STOCK PURCHASE AGREEMENT

 

BY AND AMONG

 

REGENCY YAMUNA ENERGY LIMITED

(“RYEL” or the “Company”)

 

Mr. ARUN SHARMA

(the “Promoter”)

 

The RYEL Stockholders named herein

(the “Selling Stockholders”)

 

AND

 

PAN ASIA INFRATECH CORP.

(the “Buyer”)

 

 

 

 

TABLE OF CONTENTS

 

ARTICLE I DEFINITIONS   5         ARTICLE II PURCHASE AND SALE   13      
Section 2.01 Purchase and Sale.   13       Section 2.03 Transactions to be
Effected at the Closing.   16         Section 2.04 Purchase Price Adjustment.  
16         Section 2.05 Closing.   17         ARTICLE III REPRESENTATIONS AND
WARRANTIES OF COMPANY, PROMOTER AND EACH SELLING STOCKHOLDER   19       Section
3.01 Organization and Authority of Seller.   19         Section 3.02
Organization, Authority and Qualification of the Company.   20         Section
3.03 Capitalization.   20         Section 3.04 No Subsidiaries.   21        
Section 3.05 No Conflicts; Consents.   21         Section 3.06 Financial
Statements.   21         Section 3.07 Undisclosed Liabilities.   22        
Section 3.08 Absence of Certain Changes, Events and Conditions.   22        
Section 3.09 Material Contracts.   24         Section 3.10 Title to Assets; Real
Property.   23         Section 3.11 Condition And Sufficiency of Assets.   26  
      Section 3.12 Intellectual Property.   26         Section 3.14 Accounts
Receivable.   27         Section 3.16 Insurance   28         Section 3.17 Legal
Proceedings; Governmental Orders.   28         Section 3.18 Compliance With
Laws; Permits.   28         Section 3.19 Environmental Matters.   29        
Section 3.20 Employee Benefit Matters.   30

 

STOCK PURCHASE AGREEMENTPage 2

 

 

Section 3.21 Employment Matters.   30         Section 3.22 Taxes.   31        
Section 3.23 Books and Records.   32         Section 3.24 Brokers.   32        
Section 3.25 Full Disclosure.   33         ARTICLE IV REPRESENTATIONS AND
WARRANTIES OF BUYER   33         Section 4.01 Organization and Authority of
Buyer   33         Section 4.02 No Conflicts; Consents.   34         Section
4.03 Investment Purpose.   34         Section 4.04 Brokers.   34         Section
4.05 Sufficiency of Funds.   34         Section 4.06 Legal Proceedings.   34    
    ARTICLE V COVENANTS   35         Section 5.01 Conduct of Business Prior to
the Closing.   35         Section 5.02 Access to Information.   35        
Section 5.03 No Solicitation of Other Bids.   35       Section 5.04 Notice of
Certain Events.   36         Section 5.06 Confidentiality.   37         Section
5.08 Governmental Approvals and Consents.   38         Section 5.09 Books and
Records.   38         Section 5.10. Closing Conditions.   39         Section
5.11 Public Announcements.   40         Section 5.12 Further Assurances.   40  
      ARTICLE VI TAX MATTERS   41         Section 6.01 Tax Covenants.   41      
  Section 6.03 Tax Indemnification.   41         Section 6.06 Contests.   42    
    Section 6.07 Cooperation and Exchange of Information.   42         Section
6.08 Tax Treatment of Indemnification Payments.   42         Section 6.09.
Survival.   42

 

STOCK PURCHASE AGREEMENTPage 3

 

 

Section 6.10 Overlap.   42         ARTICLE VII CONDITIONS TO CLOSING   43      
  Section 7.01 Conditions to Obligations of All Parties.   43         Section
7.02 Conditions to Obligations of Buyer.   43         Section 7.03 Conditions to
Obligations of Seller.   45         ARTICLE VIII INDEMNIFICATION 46        
Section 8.01 Survival.   46         Section 8.02 Indemnification By Seller.   46
        Section 8.03 Indemnification By Buyer.   46         Section 8.04 Certain
Limitations.   47         Section 8.05 Indemnification Procedures.   47        
Section 8.06 Payments.   49         Section 8.07 Tax Treatment of
Indemnification Payments.   50         Section 8.08 Effect of Investigation   50
        Section 8.09 Exclusive Remedies.   50         ARTICLE IX TERMINATION  
50         Section 9.01 Termination.   50         Section 9.02 Effect of
Termination   51         ARTICLE X MISCELLANEOUS   52         Section 10.01
Expenses   52         Section 10.02 Notices.   52         Section 10.03
Interpretation.   52         Section 10.04 Headings.   53         Section 10.05
Severability.   53         Section 10.06 Entire Agreement.   53         Section
10.07 Successors and Assigns.   54         Section 10.08 No Third-party
Beneficiaries.   54         Section 10.09 Amendment and Modification; Waiver.  
54         Section 10.10 Governing Law; Submission to Jurisdiction; Waiver of
Jury Trial.   54         Section 10.11 Specific Performance.   54        
Section 10.12 Counterparts   55

 

STOCK PURCHASE AGREEMENTPage 4

 

 

STOCK PURCHASE AGREEMENT

 

THIS STOCK PURCHASE AGREEMENT (this “Agreement”), dated as of the Effective
Date, is entered into between REGENCY YAMUNA ENERGY LIMITED, an India
corporation (“RYEL” or the “Company”), MR. ARUN SHARMA (the “Promoter”), each of
the stockholders of the Company listed on Exhibit A hereto (each and
collectively with the Promoter, the “Selling Stockholder” or the “Selling
Stockholders”), and PAN ASIA INFRATECH CORP., a Nevada corporation (the
“Buyer”).

 

RECITALS

 

WHEREAS, the Company is commissioning a 5.7 MW (4.9 MW allotted) Small Hydro
Project at Badyar, India having a valuation of Rs. 67.11 Cr. (the “Project”);

  

WHEREAS, the Selling Stockholders own 100% of the outstanding equity of the
Company; and

  

WHEREAS, the Buyer wishes to invest an aggregate of Rs. 38.75 Cr. in the Company
to enable the Company to restructure certain outstanding indebtedness, to fund
the completion of the Project, and to purchase 100% of the outstanding equity of
the Company, subject to the terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

 

Article I

Definitions

 

The following terms have the meanings specified or referred to in this Article
I:

 

“Accountants” mean Independent Accountants.

 

“Acquisition Proposal” has the meaning set forth in Section 5.04(a).

 

“Action” means any claim, action, cause of action, demand, lawsuit, arbitration,
inquiry, audit, notice of violation, proceeding, litigation, citation, summons,
subpoena or investigation of any nature, civil, criminal, administrative,
regulatory or otherwise, whether at law or in equity.

 

“Affiliate” of a Person means any other Person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, such Person. The term “control” (including the terms
“controlled by” and “under common control with”) means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.

 

STOCK PURCHASE AGREEMENTPage 5

 

 

“Agreement” has the meaning set forth in the preamble.

 

“Ancillary Agreements” means the Stockholders Agreement, the Escrow Agreement
and the Convertible Debenture.

 

“Audited Financial Statements” has the meaning set forth in Section 3.06.

 

“Balance Sheet” has the meaning set forth in Section 3.06.

 

“Balance Sheet Date” has the meaning set forth in Section 3.06.

 

“Basket” has the meaning set forth in Section 8.04(a).

 

“Benefit Plan” has the meaning set forth in Section 3.20(a).

 

“Business Day” means any day except Saturday, Sunday or any other day on which
commercial banks located in New Delhi, India are authorized or required by Law
to be closed for business.

 

“Buyer” has the meaning set forth in the preamble.

 

“Buyer Indemnitees” has the meaning set forth in Section 8.02.

 

“Cap” has the meaning set forth in Section 8.04(a).

 

“Capital Stock” has the meaning set forth in Section 3.03(a).

 

“Closing” has the meaning set forth in Section 2.06.

 

“Closing Adjustment” has the meaning set forth in Section 2.05(a)(ii).

 

“Closing Date” has the meaning set forth in Section 2.06.

 

“Closing Working Capital” means: (a) the Current Assets of the Company, less (b)
the Current Liabilities of the Company, determined as of the open of business on
the Closing Date.

 

“Commercial Operation Date” means the date when the power generated is exported
to the UPCL grid.

 

“Companies Act” means the Companies Act of 1956, as amended, promulgated by the
government of India.

 

“Completion Date” means the date when the Project is complete and the
communication for completion is sent to UERC/UPCL for their inspection of the
Project.

 

STOCK PURCHASE AGREEMENTPage 6

 

 

“COD” or “Commercial Operation Date” means the date on which the power generated
by the Project is exported to the UPCL grid.

 

“Code” means the Tax Code of India, as amended.

 

“Company” has the meaning set forth in the recitals.

 

“Company Intellectual Property” has the meaning set forth in Section 3.12(a).

 

“Contracts” means all contracts, leases, deeds, mortgages, licenses,
instruments, notes, commitments, undertakings, indentures, joint ventures and
all other agreements, commitments and legally binding arrangements, whether
written or oral.

 

“Convertible Debenture” means that certain convertible debenture payable by the
Company for the benefit of the Buyer for the aggregate principal amount of Rs.
4,200,000 bearing interest at a rate of 15% (fifteen percent) per annum,
commencing on the 90th day after the date of issue, maturing on the first
anniversary of the date of issue, and convertible at any time and from time to
time into Common Shares of the Company by the Buyer at a rate of Rs. 14.50 per
share, subject to adjustment in certain circumstances.

 

“Crore” or “Cr.” means 10 million Rupees.

 

“Current Assets” means cash and cash equivalents, accounts receivable, inventory
and prepaid expenses, but excluding (a) the portion of any prepaid expense of
which Buyer will not receive the benefit following the Closing, (b) deferred Tax
assets and (c) receivables from any of the Company’s Affiliates, directors,
employees, officers or stockholders and any of their respective Affiliates,
determined in accordance with Section 3(c) of Section 211 of the Companies Act
applied using the same accounting methods, practices, principles, policies and
procedures, with consistent classifications, judgments and valuation and
estimation methodologies that were used in the preparation of the Audited
Financial Statements for the most recent fiscal year end as if such accounts
were being prepared and audited as of a fiscal year end.

 

“Current Liabilities” means accounts payable, accrued Taxes and accrued
expenses, but excluding payables to any of the Company’s Affiliates, directors,
employees, officers or stockholders and any of their respective Affiliates,
applied using the same accounting methods, practices, principles, policies and
procedures, with consistent classifications, judgments and valuation and
estimation methodologies that were used in the preparation of the Audited
Financial Statements for the most recent fiscal year end as if such accounts
were being prepared and audited as of a fiscal year end.

 

“Direct Claim” has the meaning set forth in Section 8.05(c).

 

“Disclosure Schedules” means the Disclosure Schedules delivered by parties
hereto concurrently with the execution and delivery of this Agreement.

 

“Disputed Amounts” has the meaning set forth in Section 2.05(b)(iii).

 

STOCK PURCHASE AGREEMENTPage 7

 

 

“Dollars” or “$” means the lawful currency of the United States.

 

“Drop Dead Date” means the 90th day after the commencement of the Third Closing,
subject to the Buyer’s right to extend such date for an additional 90 days.

 

“Effective Date” means the date the last signatory executes this Agreement.

 

“Encumbrance” means any charge, claim, community property interest, pledge,
condition, equitable interest, lien (statutory or other), option, security
interest, mortgage, easement, encroachment, right of way, right of first
refusal, or restriction of any kind, including any restriction on use, voting,
transfer, receipt of income or exercise of any other attribute of ownership.

 

“Environmental Attributes” means any emissions and renewable energy credits,
energy conservation credits, benefits, offsets and allowances, emission
reduction credits or words of similar import or regulatory effect (including
emissions reduction credits or allowances under all applicable emission trading,
compliance or budget programs, or any other federal, state or regional emission,
renewable energy or energy conservation trading or budget program) that have
been held, allocated to or acquired for the development, construction,
ownership, lease, operation, use or maintenance of the Company as of: (i) the
date of this Agreement; and (ii) future years for which allocations have been
established and are in effect as of the date of this Agreement.

 

“Environmental Claim” means any Action, Governmental Order, lien, fine, penalty,
or, as to each, any settlement or judgment arising therefrom, by or from any
Person alleging liability of whatever kind or nature (including liability or
responsibility for the costs of enforcement proceedings, investigations,
cleanup, governmental response, removal or remediation, natural resources
damages, property damages, personal injuries, medical monitoring, penalties,
contribution, indemnification and injunctive relief) arising out of, based on or
resulting from: (a) the presence, Release of, or exposure to, any Hazardous
Materials; or (b) any actual or alleged non-compliance with any Environmental
Law or term or condition of any Environmental Permit.

 

“Environmental Law” means any applicable Law, and any Governmental Order or
binding agreement with any Governmental Authority: (a) relating to pollution (or
the cleanup thereof) or the protection of natural resources, endangered or
threatened species, human health or safety, or the environment (including
ambient air, soil, surface water or groundwater, or subsurface strata); or (b)
concerning the presence of, exposure to, or the management, manufacture, use,
containment, storage, recycling, reclamation, reuse, treatment, generation,
discharge, transportation, processing, production, disposal or remediation of
any Hazardous Materials.

 

“Environmental Notice” means any written directive, notice of violation or
infraction, or notice respecting any Environmental Claim relating to actual or
alleged non-compliance with any Environmental Law or any term or condition of
any Environmental Permit.

 

STOCK PURCHASE AGREEMENTPage 8

 

 

“Environmental Permit” means any Permit, letter, clearance, consent, waiver,
closure, exemption, decision or other action required under or issued, granted,
given, authorized by or made pursuant to Environmental Law.

 

“Escrow Agent” means The Magri Law Firm, PLLC having an office located at 2642
NE 9th Avenue, Fort Lauderdale, FL 33334.

 

“Escrow Agreement” means that certain escrow agreement by and among the parties
hereto and the Escrow Agent.

 

“Estimated Closing Working Capital” has the meaning set forth in Section
2.05(a)(i).

 

“Estimated Closing Working Capital Statement” has the meaning set forth in
Section 2.05(a)(i).

 

“Financial Statements” has the meaning set forth in Section 3.06.

 

“GAAP” means generally accepted accounting principles in the United States of
America as in effect from time to time.

 

“Governmental Authority” means any federal, state, local or foreign government
or political subdivision thereof, or any agency or instrumentality of such
government or political subdivision, or any self-regulated organization or other
non-governmental regulatory authority or quasi-governmental authority (to the
extent that the rules, regulations or orders of such organization or authority
have the force of Law), or any arbitrator, court or tribunal of competent
jurisdiction.

 

“Governmental Order” means any order, writ, judgment, injunction, decree,
stipulation, determination or award entered by or with any Governmental
Authority.

 

“Hazardous Materials” means: (a) any material, substance, chemical, waste,
product, derivative, compound, mixture, solid, liquid, mineral or gas, in each
case, whether naturally occurring or manmade, that is hazardous, acutely
hazardous, toxic, or words of similar import or regulatory effect under
Environmental Laws; and (b) any petroleum or petroleum-derived products, radon,
radioactive materials or wastes, asbestos in any form, lead or lead-containing
materials, urea formaldehyde foam insulation, and polychlorinated biphenyls.

 

“IFCI” means IFCI Venture Capital Funds Limited.

 

“IFCI Convertible Debenture” means that certain convertible debenture issued by
the Company to IFCI pursuant to the IFCI Investment Agreement.

 

“IFCI Investment Agreement” means that certain Investment Agreement, dated
January 20, 2011, by and amount the Company, the Promoter, M/s. A. Power
Himalayas, Ltd. and IFCI, as amended.

 

STOCK PURCHASE AGREEMENTPage 9

 

 

“Implementation Agreement” means that certain Implementation Agreement, dated
April 28, 2004, between The Governor of the State of Uttaranchal and the
Company.

 

“Indemnified Party” has the meaning set forth in Section 8.05.

 

“Indemnifying Party” has the meaning set forth in Section 8.05.

 

“Independent Accountants” has the meaning set forth in Section 2.05(b)(iii).

 

“Intellectual Property” has the meaning set forth in Section 3.12(a).

 

“Balance Sheet” has the meaning set forth in Section 3.06.

 

“Balance Sheet Date” has the meaning set forth in Section 3.06.

 

“Knowledge” any other similar knowledge qualification, means the actual or
constructive knowledge of any director or officer of Company or the Selling
Stockholder, after due inquiry.

 

“Law” means any statute, law, ordinance, regulation, rule, code, order,
constitution, treaty, common law, judgment, decree, other requirement or rule of
law of any Governmental Authority.

 

“Liabilities” has the meaning set forth in Section 3.06.

 

“Licensed Intellectual Property” has the meaning set forth in Section 3.12(a).

 

“Losses” means losses, damages, liabilities, deficiencies, Actions, judgments,
interest, awards, penalties, fines, costs or expenses of whatever kind,
including reasonable attorneys’ fees and the cost of enforcing any right to
indemnification hereunder and the cost of pursuing any insurance providers;
provided, however, that “Losses” shall not include punitive damages, except in
the case of fraud or to the extent actually awarded to a Governmental Authority
or other third party.

