CLOSING .
Conditions to Obligations of IKR BABOLNA FZE . IKR BABOLNA FZEs obligation to purchase the Shares at the Closing is subject to the fulfillment, at or prior to such Closing, of all of the following conditions:
(a)
Representations and Warranties True; Performance of Obligations . The representations and warranties made by the Company in Section 3 hereof shall be true and correct in all material respects at the Closing with the same force and effect as if they had been made on and as of the Closing Date; and the Company shall have performed all obligations and conditions herein required to be performed by it on or prior to the Closing.
(b)
Proceedings, Documents and Financial Records . All corporate and other proceedings in connection with the transactions contemplated at the Closing hereby and all documents and instruments incident to such transactions shall be reasonably satisfactory in substance and form to IKR BABOLNA FZE and shall be delivered to IKR BABOLNA FZE as soon as practicable following the Closing Date.
(c)
Qualifications, Legal and Investment . All authorizations, approvals, or permits, if any, of any governmental authority or regulatory body of the United States or state of the United States that are required in connection with the lawful sale and issuance of the Shares pursuant to this Agreement shall have been duly obtained and shall be effective on and as of the Closing. No stop order or other order enjoining the sale of the Shares shall have been issued and no proceedings for such purpose shall be pending or, to the knowledge of IKR BABOLNA FZE, threatened by the SEC, or any commissioner of corporations or similar officer of any state having jurisdiction over this transaction. At the time of the Closing, the sale and issuance of the Shares shall be legally permitted by all laws and regulations to which IKR BABOLNA FZE and the Company are subject.
(d)
Officers Certificate . The Company shall have delivered to counsel for IKR BABOLNA FZE an Officers Certificate, in form and substance reasonably satisfactory to counsel for IKR BABOLNA FZE, certifying the following matters to IKR BABOLNA FZE:
(i)
Resolutions of the Companys Board of Directors, which resolutions shall authorize the execution, delivery and performance of this Agreement, and the other transaction documents to which the Company is a party and which shall authorize the consummation and performance of the transactions contemplated hereby and thereby, to that extent, only;
(ii)
The incumbency of the Companys officers with specimen signatures of its President and any other officers who will sign this Agreement or any of the other transaction documents in connection herewith and delivered pursuant hereto;
(iii)
Articles of Incorporation of the Company; and
(iv)
By-laws of the Company.
8
Conditions to Obligations of the Company . The Companys obligation to issue and sell the Shares at the Closing is subject to the fulfillment to the Companys satisfaction, on or prior to the Closing, of the following conditions:
(a)
Representations and Warranties True . The representations and warranties made by IKR BABOLNA FZE in Section 4 hereof shall be true and correct at the Closing with the same force and effect as if they had been made on and as of the Closing Date.
(b)
Performance of Obligations . IKR BABOLNA FZE shall have performed and complied with all agreements and conditions herein required to be performed or complied with by it on or before the Closing.
(c)
Qualifications, Legal and Investment . All authorizations, approvals, or permits, if any, of any governmental authority or regulatory body of the United States or any state of the United States that are required in connection with the lawful sale and issuance of the Shares pursuant to this Agreement shall have been duly obtained and shall be effective on and as of the Closing. No stop order or other order enjoining the sale of the Shares shall have been issued and no proceedings for such purpose shall be pending or, to the knowledge of the Company, threatened by the SEC, or any commissioner of corporations or similar officer of any state having jurisdiction over this transaction. At the time of the Closing, the sale and issuance of the Shares shall be legally permitted by all laws and regulations to which IKR BABOLNA FZE and the Company are subject.
(d)
Officers Certificate . IKR BABOLNA FZE shall have delivered to counsel for the Company an Officers Certificate, in form and substance reasonably satisfactory to counsel for the Company, certifying the following matters to the Company:
(i)
Resolutions of IKR BABOLNA FZEs Board of Directors, which resolutions shall authorize the execution, delivery and performance of this Agreement, and the other transaction documents to which IKR BABOLNA FZE is a party and which shall authorize the consummation and performance of the transactions contemplated hereby and thereby, to that extent, only;
(ii)
The incumbency of IKR BABOLNA FZEs officers, with specimen signatures of its President and any other officers who will sign this Agreement or any of the other transaction documents in connection herewith and delivered pursuant hereto; and
(iii)
Articles of Incorporation of IKR BABOLNA FZE.
6.3
Termination . In the event that the Closing shall not have occurred on or before twenty (20) business days from the date hereof due to a failure to satisfy the conditions set forth in Sections 6.1 and 6.2 above (and the non-breaching partys failure to waive such unsatisfied conditions), the non-breaching party shall have the option to terminate this Agreement with respect to such breaching party at the close of business on such date without liability of any party to any other party.
7.
MISCELLANEOUS .
9
Governing Law . This Agreement shall be governed and construed in accordance with the internal laws of Nevada without giving effect to the conflict of laws provisions thereof; and any legal action or proceeding between the parties with respect to this Agreement or otherwise pertaining to the matters covered hereby shall only be instituted in the United States federal and state courts situated in the State of Nevada, unless otherwise agreed in writing by the parties.
7.2
Survival . All of the representations and warranties made herein shall survive the execution and delivery of this Agreement. All covenants and indemnities made herein shall survive in perpetuity, unless otherwise provided in this Agreement.
7.3
Successors and Assigns . Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors, and administrators of the parties hereto.
Entire Agreement . This Agreement and the other documents delivered pursuant hereto and thereto, constitute the full and entire understanding and agreement among the parties with regard to the subjects hereof. No party shall be liable or bound to any other party in any manner by any representations, warranties, covenants, or agreements except as specifically set forth herein or therein, and the parties hereto each acknowledge and agree that they have relied on their own judgment in connection with the execution of this Agreement. Nothing in this Agreement, express or implied, is intended to confer upon any party, other than the parties hereto and their respective successors and assigns, any rights, remedies, obligations, or liabilities or obligations of the parties hereuunder or by reason of this Agreement, except as expressly provided herein.
