Registration of Securities by a Small-Business Issuer — Form SB-2 Filing Table of Contents
Document/ExhibitDescriptionPagesSize
1: SB-2 Yafarm Technologies, Inc. HTML 419K
2: EX-2.1 Plan of Acquisition, Reorganization, Arrangement, HTML 118K Liquidation or Succession
3: EX-3.1 Articles of Incorporation/Organization or By-Laws HTML 18K
4: EX-3.2 Articles of Incorporation/Organization or By-Laws HTML 11K
5: EX-3.3 Articles of Incorporation/Organization or By-Laws HTML 154K
6: EX-23.1 Consent of Experts or Counsel HTML 9K
EX-2.1 — Plan of Acquisition, Reorganization, Arrangement, Liquidation or Succession
This
REORGANIZATION
AND STOCK PURCHASE AGREEMENT (the
“Agreement”)
is
dated as of July 31, 2006 (the “Effective
Date”),
by
and among YaFarm Technologies, Inc., a Delaware corporation (“YaFarm”),
on
the one hand, and YaFarm Group, LLC, a New Jersey limited liability company
(“YFG”)
and
the individuals identified on the signature page of this Agreement as the
members of YFG (the “Members”),
on
the other hand. Each of YaFarm, YFG, and the Members shall be referred to herein
as a “Party”
and
collectively as the “Parties.”
W
I T N E
S S E T H
WHEREAS,
the Members collectively own 100% of the issued and outstanding membership
interests of YFG, as set forth in Exhibit
A
attached
hereto (the “YFG
Membership Interests”);
WHEREAS,
the Members desire to sell and YaFarm desires to purchase all of the YFG
Membership Interests in accordance with the terms set forth herein;
WHEREAS,
the Parties desire and intend that the transactions contemplated by this
Agreement will be a tax free reorganization under Section 368(a)(1)(B) of the
Internal Revenue Code of 1986, as amended.
NOW
THEREFORE, in consideration of the premises and respective mutual agreements,
covenants, representations and warranties herein contained, it is agreed between
the Parties hereto as follows:
ARTICLE
1
SALE
AND
PURCHASE OF THE YFG MEMBERSHIP INTERESTS
1.1Sale
of the YFG Membership Interests.
At the
Closing (as defined in Section 4.1), subject to the terms and conditions herein
set forth, and on the basis of the representations, warranties and agreements
herein contained, the Members shall sell to YaFarm and YaFarm shall purchase
from the Members, all of the YFG Membership Interests.
1.2Purchase
Price.
As
consideration for the purchase of the YFG Membership Interests (the “Purchase
Price”), YaFarm shall issue to the Members, as set forth in Exhibit
A
attached
hereto and made a part hereof, a total of One Million (1,000,000) shares of
YaFarm common stock (the “YaFarmCommon
Shares”).
2
ARTICLE
2
REPRESENTATIONS
AND WARRANTIES
OF
YFG
AND THE MEMBERS
2.1Representations
and Warranties of YFG and the Members.
To
induce YaFarm to enter into this Agreement and to consummate the transactions
contemplated hereby, YFG and the Members, and each of them, represent and
warrant as of the date hereof and as of the Closing, as follows:
2.1.1Authority
of YFG and the Members; Transfer of YFG Membership Interests.
YFG and
the Members have the full right, power and authority to enter into this
Agreement and to carry out and consummate the transactions contemplated herein.
This Agreement, and all of the Exhibits attached hereto, constitutes the legal,
valid and binding obligation of YFG and the Members. The Members shall transfer
title in and to the YFG Membership Interests to YaFarm free and clear of all
liens, security interests, pledges, encumbrances, charges, restrictions,
demands, and claims of any kind or nature whatsoever, whether direct or indirect
or contingent.
2.1.2Existence
of YFG.
YFG is
duly organized, validly existing, and in good standing under the laws of the
state of New Jersey. It has all requisite power, franchises, licenses, permits
and authority to own its properties and assets and to carry on its business
as
it has been and is being conducted. It is in good standing in each state, nation
or other jurisdiction wherein the character of the business transacted by it
makes such qualification necessary.
2.1.3Capitalization
of YFG.
The
authorized equity securities of YFG consist of issued and outstanding Membership
Interests, as set forth on Exhibit
A.