 

“Material Adverse Effect” means any event, occurrence, fact, condition or change
that is, or could reasonably be expected to become, individually or in the
aggregate, materially adverse to (a) the business, results of operations,
condition (financial or otherwise) or assets of the Company, or (b) the ability
of Selling Stockholder to consummate the transactions contemplated hereby on a
timely basis; provided, however, that “Material Adverse Effect” shall not
include any event, occurrence, fact, condition or change, directly or
indirectly, arising out of or attributable to: (i) general economic or political
conditions; (ii) conditions generally affecting the industries in which the
Company operates; (iii) any changes in financial or securities markets in
general; (iv) acts of war (whether or not declared), armed hostilities or
terrorism, or the escalation or worsening thereof; (v) any action required or
permitted by this Agreement, except pursuant to Section 3.05 and Section 5.09;
(vi) any changes in applicable Laws or accounting rules, including Section 3(c)
of Section 211 of the Companies Act ; or (vii) the public announcement, pendency
or completion of the transactions contemplated by this Agreement; provided
further, however, that any event, occurrence, fact, condition or change referred
to in clauses (i) through (iv) immediately above shall be taken into account in
determining whether a Material Adverse Effect has occurred or could reasonably
be expected to occur to the extent that such event, occurrence, fact, condition
or change has a disproportionate effect on the Company compared to other
participants in the industries in which the Company conducts its businesses.

 

STOCK PURCHASE AGREEMENTPage 10

 

 

“Material Contracts” has the meaning set forth in Section 3.09(a).

 

“Pan Global” means Pan Global Corp., a Nevada corporation and the owner of 100%
of the Buyer.

 

“Pan Global Preferred Stock” means a series of non-voting preferred stock, par
value $0.0001 per share, of Pan Global to be designated by Pan Global and issued
to the Promoter pursuant to this Agreement. The Pan Global Preferred Stock will
receive dividend income equivalent to the dividend income paid on the Shares of
the Company for which the Pan Global Preferred Stock is exchanged; payable on
the same schedule as dividends are paid on the Shares.

 

“Permits” means all permits, licenses, franchises, approvals, authorizations,
registrations, certificates, variances and similar rights obtained, or required
to be obtained, from Governmental Authorities.

 

“Permitted Encumbrances” has the meaning set forth in Section 3.10(a).

 

“Person” means an individual, corporation, partnership, joint venture, limited
liability company, Governmental Authority, unincorporated organization, trust,
association or other entity.

 

“Project” has the meaning set forth in the preamble having a valuation of Rs.
67.11 Cr.

 

“Promoter” means Mr. Arun Sharma S/O K.L. Sharma, resident of Regency Complex,
River View Road, Shamsherpur, Paonta Sahib-173 025 (HP).

 

“Post-Closing Tax Period” means any taxable period beginning after the Closing
Date and, with respect to any taxable period beginning before and ending after
the Closing Date, the portion of such taxable period beginning after the Closing
Date.

 

“Post-Closing Taxes” means Taxes of the Company for any Post-Closing Tax Period.

 

“Pre-Closing Tax Period” means any taxable period ending on or before the
Closing Date and, with respect to any taxable period beginning before and ending
after the Closing Date, the portion of such taxable period ending on and
including the Closing Date.

 

“Project” has the meaning set forth in the Recitals.

 

“Purchase Price” means an aggregate of Rs. 38.75 Crores.

 

STOCK PURCHASE AGREEMENTPage 11

 

 

“Real Property” means the real property owned, leased or subleased by the
Company, together with all buildings, structures and facilities located thereon.

 

“Release” means any actual or threatened release, spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching,
dumping, abandonment, disposing or allowing to escape or migrate into or through
the environment (including, without limitation, ambient air (indoor or outdoor),
surface water, groundwater, land surface or subsurface strata or within any
building, structure, facility or fixture).

 

“Representative” means, with respect to any Person, any and all directors,
officers, employees, consultants, financial advisors, counsel, accountants and
other agents of such Person.

 

“Resolution Period” has the meaning set forth in Section 2.05(b)(ii).

 

“Review Period” has the meaning set forth in Section 2.05(b)(i).

 

“Rupees” or “Rs.” means the lawful currency of India.

 

“SBOP” means the State Bank of Patalia.

 

“SBOP Term Loan Credit Facility” means (i) SBOP Term Loan I; (ii) SBOP Term Loan
II; (iii) SBOP Term Loan III; (iv) SBOP Term Loan IV and (v) SBOP Term Loan V in
the aggregate amount of Rs. 258,841,358.25 as reflected on the Unaudited Balance
Sheet of the Company at June 30, 2013.

 

“SEC” means the United States Securities and Exchange Commission.

 

“Securities Act” means the Securities Act of 1933, as amended, promulgated by
the SEC.

 

“Selling Stockholder” or “Selling Stockholders” has the meaning set forth in the
preamble.

 

“Selling Stockholder Indemnitees” has the meaning set forth in Section 8.03.

 

“Shares” has the meaning set forth in the recitals.

 

“Statement of Objections” has the meaning set forth in Section 2.05(b)(ii).

 

“Taxes” means all federal, state, local, foreign and other income, gross
receipts, sales, use, production, ad valorem, transfer, franchise, registration,
profits, license, lease, service, service use, withholding, payroll, employment,
unemployment, estimated, excise, severance, environmental, stamp, occupation,
premium, property (real or personal), real property gains, windfall profits,
customs, duties or other taxes, fees, assessments or charges of any kind
whatsoever, together with any interest, additions or penalties with respect
thereto and any interest in respect of such additions or penalties.

 

“Tax Claim” has the meaning set forth in Section 6.03.

 

STOCK PURCHASE AGREEMENTPage 12

 

 

“Tax Return” means any return, declaration, report, claim for refund,
information return or statement or other document relating to Taxes, including
any schedule or attachment thereto, and including any amendment thereof.

 

“Third Party Claim” has the meaning set forth in Section 8.05(a).

 

“Tractebel” means Tractebel Engineering Pvt. Ltd.

 

“Transaction Documents” means this Agreement, the Ancillary Agreements, the
documents required to be delivered by the Company and Selling Stockholder at
each Closing pursuant to Section 7.02 of this Agreement and by the Buyer
pursuant to Section 7.03 of this Agreement.

 

“UERC” means the Uttarakhand Electricity Regulatory Commission.

 

“UPCL” means Uttarakhand Power Corporation Limited.

 

“Undisputed Amounts” has the meaning set forth in Section 2.05(b)(iii).

 

“Union” has the meaning set forth in Section 3.21(b).

 

“UPCL” means Uttarakhand Power Corporation Limited.

 

Article II

Purchase and sale

 

Section 2.01 Project Valuation. The parties hereto agree that valuation of the
Project is and shall remain Rs. 67.11 Cr. and upon the consummation of the
transactions contemplated by this Agreement and the Ancillary Documents, shall
consist only of the Buyer’s aggregate investment of Rs. 38.75 Cr. (the “Purchase
Price”) pursuant to this Agreement and the SBOP Term Credit Facility aggregating
Rs. 28.36 Cr.

 

Section 2.02 Purchase and Sale. Subject to the terms and conditions set forth in
this Agreement and the Ancillary Agreements contemplated hereby, the Buyer
agrees to invest the Purchase Price in the Company as set forth below. All funds
and Shares shall be placed by the respective parties in a separate attorney
escrow account with the Escrow Agent pursuant to the terms and conditions of the
Escrow Agreement, attached hereto as Exhibit B, and the Company shall use the
proceeds from each financing exclusively for the purposes set forth on the Use
of Proceeds Schedule attached hereto as Exhibit D.

 

(a)Initial Financing: Upon the delivery of two originally executed copies of the
this Agreement and the Stockholders Agreement and Escrow Agreement and one
originally executed copy of the Note and a copy thereof, and the receipt by the
Buyer of a delivery of a preliminary technical due diligence report by
Tractebel, subject to the written satisfaction of the Buyer, the Buyer shall
purchase from the Company a Convertible Debenture in the principal amount of Rs.
4,200,000 substantially in the form as Exhibit C attached hereto and convertible
into an aggregate of 289,655 Shares (the “Convertible Debenture”). Buyer shall
convert the Convertible Debenture upon First Closing – Step 1, First Tranche, as
described below.

 

STOCK PURCHASE AGREEMENTPage 13

 

 

(b)First Closing – Step One:

 

1.First Tranche: No later than five (5) Business Days of the issue date of
Convertible Debenture, the Buyer shall purchase an aggregate of 331,034 Shares
from the Company in consideration for an aggregate purchase price Rs. 4,800,000
subject to the Buyer’s receipt and written satisfaction of the following:

 

a. A final technical due diligence report from Tractebel;       b. A final
financial due diligence report from Ernst & Young, LLP;       c. A final legal
due diligence report from Buyer’s counsel;       d. Any required regulatory
approvals and third party consents, on terms satisfactory to the Buyer,
including in particular, consents from the following entities:

 

i. SBOP in relation to the SBOP Term Loan Credit Facility, whereby SBOP
expressly consents to the Company incurring the indebtedness and issuing
additional equity pursuant to this Agreement; and       ii. IFCI in relation to
that certain IFCI Investment Agreement, whereby IFCI expressly consents to the
Company incurring the indebtedness and issuing additional shares of equity
pursuant to this Agreement.

 

2.Second Tranche: No later than (15) Business Days from the Closing Date of
First Tranche, the Buyer shall purchase an aggregate of 620,690 Shares from the
Company in consideration for an aggregate purchase price of Rs. 9,000,000.

 

3.Third Tranche: No later than ten (10) Business Days of the Closing Date of the
Second Tranche and written confirmation by the Company, satisfactory to the
Buyer, that construction of the Project is progressing according to schedule,
the Buyer shall purchase an aggregate of 206,897 Shares from the Company in
consideration for an aggregate purchase price of Rs. 3,000,000.

 

(c)First Closing – Step Two:

 

a.Buyer shall purchase an aggregate of 1,310,345 Shares from the Company in
consideration for an aggregate purchase price of Rs. 19,000,000 no later than
ten (10) Business Days of Buyer’s receipt of the following, subject to the
written satisfaction by the Buyer:

 

STOCK PURCHASE AGREEMENTPage 14

 

 

i.Written confirmation that this Agreement and the Ancillary Agreements have
been properly filed with the federal or state courts in Uttarakhand or such
other similar registration mechanism as agreed to by the Buyer and Company; and

 

ii.The financial statements of the Company for two prior fiscal years and the
most recent interim period prepared in accordance with United States GAAP by
Buyer’s accountants to be engaged by RYEL immediately upon Investor’s
satisfactory completion of its due diligence investigation with fees payable by
Buyer.

 

(d)Second Closing:

 

(i) No later than fifteen (15) Business Days of the COD and the Buyer’s receipt
of (x) evidence, subject to the written satisfaction of the Buyer, that the
Project has been connected to the UPLC power grid and is producing power in the
normal course of operations; (y) the financial statements of the Company for the
two prior fiscal years, prepared in accordance with United States GAAP and
audited by a PCAOB-registered independent accountant, including an auditor’s
reports and notes thereto; and (z) the unaudited financial statements for the
Company for the latest interim period then ended, prepared in accordance with
United States GAAP and reviewed by a PCAOB-registered independent accountant,
the Buyer shall purchase (i) an aggregate of 758,621 Shares from the Company for
an aggregate purchase price of Rs. 11,000,000; (ii) an aggregate of 6,137,931
Shares from the Selling Stockholders as listed on Exhibit A, in consideration
for an aggregate purchase price of Rs. 89,000,000; and (iii) 1,230,542 Shares
from the Promoter necessary to increase the Buyer’s equity ownership in the
Company to 51% (the “Promoter Shares”) in consideration for shares of Pan Global
Preferred Stock with a stated face value of Rs. 17,842,861.

 

(e)Third Closing:

 

(i) No later than ninety (90) days of the COD, the Buyer shall consummate a
financing with a third party and have filed a registration statement on Form
S-1, or such other appropriate form (the “Registration Statement”), with the
United States Securities and Exchange Commission (“SEC”) therein registering an
amount of Common Stock of Pan Global sufficient for the financing; and shall use
its best efforts to have the Registration Statement declared effective by the
SEC as soon as possible.

 

(ii) No later than thirty (30) days after the date the SEC declares the
Registration Statement to be effective under the Securities Act, the Buyer shall
commence purchasing for an aggregate purchase price of Rs. 247,500,000 (adjusted
up or down for the difference between Rs 38.75 Cr. and the Rupee value of prior
payments calculated on the day of each prior payment):

 

(A)the remaining outstanding Shares (the “Remaining Shares”) from the Selling
Stockholders and cash repurchase of the Pan Global Preferred Stock exchanged in
the Second Closing for the purchase price of the Promoter Shares and any other
liabilities other than the SBOP term loan or the indebtedness listed in Exhibit
E; and either

 

STOCK PURCHASE AGREEMENTPage 15

 

 

(B)the indebtedness of the Promoter and his associates listed on Exhibit E
(listed therein as Unsecured Loans in the amounts of Rs. 55,572,337 and Rs.
13,109,000 (the “Indebtedness”)) attached hereto pursuant to a purchase
agreement agreed to by the Company and the Promoter and other Unsecured
Creditors; or

 

(C)the Shares issued upon the conversion of the Promoter’s debt and the other
Unsecured Creditors,

 

(iii) The Buyer shall have ninety (90) days to fully consummate the Third
Closing, resulting in the Buyer owning 100% of the outstanding equity of the
Company and RYEL having no debt other than the SBOP term loan of Rs. 28.36 Cr.,
subject to the Buyer’s option to extend such ninety (90) day period by up to an
additional ninety (90) days in its sole discretion (the “Drop Dead Date”).

 

Section 2.03 Promoter SBOP Personal Guarantee. Buyer shall promptly take all
necessary actions to either substitute or release Promoter’s personal guarantee
of the SBOP Term Loan Credit Facility as soon as necessary. In consideration for
Promoter’s agreement to continue his personal guarantee of the SBOP Credit Term
Facility for the time period from such required date to the date on which such
substitution or release is effected, the Buyer agrees to pay Promoter an amount
of Rupees equal to 1% (one percent) of the outstanding indebtedness under the
SBOP Term Loan Credit Facility per annum, payable yearly.

 

Section 2.04 Transactions to be Effected at each Closing.

 

(a) At the Closing, Company and/or Selling Stockholder shall deliver to Buyer:

 

(i) stock certificates evidencing the Shares being purchased at that Closing,
free and clear of all Encumbrances, duly endorsed in blank or accompanied by
stock powers or other instruments of transfer duly executed in blank, with all
required stock transfer tax stamps affixed thereto, registered in the name of
the Buyer or its designee(s); and

 

(ii) the Transaction Documents and all other agreements, documents, instruments
or certificates required to be delivered by Company or Selling Stockholder at or
prior to the Closing pursuant to Section 7.02 of this Agreement.

 

(b) At the Closing, Buyer shall deliver to Company and/or Selling Stockholder:

 

(i) the portion of the Purchase Price then due and payable in consideration for
the Shares, subject to any Closing Adjustment pursuant to Section 2.05(a), by a
wire transfer of immediately available funds to an account of Company and/or
Selling Stockholder, as the case may be, designated in writing by Company and/or
Selling Stockholder, to Buyer no later than two (2) Business Days prior to the
Closing Date; and

 

(ii) the Transaction Documents and all other agreements, documents, instruments
or certificates required to be delivered by Buyer at or prior to the Closing
pursuant to Section 7.03 of this Agreement.

 

STOCK PURCHASE AGREEMENTPage 16

 

 

Section 2.05 Purchase Price Adjustment.

 

(a)  Closing Adjustment.

 

(i) At least three (3) Business Days before the Closing, Company shall prepare
and deliver to Buyer an estimated balance sheet of the Company as of the Closing
Date (without giving effect to the transactions contemplated herein), which
shall include the Estimated Closing Working Capital (the “Estimated Closing
Working Capital Statement”), and a certificate of the Chief Financial Officer of
the Company that the Estimated Closing Working Capital Statement was prepared in
accordance with Section 3(c) of Section 211 of the Companies Act applied using
the same accounting methods, practices, principles, policies and procedures,
with consistent classifications, judgments and valuation and estimation
methodologies that were used in the preparation of the Audited Financial
Statements for the most recent fiscal year end as if such Estimated Closing
Working Capital Statement was being prepared and audited as of a fiscal year
end.

 

(ii) The “Closing Adjustment” shall be an amount equal to that portion of the
interest on the secured and unsecured liabilities of the Company incurred before
the Commercial Operation Date, or any other advances of a similar nature, to the
percentage of equity transferred to the Buyer and the Buyer’s holding period of
such equity under the phased acquisition described herein and any other material
adverse findings by the Buyer regarding the Company and Project during its due
diligence investigation.

 

(iii) The Purchase payment shall be adjusted to reflect the Closing Adjustment.
If the Closing Adjustment is a positive number, the Purchase Price shall be
increased by the amount of the Closing Adjustment. If the Closing Adjustment is
a negative number, the Purchase Price shall be reduced by the amount of the
Closing Adjustment.

 

(b) Examination and Review.

 

(i) Examination. After receipt of the Estimated Closing Working Capital
Statement, Buyer shall have 30 days (the “Review Period”) to review the
Estimated Closing Working Capital Statement. During the Review Period, Buyer and
Buyer’s Accountants shall have full access to the books and records of the
Company, the personnel of, and work papers prepared by, Company and /or
Company’s Accountants to the extent that they relate to the Estimated Closing
Working Capital Statement and to such historical financial information (to the
extent in Company’s possession) relating to the Estimated Closing Working
Capital Statement as Buyer may reasonably request for the purpose of reviewing
the Estimated Closing Working Capital Statement and to prepare a Statement of
Objections (defined below), provided, that such access shall be in a manner that
does not interfere with the normal business operations of the Company.

 

(ii) Objection. On or prior to the last day of the Review Period, Buyer may
object to the Estimated Closing Working Capital Statement by delivering to Buyer
a written statement setting forth Buyer’s objections in reasonable detail,
indicating each disputed item or amount and the basis for Buyer’s disagreement
therewith (the “Statement of Objections”). If Buyer fails to deliver the
Statement of Objections before the expiration of the Review Period, the
Estimated Closing Working Capital Statement and the Closing Adjustment, as the
case may be, reflected in the Estimated Closing Working Capital Statement shall
be deemed to have been accepted by Buyer. If Buyer delivers the Statement of
Objections before the expiration of the Review Period, Buyer, Company and
Selling Stockholder shall negotiate in good faith to resolve such objections
within 30 days after the delivery of the Statement of Objections (the
“Resolution Period”), and, if the same are so resolved within the Resolution
Period, the Closing Adjustment and the Estimated Closing Working Capital
Statement with such changes as may have been previously agreed in writing by
Buyer and Company and Selling Stockholder, shall be final and binding.