Severability . In case any provision of this Agreement shall be invalid, illegal, or unenforceable, it shall to the extent practicable, be modified so as to make it valid, legal and enforceable and to retain as nearly as practicable the intent of the parties, and the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
Amendment and Waiver . Except as otherwise provided herein, any term of this Agreement may be amended, and the observance of any term of this Agreement may be waived (either generally or in a particular instance, either retroactively or prospectively, and either for a specified period of time or indefinitely), with the written consent of the Company and IKR BABOLNA FZE. Any amendment or waiver effected in accordance with this Section shall be binding upon each future holder of any security purchased under this Agreement (including securities into which such securities have been converted) and the Company.
Notices . All notices and other communications required or permitted hereunder shall be in writing and shall be effective when delivered personally, or sent by telex, facsimile, email or telecopier (with receipt confirmed), provided that a copy is mailed by registered mail, return receipt requested, or when received by the addressee, if sent by Express Mail, federal Express or other express delivery service (receipt requested) in each case to the appropriate address set forth below:
10
If to the Company:
TORtec Group
c/o Stephen Smoot, President
30 N Gould St. Suite 2489
Sheridan, WY 82801 USA
Telephone: +13072489177
E-mail: utahinternational@gmail.com
With a copy to:
Robert N. Wilkinson
ANDERSON CALL & WILKINSON
110 South Regent Street, Suite 200
Salt Lake City, Utah 84111
Telephone: +18015339645
Email: rnwlaw@aol.com
If to IKR BABOLNA FZE : IKR BABOLNA FZE
AFZA Office № SM № F1-222C,
Dubai, United Arab Emirates
E-mail: ikr.dubai@gmail.com
Bank Details:
Name of the Bank:
Account number:
Dubai, United Arab Emirates
IBAN:
SWIFT:
EURO correspondent Bank:
SWIFT:
7.8
Third Party Beneficiaries . Nothing in this Agreement will confer any third party beneficiary or other rights upon any person (specifically including any employees of the Company) or any entity that is not a party to this Agreement.
7.9
Certain Expenses . Each party shall be responsible for their own costs and expenses. In the event that legal proceedings are commenced by any party to this Agreement against another party to this Agreement in connection with this Agreement or the other transaction documents, the party or parties which do not prevail in such proceedings shall severally, but not jointly, pay their pro rata share of the reasonable attorneys fees and other reasonable out-of-pocket costs and expenses incurred by the prevailing party in such proceedings.
7.10
Independent Counsel . The parties agree that they have carefully read the terms and conditions of this Agreement, that they know and understand the contents and effect of this Agreement and that the legal effect of this Agreement has been fully explained to its
11
satisfaction by counsel of its own choosing or that such party has waived its right to independent counsel.
7.11
Titles and Subtitles . The titles of the paragraphs and subparagraphs of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the date first set forth above.
TORtec Group Corporation
Date: 5/20/2019.
By/s/ Stephen H. Smoot
Stephen H. Smoot, President
IKR BABOLNA FZE
Date: 5/20/2019
By/s/ Merdan Atayev
Merdan Atayev, Drirector
12
ADDENDUM A
WIRE INSTRUCTIONS
INTERNATIONAL WIRE INSTRUCTIONS
(Intermediary Bank)
SWIFT Code:
Bank:
(Beneficiary Bank)
Account #:
Bank:
(Beneficiary)
Account #:
Beneficiary:
ADDENDUM B
The Company represents and IKR BABOLNA FZE hereby acknowledges that the Company is in the process of acquiring one hundred percent (100%) of the issued and outstanding shares of SI-TECH GmbH , a German company of Gewerbestraße 7, 79730 Murg-Hänner, Germany (Si-Tech) from Ecotor Technology S.A.R.L. a Swiss Company of Alpenstrasse 15, 6302 Zug, Switzerland.
The One Million Five Hundred Thousand Euros ( 1,500,000) received from this STOCK PURCHASE AGREEMENT, which this Addendum B is an addendum to, and made a part hereof, will be distributed as follows:
Approximately Euros 700,000 to be paid to Ecotor for one hundred percent (100%) of the total and issued and outstanding shares of Si-Tech GmbH . This payment will eliminate all debts of Ecotor to its creditors (a definitive list to be outlined hereafter in Addendum C .
Approximately Euros 800,000 to be transferred to Si-Tech as additional paid-up capital from both the Company and IKR BABOLNA FZE as fifty-fifty (50/50) owners in Si-Tech
Upon receipt of the above payment from IKR BABOLNA FZE, the Company will cause the transfer of fifty percent (50%) of the ownership of Si-Tech to IKR BABOLNA FZE from Ecotor as soon as the official registration and approvals from German & Swiss government entities will permit.
All decisions regarding further capitalization of Si-Tech will be made upon mutually acceptable terms between the Company and IKR BABOLNA FZE.
The Company will also cause, through its wholly-owned subsidiary TORtec Titan+, the granting of a Territorial License to Si-Tech to the following territory: The Federal Republic of Germany
Payment for this license shall be made to TORtec Titan+ under the terms and conditions outlined in the License (License Agreement to follow).
IN WITNESS WHEREOF, the parties have executed this Addendum B effective as of the date set forth below.
TORtec Group Corporation
Date: 5/20/2019
By/s/ Stephen H. Smoot
Stephen H. Smoot, President
IKR BABOLNA FZE
Date: 5/20/2019
By /s/ Merdan Atayev
Merdan Atayev, Director