No
other Membership Interests of YFG are issued and outstanding. All of the issued
and outstanding Membership Interests have been duly and validly issued in
accordance and compliance with all applicable laws, rules and regulations and
are fully paid and nonassessable. There are no options, warrants, rights, calls,
commitments, plans, contracts or other agreements of any character granted
or
issued by YFG which provide for the purchase, issuance or transfer of any
Membership Interests of YFG nor are there any outstanding securities granted
or
issued by YFG that are convertible into any Membership Interests of YFG, and
none is authorized. YFG is not obligated or committed to purchase, redeem or
otherwise acquire any of its equity. All presently exercisable voting rights
in
YFG are vested exclusively in its outstanding Membership Interests, which voting
rights are apportioned in accordance with each member’s respective ownership
percentage of the Membership Interests, and other than as may be contemplated
by
this Agreement, there are no voting trusts or other voting arrangements with
respect to any of YFG’s equity securities.
2.1.4Subsidiaries.
“Subsidiary”
or
“Subsidiaries”
means
all corporations, trusts, partnerships, associations, joint ventures or other
Persons, as defined below, of which a corporation or any other Subsidiary of
such corporation owns not less than twenty percent (20%) of the voting
securities or other equity or of which such corporation or any other Subsidiary
of such corporation possesses, directly or indirectly, the power to direct
or
cause the direction of the management and policies, whether through ownership
of
voting Membership Interests, management contracts or otherwise. “Person”
means
any individual, corporation, trust, association, partnership, proprietorship,
joint venture or other entity. YFG does not have any Subsidiaries.
3
2.1.5Execution
of Agreement.
The
execution and delivery of this Agreement does not, and the consummation of
the
transactions contemplated hereby will not: (a) violate, conflict with, modify
or
cause any default under or acceleration of (or give any Party any right to
declare any default or acceleration upon notice or passage of time or both),
in
whole or in part, any charter, article of incorporation, bylaw, mortgage, lien,
deed of trust, indenture, lease, agreement, instrument, order, injunction,
decree, judgment, law or any other restriction of any kind to which YFG or
the
Members are a party or by which any of them or any of their properties are
bound; (b) result in the creation of any security interest, lien, encumbrance,
adverse claim, proscription or restriction on any property or asset (whether
real, personal, mixed, tangible or intangible), right, contract, agreement
or
business of YFG or the Members; (c) violate any law, rule or regulation of
any
federal or state regulatory agency; or (d) permit any federal or state
regulatory agency to impose any restrictions or limitations of any nature on
YFG
or the Members or any of their respective actions.
2.1.6Taxes.
2.1.6.1 All
taxes, assessments, fees, penalties, interest and other governmental charges
with respect to YFG which have become due and payable on the date hereof have
been paid in full or adequately reserved against by YFG, (including without
limitation, income, property, sales, use, franchise, capital stock, excise,
added value, employees’ income withholding, social security and unemployment
taxes), and all interest and penalties thereon with respect to the periods
then
ended and for all periods thereto;
2.1.6.2 There
are
no agreements, waivers or other arrangements providing for an extension of
time
with respect to the assessment of any tax or deficiency against YFG, nor are
there any actions, suits, proceedings, investigations or claims now pending
against YFG, nor are there any actions, suits, proceedings, investigations
or
claims now pending against YFG in respect of any tax or assessment, or any
matters under discussion with any federal, state, local or foreign authority
relating to any taxes or assessments, or any claims for additional taxes or
assessments asserted by any such authority, and there is no basis for the
assertion of any additional taxes or assessments against YFG; and
4
2.1.6.3 The
consummation of the transactions contemplated by this Agreement will not result
in the imposition of any additional taxes on or assessments against
YFG.
2.1.8Compliance
with laws.
YFG has
at all times been, and presently is, in full compliance with, and has not
received notice of any claimed violation of, any applicable federal, state,
local, foreign and other laws, rules and regulations. YFG has filed all returns,
reports and other documents and furnished all information required or requested
by any federal, state, local or foreign governmental agency and all such
returns, reports, documents and information are true and complete in all
respects. All permits, licenses, orders, franchises and approvals of all
federal, state, local or foreign governmental or regulatory bodies required
of
YFG for the conduct of its business have been obtained, no violations are or
have been recorded in respect of any such permits, licenses, orders, franchises
and approvals, and there is no litigation, proceeding, investigation,
arbitration, claim, complaint or accusation, formal or informal, pending or
threatened, which may revoke, limit, or question the validity, sufficiency
or
continuance of any such permit, license, order, franchise or approval. Such
permits, licenses, orders, franchises and approvals are valid and sufficient
for
all activities presently carried on by YFG.
2.1.9Guaranties.
YFG has
not guaranteed any dividend, obligation or indebtedness of any Person; nor
has
any Person guaranteed any dividend, obligation or indebtedness of
YFG.
2.1.10Books
and Records.
YFG
keeps its books, records and accounts (including, without limitation, those
kept
for financial reporting purposes and for tax purposes) in accordance with good
business practice and in sufficient detail to reflect the transactions and
dispositions of its assets, liabilities and equities. The minute books of YFG
contain records of its Members’ meetings and of action taken by such Members.