 

STOCK PURCHASE AGREEMENTPage 17

 

 

(iii) Resolution of Disputes. If Company and Buyer fail to reach an agreement
with respect to all of the matters set forth in the Statement of Objections
before expiration of the Resolution Period, then any amounts remaining in
dispute (“Disputed Amounts” and any amounts not so disputed, the “Undisputed
Amounts”) Buyer and Selling Stockholder shall appoint by mutual agreement the
office of an impartial nationally recognized firm of independent certified
public accountants other than Company’s Accountants, Selling Stockholder’s
Accountants or Buyer’s Accountants (the “Independent Accountants”) who, acting
as experts and not arbitrators, shall resolve the Disputed Amounts only and make
any adjustments to the Closing Adjustment, as the case may be, and the Estimated
Closing Working Capital Statement. The parties hereto agree that all adjustments
shall be made without regard to materiality. The Independent Accountants shall
only decide the specific items under dispute by the parties and their decision
for each Disputed Amount must be within the range of values assigned to each
such item in the Estimated Closing Working Capital Statement and the Statement
of Objections, respectively.

 

(iv) Fees of the Independent Accountants. Company and Selling Stockholder shall
jointly and severally pay a portion of the fees and expenses of the Independent
Accountants equal to 100% multiplied by a fraction, the numerator of which is
the amount of Disputed Amounts submitted to the Independent Accountants that are
resolved in favor of Buyer (that being the difference between the Independent
Accountants’ determination and Selling Stockholder’s determination) and the
denominator of which is the total amount of Disputed Amounts submitted to the
Independent Accountants (that being the sum total by which Buyer’s determination
and Selling Stockholder’s determination differ from the determination of the
Independent Accountants). Buyer shall pay that portion of the fees and expenses
of the Independent Accountants that Company and Selling Stockholder are not
required to pay hereunder.

 

(v) Determination by Independent Accountants. The Independent Accountants shall
make a determination as soon as practicable within 10 Business Days (or such
other time as the parties hereto shall agree in writing) after their engagement,
and their resolution of the Disputed Amounts and their adjustments to the
Estimated Closing Working Capital Statement and/or the Post-Closing Adjustment
shall be conclusive and binding upon the parties hereto.

 

(vi) Payments of Post-Closing Adjustment. Except as otherwise provided herein,
any payment of the Post-Closing Adjustment, together with interest calculated as
set forth below, shall (A) be due (x) within five Business Days of acceptance of
the applicable Estimated Closing Working Capital Statement or (y) if there are
Disputed Amounts, then within five Business Days of the resolution described in
clause (v) above; and (B) be paid by wire transfer of immediately available
funds to such account as is directed by Buyer or Selling Stockholder, as the
case may be. The amount of any Post-Closing Adjustment shall bear interest from
and including the Closing Date to the date of payment at a rate per annum equal
to 18%. Such interest shall be calculated daily on the basis of a 365 day year
and the actual number of days elapsed, without compounding.

 

STOCK PURCHASE AGREEMENTPage 18

 

 

(c) Adjustments for Tax Purposes. Any payments made pursuant to Section 2.05
shall be treated as an adjustment to the Purchase Price by the parties for Tax
purposes, unless otherwise required by Law.

 

Section 2.06 Closing. Subject to the terms and conditions of this Agreement,
each closing (each a “Closing”) shall take place no later than two (2) Business
Days after the last of the conditions prior to each Closing set forth in Article
VII have been satisfied or waived (other than conditions which, by their nature,
are to be satisfied on the Closing Date), at such time, date and place as
Company, Selling Stockholder and Buyer may mutually agree upon (the day on which
each Closing takes place being a “Closing Date”).

 

Article III

 

Representations and warranties of Company, Promoter and each Selling Stockholder

 

Except as set forth in the correspondingly numbered Section of the Disclosure
Schedules, Company, Promoter and each Selling Stockholder jointly and severally
represent and warrant to Buyer that the statements contained in this Article III
are true and correct as of the Effective Date and shall be true and correct
through each Closing Date as if made on such date.

 

Section 3.01 Authority of Company and Selling Stockholder.

 

(a)  The Company has full corporate power and authority to enter into this
Agreement and the other Transaction Documents to which Company is a party, to
carry out its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. The execution and delivery by
Company of this Agreement and any other Transaction Document to which Company is
a party, the performance by Company of its obligations hereunder and thereunder
and the consummation by Company of the transactions contemplated hereby and
thereby have been duly authorized by all requisite corporate action on the part
of Company. This Agreement has been duly executed and delivered by Company, and
(assuming due authorization, execution and delivery by each other party thereto)
this Agreement constitutes a legal, valid and binding obligation of Company
enforceable against Company in accordance with its terms. When each other
Transaction Document to which Company is or will be a party has been duly
executed and delivered by Company (assuming due authorization, execution and
delivery by each other party thereto), such Transaction Document will constitute
a legal and binding obligation of Company enforceable against it in accordance
with its terms.

 

(b) Selling Stockholder has full power and authority to enter into this
Agreement and the other Transaction Documents to which Selling Stockholder is a
party, to carry out its obligations hereunder and thereunder and to consummate
the transactions contemplated hereby and thereby. The execution and delivery by
Selling Stockholder of this Agreement and any other Transaction Document to
which Selling Stockholder is a party, the performance by Selling Stockholder of
its obligations hereunder and thereunder and the consummation by Selling
Stockholder of the transactions contemplated hereby and thereby have been duly
authorized by all requisite corporate action on the part of Selling Stockholder.
This Agreement has been duly executed and delivered by Selling Stockholder, and
(assuming due authorization, execution and delivery by each other party thereto)
this Agreement constitutes a legal, valid and binding obligation of Selling
Stockholder enforceable against Company in accordance with its terms. When each
other Transaction Document to which Selling Stockholder is or will be a party
has been duly executed and delivered by Selling Stock (assuming due
authorization, execution and delivery by each other party thereto), such
Transaction Document will constitute a legal and binding obligation of Selling
Stockholder enforceable against it in accordance with its terms.

 

STOCK PURCHASE AGREEMENTPage 19

 

 

Section 3.02 Organization, Authority and Qualification of the Company. The
Company is a corporation duly organized, validly existing and in good standing
under the Laws of India and has full corporate power and authority to own,
operate or lease the properties and assets now owned, operated or leased by it
and to carry on its business as it has been and is currently conducted. The
Company is licensed or qualified to do business in India, and the Company is
duly licensed or qualified to do business and is in good standing in India and
each jurisdiction in which the properties owned or leased by it or the operation
of its business as currently conducted makes such licensing or qualification
necessary. All corporate actions taken by the Company in connection with this
Agreement and the other Transaction Documents will be duly authorized on or
prior to the Closing.

 

Section 3.03 Capitalization.

 

(a) As of the date of this Agreement, there are an aggregate of 17,827,297
common shares, with a face value of INR 10, issued and outstanding. The Company
has or will amend its charter documents to have a sufficient amount of
authorized capital stock to consummate the transactions contemplated by this
Agreement. All of the outstanding Shares have been duly authorized, are validly
issued, fully paid and non-assessable shares of capital stock of the Company,
and are owned of record by the holders thereof, free and clear of all
Encumbrances. Upon consummation of the transactions contemplated by this
Agreement, Buyer shall own the Shares purchased from the Company and the Selling
Stockholder, free and clear of all Encumbrances and the Shares shall be deemed
to be duly authorized, are validly issued, fully paid and non-assessable shares
of capital stock of the Company.

 

(b) All of the outstanding Shares were issued in compliance with applicable
Laws. None of the outstanding Shares were issued in violation of any agreement,
arrangement or commitment to which Selling Stockholder or the Company is a party
or is subject to or in violation of any preemptive or similar rights of any
Person.

 

(c) There are no outstanding or authorized options, warrants, convertible
securities or other rights, agreements, arrangements or commitments of any
character relating to the Capital Stock of the Company or obligating Selling
Stockholder or the Company to issue or sell any shares of Capital Stock of, or
any other interest in, the Company. The Company does not have outstanding or
authorized any stock appreciation, phantom stock, profit participation or
similar rights. There are no voting trusts, stockholder agreements, proxies or
other agreements or understandings in effect with respect to the voting or
transfer of any of the Shares.

 

STOCK PURCHASE AGREEMENTPage 20

 

 

(d) When the Buyer purchases Shares directly from the Company, the Shares will
be issued not be issued in violation of any agreement, arrangement or commitment
to which Selling Stockholder or the Company is a party or is subject to or in
violation of any preemptive or similar rights of any Person. Such Shares will
have been duly authorized, validly issued, fully paid and non-assessable, and
will be owned of record and beneficially by the Buyer, free and clear of all
Encumbrances. Upon consummation of the transactions contemplated by this
Agreement, Buyer shall own such Shares purchased from the Company, free and
clear of all Encumbrances.

 

Section 3.04 No Subsidiaries. The Company does not own, or have any interest in
any shares or have an ownership interest in any other Person.

 

Section 3.05 No Conflicts; Consents. The execution, delivery and performance by
the Company and Selling Stockholder of this Agreement and the other Transaction
Documents to which each is a party, and the consummation of the transactions
contemplated hereby and thereby, do not and will not: (a) conflict with or
result in a violation or breach of, or default under, any provision of the
certificate of incorporation, by-laws or other organizational documents of the
Company; (b) conflict with or result in a violation or breach of any provision
of any Law or Governmental Order applicable to Selling Stockholder or the
Company; (c) require the consent, notice or other action by any Person under,
conflict with, result in a violation or breach of, constitute a default or an
event that, with or without notice or lapse of time or both, would constitute a
default under, result in the acceleration of or create in any party the right to
accelerate, terminate, modify or cancel any Contract to which Selling
Stockholder or the Company is a party or by which Selling Stockholder or the
Company is bound or to which any of their respective properties and assets are
subject (including any Material Contract) or any Permit affecting the
properties, assets or business of the Company; or (d) result in the creation or
imposition of any Encumbrance other than Permitted Encumbrances on any
properties or assets of the Company. No consent, approval, Permit, Governmental
Order, declaration or filing with, or notice to, any Governmental Authority is
required by or with respect to Selling Stockholder or the Company in connection
with the execution and delivery of this Agreement and the other Transaction
Documents and the consummation of the transactions contemplated hereby and
thereby.

 

Section 3.06 Financial Statements. Complete copies of the Company’s audited
financial statements consisting of the balance sheet of the Company as at March
31st in each of the years 2008 to 2013 and the related statements of income and
retained earnings, stockholders’ equity and cash flow for the years then ended
(the “Audited Financial Statements”), and the unaudited balance sheet (the
“Balance Sheet,” and together with the Audited Financial Statements, the
“Financial Statements”) of the Company as at June 30, 2013 (the “Balance Sheet
Date”) have been delivered to Buyer. The Financial Statements have been prepared
in accordance with Section 3(c) of Section 211 of the Companies Act applied on a
consistent basis throughout the period involved, subject, in the case of the
Balance Sheet, to normal and recurring year-end adjustments (the effect of which
will not be materially adverse) and the absence of notes (that, if presented,
would not differ materially from those presented in the Audited Financial
Statements). The Financial Statements are based on the books and records of the
Company, and fairly present in all material respects the financial condition of
the Company as of the respective dates they were prepared and the results of the
operations of the Company for the periods indicated. The Company maintains a
standard system of accounting established and administered in accordance with
Section 3(c) of Section 211 of the Companies Act.

 

STOCK PURCHASE AGREEMENTPage 21

 

 

Section 3.07 Undisclosed Liabilities. The Company has no liabilities,
obligations or commitments of any nature whatsoever, asserted or unasserted,
known or unknown, absolute or contingent, accrued or unaccrued, matured or
unmatured or otherwise (“Liabilities”), except (a) those which are adequately
reflected or reserved against in the Balance Sheet as of the Balance Sheet Date,
and (b) those which have been incurred in the ordinary course of business
consistent with past practice since the Balance Sheet Date and which are not,
individually or in the aggregate, material in amount.

 

Section 3.08 Absence of Certain Changes, Events and Conditions. Since the
Balance Sheet Date and other than in the ordinary course of business consistent
with past practice, there has not been, with respect to the Company, any:

 

(a) event, occurrence or development that has had, or could reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect;

 

(b) amendment of the charter, by-laws or other organizational documents of the
Company;

 

(c) split, combination or reclassification of any shares of its capital stock;

 

(d) issuance, sale or other disposition of any of its capital stock, or grant of
any options, warrants or other rights to purchase or obtain (including upon
conversion, exchange or exercise) any of its capital stock;

 

(e) declaration or payment of any dividends or distributions on or in respect of
any of its capital stock or redemption, purchase or acquisition of its Capital
Stock;

 

(f) material change in any method of accounting or accounting practice of the
Company, except as required by Section 3(c) of Section 211 of the Companies Act
or as disclosed in the notes to the Financial Statements;

 

(g) material change in the Company’s cash management practices and its policies,
practices and procedures with respect to collection of accounts receivable,
establishment of reserves for uncollectible accounts, accrual of accounts
receivable, inventory control, prepayment of expenses, payment of trade accounts
payable, accrual of other expenses, deferral of revenue and acceptance of
customer deposits;

 

(h) entry into any Contract that would constitute a Material Contract;

 

(i) incurrence, assumption or guarantee of any indebtedness for borrowed money
except unsecured current obligations and Liabilities incurred in the ordinary
course of business consistent with past practice;

 

(j) transfer, assignment, sale or other disposition of any of the assets shown
or reflected in the Balance Sheet or cancellation of any debts or entitlements;

 

STOCK PURCHASE AGREEMENTPage 22

 

 

(k) transfer, assignment or grant of any license or sublicense of any material
rights under or with respect to any Intellectual Property;

 

(l) material damage, destruction or loss (whether or not covered by insurance)
to its property;

 

(m) any capital investment in, or any loan to, any other Person;

 

(n) acceleration, termination, material modification to or cancellation of any
material Contract (including, but not limited to, any Material Contract) to
which the Company is a party or by which it is bound;

 

(o) any material capital expenditures;

 

(p) imposition of any Encumbrance upon any of the Company properties, capital
stock or assets, tangible or intangible;

 

(q) (i) grant of any bonuses, whether monetary or otherwise, or increase in any
wages, salary, severance, pension or other compensation or benefits in respect
of its employees, officers, directors, independent contractors or consultants,
other than as provided for in any written agreements or required by applicable
Law, (ii) change in the terms of employment for any employee or any termination
of any employees for which the aggregate costs and expenses exceed $25,000, or
(iii) action to accelerate the vesting or payment of any compensation or benefit
for any employee, officer, director, independent contractor or consultant;

 

(r) adoption, modification or termination of any: (i) employment, severance,
retention or other agreement with any current or former employee, officer,
director, independent contractor or consultant, (ii) Benefit Plan or (iii)
collective bargaining or other agreement with a Union, in each case whether
written or oral;

 

(s) any loan to (or forgiveness of any loan to), or entry into any other
transaction with, any of its stockholders, directors, officers and employees;

 

(t) entry into a new line of business or abandonment or discontinuance of
existing lines of business;

 

(u) adoption of any plan of merger, consolidation, reorganization, liquidation
or dissolution or filing of a petition in bankruptcy under any provisions of
federal or state bankruptcy Law or consent to the filing of any bankruptcy
petition against it under any similar Law;

 

(v) purchase, lease or other acquisition of the right to own, use or lease any
property or assets for an amount in excess of $25,000, individually (in the case
of a lease, per annum) or $25,000 in the aggregate (in the case of a lease, for
the entire term of the lease, not including any option term), except for
purchases of inventory or supplies in the ordinary course of business consistent
with past practice;

 

(w) acquisition by merger or consolidation with, or by purchase of a substantial
portion of the assets or stock of, or by any other manner, any business or any
Person or any division thereof;

 

(x) action by the Company to make, change or rescind any Tax election, amend any
Tax Return or take any position on any Tax Return, take any action, omit to take
any action or enter into any other transaction that would have the effect of
increasing the Tax liability or reducing any Tax asset of Buyer in respect of
any Post-Closing Tax Period; or

 

(y) any Contract to do any of the foregoing, or any action or omission that
would result in any of the foregoing.

 

STOCK PURCHASE AGREEMENTPage 23

 

 

Section 3.09 Material Contracts.

 

(a) Section 3.09(a) of the Disclosure Schedules lists each of the following
Contracts of the Company (such Contracts, together with all Contracts concerning
the occupancy, management or operation of any Real Property (including without
limitation, brokerage contracts) listed or otherwise disclosed in Section
3.10(b) of the Disclosure Schedules (“Material Contracts”):

 

(i) each Contract of the Company involving aggregate consideration in excess of
$5,000 and which, in each case, cannot be cancelled by the Company without
penalty or without more than 30 days’ notice;

 

(ii) all Contracts that require the Company to purchase its total requirements
of any product or service from a third party or that contain “take or pay”
provisions;

 

(iii) all Contracts that provide for the indemnification by the Company of any
Person or the assumption of any Tax, environmental or other Liability of any
Person;

 

(iv) all Contracts that relate to the acquisition or disposition of any
business, a material amount of stock or assets of any other Person or any real
property (whether by merger, sale of stock, sale of assets or otherwise);

 

(v) all broker, distributor, dealer, manufacturer’s representative, franchise,
agency, sales promotion, market research, marketing consulting and advertising
Contracts to which the Company is a party;

 

(vi) all employment agreements and Contracts with independent contractors or
consultants (or similar arrangements) to which the Company is a party and which
are not cancellable without material penalty or without more than 30 days’
notice;

 

(vii) except for Contracts relating to trade receivables, all Contracts relating
to indebtedness (including, without limitation, guarantees) of the Company;

 

(viii) all Contracts with any Governmental Authority to which the Company is a
party;

 

(ix) all Contracts that limit or purport to limit the ability of the Company to
compete in any line of business or with any Person or in any geographic area or
during any period of time;

 

(x) any Contracts to which the Company is a party that provide for any joint
venture, partnership or similar arrangement by the Company;

 

(xi) all Contracts between or among the Company on the one hand and Company or
any Affiliate of Company (other than the Company) on the other hand;

 

(xii) all collective bargaining agreements or Contracts with any Union to which
the Company is a party; and

 

(xiii) any other Contract that is material to the Company and not previously
disclosed pursuant to this Section 3.09.