The meetings Members referred to in such minute books were duly called and
held,
and the resolutions appearing in such minute books were duly adopted. The
signatures appearing on all documents contained in such minute books are the
true signatures of the persons purporting to have signed the same. Attached
hereto as Exhibit
B
is (a)
an income statement and a balance sheet of YFG as of and for the years ended
December 31, 2004 and 2005, (b) an income statement and a balance sheet as
of
and for the six months ended June 30, 2006, prepared with the most up-to-date
adjustments reasonably available, and (c) a “mini-statement” or receipt from any
banks at which YFG has an account showing debits and credits as well as the
bank
balance as of the Closing Date. Attached hereto as Exhibit
C
is a
list of all contracts to which YFG is a party or obligated as of the Closing
Date, and YFG hereby represents and warrants that there are no other material
contracts or agreements in existence as of the Closing Date.
5
2.1.11YaFarm
Shares to be Restricted Securities.
The
Members acknowledge that the YaFarm Common Shares will be “restricted
securities” (as such term is defined in Rule 144 promulgated under the
Securities Act of 1933, as amended (“Rule
144”)),
will
include the customary restrictive legend, and, except as otherwise set forth
in
this Agreement, that the shares cannot be sold for a period of at least one
year
from the date of issuance unless registered with the United States Securities
and Exchange Commission (the “SEC”)
and
qualified by appropriate state securities regulators, or unless the Members
obtain written consent from YaFarm and otherwise complies with an exemption
from
such registration and qualification (including, without limitation, compliance
with Rule 144).
2.1.12Leases.
YFG
either owns or has valid and existing leases with all facilities where its
offices are located or where any of YFG’s equipment or other assets are
located.
ARTICLE
3
REPRESENTATIONS
AND WARRANTIES OF YAFARM
3.1Representations
and Warranties of YaFarm.
To
induce YFG and the Members to enter into this Agreement and to consummate the
transactions contemplated hereby, YaFarm represents and warrants, as of the
date
hereof and as of the Closing, as follows:
3.1.1Authority
of YaFarm.
YaFarm
has the full right, power and authority to enter into this Agreement and to
carry out and consummate the transactions contemplated herein. This Agreement,
and all of the Exhibits attached hereto, constitutes the legal, valid and
binding obligation of YaFarm.
3.1.2Corporate
Existence and Authority of YaFarm.
YaFarm
is a corporation duly organized, validly existing and in good standing under
the
laws of the State of Delaware. It has all requisite corporate power, franchises,
licenses, permits and authority to own its properties and assets and to carry
on
its business as it has been and is being conducted. It is in good standing
in
each state, nation or other jurisdiction in each state, nation or other
jurisdiction wherein the character of the business transacted by it makes such
qualification necessary.
6
3.1.3Capitalization
of YaFarm.
The
authorized equity securities of YaFarm consists of 100,000,000 shares of common
stock, par value $0.001 per share, of which 6,500,000 shares are issued and
outstanding as of the date hereof, and 10,000,000 shares of preferred stock,
par
value $0.001 per share, none of which are issued or outstanding. No other shares
of capital stock of YaFarm are issued and outstanding. All of the issued and
outstanding shares have been duly and validly issued in accordance and
compliance with all applicable laws, rules and regulations and are fully paid
and nonassessable. All presently exercisable voting rights in YaFarm are vested
exclusively in its outstanding shares of common stock, each share of which
is
entitled to one vote on every matter to come before its shareholders. Other
than
as may be contemplated by this Agreement, there are no voting trusts or other
voting arrangements with respect to any of YaFarm’s equity
securities.
3.1.5Execution
of Agreement.
The
execution and delivery of this Agreement does not, and the consummation of
the
transactions contemplated hereby will not: (a) violate, conflict with, modify
or
cause any default under or acceleration of (or give any Party any right to
declare any default or acceleration upon notice or passage of time or both),
in
whole or in part, any charter, article of incorporation, bylaw, mortgage, lien,
deed of trust, indenture, lease, agreement, instrument, order, injunction,
decree, judgment, law or any other restriction of any kind to which YaFarm
is a
party or by which it or any of its properties are bound; (b) result in the
creation of any security interest, lien, encumbrance, adverse claim,
proscription or restriction on any property or asset (whether real, personal,
mixed, tangible or intangible), right, contract, agreement or business of
YaFarm; (c) violate any law, rule or regulation of any federal or state
regulatory agency; or (d) permit any federal or state regulatory agency to
impose any restrictions or limitations of any nature on YaFarm or any of its
actions.
7
ARTICLE
4
CLOSING
AND DELIVERY OF DOCUMENTS
4.1Closing.
The
Closing (the “Closing”)
shall
take place at the offices of The Lebrecht Group, APLC, 406 W. South Jordan
Parkway, Suite 160, South Jordan, Utah84095, no later than the close of
business (Mountain Standard Time) on July 31, 2006, or at such other place,
date
and time as the Parties may agree in writing (the “Closing
Date”).
4.2Deliveries
by YaFarm.
At the
Closing, YaFarm shall deliver the following:
4.2.1 YaFarm
shall deliver to the Members:
(a) written
confirmation of the approval of this Agreement and the herein described
transactions by YaFarm’s
Board
of Directors; and
(b) the
YaFarm Common Shares subject
to no liens, security interests, pledges, encumbrances, charges, restrictions,
demands or claims in any other party whatsoever;
4.2.2 YaFarm
shall deliver to YFG:
(a) written
confirmation of the approval of this Agreement and the herein described
transactions by YaFarm’s Board of Directors; and
(b) an
officer’s certificate, executed by the President of YaFarm, in the form attached
hereto as Exhibit
D;
4.3Delivery
by YFG:
At the
Closing, or as otherwise set forth below, YFG shall deliver the
following:
4.3.1 YFG
shall
deliver to YaFarm:
(a) an
officer’s certificate, executed by the President of YFG, in the form attached
hereto as Exhibit
E;
(b) written
confirmation of the approval of this Agreement and the herein described
transactions by YFG’s management. The officer’s certificate, in the form
attached hereto as Exhibit
E,
shall
satisfy this delivery requirement;
(c) a
certificate of good standing, dated within ten (10) days prior to the Closing
Date, evidencing the good standing status of YFG;
(d) the
financial statements of YFG as set forth in Section 2.1.10, except for an income
statement and a balance sheet as of and for the six months ended June 30, 2006,
which YFG shall deliver to YaFarm within 30 days of the Closing;
8
4.4Delivery
by The Members:
At the
Closing, the Members shall deliver the following:
4.4.1 The
Members shall deliver to YaFarm:
(a) the
YFG
Membership Interests subject to no liens, security interests, pledges,
encumbrances, charges, restrictions, demands or claims in any other party
whatsoever;
ARTICLE
5
CONDITIONS,
TERMINATION, AMENDMENT AND WAIVER
5.1Conditions
Precedent.
This
Agreement, and the transactions contemplated hereby, shall be subject to the
following conditions precedent:
5.1.1 The
obligation of YaFarm to pay the Purchase Price and to satisfy its other
obligations hereunder shall be subject to the fulfillment (or waiver by YaFarm),
at or prior to the Closing, of the following conditions, which YFG agrees to
use
its best efforts to cause to be fulfilled:
(a)Representations,
Performance.
If the
Closing Date is not the date hereof, the representations and warranties
contained in Section 2.1 hereof shall be true at and as of the date hereof
and
shall be repeated and shall be true at and as of the Closing Date with the
same
effect as though made at and as of the Closing Date, except as affected by
the
transactions contemplated hereby; YFG and the Members shall have duly performed
and complied with all agreements and conditions required by this Agreement
to be
performed or complied with by it prior to or on the Closing Date; and YFG shall
have delivered to YaFarm a certificate dated the Closing Date, and signed by
its
President to the effect set forth above in this section.
(b)Consents.
Any
required consent to the transactions contemplated by this Agreement shall have
been obtained or waived.
(c)Litigation.
No
suit, action, arbitration or other proceeding or investigation shall be
threatened or pending before any court or governmental agency in which it is
sought to restrain or prohibit or to obtain material damages or other material
relief in connection with this Agreement or the consummation of the transactions
contemplated hereby or which is likely to affect materially the value of YFG,
other than as set forth in Schedule 2.1.7.
(d)Proceedings
and Documentation.
All
proceedings of YFG in connection with the transactions contemplated by this
Agreement, and all documents and instruments incident to such proceedings,
shall
be satisfactory in form and substance to YaFarm and YaFarm’s counsel, and YaFarm
and YaFarm’s counsel shall have received all such receipts, documents and
instruments, or copies thereof, certified if requested, to which YaFarm is
entitled and as may be reasonably requested.
9
(e)Property
Loss.
No
portion of YFG’s assets shall have been destroyed or damaged or taken by
condemnation under circumstances where the loss thereof will not be
substantially reimbursed to YaFarm through the proceeds of applicable insurance
or condemnation award.
(f)Consents
and Approvals.
All
material licenses, permits, consents, approvals, authorizations, qualifications
and orders of governmental or regulatory bodies which are (1) necessary to
enable YaFarm to fully operate the business of YFG as contemplated from and
after the Closing shall have been obtained and be in full force and effect,
or
(2) necessary for the consummation of the transactions contemplated hereby,
shall have been obtained. Any notices to or consents of any party to any
agreement or commitment constituting part of the transactions contemplated
hereby, or otherwise required to consummate any such transactions, shall have
been delivered or obtained.