 

STOCK PURCHASE AGREEMENTPage 24

 

 

(b) Each Material Contract is valid and binding on the Company in accordance
with its terms and is in full force and effect. None of the Company or, to
Company’s Knowledge, any other party thereto is in breach of or default under
(or is alleged to be in breach of or default under), or has provided or received
any notice of any intention to terminate, any Material Contract. No event or
circumstance has occurred that, with notice or lapse of time or both, would
constitute an event of default under any Material Contract or result in a
termination thereof or would cause or permit the acceleration or other changes
of any right or obligation or the loss of any benefit thereunder. Complete and
correct copies of each Material Contract (including all modifications,
amendments and supplements thereto and waivers thereunder) have been made
available to Buyer.

 

Section 3.10 Title to Assets; Real Property.

 

(a) The Company has good and valid (and, in the case of owned Real Property,
good and marketable fee simple) title to, or a valid leasehold interest in, all
Real Property and personal property and other assets reflected in the Audited
Financial Statements or acquired after the Balance Sheet Date, other than
properties and assets sold or otherwise disposed of in the ordinary course of
business consistent with past practice since the Balance Sheet Date. All such
properties and assets (including leasehold interests) are free and clear of
Encumbrances except for the following (collectively referred to as “Permitted
Encumbrances”):

 

(i) those items set forth in Section 3.10(a) of the Disclosure Schedules;

 

(ii) liens for Taxes not yet due and payable or being contested in good faith by
appropriate procedures and for which there are adequate accruals or reserves on
the Balance Sheet;

 

(iii) mechanics, carriers’, workmen’s, repairmen’s or other like liens arising
or incurred in the ordinary course of business consistent with past practice or
amounts that are not delinquent and which are not, individually or in the
aggregate, material to the business of the Company;

 

(iv) easements, rights of way, zoning ordinances and other similar encumbrances
affecting Real Property which are not, individually or in the aggregate,
material to the business of the Company; or

 

(v) other than with respect to owned Real Property, liens arising under original
purchase price conditional sales contracts and equipment leases with third
parties entered into in the ordinary course of business consistent with past
practice which are not, individually or in the aggregate, material to the
business of the Company.

 

(b) Section 3.10(b) of the Disclosure Schedules lists (i) the street address of
each parcel of Real Property; (ii) if such property is leased or subleased by
the Company, the landlord under the lease, the rental amount currently being
paid, and the expiration of the term of such lease or sublease for each leased
or subleased property; and (iii) the current use of such property. With respect
to owned Real Property, Selling Stockholder has delivered or made available to
Buyer true, complete and correct copies of the deeds and other instruments (as
recorded) by which the Company acquired such Real Property, and copies of all
title insurance policies, opinions, abstracts and surveys in the possession of
Selling Stockholder or the Company and relating to the Real Property. With
respect to leased Real Property, Selling Stockholder has delivered or made
available to Buyer true, complete and correct copies of any leases affecting the
Real Property. The Company is not a sublessor or grantor under any sublease or
other instrument granting to any other Person any right to the possession,
lease, occupancy or enjoyment of any leased Real Property. The use and operation
of the Real Property in the conduct of the Company’s business do not violate in
any material respect any Law, covenant, condition, restriction, easement,
license, permit or agreement. No material improvements constituting a part of
the Real Property encroach on real property owned or leased by a Person other
than the Company. There are no Actions pending nor, to the Selling Stockholder’s
Knowledge, threatened against or affecting the Real Property or any portion
thereof or interest therein in the nature or in lieu of condemnation or eminent
domain proceedings.

 

STOCK PURCHASE AGREEMENTPage 25

 

 

Section 3.11 Condition and Sufficiency of Assets. The buildings, plants,
structures, furniture, fixtures, machinery, equipment, vehicles and other items
of tangible personal property of the Company are structurally sound, are in good
operating condition and repair, and are adequate for the uses to which they are
being put, and none of such buildings, plants, structures, furniture, fixtures,
machinery, equipment, vehicles and other items of tangible personal property is
in need of maintenance or repairs except for ordinary, routine maintenance and
repairs that are not material in nature or cost. The buildings, plants,
structures, furniture, fixtures, machinery, equipment, vehicles and other items
of tangible personal property currently owned or leased by the Company, together
with all other properties and assets of the Company, are sufficient for the
continued conduct of the Company’s business after the Closing in substantially
the same manner as conducted prior to the Closing and constitute all of the
rights, property and assets necessary to conduct the business of the Company as
currently conducted.

 

Section 3.12 Intellectual Property.

 

(a) The Company does not own, license or sublicense any Intellectual Property.
“Intellectual Property” means all of the following and similar intangible
property and related proprietary rights, interests and protections, however
arising, pursuant to the Laws of any jurisdiction throughout the world,
including such property that is owned by the Company (“Company Intellectual
Property”) and that in which the Company holds exclusive or non-exclusive rights
or interests granted by license from other Persons, including the Selling
Stockholder (“Licensed Intellectual Property”):

 

(i) trademarks, service marks, trade names, brand names, logos, trade dress and
other proprietary indicia of goods and services, whether registered or
unregistered, and all registrations and applications for registration of such
trademarks, including intent-to-use applications, all issuances, extensions and
renewals of such registrations and applications and the goodwill connected with
the use of and symbolized by any of the foregoing;

 

(ii) internet domain names, whether or not trademarks, registered in any
top-level domain by any authorized private registrar or Governmental Authority;

 

STOCK PURCHASE AGREEMENTPage 26

 

 

(iii) original works of authorship in any medium of expression, whether or not
published, all copyrights (whether registered or unregistered), all
registrations and applications for registration of such copyrights, and all
issuances, extensions and renewals of such registrations and applications;

 

(iv) confidential information, formulas, designs, devices, technology, know-how,
research and development, inventions, methods, processes, compositions and other
trade secrets, whether or not patentable; and

 

(v) patented and patentable designs and inventions, all design, plant and
utility patents, letters patent, utility models, pending patent applications and
provisional applications and all issuances, divisions, continuations,
continuations-in-part, reissues, extensions, reexaminations and renewals of such
patents and applications.

 

Section 3.13 Inventory. The Company does not have any inventory, whether raw
materials, work-in-process or finished goods.

 

Section 3.14 Accounts Receivable. The accounts receivable reflected on the
Balance Sheet and the accounts receivable arising after the date thereof (a)
have arisen from bona fide transactions entered into by the Company involving
the sale of goods or the rendering of services in the ordinary course of
business consistent with past practice; (b) constitute only valid, undisputed
claims of the Company not subject to claims of set-off or other defenses or
counterclaims other than normal cash discounts accrued in the ordinary course of
business consistent with past practice; and (c) subject to a reserve for bad
debts shown on the Balance Sheet or, with respect to accounts receivable arising
after the Balance Sheet Date, on the accounting records of the Company, are
collectible in full within 90 days after billing. The reserve for bad debts
shown on the Balance Sheet or, with respect to accounts receivable arising after
the Balance Sheet Date, on the accounting records of the Company have been
determined in accordance with Section 3(c) of Section 211 of the Companies Act,
consistently applied, subject to normal year-end adjustments and the absence of
disclosures normally made in footnotes.

 

Section 3.15 Customers and Suppliers.

 

(a) The Company does not have any customers who has paid aggregate consideration
to the Company for goods or services rendered in an amount greater than or equal
to $50,000 for each of the two most recent fiscal years (collectively, the
“Material Customers”).

 

(b) Section 3.15(b) of the Disclosure Schedules sets forth (i) each supplier to
whom the Company has paid consideration for goods or services rendered in an
amount greater than or equal to $50,000 for each of the two most recent fiscal
years (collectively, the “Material Suppliers”); and (ii) the amount of purchases
from each Material Supplier during such periods. Except as set forth in Section
3.15(b) of the Disclosure Schedules, the Company has not received any notice,
and has no reason to believe, that any of its Material Suppliers has ceased, or
intends to cease, to supply goods or services to the Company or to otherwise
terminate or materially reduce its relationship with the Company.

 

STOCK PURCHASE AGREEMENTPage 27

 

 

Section 3.16 Insurance. Section 3.16 of the Disclosure Schedules sets forth a
true and complete list of all current policies or binders of fire, liability,
product liability, umbrella liability, real and personal property, workers’
compensation, vehicular, directors’ and officers’ liability, fiduciary liability
and other casualty and property insurance maintained by Company or its
Affiliates (including the Company) and relating to the assets, business,
operations, employees, officers and directors of the Company (collectively, the
“Insurance Policies”) and true and complete copies of such Insurance Policies
have been made available to Holder. Such Insurance Policies are in full force
and effect and shall remain in full force and effect following the consummation
of the transactions contemplated by the Note. Neither the Company nor any of its
Affiliates (including the Company) has received any written notice of
cancellation of, premium increase with respect to, or alteration of coverage
under, any of such Insurance Policies. All premiums due on such Insurance
Policies have either been paid or, if due and payable prior to Closing, will be
paid prior to Closing in accordance with the payment terms of each Insurance
Policy. The Insurance Policies do not provide for any retrospective premium
adjustment or other experience-based liability on the part of the Company. All
such Insurance Policies (a) are valid and binding in accordance with their
terms; (b) are provided by carriers who are financially solvent; and (c) have
not been subject to any lapse in coverage. Except as set forth on Section 3.16
of the Disclosure Schedules, there are no claims related to the business of the
Company pending under any such Insurance Policies as to which coverage has been
questioned, denied or disputed or in respect of which there is an outstanding
reservation of rights. None of Company or any of its Affiliates (including the
Company) is in default under, or has otherwise failed to comply with, in any
material respect, any provision contained in any such Insurance Policy. The
Insurance Policies are of the type and in the amounts customarily carried by
Persons conducting a business similar to the Company and are sufficient for
compliance with all applicable Laws and Contracts to which the Company is a
party or by which it is bound.

 

Section 3.17 Legal Proceedings; Governmental Orders.

 

(a) There are no Actions pending or, to Selling Stockholder’s Knowledge,
threatened (a) against or by the Company affecting any of its properties or
assets (or by or against Selling Stockholder or any Affiliate thereof and
relating to the Company); or (b) against or by the Company, Selling Stockholder
or any Affiliate of Selling Stockholder that challenges or seeks to prevent,
enjoin or otherwise delay the transactions contemplated by this Agreement. No
event has occurred or circumstances exist that may give rise to, or serve as a
basis for, any such Action.

 

(b) There are no outstanding Governmental Orders and no unsatisfied judgments,
penalties or awards against or affecting the Company or any of its properties or
assets.

 

Section 3.18 Compliance With Laws; Permits.

 

(a) The Company has complied, and is now complying, with all Laws applicable to
it or its business, properties or assets.

 

(b) All Permits required for the Company to conduct its business have been
obtained by it and are valid and in full force and effect. All fees and charges
with respect to such Permits as of the Effective Date have been paid in full.
Section 3.18(b) of the Disclosure Schedules lists all current Permits issued to
the Company, including the names of the Permits and their respective dates of
issuance and expiration. No event has occurred that, with or without notice or
lapse of time or both, would reasonably be expected to result in the revocation,
suspension, lapse or limitation of any Permit set forth in Section 3.18(b) of
the Disclosure Schedules.

 

STOCK PURCHASE AGREEMENTPage 28

 

 

Section 3.19 Environmental Matters.

 

(a) The Company is currently and has been in compliance with all Environmental
Laws and has not, and the Company has not, received from any Person any: (i)
Environmental Notice or Environmental Claim; or (ii) written request for
information pursuant to Environmental Law, which, in each case, either remains
pending or unresolved, or is the source of ongoing obligations or requirements
as of the Closing Date.

 

(b) The Company has obtained and is in material compliance with all
Environmental Permits (each of which is disclosed in Section 3.19(b) of the
Disclosure Schedules) necessary for the ownership, lease, operation or use of
the business or assets of the Company and all such Environmental Permits are in
full force and effect and shall be maintained in full force and effect by the
Company through the Closing Date in accordance with Environmental Law, and
neither Selling Stockholder nor the Company is aware of any condition, event or
circumstance that might prevent or impede, after the Closing Date, the
ownership, lease, operation or use of the business or assets of the Company as
currently carried out. With respect to any such Environmental Permits, Company
has undertaken, or will undertake prior to the Closing Date, all measures
necessary to facilitate transferability of the same, and neither the Company nor
the Selling Stockholder is aware of any condition, event or circumstance that
might prevent or impede the transferability of the same, nor have they received
any Environmental Notice or written communication regarding any material adverse
change in the status or terms and conditions of the same.

 

(c) There has been no Release of Hazardous Materials in contravention of
Environmental Law with respect to the business or assets of the Company or any
real property currently or formerly owned, operated or leased by the Company,
and neither the Company nor Selling Stockholder has received an Environmental
Notice that any real property currently or formerly owned, operated or leased in
connection with the business of the Company (including soils, groundwater,
surface water, buildings and other structure located on any such real property)
has been contaminated with any Hazardous Material which could reasonably be
expected to result in an Environmental Claim against, or a violation of
Environmental Law or term of any Environmental Permit by, Selling Stockholder or
the Company.

 

(d) There are no active or abandoned aboveground or underground storage tanks
owned or operated by the Company.

 

(e) There are no off-site Hazardous Materials treatment, storage, or disposal
facilities or locations used by the Company or any predecessors as to which the
Company may retain liability.

 

(f) The Company has not retained or assumed, by contract or operation of Law,
any liabilities or obligations of third parties under Environmental Law.

 

(g) Company has provided or otherwise made available to Buyer: (i) all
environmental reports, studies, audits, records, sampling data, site
assessments, risk assessments, economic models and other similar documents with
respect to the business or assets of the Company or any currently or formerly
owned, operated or leased real property which are in the possession or control
of the Selling Stockholder or Company related to compliance with Environmental
Laws, Environmental Claims or an Environmental Notice or the Release of
Hazardous Materials; and (ii) any and all material documents concerning planned
or anticipated capital expenditures required to reduce, offset, limit or
otherwise control pollution and/or emissions, manage waste or otherwise ensure
compliance with current or future Environmental Laws (including, without
limitation, costs of remediation, pollution control equipment and operational
changes).

 

STOCK PURCHASE AGREEMENTPage 29

 

 

(h) Neither the Selling Stockholder nor the Company is aware of or reasonably
anticipates, as of the Closing Date, any condition, event or circumstance
concerning the Release or regulation of Hazardous Materials that might, after
the Closing Date, prevent, impede or materially increase the costs associated
with the ownership, lease, operation, performance or use of the business or
assets of the Company as currently carried out.

 

(i) There are no Environmental Attributes nor has the Company entered into any
contract or pledge to transfer, lease, license, guarantee, sell, mortgage,
pledge or otherwise dispose of or encumber any Environmental Attributes as of
the Effective Date.

 

Section 3.20 Employee Benefit Matters.

 

(a) There are no pension, benefit, retirement, compensation, profit-sharing,
deferred compensation, incentive, performance award, phantom equity, stock or
stock-based, change in control, retention, severance, vacation, paid time off,
fringe-benefit and other similar agreement, plan, policy, program or arrangement
(and any amendments thereto), in each case whether or not reduced to writing and
whether funded or unfunded, including each employee benefit plan, which is or
has been maintained, sponsored, contributed to, or required to be contributed to
by the Company for the benefit of any current or former employee, officer,
director, retiree, independent contractor or consultant of the Company or any
spouse or dependent of such individual, or under which the Company has or may
have any Liability, or with respect to which Buyer or any of its Affiliates
would reasonably be expected to have any Liability, contingent or otherwise
(each, a “Benefit Plan”).

 

(b) Neither the execution of this Agreement nor any of the transactions
contemplated by this Agreement will (either alone or upon the occurrence of any
additional or subsequent events): (i) entitle any current or former director,
officer, employee, independent contractor or consultant of the Company to
severance pay or any other payment; (ii) accelerate the time of payment, funding
or vesting, or increase the amount of compensation due to any such individual;
(iii) limit or restrict the right of the Company to merge, amend or terminate
any Benefit Plan; or (iv) increase the amount payable under or result in any
other material obligation pursuant to any Benefit Plan.

 

Section 3.21 Employment Matters.

 

(a) Section 3.21(a) of the Disclosure Schedules contains a list of all persons
who are employees, independent contractors or consultants of the Company as of
the Effective Date, and sets forth for each such individual the following: (i)
name; (ii) title or position (including whether full or part time); (iii) hire
date; (iv) current annual base compensation rate; (v) commission, bonus or other
incentive-based compensation; and (vi) a description of the fringe benefits
provided to each such individual as of the Effective Date. All compensation,
including wages, commissions and bonuses, payable to employees, independent
contractors or consultants of the Company for services performed on or prior to
the Effective Date have been paid in full (or accrued in full on the audited
balance sheet contained in the Estimated Closing Working Capital Statement) and
there are no outstanding agreements, understandings or commitments of the
Company with respect to any compensation, commissions or bonuses.