(g) As
of the
Closing Date, the balance of all bank accounts for YFG shall be at least $100
after accounting for any outstanding debits and/or credits, and all accounts
payable will have been timely paid in accordance with their terms.
5.1.2 The
obligation of YFG and the Members to deliver the YFG Membership Interests and
to
satisfy their other obligations hereunder shall be subject to the fulfillment
(or waiver by YFG and the Members), at or prior to the Closing, of the following
conditions, which YaFarm agrees to use its best efforts to cause to be
fulfilled:
(a)Representations,
Performance.
If the
Closing Date is not the date hereof, the representations and warranties
contained in Section 3.1 hereof shall be true at and as of the date hereof
and
shall be repeated and shall be true at and as of the Closing Date with the
same
effect as though made at and as of the Closing Date, except as affected by
the
transactions contemplated hereby; YaFarm shall have duly performed and complied
with all agreements and conditions required by this Agreement to be performed
or
complied with by it prior to or on the Closing Date.
10
(b)Proceedings
and Documentation.
All
corporate and other proceedings of YaFarm in connection with the transactions
contemplated by this Agreement, and all documents and instruments incident
to
such corporate proceedings, shall be satisfactory in form and substance to
YFG
and YFG’s counsel, and YFG and YFG’s counsel shall have received all such
receipts, documents and instruments, or copies thereof, certified if requested,
to which YFG is entitled and as may be reasonably requested.
5.2Termination.
Notwithstanding anything to the contrary contained in this Agreement, this
Agreement may be terminated and the transactions contemplated hereby may be
abandoned prior to the Closing Date only by the mutual consent of all of the
Parties.
5.3Waiver
and Amendment.
Any
term, provision, covenant, representation, warranty or condition of this
Agreement may be waived, but only by a written instrument signed by the Party
entitled to the benefits thereof. The failure or delay of any Party at any
time
or times to require performance of any provision hereof or to exercise its
rights with respect to any provision hereof shall in no manner operate as a
waiver of or affect such Party’s right at a later time to enforce the same. No
waiver by any Party of any condition, or of the breach of any term, provision,
covenant, representation or warranty contained in this Agreement, in any one
or
more instances, shall be deemed to be or construed as a further or continuing
waiver of any such condition or breach or waiver of any other condition or
of
the breach of any other term, provision, covenant, representation or warranty.
No modification or amendment of this Agreement shall be valid and binding unless
it be in writing and signed by all Parties hereto.
ARTICLE
6
COVENANTS,
INDEMNIFICATION
6.1 To
induce
YaFarm to enter into this Agreement and to consummate the transactions
contemplated hereby, and without limiting any covenant, agreement,
representation or warranty made, YFG and the Members covenant and agree as
follows:
6.1.1
Notices
and Approvals.
YFG and
the Members agree: (a) to give all notices to third parties which may be
necessary or deemed desirable by YaFarm in connection with this Agreement and
the consummation of the transactions contemplated hereby; (b) to use its best
efforts to obtain all federal and state governmental regulatory agency
approvals, consents, permit, authorizations, and orders necessary or deemed
desirable by YaFarm in connection with this Agreement and the consummation
of
the transaction contemplated hereby; and (c) to use its best efforts to obtain
all consents and authorizations of any other third parties necessary or deemed
desirable by YaFarm in connection with this Agreement and the consummation
of
the transactions contemplated hereby.
6.1.2
Information
for YaFarm’s Statements and Applications.
YFG and
the Members and their employees, accountants and attorneys shall cooperate
fully
with YaFarm in the preparation of any statements or applications made by YaFarm
to any federal or state governmental regulatory agency in connection with this
Agreement and the transactions contemplated hereby and to furnish YaFarm with
all information concerning YFG and the Members necessary or deemed desirable
by
YaFarm for inclusion in such statements and applications, including, without
limitation, all requisite financial statements and schedules.
11
6.1.3Access
to Information.
YaFarm,
together with its appropriate attorneys, agents and representatives, shall
be
permitted to make the full and complete investigation of YFG and the Members
and
have full access to all of the books and records of YFG during reasonable
business hours. Notwithstanding the foregoing, such parties shall treat all
such
information as confidential and shall not disclose such information without
the
prior consent of the other.
6.2 To
induce
YFG and the Members to enter into this Agreement and to consummate the
transactions contemplated hereby, and without limiting any covenant, agreement,
representation or warranty made, YaFarm covenants and agrees as
follows:
6.2.1Access
to Information.