 

STOCK PURCHASE AGREEMENTPage 30

 

 

(b) The Company is not, and has not been for the past three years, a party to,
bound by, or negotiating any collective bargaining agreement or other Contract
with a union, works council or labor organization (collectively, “Union”), and
there is not, and has not been for the past three years, any Union representing
or purporting to represent any employee of the Company, and, to Company’s
Knowledge, no Union or group of employees is seeking or has sought to organize
employees for the purpose of collective bargaining.

 

(c) There are no Actions against the Company pending, or to the Company’s
Knowledge, threatened to be brought or filed, by or with any Governmental
Authority or arbitrator in connection with the employment of any current or
former applicant, employee, consultant, volunteer, intern or independent
contractor of the Company, including, without limitation, any claim relating to
unfair labor practices, employment discrimination, harassment, retaliation,
equal pay, wage and hours or any other employment related matter arising under
applicable Laws.

 

Section 3.22 Taxes.

 

(a) All Tax Returns required to be filed on or before the Closing Date by the
Company have been, or will be, timely filed. Such Tax Returns are, or will be,
true, complete and correct in all respects. All Taxes due and owing by the
Company (whether or not shown on any Tax Return) have been, or will be, timely
paid.

 

(b) The Company has withheld and paid each Tax required to have been withheld
and paid in connection with amounts paid or owing to any employee, independent
contractor, creditor, customer, stockholder or other party, and complied with
all information reporting and backup withholding provisions of applicable Law.

 

(c) No claim has been made by any taxing authority in any jurisdiction where the
Company does not file Tax Returns that it is, or may be, subject to Tax by that
jurisdiction.

 

(d) No extensions or waivers of statutes of limitations have been given or
requested with respect to any Taxes of the Company.

 

(e) The amount of the Company’s Liability for unpaid Taxes for all periods
ending on or before March 31, 2013 does not, in the aggregate, exceed the amount
of accruals for Taxes (excluding reserves for deferred Taxes) reflected on the
Financial Statements. The amount of the Company’s Liability for unpaid Taxes for
all periods following the end of the recent period covered by the Financial
Statements shall not, in the aggregate, exceed the amount of accruals for Taxes
(excluding reserves for deferred Taxes) as adjusted for the passage of time in
accordance with the past custom and practice of the Company (and which accruals
shall not exceed comparable amounts incurred in similar periods in prior years).

 

STOCK PURCHASE AGREEMENTPage 31

 

 

(f) All deficiencies asserted, or assessments made, against the Company as a
result of any examinations by any taxing authority have been fully paid.

 

(g) The Company is not a party to any Action by any taxing authority. There are
no pending or threatened Actions by any taxing authority.

 

(h) Company has delivered to the Buyer copies of all Tax Returns, examination
reports, and statements of deficiencies assessed against, or agreed to by, the
Company for all Tax periods ending after 2007.

 

(i) There are no Encumbrances for Taxes (other than for current Taxes not yet
due and payable) upon the assets of the Company.

 

(j) The Company is not a party to, or bound by, any Tax indemnity, Tax-sharing
or Tax allocation agreement.

 

(k) The Company is not a party to, or bound by, any closing agreement or offer
in compromise with any taxing authority.

 

(l) No private letter rulings, technical advice memoranda or similar agreement
or rulings have been requested, entered into or issued by any taxing authority
with respect to the Company.

 

(m) The Company has not been a member of an affiliated, combined, consolidated
or unitary Tax group for Tax purposes. The Company has no Liability for Taxes of
any Person (other than the Company) under the income tax laws of India as
transferee or successor, by contract or otherwise.

 

(n) There is currently no limitation on the utilization of net operating losses,
capital losses, built-in losses, tax credits or similar items of the Company.

 

Section 3.23 Books and Records. The minute books and stock record books of the
Company, all of which have been made available to Buyer, are complete and
correct and have been maintained in accordance with sound business practices.
The minute books of the Company contain accurate and complete records of all
meetings, and actions taken by written consent of, the stockholders, the board
of directors and any committees of the board of directors of the Company, and no
meeting, or action taken by written consent, of any such stockholders, board of
directors or committee has been held for which minutes have not been prepared
and are not contained in such minute books. At the Closing, all of those books
and records will be in the possession of the Company.

 

Section 3.24 Brokers. Except for Deodar Advisory LLP, no broker, finder or
investment banker is entitled to any brokerage, finder’s or other fee or
commission in connection with the transactions contemplated by this Agreement or
any other Transaction Document based upon arrangements made by or on behalf of
the Company and the Selling Stockholder.

 

STOCK PURCHASE AGREEMENTPage 32

 

 

Section 3.25 Implementation Agreement Stipulation. Pursuant to the Companies Act
or other applicable Law promulgated by the Government Authority in India,
Section 5.1.23 of the Implementation Agreement therein specifically stipulating
that “Unless otherwise permitted by the Government, the aggregate equity
contribution of the Company/Promoter of the allottee Company/Consortium to which
the Project was initially allotted shall not be less than 51% (fifty one
percent) during the Construction Period and until 2 (two) years following the
commencement of Commercial Operations” has been made void and is of no legal
import or consequence, nor does it prohibit, in any way whatsoever, the Company,
Promoter and Selling Stockholders from executing and delivering this Agreement
and the other Transaction Documents and taking any actions in furtherance of
consummating the transactions contemplated hereby and thereby.

 

Section 3.26 Power Purchase Agreement. Within thirty (30) days of the COD, the
Company shall qualify under UERC’s notification, dated April 15, 2013, to sign a
new Power Purchase Agreement for a thirty five (35) year term at a gross tariff
(defined as prior to accelerated depreciation) at a rate of Rs. 4.27 per
kilo-watt hour.

 

Section 3.27 Full Disclosure. No representation or warranty by Company and
Selling Stockholder in this Agreement and no statement contained in the
Disclosure Schedules to this Agreement or any certificate or other document
furnished or to be furnished to Buyer pursuant to this Agreement contains any
untrue statement of a material fact, or omits to state a material fact necessary
to make the statements contained therein, in light of the circumstances in which
they are made, not misleading.

 

Article IV
Representations and warranties of buyer

 

Except as set forth in the correspondingly numbered Section of the Disclosure
Schedules, Buyer represents and warrants to the Company and Selling Stockholder
that the statements contained in this Article IV are true and correct as of the
Effective Date and shall be true and correct through each Closing Date as if
made on such date.

 

Section 4.01 Organization and Authority of Buyer. Buyer is a corporation duly
organized, validly existing and in good standing under the Laws of the state of
State of Nevada. Buyer has full corporate power and authority to enter into this
Agreement and the other Transaction Documents to which Buyer is a party, to
carry out its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. The execution and delivery by
Buyer of this Agreement and any other Transaction Document to which Buyer is a
party, the performance by Buyer of its obligations hereunder and thereunder and
the consummation by Buyer of the transactions contemplated hereby and thereby
have been duly authorized by all requisite corporate action on the part of
Buyer. This Agreement has been duly executed and delivered by Buyer, and
(assuming due authorization, execution and delivery by each other party hereto)
this Agreement constitutes a legal, valid and binding obligation of Buyer
enforceable against Buyer in accordance with its terms. Each other Transaction
Document to which Buyer is or will be a party has been duly executed and
delivered by Buyer (assuming due authorization, execution and delivery by each
other party thereto), such Transaction Document will constitute a legal and
binding obligation of Buyer enforceable against it in accordance with its terms.

 

STOCK PURCHASE AGREEMENTPage 33

 

 

Section 4.02 No Conflicts; Consents. The execution, delivery and performance by
Buyer of this Agreement and the other Transaction Documents to which it is a
party, and the consummation of the transactions contemplated hereby and thereby,
do not and will not: (a) conflict with or result in a violation or breach of, or
default under, any provision of the certificate of incorporation, by-laws or
other organizational documents of Buyer; (b) conflict with or result in a
violation or breach of any provision of any Law or Governmental Order applicable
to Buyer; or (c) require the consent, notice or other action by any Person under
any Contract to which Buyer is a party. No consent, approval, Permit,
Governmental Order, declaration or filing with, or notice to, any Governmental
Authority is required by or with respect to Company in connection with the
execution and delivery of the Convertible Debenture and the consummation of the
transactions contemplated thereby, except notification to the Reserve Bank of
India (“RBI”) under the Foreign Exchange regulations of India.

 

Section 4.03 Investment Purpose. Buyer is acquiring the Shares solely for its
own account for investment purposes and not with a view to, or for offer or sale
in connection with, any distribution thereof. Buyer acknowledges that the Shares
are not registered under the Securities Act of 1933, as amended, or any state
securities laws, and that the Shares may not be transferred or sold except
pursuant to the registration provisions of the Securities Act of 1933, as
amended or pursuant to an applicable exemption therefrom and subject to state
securities laws and regulations, as applicable.

 

Section 4.04 Brokers. No broker, finder or investment banker is entitled to any
brokerage, finder’s or other fee or commission in connection with the
transactions contemplated by this Agreement or any other Transaction Document
based upon arrangements made by or on behalf of Buyer.

 

Section 4.05 Sufficiency of Funds. Buyer has sufficient cash on hand or other
sources of immediately available funds to enable it to make payment of the
Purchase Price and consummate the transactions contemplated by this Agreement.

 

Section 4.06 Legal Proceedings. There are no Actions pending or, to Buyer’s
knowledge, threatened against or by Buyer or any Affiliate of Buyer that
challenge or seek to prevent, enjoin or otherwise delay the transactions
contemplated by this Agreement. No event has occurred or circumstances exist
that may give rise or serve as a basis for any such Action.

 

STOCK PURCHASE AGREEMENTPage 34

 

 

Article V

 Covenants

 

Section 5.01 Conduct of Business Prior to the Closing. From the Effective Date
until the Closing, except as otherwise provided in this Agreement or consented
to in writing by Buyer (which consent shall not be unreasonably withheld or
delayed), Company shall (x) conduct the business of the Company in the ordinary
course of business consistent with past practice; and (y) use reasonable best
efforts to maintain and preserve intact the current organization, business and
franchise of the Company and to preserve the rights, franchises, goodwill and
relationships of its employees, customers, lenders, suppliers, regulators and
others having business relationships with the Company. Without limiting the
foregoing, from the Effective Date until the final Closing Date, the Company,
Promoter and Selling Stockholders shall:

 

(a) cause the Company to preserve and maintain all of its Permits;

 

(b) cause the Company to pay its debts, Taxes and other obligations when due;

 

(c) cause the Company to maintain the properties and assets owned, operated or
used by the Company in the same condition as they were on the date of this
Agreement, subject to reasonable wear and tear;

 

(d) cause the Company to continue in full force and effect without modification
all Insurance Policies, except as required by applicable Law;

 

e) cause the Company to defend and protect its properties and assets from
infringement or usurpation;

 

(f) cause the Company to perform all of its obligations under all Contracts
relating to or affecting its properties, assets or business;

 

(g) cause the Company to maintain its books and records in accordance with past
practice;

 

(h) cause the Company to comply in all material respects with all applicable
Laws; and

 

(i) cause the Company not to take or permit any action that would cause any of
the changes, events or conditions described in Section 3.08 to occur.

 

Section 5.02 Memorandum and Articles of Association. Prior to the First Closing,
the Company shall take all necessary actions to amend the Company’s Memorandum
and Articles of Association to allow the Company to consummate the transactions
contemplated by this Agreement and the other Transaction Documents.

 

Section 5.03 Access to Information. From the Effective Date until the Closing,
Company shall (a) afford Buyer and its Representatives full and free access to
and the right to inspect all of the Real Property, properties, assets, premises,
books and records, Contracts and other documents and data related to the
Company; (b) furnish Buyer and its Representatives with such financial,
operating and other data and information related to the Company as Buyer or any
of its Representatives may reasonably request; and (c) instruct the
Representatives of Selling Stockholder and the Company to cooperate with Buyer
in its investigation of the Company. Without limiting the foregoing, Company
shall permit Buyer and its Representatives to conduct environmental due
diligence of the Company and the Real Property, including the collecting and
analysis of samples of indoor or outdoor air, surface water, groundwater or
surface or subsurface land on, at, in, under or from the Company and the Real
Property. Any investigation pursuant to this Section 5.03 shall be conducted in
such manner as not to interfere unreasonably with the conduct of the business of
the Company. No investigation by Buyer or other information received by Buyer
shall operate as a waiver or otherwise affect any representation, warranty or
agreement given or made by Selling Stockholder in this Agreement.

 

STOCK PURCHASE AGREEMENTPage 35

 

 

Section 5.04 No Solicitation of Other Bids.

 

(a) Selling Stockholder shall not, and shall not authorize or permit any of its
Affiliates (including the Company) or any of its or their Representatives to,
directly or indirectly, (i) encourage, solicit, initiate, facilitate or continue
inquiries regarding an Acquisition Proposal; (ii) enter into discussions or
negotiations with, or provide any information to, any Person concerning a
possible Acquisition Proposal; or (iii) enter into any agreements or other
instruments (whether or not binding) regarding an Acquisition Proposal. Selling
Stockholder shall immediately cease and cause to be terminated, and shall cause
its Affiliates (including the Company) and all of its and their Representatives
to immediately cease and cause to be terminated, all existing discussions or
negotiations with any Persons conducted heretofore with respect to, or that
could lead to, an Acquisition Proposal. For purposes hereof, “Acquisition
Proposal” shall mean any inquiry, proposal or offer from any Person (other than
Buyer or any of its Affiliates) concerning (i) a merger, consolidation,
liquidation, recapitalization, share exchange or other business combination
transaction involving the Company; (ii) the issuance or acquisition of shares of
capital stock or other equity securities of the Company; or (iii) the sale,
lease, exchange or other disposition of any significant portion of the Company’s
properties or assets.

 

(b) In addition to the other obligations under this Section 5.04, Company and
Selling Stockholder shall promptly (and in any event within three Business Days
after receipt thereof by Company, Selling Stockholder or their respective
Representatives) advise Buyer orally and in writing of any Acquisition Proposal,
any request for information with respect to any Acquisition Proposal, or any
inquiry with respect to or which could reasonably be expected to result in an
Acquisition Proposal, the material terms and conditions of such request,
Acquisition Proposal or inquiry, and the identity of the Person making the same.

 

(c) Company and Selling Stockholder agree that the rights and remedies for
noncompliance with this Section 5.04 shall include having such provision
specifically enforced by any court having equity jurisdiction, it being
acknowledged and agreed that any such breach or threatened breach shall cause
irreparable injury to Buyer and that money damages would not provide an adequate
remedy to Buyer.

 

STOCK PURCHASE AGREEMENTPage 36

 

 

Section 5.05 Notice of Certain Events.

 

(a) From the Effective Date until the Closing, Company shall promptly notify
Buyer in writing of:

 

(i) any fact, circumstance, event or action the existence, occurrence or taking
of which (A) has had, or could reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect, (B) has resulted in, or could
reasonably be expected to result in, any representation or warranty made by
Selling Stockholder hereunder not being true and correct or (C) has resulted in,
or could reasonably be expected to result in, the failure of any of the
conditions set forth in Section 7.02 to be satisfied;

 

(ii) any notice or other communication from any Person alleging that the consent
of such Person is or may be required in connection with the transactions
contemplated by this Agreement;

 

(iii) any notice or other communication from any Governmental Authority in
connection with the transactions contemplated by this Agreement; and

 

(iv) any Actions commenced or, to Selling Stockholder’s Knowledge, threatened
against, relating to or involving or otherwise affecting Selling Stockholder or
the Company that, if pending on the date of this Agreement, would have been
required to have been disclosed pursuant to Section 3.17 or that relates to the
consummation of the transactions contemplated by this Agreement.

 

(b) Buyer’s receipt of information pursuant to this Section 5.05 shall not
operate as a waiver or otherwise affect any representation, warranty or
agreement given or made by Selling Stockholder in this Agreement (including
Section 8.02 and Section 9.01(b)) and shall not be deemed to amend or supplement
the Disclosure Schedules.

 

Section 5.06 Board Seats. The Board of Directors of the Company shall be
comprised of four (4) directors as follows:

 

(a) Upon the consummation of the First Closing, the Board of Directors of the
Company shall appoint one person designated by the Buyer as a member of the
Board of Directors (an “Investor Director”).

 

(b) Upon the consummation of the Second Closing, the Board of Directors of the
Company shall appoint a second Investor Director as a member of the Board of
Directors.

 

(c) Upon the commencement of the Third Closing, the Board of Directors of the
Company shall appoint a third Investor Director as a member of the Board of
Directors.

 

(d) Upon the completion of the Third Closing, the Board of Directors of the
Company shall appoint a fourth Investor Director designated by the Buyer as a
member of the Board of Directors.

 

Section 5.07 Use of Proceeds. The Company agrees agree to allocate the net
proceeds from each Closing as set forth in this Agreement and on Use of Proceeds
Schedule attached hereto as Exhibit D.

 

STOCK PURCHASE AGREEMENTPage 37

 

 

Section 5.08 Confidentiality. From and after the First Closing, Company and
Selling Stockholder shall, and shall cause its Affiliates to, hold, and shall
use its reasonable best efforts to cause its or their respective Representatives
to hold, in confidence any and all information, whether written or oral,
concerning the Company, except to the extent that Selling Stockholder can show
that such information (a) is generally available to and known by the public
through no fault of Company, Selling Stockholder, any of their respective
Affiliates or Representatives; or (b) is lawfully acquired by Company, Selling
Stockholder, any of their respective Affiliates or Representatives from and
after the Closing from sources which are not prohibited from disclosing such
information by a legal, contractual or fiduciary obligation. If Company or
Selling Stockholder or any of their respective Affiliates or Representatives are
compelled to disclose any information by judicial or administrative process or
by other requirements of Law, Company and Selling Stockholder shall promptly
notify Buyer in writing and shall disclose only that portion of such information
which Company or Selling Stockholder is advised by its counsel in writing is
legally required to be disclosed, provided that Company and Selling Stockholder
shall use reasonable best efforts to obtain an appropriate protective order or
other reasonable assurance that confidential treatment will be accorded such
information.

 

Section 5.09 Governmental Approvals and Consents

 

(a) Each party hereto shall, as promptly as possible, (i) make, or cause or be
made, all filings and submissions required under any Law applicable to such
party or any of its Affiliates; and (ii) use reasonable best efforts to obtain,
or cause to be obtained, all consents, authorizations, orders and approvals from
all Governmental Authorities that may be or become necessary for its execution
and delivery of this Agreement and the performance of its obligations pursuant
to this Agreement and the other Transaction Documents. Each party shall
cooperate fully with the other party and its Affiliates in promptly seeking to
obtain all such consents, authorizations, orders and approvals. The parties
hereto shall not willfully take any action that will have the effect of
delaying, impairing or impeding the receipt of any required consents,
authorizations, orders and approvals.

 

(b) Selling Stockholder shall use reasonable best efforts to give all notices
to, and obtain all consents from, all third parties that are described in
Section 3.05 of the Disclosure Schedules.

 

(c) Without limiting the generality of the parties’ undertakings pursuant to
subsections (a) and (b) above, each of the parties hereto shall use all
reasonable best efforts to:

 

(i) respond to any inquiries by any Governmental Authority regarding antitrust
or other matters with respect to the transactions contemplated by this Agreement
or any agreement or document contemplated hereby, including any Transaction
Document;

 

(ii) avoid the imposition of any order or the taking of any action that would
restrain, alter or enjoin the transactions contemplated by this Agreement or any
agreement or document contemplated hereby, including any Transaction Document;
and

 

(iii) in the event any Governmental Order adversely affecting the ability of the
parties to consummate the transactions contemplated by this Agreement or any
agreement or document contemplated hereby, including any Transaction Document,
has been issued, to have such Governmental Order vacated or lifted.

 

STOCK PURCHASE AGREEMENTPage 38

 

 

(d) If any consent, approval or authorization necessary to preserve any right or
benefit under any Contract to which the Company is a party is not obtained prior
to the Closing, Selling Stockholder shall, subsequent to the Closing, cooperate
with Buyer and the Company in attempting to obtain such consent, approval or
authorization as promptly thereafter as practicable. If such consent, approval
or authorization cannot be obtained, Selling Stockholder shall use its
reasonable best efforts to provide the Company with the rights and benefits of
the affected Contract for the term thereof, and, if Selling Stockholder provides
such rights and benefits, the Company shall assume all obligations and burdens
thereunder.

 

(e) All analyses, appearances, meetings, discussions, presentations, memoranda,
briefs, filings, arguments, and proposals made by or on behalf of either party
before any Governmental Authority or the staff or regulators of any Governmental
Authority, in connection with the transactions contemplated hereunder (but, for
the avoidance of doubt, not including any interactions between Selling
Stockholder or the Company with Governmental Authorities in the ordinary course
of business, any disclosure which is not permitted by Law or any disclosure
containing confidential information) shall be disclosed to the other party
hereunder in advance of any filing, submission or attendance, it being the
intent that the parties will consult and cooperate with one another, and
consider in good faith the views of one another, in connection with any such
analyses, appearances, meetings, discussions, presentations, memoranda, briefs,
filings, arguments, and proposals. Each party shall give notice to the other
party with respect to any meeting, discussion, appearance or contact with any
Governmental Authority or the staff or regulators of any Governmental Authority,
with such notice being sufficient to provide the other party with the
opportunity to attend and participate in such meeting, discussion, appearance or
contact.

 

(f) Notwithstanding the foregoing, nothing in this Section 5.09 shall require,
or be construed to require, Buyer or any of its Affiliates to agree to (i) sell,
hold, divest, discontinue or limit, before or after the Closing Date, any
assets, businesses or interests of Buyer, the Company or any of their respective
Affiliates; (ii) any conditions relating to, or changes or restrictions in, the
operations of any such assets, businesses or interests which, in either case,
could reasonably be expected to result in a Material Adverse Effect or
materially and adversely impact the economic or business benefits to Buyer of
the transactions contemplated by this Agreement; or (iii) any material
modification or waiver of the terms and conditions of this Agreement.

 

Section 5.10 Books and Records.

 

(a) In order to facilitate the resolution of any claims made against or incurred
by Company or Promoter prior to the Closing, or for any other reasonable
purpose, for a period of three years after the Closing, Buyer shall:

 

(i) retain the books and records (including personnel files) of the Company
relating to periods prior to the Closing in a manner reasonably consistent with
the prior practices of the Company; and

 

(ii) upon reasonable notice, afford the Representatives of Promoter reasonable
access (including the right to make, at Selling Stockholder’s expense,
photocopies), during normal business hours, to such books and records;

 

provided, however, that any books and records related to Tax matters shall be
retained pursuant to the periods set forth in Article VI.

 

STOCK PURCHASE AGREEMENTPage 39

 

 

(b) In order to facilitate the resolution of any claims made by or against or
incurred by Buyer or the Company after the Closing, or for any other reasonable
purpose, for a period of five years following the Closing, Promoter shall:

 

(i) retain the books and records (including personnel files) of Promoter which
relate to the Company and its operations for periods prior to the Closing; and

 

(ii) upon reasonable notice, afford the Representatives of Buyer or the Company
reasonable access (including the right to make, at Buyer’s expense,
photocopies), during normal business hours, to such books and records;

 

provided, however, that any books and records related to Tax matters shall be
retained pursuant to the periods set forth in Article VI.

 

(c) Neither Buyer nor Promoter shall be obligated to provide the other party
with access to any books or records (including personnel files) pursuant to this
Section 5.10 where such access would violate any Law.

 

Section 5.11 Closing Conditions From the Effective Date until the last Closing,
each party hereto shall, and Promoter shall cause the Company to, use reasonable
best efforts to take such actions as are necessary to expeditiously satisfy the
closing conditions set forth in Article VII hereof.

 

Section 5.12 Public Announcements. Unless otherwise required by applicable Law,
the Company, Promoter and Selling Stockholder shall not make any public
announcements with respect of this Agreement and other Transaction Documents and
the transactions contemplated hereby or thereby or otherwise communicate with
any news media without the prior written consent of the Buyer (which consent
shall not be unreasonably withheld or delayed), and the disclosing parties shall
cooperate as to the timing and contents of any such announcement.

 

Section 5.13 Further Assurances. Following the Closing, each of the parties
hereto shall, and shall cause their respective Affiliates to, execute and
deliver such additional documents, instruments, conveyances and assurances and
take such further actions as may be reasonably required to carry out the
provisions hereof and give effect to the transactions contemplated by this
Agreement.

 

Section 5.14 Debt. Commencing on the Closing Date of the Second Closing, the
Promoter shall not convert any Promoter Debt into Shares (or any other
securities) of the Company, nor shall the Company convert any other debt into
Shares (or any other securities) of the Company without the prior written
consent of Buyer.

 

STOCK PURCHASE AGREEMENTPage 40

 

 

Article VI

Tax matters

 

Section 6.01 Tax Covenants.

 

(a) Without the prior written consent of Buyer, Selling Stockholder (and, prior
to the Closing, the Company, its Affiliates and their respective
Representatives) shall not, to the extent it may affect, or relate to, the
Company, make, change or rescind any Tax election, amend any Tax Return or take
any position on any Tax Return, take any action, omit to take any action or
enter into any other transaction that would have the effect of increasing the
Tax liability or reducing any Tax asset of Buyer or the Company in respect of
any Post-Closing Tax Period. Selling Stockholder agrees that Buyer is to have no
liability for any Tax resulting from any action of Selling Stockholder, the
Company, its Affiliates or any of their respective Representatives, and agrees
to indemnify and hold harmless Buyer (and, after the Closing Date, the Company)
against any such Tax or reduction of any Tax asset.

 

(b) All transfer, documentary, sales, use, stamp, registration, value added and
other such Taxes and fees (including any penalties and interest) incurred in
connection with this Agreement and the other Transaction Documents (including
any real property transfer Tax and any other similar Tax) shall be borne and
paid by Selling Stockholder when due. Selling Stockholder shall, at its own
expense, timely file any Tax Return or other document with respect to such Taxes
or fees (and Buyer shall cooperate with respect thereto as necessary).

 

Section 6.02 Tax Indemnification. Except to the extent treated as a liability in
the calculation of Closing Working Capital, Selling Stockholder shall indemnify
the Company, Buyer, and each Buyer Indemnitee and hold them harmless from and
against (a) any Loss attributable to any breach of or inaccuracy in any
representation or warranty made in Section 3.21(a); (b) any Loss attributable to
any breach or violation of, or failure to fully perform, any covenant,
agreement, undertaking or obligation in Article VI; (c) all Taxes of the Company
or relating to the business of the Company for all Pre-Closing Tax Periods; (d)
all Taxes of any member of an affiliated, consolidated, combined or unitary
group of which the Company (or any predecessor of the Company) is or was a
member on or prior to the Closing Date by reason of a liability under Treasury
Regulation Section 1.1502-6 or any comparable provisions of foreign, state or
local Law; and (e) any and all Taxes of any person imposed on the Company
arising under the principles of transferee or successor liability or by
contract, relating to an event or transaction occurring before the Closing Date.
In each of the above cases, together with any out-of-pocket fees and expenses
(including attorneys’ and accountants’ fees) incurred in connection therewith.
Selling Stockholder shall reimburse Buyer for any Taxes of the Company that are
the responsibility of Selling Stockholder pursuant to this Section 6.02 within
ten Business Days after payment of such Taxes by Buyer or the Company.

 

Section 6.03 Contests. Buyer agrees to give written notice to Selling
Stockholder of the receipt of any written notice by the Company, Buyer or any of
Buyer’s Affiliates which involves the assertion of any claim, or the
commencement of any Action, in respect of which an indemnity may be sought by
Buyer pursuant to this Article VI (a “Tax Claim”); provided, that failure to
comply with this provision shall not affect Buyer’s right to indemnification
hereunder. Buyer shall control the contest or resolution of any Tax Claim;
provided, however, that Buyer shall obtain the prior written consent of Selling
Stockholder (which consent shall not be unreasonably withheld or delayed) before
entering into any settlement of a claim or ceasing to defend such claim; and,
provided further, that Selling Stockholder shall be entitled to participate in
the defense of such claim and to employ counsel of its choice for such purpose,
the fees and expenses of which separate counsel shall be borne solely by Selling
Stockholder.

 

STOCK PURCHASE AGREEMENTPage 41

 

 

Section 6.04 Cooperation and Exchange of Information. Selling Stockholder and
Buyer shall provide each other with such cooperation and information as either
of them reasonably may request of the other in filing any Tax Return pursuant to
this Article VI or in connection with any audit or other proceeding in respect
of Taxes of the Company. Such cooperation and information shall include
providing copies of relevant Tax Returns or portions thereof, together with
accompanying schedules, related work papers and documents relating to rulings or
other determinations by tax authorities. Each of Selling Stockholder and Buyer
shall retain all Tax Returns, schedules and work papers, records and other
documents in its possession relating to Tax matters of the Company for any
taxable period beginning before the Closing Date until the expiration of the
statute of limitations of the taxable periods to which such Tax Returns and
other documents relate, without regard to extensions except to the extent
notified by the other party in writing of such extensions for the respective Tax
periods. Prior to transferring, destroying or discarding any Tax Returns,
schedules and work papers, records and other documents in its possession
relating to Tax matters of the Company for any taxable period beginning before
the Closing Date, Selling Stockholder or Buyer (as the case may be) shall
provide the other party with reasonable written notice and offer the other party
the opportunity to take custody of such materials.

 

Section 6.05 Tax Treatment of Indemnification Payments. Any indemnification
payments pursuant to this Article VI shall be treated as an adjustment to the
Purchase Price by the parties for Tax purposes, unless otherwise required by
Law.

 

Section 6.06 Survival. Notwithstanding anything in this Agreement to the
contrary, the provisions of Section 3.21(a) and this Article VI shall survive
for the full period of all applicable statutes of limitations (giving effect to
any waiver, mitigation or extension thereof) plus 60 days.

 

Section 6.07 Overlap. To the extent that any obligation or responsibility
pursuant to Article VIII may overlap with an obligation or responsibility
pursuant to this Article VI, the provisions of this Article VI shall govern.

 

STOCK PURCHASE AGREEMENTPage 42

 

 

Article VII

Conditions to closing

 

Section 7.01 Conditions to Obligations of All Parties. The obligations of each
party to consummate the transactions contemplated by this Agreement shall be
subject to the fulfillment, at or prior to the Second Closing, of each of the
following conditions:

 

(a) No Governmental Authority shall have enacted, issued, promulgated, enforced
or entered any Governmental Order which is in effect and has the effect of
making the transactions contemplated by this Agreement illegal, otherwise
restraining or prohibiting consummation of such transactions or causing any of
the transactions contemplated hereunder to be rescinded following completion
thereof.

 

(b) Company and Selling Stockholder shall have received all consents,
authorizations, orders and approvals from the Governmental Authorities referred
to in Section 3.05 and Buyer shall have received all consents, authorizations,
orders and approvals from the Governmental Authorities referred to in Section
4.02, in each case, in form and substance reasonably satisfactory to other
parties, and no such consent, authorization, order and approval shall have been
revoked.

 

Section 7.02 Conditions to Obligations of Buyer. The obligations of Buyer to
consummate the transactions contemplated by this Agreement shall be subject to
the fulfillment or Buyer’s waiver, at or prior to the Closing, of each of the
following conditions:

 

(a) The representations and warranties of the Company, Promoter and Selling
Stockholders contained in this Agreement, the other Transaction Documents and
any certificate or other writing delivered pursuant hereto shall be true and
correct in all respects (in the case of any representation or warranty qualified
by materiality or Material Adverse Effect) or in all material respects (in the
case of any representation or warranty not qualified by materiality or Material
Adverse Effect) on and as of the Effective Date and on and as of the Closing
Date with the same effect as though made at and as of such date (except those
representations and warranties that address matters only as of a specified date,
the accuracy of which shall be determined as of that specified date in all
respects). The representations and warranties of Selling Stockholder contained
in Section 3.01, Section 3.02, Section 3.03, Section 3.06 and Section 3.24 shall
be true and correct in all respects on and as of the Effective Date and on and
as of the Closing Date with the same effect as though made at and as of such
date (except those representations and warranties that address matters only as
of a specified date, the accuracy of which shall be determined as of that
specified date in all respects).

 

(b) The Company, Promoter and Selling Stockholders shall have duly performed and
complied in all material respects with all agreements, covenants and conditions
required by this Agreement and each of the other Transaction Documents to be
performed or complied with by it prior to or on the Second Closing Date.

 

(c) No Action shall have been commenced against Buyer, Selling Stockholder or
the Company, which would prevent the Second Closing.

 

STOCK PURCHASE AGREEMENTPage 43

 

 

(d) No injunction or restraining order shall have been issued by any
Governmental Authority, and be in effect as of the Second Closing, which
restrains or prohibits any transaction contemplated hereby.

 

(e) All approvals, consents and waivers that are listed on Section 3.05 of the
Disclosure Schedules shall have been received, and executed counterparts thereof
shall have been delivered to Buyer at or prior to the Second Closing.

 

(f) From the Effective Date of this Agreement, there shall not have occurred any
Material Adverse Effect, nor shall any event or events have occurred that,
individually or in the aggregate, with or without the lapse of time, could
reasonably be expected to result in a Material Adverse Effect.

 

(g) The Transaction Documents (other than this Agreement) shall have been
executed and delivered by the parties thereto and true and complete copies
thereof shall have been delivered to Buyer.

 

(h) Buyer shall have received a certificate, dated the Closing Date and signed
by a duly authorized officer of Company, that each of the conditions set forth
in Section 7.02(a) (and for the Second Closing, Section 7.02(b)) have been
satisfied.

 

(i) Buyer shall have received a certificate of the Secretary or an Assistant
Secretary (or equivalent officer) or statutory auditors of Company certifying
that attached thereto are true and complete copies of all resolutions adopted by
the board of directors of Company authorizing the execution, delivery and
performance of this Agreement and the other Transaction Documents and the
consummation of the transactions contemplated hereby and thereby, and that all
such resolutions are in full force and effect and are all the resolutions
adopted in connection with the transactions contemplated hereby and thereby.

 

(j) Buyer shall have received a certificate of the Secretary or an Assistant
Secretary (or equivalent officer) of Company or statutory auditors of the
company certifying the names and signatures of the officers of the Company
authorized to sign this Agreement, the Transaction Documents and the other
documents to be delivered hereunder and thereunder.

 

(k) Company shall have delivered to Buyer a good standing certificate (or its
equivalent) for the Company from the secretary of state or similar Governmental
Authority of the jurisdiction under the Laws in which the Company is organized.

 

(l) If applicable for the Closing, the Company shall have delivered, or caused
to be delivered, to Buyer stock certificates evidencing the Shares, free and
clear of Encumbrances, duly endorsed in blank or accompanied by stock powers or
other instruments of transfer duly executed in blank and with all required stock
transfer tax stamps affixed.

 

(m) Company shall have delivered to Buyer such other documents or instruments as
Buyer reasonably requests and are reasonably necessary to consummate the
transactions contemplated by this Agreement.

 

(n) Prior to the completion of the Third Closing, the Company shall have
satisfied all outstanding indebtedness of the Company other than the secured
loan from SBOP and other indebtedness agreed to in writing by the Buyer.