YFG and
the Members, together with their appropriate attorneys, agents and
representatives, shall be permitted to make the full and complete investigation
of YaFarm and have full access to all of the books and records of the other
during reasonable business hours. Notwithstanding the foregoing, such parties
shall treat all such information as confidential and shall not disclose such
information without the prior consent of the other.
6.3Indemnification.
6.3.1Indemnity
of YFG and the Members.
YaFarm
agrees to indemnify, defend and hold the YFG and the Members harmless from
and
against any and all Losses (as hereinafter defined) arising out of or resulting
from the breach by YaFarm of any representation, warranty, covenant or agreement
of YaFarm contained in this Agreement or the schedules and exhibits hereto.
For
purposes of Section 6.3, the term “Losses”
shall
mean all damages, costs and expenses (including reasonable attorneys’ fees) of
every kind, nature or description, it being the intent of the Parties that
the
amount of any such Loss shall be the amount necessary to restore the indemnified
party to the position it would have been in (economically or otherwise),
including any costs or expenses incident to such restoration, had the breach,
event, occurrence or condition occasioning such Loss never occurred.
Notwithstanding the foregoing provisions of this section, no claim for
indemnification shall be made by YFG or the Members under this Section unless
and until the aggregate amount of all Losses of YFG and the Members in respect
thereof shall exceed $5,000. YaFarm’s liability under this Section shall not
exceed the Purchase Price.
6.3.2Indemnity
of YaFarm.
YFG and
the Members, and each of them, hereby agrees to indemnify, defend and hold
YaFarm harmless from and against any and all Losses arising out of or resulting
from the breach by YFG or the Members of any representation, warranty, agreement
or covenant contained in this Agreement or the exhibits and schedules hereto,
including, without limitation, the failure to disclose any liabilities or
material contracts or agreements pursuant to Section 2.1.10. YaFarm shall have
the right to offset any Losses incurred and actually paid pursuant to this
Section 6.3.2 against any amounts due from YaFarm to YFG or the Members,
however, any offset shall not act as YaFarm’s sole remedy. Notwithstanding the
foregoing provisions of this Section, no claim for indemnification shall be
made
by YaFarm under this Section unless and until the aggregate amount of all Losses
of YaFarm in respect thereof shall exceed $5,000.
12
6.3.3Indemnification
Procedure.
(a) An
indemnified party shall notify the indemnifying party of any claim of such
indemnified party for indemnification under this Agreement within thirty days
of
the date on which such indemnified party or an executive officer or
representative of such indemnified party first becomes aware of the existence
of
such claim. Such notice shall specify the nature of such claim in reasonable
detail and the indemnifying party shall be given reasonable access to any
documents or properties within the control of the indemnified party as may
be
useful in the investigation of the basis for such claim. The failure to so
notify the indemnifying party within such thirty-day period shall not constitute
a waiver of such claim but an indemnified party shall not be entitled to receive
any indemnification with respect to any additional loss that occurred as a
result of the failure of such person to give such notice.
In
the
event any indemnified party is entitled to indemnification hereunder based
upon
a claim asserted by a third party (including a claim arising from an assertion
or potential assertion of a claim for Taxes), the indemnifying party shall
be
given prompt notice thereof, in reasonable detail. The failure to so notify
the
indemnifying party shall not constitute a waiver of such claim but an
indemnified party shall not be entitled to receive any indemnification with
respect to any Loss that occurred as a result of the failure of such person
to
give such notice. The indemnifying party shall have the right (without prejudice
to the right of any indemnified party to participate at its expense through
counsel of its own choosing) to defend or prosecute such claim at its expense
and through counsel of its own choosing if it gives written notice of its
intention to do so not later than twenty days following notice thereof by the
indemnifying party or such shorter time period as required so that the interests
of the indemnified party would not be materially prejudiced as a result of
its
failure to have received such notice; provided,
however, that if the defendants in any action shall include both an indemnifying
party and an indemnified party and the indemnified party shall have reasonably
concluded that counsel selected by the indemnifying party has a conflict of
interest because of the availability of different or additional defenses to
the
indemnified party, the indemnified party shall have the right to select separate
counsel to participate in the defense of such action on its behalf, at the
expense of the indemnifying party. If the indemnifying party does not so choose
to defend or prosecute any such claim asserted by a third party for which any
indemnified party would be entitled to indemnification hereunder, then the
indemnified party shall be entitled to recover from the indemnifying party,
on a
monthly basis, all of its attorneys’ reasonable fees and other costs and
expenses of litigation of any nature whatsoever incurred in the defense of
such
claim. Notwithstanding the assumption of the defense of any claim by an
indemnifying party pursuant to this paragraph, the indemnified party shall
have
the right to approve the terms of any settlement of a claim (which approval
shall not be unreasonably withheld).