 

STOCK PURCHASE AGREEMENTPage 44

 

 

Section 7.03 Conditions to Obligations of the Company, Promoter and Selling
Stockholders. The obligations of the Company, Promoter and Selling Stockholders
to consummate the transactions contemplated by this Agreement shall be subject
to the fulfillment or the Company’s or Selling Stockholder’s waiver, at or prior
to the Closing, of each of the following conditions:

 

(a) The representations and warranties of Buyer contained in this Agreement, the
other Transaction Documents and any certificate or other writing delivered
pursuant hereto shall be true and correct in all respects (in the case of any
representation or warranty qualified by materiality or Material Adverse Effect)
or in all material respects (in the case of any representation or warranty not
qualified by materiality or Material Adverse Effect) on and as of the Effective
Date and on and as of the Closing Date with the same effect as though made at
and as of such date (except those representations and warranties that address
matters only as of a specified date, the accuracy of which shall be determined
as of that specified date in all respects). The representations and warranties
of Buyer contained in Section 4.01 and Section 4.04 shall be true and correct in
all respects on and as of the Effective Date and on and as of the Closing Date
with the same effect as though made at and as of such date.

 

(b) Buyer shall have duly performed and complied in all material respects with
all agreements, covenants and conditions required by this Agreement and each of
the other Transaction Documents to be performed or complied with by it prior to
or on the Second Closing Date.

 

(c) No injunction or restraining order shall have been issued by any
Governmental Authority, and be in effect as of Second Closing, which restrains
or prohibits any material transaction contemplated hereby.

 

(d) All approvals, consents and waivers that are listed on Section 4.02 of the
Disclosure Schedules shall have been received, and executed counterparts thereof
shall have been delivered to Selling Stockholder at or prior to the Second
Closing.

 

(e) The Transaction Documents (other than this Agreement) shall have been
executed and delivered by the parties thereto and true and complete copies
thereof shall have been delivered to Selling Stockholder.

 

(f) Company shall have received a certificate, dated the Closing Date and signed
by a duly authorized officer of Buyer, that each of the conditions set forth in
Section 7.03(a) (and for the Second Closing, Section 7.03(b)) have been
satisfied.

 

(g) Company shall have received a certificate of the Secretary or an Assistant
Secretary (or equivalent officer) of Buyer certifying that attached thereto are
true and complete copies of all resolutions adopted by the board of directors of
Buyer authorizing the execution, delivery and performance of this Agreement and
the other Transaction Documents and the consummation of the transactions
contemplated hereby and thereby, and that all such resolutions are in full force
and effect and are all the resolutions adopted in connection with the
transactions contemplated hereby and thereby.

 

(h) Buyer shall have delivered to the Company and Selling Stockholder such other
documents or instruments as the Company and Selling Stockholder reasonably
requests and are reasonably necessary to consummate the transactions
contemplated by this Agreement.

 

STOCK PURCHASE AGREEMENTPage 45

 

 

Article VIII

Indemnification

 

Section 8.01 Survival. Subject to the limitations and other provisions of this
Agreement, the representations and warranties contained herein (other than any
representations or warranties contained in Section 3.21(a) which are subject to
Article VI) shall survive the Closing and shall remain in full force and effect
until the date that is three years from the Closing Date; provided, that the
representations and warranties in Section 3.01, Section 3.03, Section 3.19,
Section 3.24, Section 4.01 and Section 4.04 shall survive indefinitely and the
representations and warranties in Section 3.20 shall survive for the full period
of all applicable statutes of limitations (giving effect to any waiver,
mitigation or extension thereof) plus 60 days. All covenants and agreements of
the parties contained herein (other than any covenants or agreements contained
in Article VI which are subject to Article VI) shall survive the Closing
indefinitely or for the period explicitly specified therein. Notwithstanding the
foregoing, any claims asserted in good faith with reasonable specificity (to the
extent known at such time) and in writing by notice from the non-breaching party
to the breaching party prior to the expiration date of the applicable survival
period shall not thereafter be barred by the expiration of the relevant
representation or warranty and such claims shall survive until finally resolved.

 

Section 8.02 Indemnification By Selling Stockholders. Subject to the other terms
and conditions of this Article VIII, Selling Stockholders shall indemnify and
defend each of Buyer and its Affiliates (including the Company) and their
respective Representatives (collectively, the “Buyer Indemnitees”) against, and
shall hold each of them harmless from and against, and shall pay and reimburse
each of them for, any and all Losses incurred or sustained by, or imposed upon,
the Buyer Indemnitees based upon, arising out of, with respect to or by reason
of:

 

(a) any inaccuracy in or breach of any of the representations or warranties of
Company and Selling Stockholder contained in this Agreement or in any
certificate or instrument delivered by or on behalf of Company and Selling
Stockholder pursuant to this Agreement (other than in respect of Section
3.21(a), it being understood that the sole remedy for any such inaccuracy in or
breach thereof shall be pursuant to Article VI), as of the date such
representation or warranty was made or as if such representation or warranty was
made on and as of the Closing Date (except for representations and warranties
that expressly relate to a specified date, the inaccuracy in or breach of which
will be determined with reference to such specified date); or

 

(b) any breach or non-fulfillment of any covenant, agreement or obligation to be
performed by Company and Selling Stockholder pursuant to this Agreement (other
than any breach or violation of, or failure to fully perform, any covenant,
agreement, undertaking or obligation in Article VI, it being understood that the
sole remedy for any such breach, violation or failure shall be pursuant to
Article VI).

 

Section 8.03 Indemnification By Buyer. Subject to the other terms and conditions
of this Article VIII, Buyer shall indemnify and defend each of Selling
Stockholder and its Affiliates and their respective Representatives
(collectively, the “Selling Stockholder Indemnitees”) against, and shall hold
each of them harmless from and against, and shall pay and reimburse each of them
for, any and all Losses incurred or sustained by, or imposed upon, the Selling
Stockholder Indemnitees based upon, arising out of, with respect to or by reason
of:

 

STOCK PURCHASE AGREEMENTPage 46

 

 

(a) any inaccuracy in or breach of any of the representations or warranties of
Buyer contained in this Agreement or in any certificate or instrument delivered
by or on behalf of Buyer pursuant to this Agreement, as of the date such
representation or warranty was made or as if such representation or warranty was
made on and as of the Closing Date (except for representations and warranties
that expressly relate to a specified date, the inaccuracy in or breach of which
will be determined with reference to such specified date); or

 

(b) any breach or non-fulfillment of any covenant, agreement or obligation to be
performed by Buyer pursuant to this Agreement (other than Article VI, it being
understood that the sole remedy for any such breach thereof shall be pursuant to
Article VI).

 

Section 8.04 Certain Limitations. The indemnification provided for in Section
8.02 and Section 8.03 shall be subject to the following limitations:

 

(a) Selling Stockholders shall not be liable to the Buyer Indemnitees for
indemnification under Section 8.02(a) until the aggregate amount of all Losses
in respect of indemnification under Section 8.02(a) exceeds 10% of the Purchase
Price (the “Basket”), in which event Selling Stockholder shall be required to
pay or be liable for all such Losses from the first dollar. The aggregate amount
of all Losses for which Selling Stockholder shall be liable pursuant to Section
8.02(a) shall not exceed 100% of the Purchase Price (the “Cap”).

 

(b) Buyer shall not be liable to the Selling Stockholder Indemnitees for
indemnification under Section 8.03(a) until the aggregate amount of all Losses
in respect of indemnification under Section 8.03(a) exceeds the Basket, in which
event Buyer shall be required to pay or be liable for all such Losses from the
first dollar. The aggregate amount of all Losses for which Buyer shall be liable
pursuant to Section 8.03(a) shall not exceed the Cap.

 

(c) Notwithstanding the foregoing, the limitations set forth in Section 8.04(a)
and Section 8.04(b) shall not apply to Losses based upon, arising out of, with
respect to or by reason of any inaccuracy in or breach of any representation or
warranty in Section 3.01, Section 3.03, Section 3.19, Section 3.20, Section
3.24, Section 4.01 and Section 4.04.

 

(d) For purposes of this Article VIII, any inaccuracy in or breach of any
representation or warranty shall be determined without regard to any
materiality, Material Adverse Effect or other similar qualification contained in
or otherwise applicable to such representation or warranty.

 

Section 8.05 Indemnification Procedures. The party making a claim under this
Article VIII is referred to as the “Indemnified Party”, and the party against
whom such claims are asserted under this Article VIII is referred to as the
“Indemnifying Party”.

 

STOCK PURCHASE AGREEMENTPage 47

 

 

(a) Third Party Claims. If any Indemnified Party receives notice of the
assertion or commencement of any Action made or brought by any Person who is not
a party to this Agreement or an Affiliate of a party to this Agreement or a
Representative of the foregoing (a “Third Party Claim”) against such Indemnified
Party with respect to which the Indemnifying Party is obligated to provide
indemnification under this Agreement, the Indemnified Party shall give the
Indemnifying Party reasonably prompt written notice thereof, but in any event
not later than 30 calendar days after receipt of such notice of such Third Party
Claim. The failure to give such prompt written notice shall not, however,
relieve the Indemnifying Party of its indemnification obligations, except and
only to the extent that the Indemnifying Party forfeits rights or defenses by
reason of such failure. Such notice by the Indemnified Party shall describe the
Third Party Claim in reasonable detail, shall include copies of all material
written evidence thereof and shall indicate the estimated amount, if reasonably
practicable, of the Loss that has been or may be sustained by the Indemnified
Party. The Indemnifying Party shall have the right to participate in, or by
giving written notice to the Indemnified Party, to assume the defense of any
Third Party Claim at the Indemnifying Party’s expense and by the Indemnifying
Party’s own counsel, and the Indemnified Party shall cooperate in good faith in
such defense; provided, that if the Indemnifying Party is Selling Stockholder,
such Indemnifying Party shall not have the right to defend or direct the defense
of any such Third Party Claim that (x) is asserted directly by or on behalf of a
Person that is a supplier or customer of the Company, or (y) seeks an injunction
or other equitable relief against the Indemnified Party. In the event that the
Indemnifying Party assumes the defense of any Third Party Claim, subject to
Section 8.05(b), it shall have the right to take such action as it deems
necessary to avoid, dispute, defend, appeal or make counterclaims pertaining to
any such Third Party Claim in the name and on behalf of the Indemnified Party.
The Indemnified Party shall have the right to participate in the defense of any
Third Party Claim with counsel selected by it subject to the Indemnifying
Party’s right to control the defense thereof. The fees and disbursements of such
counsel shall be at the expense of the Indemnified Party, provided, that if in
the reasonable opinion of counsel to the Indemnified Party, (A) there are legal
defenses available to an Indemnified Party that are different from or additional
to those available to the Indemnifying Party; or (B) there exists a conflict of
interest between the Indemnifying Party and the Indemnified Party that cannot be
waived, the Indemnifying Party shall be liable for the reasonable fees and
expenses of counsel to the Indemnified Party in each jurisdiction for which the
Indemnified Party determines counsel is required. If the Indemnifying Party
elects not to compromise or defend such Third Party Claim, fails to promptly
notify the Indemnified Party in writing of its election to defend as provided in
this Agreement, or fails to diligently prosecute the defense of such Third Party
Claim, the Indemnified Party may, subject to Section 8.05(b), pay, compromise,
defend such Third Party Claim and seek indemnification for any and all Losses
based upon, arising from or relating to such Third Party Claim. Selling
Stockholder and Buyer shall cooperate with each other in all reasonable respects
in connection with the defense of any Third Party Claim, including making
available (subject to the provisions of Section 5.08) records relating to such
Third Party Claim and furnishing, without expense (other than reimbursement of
actual out-of-pocket expenses) to the defending party, management employees of
the non-defending party as may be reasonably necessary for the preparation of
the defense of such Third Party Claim.

 

STOCK PURCHASE AGREEMENTPage 48

 

 

(b) Settlement of Third Party Claims. Notwithstanding any other provision of
this Agreement, the Indemnifying Party shall not enter into settlement of any
Third Party Claim without the prior written consent of the Indemnified Party,
except as provided in this Section 8.05(b). If a firm offer is made to settle a
Third Party Claim without leading to liability or the creation of a financial or
other obligation on the part of the Indemnified Party and provides, in customary
form, for the unconditional release of each Indemnified Party from all
liabilities and obligations in connection with such Third Party Claim and the
Indemnifying Party desires to accept and agree to such offer, the Indemnifying
Party shall give written notice to that effect to the Indemnified Party. If the
Indemnified Party fails to consent to such firm offer within ten days after its
receipt of such notice, the Indemnified Party may continue to contest or defend
such Third Party Claim and in such event, the maximum liability of the
Indemnifying Party as to such Third Party Claim shall not exceed the amount of
such settlement offer. If the Indemnified Party fails to consent to such firm
offer and also fails to assume defense of such Third Party Claim, the
Indemnifying Party may settle the Third Party Claim upon the terms set forth in
such firm offer to settle such Third Party Claim. If the Indemnified Party has
assumed the defense pursuant to Section 8.05(a), it shall not agree to any
settlement without the written consent of the Indemnifying Party (which consent
shall not be unreasonably withheld or delayed).

 

(c) Direct Claims. Any Action by an Indemnified Party on account of a Loss which
does not result from a Third Party Claim (a “Direct Claim”) shall be asserted by
the Indemnified Party giving the Indemnifying Party reasonably prompt written
notice thereof, but in any event not later than 30 days after the Indemnified
Party becomes aware of such Direct Claim. The failure to give such prompt
written notice shall not, however, relieve the Indemnifying Party of its
indemnification obligations, except and only to the extent that the Indemnifying
Party forfeits rights or defenses by reason of such failure. Such notice by the
Indemnified Party shall describe the Direct Claim in reasonable detail, shall
include copies of all material written evidence thereof and shall indicate the
estimated amount, if reasonably practicable, of the Loss that has been or may be
sustained by the Indemnified Party. The Indemnifying Party shall have 30 days
after its receipt of such notice to respond in writing to such Direct Claim. The
Indemnified Party shall allow the Indemnifying Party and its professional
advisors to investigate the matter or circumstance alleged to give rise to the
Direct Claim, and whether and to what extent any amount is payable in respect of
the Direct Claim and the Indemnified Party shall assist the Indemnifying Party’s
investigation by giving such information and assistance (including access to the
Company’s premises and personnel and the right to examine and copy any accounts,
documents or records) as the Indemnifying Party or any of its professional
advisors may reasonably request. If the Indemnifying Party does not so respond
within such 30 day period, the Indemnifying Party shall be deemed to have
rejected such claim, in which case the Indemnified Party shall be free to pursue
such remedies as may be available to the Indemnified Party on the terms and
subject to the provisions of this Agreement.

 

(d) Tax Claims. Notwithstanding any other provision of this Agreement, the
control of any claim, assertion, event or proceeding in respect of Taxes of the
Company (including, but not limited to, any such claim in respect of a breach of
the representations and warranties in Section 3.21(a) hereof or any breach or
violation of or failure to fully perform any covenant, agreement, undertaking or
obligation in Article VI) shall be governed exclusively by Article VI hereof.

 

Section 8.06 Payments. Once a Loss is agreed to by the Indemnifying Party or
finally adjudicated to be payable pursuant to this Article VIII, the
Indemnifying Party shall satisfy its obligations within 15 Business Days of such
final, non-appealable adjudication by wire transfer of immediately available
funds. The parties hereto agree that should an Indemnifying Party not make full
payment of any such obligations within such 15 Business Day period, any amount
payable shall accrue interest from and including the date of agreement of the
Indemnifying Party or final, non-appealable adjudication to and including the
date such payment has been made at a rate per annum equal to 20%. Such interest
shall be calculated daily on the basis of a 365 day year and the actual number
of days elapsed, without compounding.

 

STOCK PURCHASE AGREEMENTPage 49

 

 

Section 8.07 Tax Treatment of Indemnification Payments. All indemnification
payments made under this Agreement shall be treated by the parties as an
adjustment to the Purchase Price for Tax purposes, unless otherwise required by
Law.

 

Section 8.08 Effect of Investigation. The representations, warranties and
covenants of the Indemnifying Party, and the Indemnified Party’s right to
indemnification with respect thereto, shall not be affected or deemed waived by
reason of any investigation made by or on behalf of the Indemnified Party
(including by any of its Representatives) or by reason of the fact that the
Indemnified Party or any of its Representatives knew or should have known that
any such representation or warranty is, was or might be inaccurate or by reason
of the Indemnified Party’s waiver of any condition set forth in Section 7.02 or
Section 7.03, as the case may be.

 

Section 8.09 Exclusive Remedies. Subject to Section 10.12, the parties
acknowledge and agree that their sole and exclusive remedy with respect to any
and all claims (other than claims arising from fraud, criminal activity or
willful misconduct on the part of a party hereto in connection with the
transactions contemplated by this Agreement) for any breach of any
representation, warranty, covenant, agreement or obligation set forth herein or
otherwise relating to the subject matter of this Agreement, shall be pursuant to
the indemnification provisions set forth in Article VI and this Article VIII. In
furtherance of the foregoing, each party hereby waives, to the fullest extent
permitted under Law, any and all rights, claims and causes of action for any
breach of any representation, warranty, covenant, agreement or obligation set
forth herein or otherwise relating to the subject matter of this Agreement it
may have against the other parties hereto and their Affiliates and each of their
respective Representatives arising under or based upon any Law, except pursuant
to the indemnification provisions set forth in Article VI and this Article VIII.
Nothing in this Section 8.09 shall limit any Person’s right to seek and obtain
any equitable relief to which any Person shall be entitled or to seek any remedy
on account of any party’s fraudulent, criminal or intentional misconduct.