13
(b) The
indemnifying party and the indemnified party shall cooperate in furnishing
evidence and testimony and in any other manner which the other may reasonably
request, and shall in all other respects have an obligation of good faith
dealing, one to the other, so as not to unrea-sonably expose the other to an
undue risk of loss. The indemnified party shall be entitled to reimbursement
for
out-of-pocket expenses reasonably incurred by it in connec-tion with such
cooperation. Except for fees and expenses for which indemnification is provided
pursuant to Section 6.3 or Section 6.4, as the case may be, and as provided
in
the preceding sentence, each party shall bear its own fees and expenses incurred
pursuant to this paragraph (b).
ARTICLE
7
MISCELLANEOUS
7.1Expenses.
Except
as otherwise specifically provided for herein, whether or not the transactions
contemplated hereby are consummated, each of the Parties hereto shall bear
the
cost of all fees and expenses relating to or arising from its compliance with
the various provisions of this Agreement and such Party’s covenants to be
performed hereunder, and except as otherwise specifically provided for herein,
each of the Parties hereto agrees to pay all of its own expenses (including,
without limitation, attorneys and accountants’ fees and printing expenses)
incurred in connection with this Agreement, the transactions contemplated
hereby, the negotiations leading to the same and the preparations made for
carrying the same into effect, and all such fees and expenses of the Parties
hereto shall be paid prior to Closing.
7.2Notices.
Any
notice, request, instruction or other document required by the terms of this
Agreement, or deemed by any of the Parties hereto to be desirable, to be given
to any other Party hereto shall be in writing and shall be delivered by
facsimile or overnight courier to the following addresses:
The
persons and addresses set forth above may be changed from time to time by a
notice sent as aforesaid. Notice shall be conclusively deemed given at the
time
of delivery if made during normal business hours, otherwise notice shall be
deemed given on the next business day.
7.3Entire
Agreement.
This
Agreement, together with the schedules and exhibits hereto, sets forth the
entire agreement and understanding of the Parties hereto with respect to the
transactions contemplated hereby, and supersedes all prior agreements,
arrangements and understandings related to the subject matter hereof. No
understanding, promise, inducement, statement of intention, representation,
warranty, covenant or condition, written or oral, express or implied, whether
by
statute or otherwise, has been made by any Party hereto which is not embodied
in
this Agreement, or exhibits hereto or the written statements, certificates,
or
other documents delivered pursuant hereto or in connection with the transactions
contemplated hereby, and no Party hereto shall be bound by or liable for any
alleged understanding, promise, inducement, statement, representation, warranty,
covenant or condition not so set forth.
15
7.4Survival
of Representations.
All
statements of fact (including financial statements) contained in the schedules,
the exhibits, the certificates or any other instrument delivered by or on behalf
of the Parties hereto, or in connection with the transactions contemplated
hereby, shall be deemed representations and warranties by the respective Party
hereunder. All representations, warranties, agreements, and covenants hereunder
shall survive the Closing and remain effective regardless of any investigation
or audit at any time made by or on behalf of the Parties or of any information
a
Party may have in respect thereto. Consummation of the transactions contemplated
hereby shall not be deemed or construed to be a waiver of any right or remedy
possessed by any Party hereto, notwithstanding that such Party knew or should
have known at the time of Closing that such right or remedy
existed.
7.5Incorporated
by Reference.
All
documents (including, without limitation, all financial statements) delivered
as
part hereof or incident hereto are incorporated as a part of this Agreement
by
reference.
7.6Remedies
Cumulative.
No
remedy herein conferred upon any Party is intended to be exclusive of any other
remedy and each and every such 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.
7.7Execution
of Additional Documents.
Each
Party hereto shall make, execute, acknowledge and deliver such other instruments
and documents, and take all such other actions as may be reasonably required
in
order to effectuate the purposes of this Agreement and to consummate the
transactions contemplated hereby.
7.8Finders’
and Related Fees.
Each of
the Parties hereto is responsible for, and shall indemnify the other against,
any claim by any third party to a fee, commission, bonus or other remuneration
arising by reason of any services alleged to have been rendered to or at the
instance of said Party to this Agreement with respect to this Agreement or
to
any of the transactions contemplated hereby.
7.9Governing
Law.
This
Agreement has been negotiated and executed in the State of New Jersey and shall
be construed and enforced in accordance with the laws of such
state.
7.10Forum.
Each of
the Parties hereto agrees that any action or suit which may be brought by any
Party hereto against any other Party hereto in connection with this Agreement
or
the transactions contemplated hereby may be brought only in a federal or state
court in Middlesex County, New Jersey.
7.11Attorneys’
Fees.
Except
as otherwise provided herein, if a dispute should arise between the Parties
including, but not limited to arbitration, the prevailing Party shall be
reimbursed by the nonprevailing Party for all reasonable expenses incurred
in
resolving such dispute, including reasonable attorneys’ fees exclusive of such
amount of attorneys’ fees as shall be a premium for result or for risk of loss
under a contingency fee arrangement.
16
7.12Binding
Effect and Assignment.
This
Agreement shall inure to the benefit of and be binding upon the Parties hereto
and their respective heirs, executors, administrators, legal representatives
and
assigns.
7.13Counterparts.
This
Agreement may be executed in counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument. In making proof of this Agreement, it shall not be necessary to
produce or account for more than one such counterpart.
[remainder
of page intentionally left blank; signature page to follow]
17
IN
WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
date
first written hereinabove.
The
undersigned hereby certifies on behalf of YaFarm Technologies, Inc., a Delaware
corporation (“YaFarm” or the “Company”), pursuant to that certain Reorganization
and Stock Purchase Agreement (the “Purchase Agreement”) dated July 31, 2006, by
and among the Company, on the one hand, and YaFarm Group, LLC, a New Jersey
limited liability company (“YFG”) and Zhiguang Zhang, an individual and Jie
Geng, an individual (collectively, the “Members”), on the other hand, that he is
the duly appointed President of the Company, and further certifies on behalf
of
the Company that:
1. The
representations and warranties of the Company set forth in the Purchase
Agreement are true and correct as of the date hereof as though made on and
as of
the date hereof (except for any representation or warranty that expressly
relates to an earlier date, in which case such representation or warranty shall
have been true and correct as of such earlier date).
2. All
of
the terms, covenants and conditions of the Purchase Agreement to be complied
with or performed by the Company at or prior to the date hereof have been
complied with and performed by the Company in all material
respects.
3. Attached
hereto as Exhibit
A
is a
true, correct and complete copy of resolutions adopted by unanimous written
consent by the Board of Directors of the Company on July 31, 2006, which
resolutions have not been modified, amended, rescinded or revoked in any way
and
remain in full force and effect as of the date hereof. Such resolutions
constitute the only resolutions adopted by the Board of Directors of the Company
relating to the Purchase Agreement.
4. The
following is a list of those executive officers of the Company who may be
signing any document or certificate in connection with the Purchase Agreement
and their respective positions; (ii) each such executive officer has been duly
elected and qualified and continues to act in and hold that position; and (iii)
the signatures of those appearing adjacent to their respective names and
positions below are the genuine and original signatures of such
officers:
1.1 Name
2.1 Position
3.1 Signature
Hong
Zhao
President
/s/
Hong Zhao
Hong Zhao
IN
WITNESS WHEREOF, the undersigned has executed this Certificate as of
July
31,
2006.
/s/
Hong Zhao
Hong Zhao, President
D
-
23
Exhibit
A
Unanimous
Written Consent of Directors
24
Exhibit
E
YFG
Officer’s Certificate
OFFICERS
CERTIFICATE
The
undersigned hereby certifies on behalf of YaFarm Group, LLC, a New Jersey
limited liability company (“YFG” or the “Company”), pursuant to that certain
Reorganization and Stock Purchase Agreement (the “Purchase Agreement”) dated
July 31, 2006, by and among the Company and Zhiguang Zhang, an individual and
Jie Geng, an individual (collectively, the “Members”), on the one hand, and
YaFarm Technologies, Inc., a Delaware corporation (“YaFarm”), on the other hand,
that he is the duly appointed President of the Company, and further certifies
on
behalf of the Company that:
1. The
representations and warranties of the Company set forth in the Purchase
Agreement are true and correct as of the date hereof as though made on and
as of
the date hereof (except for any representation or warranty that expressly
relates to an earlier date, in which case such representation or warranty shall
have been true and correct as of such earlier date).
2. All
of
the terms, covenants and conditions of the Purchase Agreement to be complied
with or performed by the Company at or prior to the date hereof have been
complied with and performed by the Company in all material
respects.
3. The
following is a list of those executive officers of the Company who may be
signing any document or certificate in connection with the Purchase Agreement
and their respective positions; (ii) each such executive officer has been duly
elected and qualified and continues to act in and hold that position; and (iii)
the signatures of those appearing adjacent to their respective names and
positions below are the genuine and original signatures of such
officers:
4.1 Name
5.1 Position
6.1 Signature
Zhiguang
Zhang
President
and Secretary
/s/
Zhiguang Zhang
Jie
Geng
Chief
Financial Officer
and
Chief Technology Officer
/s/
Jie Geng
IN
WITNESS WHEREOF, the undersigned has executed this Certificate as of
July
31,
2006.