 

Article IX
Termination

 

Section 9.01 Termination. This Agreement may be terminated at any time prior to
the Drop Dead Date:

 

(a) by the unanimous written consent of the parties;

 

(b) by Buyer by written notice to Company and Promoter if:

 

STOCK PURCHASE AGREEMENTPage 50

 

 

(i) Buyer is not then in material breach of any provision of this Agreement and
there has been a breach, inaccuracy in or failure to perform any representation,
warranty, covenant or agreement made by Company or Selling Stockholder pursuant
to this Agreement that would give rise to the failure of any of the conditions
specified in Article VII and such breach, inaccuracy or failure has not been
cured by Company or Selling Stockholder within ten days of Company’s or Selling
Stockholder’s receipt of written notice of such breach from Buyer;

 

(ii) any of the conditions set forth in Section 7.01 or Section 7.02 shall not
have been, or if it becomes apparent that any of such conditions will not be,
fulfilled by the Drop Dead Date, unless such failure shall be due to the failure
of Buyer to perform or comply with any of the covenants, agreements or
conditions hereof to be performed or complied with by it prior to the Closing;
or

 

(iii) if the Company or the Selling Stockholders fail or refuse to consummate
all of the transactions contemplated hereby by the Drop Dead Date.

 

(c) by Company or Selling Stockholder by written notice to Buyer if:

 

(i) Company or Selling Stockholder is not then in material breach of any
provision of this Agreement and there has been a breach, inaccuracy in or
failure to perform any representation, warranty, covenant or agreement made by
Buyer pursuant to this Agreement that would give rise to the failure of any of
the conditions specified in Article VII and such breach, inaccuracy or failure
has not been cured by Buyer within ten days of Buyer’s receipt of written notice
of such breach from Selling Stockholder; or

 

(ii) any of the conditions set forth in Section 7.01 or Section 7.03 shall not
have been, or if it becomes apparent that any of such conditions will not be,
fulfilled by the Drop Dead Date, unless such failure shall be due to the failure
of the Company or Selling Stockholder to perform or comply with any of the
covenants, agreements or conditions hereof to be performed or complied with by
it prior to the Closing; or

 

(d) by Buyer, Company or Selling Stockholder in the event that (i) there shall
be any Law that makes consummation of the transactions contemplated by this
Agreement illegal or otherwise prohibited or (ii) any Governmental Authority
shall have issued a Governmental Order restraining or enjoining the transactions
contemplated by this Agreement, and such Governmental Order shall have become
final and non-appealable.

 

Section 9.02 Effect of Termination. In the event of the termination of this
Agreement in accordance with this Article:

 

(a) the Pan Global Preferred Stock issued pursuant to Section 2.01(b), if any,
shall be exchanged by the Promoter for the Promoter Shares;

 

(b) this Agreement shall forthwith become void and there shall be no liability
on the part of any party hereto except:

 

STOCK PURCHASE AGREEMENTPage 51

 

 

(i) as set forth in this Article IX and Section 5.08 and Article X hereof; and

 

(ii) that nothing herein shall relieve any party hereto from liability for any
willful breach of any provision hereof.

 

(c) Notwithstanding anything contained herein to the contrary, upon the
termination of this Agreement, Buyer shall retain such proportionate equity
interest in the Project (“Retained Interest”) based on funds invested by Buyer
in relation to the total equity of the Project; provided, however, if in the
event the termination of the Agreement is by the Company or Selling Stockholder
pursuant to under Section 9.01(b), the Company shall pay Buyer 18% annualized
interest, due monthly, on Buyer’s invested capital in the Project and provided
further, that notwithstanding anything contained herein to the contrary, the
Buyer shall have the right to require the Company to repurchase all the equity
of the Company (“Put Option”) purchased by the Buyer as of the date of
termination for 125% of the Purchase Price paid by Buyer as of the Drop Dead
Date; in the event Buyer invokes its Put Option, the Company shall have 30 days
to complete its repurchase; after 30 days additional penalty interest of 1% per
month shall be due.

 

Article X
Miscellaneous

 

Section 10.01 Expenses. Except as otherwise expressly provided herein, all costs
and expenses, including, without limitation, fees and disbursements of counsel,
financial advisors and accountants, incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such costs and expenses, whether or not the Closing shall have occurred;
provided, however, Promoter and/or Selling Stockholder shall pay all amounts
payable to Deodar Advisory LLP and other brokers or finders retained by them.

 

Section 10.02 Notices. All notices, requests, consents, claims, demands, waivers
and other communications hereunder shall be in writing and shall be deemed to
have been given (a) when delivered by hand (with written confirmation of
receipt); (b) when received by the addressee if sent by a nationally recognized
overnight courier (receipt requested); (c) on the date sent by facsimile or
e-mail of a PDF document (with confirmation of transmission) if sent during
normal business hours of the recipient, and on the next Business Day if sent
after normal business hours of the recipient or (d) on the third day after the
date mailed, by certified or registered mail, return receipt requested, postage
prepaid. Such communications must be sent to the respective parties at the
following addresses (or at such other address for a party as shall be specified
in a notice given in accordance with this Section 10.01):

 

If to Company:

Regency Yamuna Energy Limited

Regency Complex, River View Road

Shamsherpur, Paonta Sahib-173 025 (HP)

 

Telephone: +91-1704-223431, 224431

Facsimile: +91-1704-222645

E-mail: aphregency@yahoo.co.in

 

 

with a copy to:

Attention: Sh. Arun Sharma

 

Sh. Rajeev Walia (rkwalia7777@gmail.com),

Mobile : +91-9418049977

    If to Promoter:

Mr. Arun Sharma

Regency Complex

River View Road

Shamsherpur, Paonta Sahib-173 025 (HP).

 

Telephone: +91-1704-223778

Facsimile:+91-1704-222645

E-mail: arunsharma5000@rediffmail.com

 

with a copy to:

Sh. Amitabh Sharma (skihimalayas@gmail.com,

Mobile : +91-98160-55555)

 

If to Buyer:

Pan Asia Infratech, Corp.

c/o Pan Global, Corp.

123 W. Nye Lane, Suite 455

Carson City, Nevada 89706

Attention of: Bharat Vasandani

Telephone: (888) 983-1623

 

with a copy to:

The Magri Law Firm, PLLC

2642 NE 9th Avenue

Fort Lauderdale, FL 33334

USA

Direct: (954) 303-8027

T: (646) 502-5900

F: (646) 836-9200

pmagri@magrilaw.com

www.magrilaw.com

Attention: Philip Magri, Esq.

 

STOCK PURCHASE AGREEMENTPage 52

 

 

Section 10.03 Interpretation. For purposes of this Agreement, (a) the words
“include,” “includes” and “including” shall be deemed to be followed by the
words “without limitation”; (b) the word “or” is not exclusive; and (c) the
words “herein,” “hereof,” “hereby,” “hereto” and “hereunder” refer to this
Agreement as a whole. Unless the context otherwise requires, references herein:
(x) to Articles, Sections, Disclosure Schedules and Exhibits mean the Articles
and Sections of, and Disclosure Schedules and Exhibits attached to, this
Agreement; (y) to an agreement, instrument or other document means such
agreement, instrument or other document as amended, supplemented and modified
from time to time to the extent permitted by the provisions thereof and (z) to a
statute means such statute as amended from time to time and includes any
successor legislation thereto and any regulations promulgated thereunder. This
Agreement shall be construed without regard to any presumption or rule requiring
construction or interpretation against the party drafting an instrument or
causing any instrument to be drafted. The Disclosure Schedules and Exhibits
referred to herein shall be construed with, and as an integral part of, this
Agreement to the same extent as if they were set forth verbatim herein.

 

Section 10.04 Force Majeure. None of the parties shall be liable or responsible
to the other parties, nor be deemed to have defaulted under or breached this
Agreement, for any failure or delay in fulfilling or performing any term of this
Agreement or Ancillary Document, when and to the extent such failure or delay is
caused by: (a) natural calamities and other acts of God; (b) flood, fire or
explosion; (c) war, terrorism, invasion, riot or other civil unrest; (d)
embargoes or blockades in effect on or after the date of this Agreement; (e)
national or regional emergency;(f) strikes, lock-outs, labor stoppages or
slowdowns or other industrial disturbances;(g) any passage of law or
governmental order, rule, regulation or direction, or any action taken by a
governmental or public authority, including imposing an embargo, export or
import restriction, quota or other restriction or prohibition; (h) national or
regional shortage of adequate power or telecommunications or transportation
facilities; (i) any effects of the “shutdown” of the U.S. government as a result
of any impasse in the United States Congress over the budget or federal debt
ceiling, including delays or failures to act by any Governmental Authority or
(j) any disruption in the banking systems or financial markets in the United
States or India (each of the foregoing, a “Force Majeure Event”), in each case
provided that (A) such event is outside the reasonable control of the affected
party; (B) the affected party provides prompt notice to the other party, stating
the period of time the occurrence is expected to continue; and (C) the affected
party uses diligent efforts to end the failure or delay and minimize the effects
of such Force Majeure Event.

 

Section 10.05 Headings. The headings in this Agreement are for reference only
and shall not affect the interpretation of this Agreement.

 

Section 10.06 Severability. If any term or provision of this Agreement is
invalid, illegal or unenforceable in any jurisdiction, such invalidity,
illegality or unenforceability shall not affect any other term or provision of
this Agreement or invalidate or render unenforceable such term or provision in
any other jurisdiction. Upon such determination that any term or other provision
is invalid, illegal or unenforceable, the parties hereto shall negotiate in good
faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in a mutually acceptable manner in order that the
transactions contemplated hereby be consummated as originally contemplated to
the greatest extent possible.

 

STOCK PURCHASE AGREEMENTPage 53

 

 

Section 10.07 Entire Agreement. This Agreement and the other Transaction
Documents constitute the sole and entire agreement of the parties to this
Agreement with respect to the subject matter contained herein and therein, and
supersede all prior and contemporaneous understandings and agreements, both
written and oral, with respect to such subject matter. In the event of any
inconsistency between the statements in the body of this Agreement and those in
the other Transaction Documents, the Exhibits and Disclosure Schedules (other
than an exception expressly set forth as such in the Disclosure Schedules), the
statements in the body of this Agreement will control.

 

Section 10.08 Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and permitted assigns. Neither party may assign its rights or obligations
hereunder without the prior written consent of the other party, which consent
shall not be unreasonably withheld or delayed. No assignment shall relieve the
assigning party of any of its obligations hereunder.

 

Section 10.09 No Third-party Beneficiaries. Except as provided in Section 6.02
and Article VIII, this Agreement is for the sole benefit of the parties hereto
and their respective successors and permitted assigns and nothing herein,
express or implied, is intended to or shall confer upon any other Person or
entity any legal or equitable right, benefit or remedy of any nature whatsoever
under or by reason of this Agreement.

 

Section 10.10 Amendment and Modification; Waiver. This Agreement may only be
amended, modified or supplemented by an agreement in writing signed by each
party hereto. No waiver by any party of any of the provisions hereof shall be
effective unless explicitly set forth in writing and signed by the party so
waiving. No waiver by any party shall operate or be construed as a waiver in
respect of any failure, breach or default not expressly identified by such
written waiver, whether of a similar or different character, and whether
occurring before or after that waiver. No failure to exercise, or delay in
exercising, any right, remedy, power or privilege arising from this Agreement
shall operate or be construed as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege.

 

Section 10.11 Governing Law; Submission to Jurisdiction; Waiver of Jury Trial.

 

(a) This Agreement shall be governed by and construed in accordance with the
internal laws of the State of Nevada without giving effect to any choice or
conflict of law provision or rule (whether of the State of Nevada or any other
jurisdiction).

 

STOCK PURCHASE AGREEMENTPage 54

 

 

(b) ANY DISPUTE, CONTROVERSY OR CLAIM ARISING OUT OF OR IN ANY WAY RELATING TO
THIS AGREEMENT OR THE BREACH, TERMINATION OR INVALIDITY THEREOF, SHALL BE
SETTLED IN ARBITRATION IN ACCORDANCE WITH THE ARBITRATION RULES AS AT PRESENT
FORCE OF THE INTERNATIONAL ARBITRATION ASSOCIATION (“IAA”) IN NEW DELHI, INDIA.
IAA SHALL DESIGNATE AN ARBITRATOR FROM AN APPROVED LIST OF ARBITRATORS FOLLOWING
BOTH PARTIES’ REVIEW AND DELETION OF THOSE ARBITRATORS ON THE APPROVED LIST
HAVING A CONFLICT OF INTEREST WITH EITHER PARTY. EACH PARTY SHALL PAY ITS OWN
EXPENSES ASSOCIATED WITH SUCH ARBITRATION. A DEMAND FOR ARBITRATION SHALL BE
MADE WITHIN A REASONABLE TIME AFTER THE CLAIM, DISPUTE OR OTHER MATTER HAS
ARISEN AND IN NO EVENT SHALL SUCH DEMAND BE MADE AFTER THE DATE WHEN INSTITUTION
OF LEGAL OR EQUITABLE PROCEEDINGS BASED ON SUCH CLAIM, DISPUTE OR OTHER MATTER
IN QUESTION WOULD BE BARRED BY THE APPLICABLE STATUTES OF LIMITATIONS. THE
DECISION OF THE ARBITRATORS SHALL BE RENDERED WITHIN 60 DAYS OF SUBMISSION OF
ANY CLAIM OR DISPUTE, SHALL BE IN WRITING AND MAILED TO ALL THE PARTIES INCLUDED
IN THE ARBITRATION. THE DECISION OF THE ARBITRATOR SHALL BE BINDING UPON THE
PARTIES AND JUDGMENT IN ACCORDANCE WITH THAT DECISION. THE COMPANY AGREES THAT
THE SERVICE OF PROCESS UPON IT MAILED BY CERTIFIED OR REGISTERED MAIL (AND
SERVICE SO MADE SHALL BE DEEMED COMPLETE THREE DAYS AFTER THE SAME HAS BEEN
POSTED AS AFORESAID) OR BY PERSONAL SERVICE SHALL BE DEEMED IN EVERY RESPECT
EFFECTIVE SERVICE OF PROCESS UPON IT IN ANY SUCH SUIT OR PROCEEDING. NOTHING
HEREIN SHALL AFFECT THE PARTY’S RIGHT TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW. THE COMPANY AGREES THAT A FINAL NON-APPEALABLE JUDGMENT IN ANY
SUCH SUIT OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON SUCH JUDGMENT OR IN ANY OTHER LAWFUL MANNER.

 

(c) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE
UNDER THIS AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER
TRANSACTION DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH
PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE OF
ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY
WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION,
(B) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY
MAKES THIS WAIVER VOLUNTARILY, AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO
THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION 10.10(c).

 

Section 10.12 Specific Performance. The parties agree that irreparable damage
would occur if any provision of this Agreement were not performed in accordance
with the terms hereof and that the parties shall be entitled to specific
performance of the terms hereof, in addition to any other remedy to which they
are entitled at law or in equity.

 

Section 10.13 Counterparts. This Agreement may not be executed in counterparts.
Two completely signed copies of this Agreement must be executed. One completely
executed Agreement must be delivered by facsimile, e-mail or other means of
electronic transmission and shall be deemed to have the same legal effect as
delivery of an original signed copy of this Agreement.

 

[SIGNATURE PAGE TO FOLLOW]

 

STOCK PURCHASE AGREEMENTPage 55

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date written adjacent to their respective signatures.

 

 

REGENCY YAMUNA ENERGY LIMITED

      By /s/ Arun Sharma   Name : Arun Sharma   Title: Director         Date:
October 18, 2013         PAN ASIA INFRATECH CORP.         By /s/ Bharat
Vasandani   Name: Bharat Vasandani   Title: Chairman, Chief Executive Officer,
President, Secretary and Treasurer     Date: October 28, 2013

 

SELLING STOCKHOLDER: SIGNATURE: DATE:       Arun Sharma (the “Promoter”) /s/
Arun Sharma October 18, 2013 Amitabh Sharma /s/ Amitabh Sharma October 18, 2013
Sunita Sharma /s/ Sunita Sharma October 18, 2013 Abhay Sharma /s/ Abhay Sharma
October 18, 2013 A.Power Himalayas Ltd

By: /s/ Arun Sharma

 

Title: Director

October 18, 2013 Charu Finvest Consultant Ltd

By: /s/ Arun Sharma

 

Title: Director

October 18, 2013 Regency Aquaelectro & Motel - Resorts Ltd.

By: /s/ Arun Sharma

 

Title: Director

October 18, 2013 Spoxy Vyapaar Pvt. Ltd.

By: /s/ Tarun Sharma

 

Title: Director

October 18, 2013 Sunrays Agencies Pvt. Ltd.

By: /s/ Arun Sharma

 

Title: Director

October 18, 2013 Indu Jindal /s/ Indu Jindal October 18, 2013 Pavaljeet Singh
Ruppal /s/ Pavaljeet Singh Ruppal October 18, 2013 Pradeep Kaur /s/ Pradeep Kaur
October 18, 2013 Himanshu Leasefin Co. Pvt. Ltd.

By: /s/ Sanjay Jindal

 

Title: Director

 

October 18, 2013 Sanjay Kumar Jindal /s/ Sanjay Kumar Jindal October 18, 2013

 

STOCK PURCHASE AGREEMENTPage 56

 

 

LIST OF EXHIBITS

 

EXHIBIT A SELLING STOCKHOLDERS       EXHIBIT B   ESCROW AGREEMENT       EXHIBIT
C   FORM OF CONVERTIBLE DEBENTURE       EXHIBIT D   USE OF PROCEEDS SCHEDULE    
  EXHIBIT E   INDEBTEDNESS

 

STOCK PURCHASE AGREEMENTPage 57

 

 

List of Company/Selling Stockholder Disclosure Schedules

 

Schedule Description 3.09 Material Contracts 3.10(a) Permitted Encumbrances
3.10(b) Real Property description 3.15(b) List of Suppliers 3.16 Insurance
Policies 3.18(b) Permits 3.19(b) Environmental Permits 3.21(a) Employees,
Independent Contractors or Consultants

 

STOCK PURCHASE AGREEMENTPage 58