STOCK EXCHANGE AGREEMENT
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THIS STOCK EXCHANGE AGREEMENT (the "Agreement"), dated as of June 15, 2000,
by and among FIRST CAPITAL INTERNATIONAL, INC., a Delaware corporation ("FCAI"),
and VALERI SEREDENKO, personal code 35402050353, of Tallinn, Republic of Estonia
and TATJANA TIKERPUU Personal code: 45105060334 (collectively the
"STOCKHOLDERS"), such persons being registered holder of capital stock of AS
Andevis, an Estonian corporation ("ANDEVIS"), and ANDEVIS for the purposes of
Articles VII and VIII.
R E C I T A L S
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WHEREAS, each Stockholder is the record and beneficial owner of the number
of shares of common stock, par value 100 EEK per share, of ANDEVIS indicated in
the table set forth as Exhibit A to this Agreement (which shares are hereinafter
collectively referred to as the "ANDEVIS Stock");
WHEREAS, FCAI desires to acquire from the Stockholders, and the
Stockholders desire to convey to FCAI, all of the issued and outstanding ANDEVIS
Stock owned by the Stockholders in exchange for shares of voting common stock,
$0,001 par value of FCAI (the "FCAI Stock"), all on the terms and conditions set
forth below;
NOW, THEREFORE, in consideration of the premises, the mutual covenants and
agreements and the respective representations and warranties herein contained in
this Agreement, and on the terms and subject to the conditions set forth in this
Agreement, the parties hereto, intending to be legally bound, hereby agree as
follows:
ARTICLE I
EXCHANGE OF SHARES
Section 1.1 ANDEVIS Stock. At the Closing (as defined below), each
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Stockholder shall transfer, convey and deliver to FCAI the number of shares of
ANDEVIS Stock set forth opposite their name on Exhibit A hereto, and shall
deliver to FCAI stock certificates representing the ANDEVIS Stock, duly endorsed
to FCAI or accompanied by duly executed stock powers in form and substance
satisfactory to FCAI.
Section 1.2 FCAI Stock. At the Closing, in exchange for each share of
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ANDEVIS Stock transferred to FCAI, FCAI shall issue and deliver to each
Stockholder the number of shares of FCAI Stock set forth opposite their name on
Exhibit A hereto. The transaction by which the transfer shall take place is
referred to in this Agreement as the "Exchange".
ARTICLE II
THE CLOSING
The Closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at 10:00 A.M. on July 5, 2000 (the "Closing Date"),
at the offices of FCAI, 5120 Woodway, Suite 9004, Houston, Texas 77056 or at
such other time and place as agreed upon among the parties hereto.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
Each of the Stockholders hereby severally represents and warrants to FCAI
as follows:
Stock Exchange Agreement -- 1
<PAGE>
Section 3.1 Ownership of the ANDEVIS Stock. The Stockholder owns,
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beneficially and of record, that number of shares of ANDEVIS Stock set forth
opposite the Stockholder's name on Exhibit A hereto; except for restrictions
imposed by national, federal and state securities laws, (i) such shares are
owned by such Stockholder free and clear of any liens, claims, equities,
charges, options, rights of first refusal, or encumbrances; (ii) the Stockholder
has the unrestricted right and power to transfer, convey and deliver full
ownership of such shares without the consent or agreement of any other person
and without any designation, declaration or filing with any governmental
authority; and, (iii) upon the transfer of such shares to FCAI as contemplated
herein, FCAI will receive good and valid title thereto, free and clear of any
liens, claims, equities, charges, options, rights of first refusal, encumbrances
or other restrictions.
Section 3.2 Organization. If the Stockholder is either a corporation,
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limited liability company or partnership, it represents and warrants that it is
duly organized, validly existing and in good standing under the laws of the
state or nation of its incorporation or formation, with full power and authority
and all necessary governmental and regulatory licenses, permits and
authorizations to carry on the businesses in which it is engaged, to own the
properties that it owns currently and will own at the Closing, and to perform
its obligations under this Agreement. If the Stockholder is a corporation,
limited liability company or partnership it is qualified as a foreign
corporation, foreign limited liability company or foreign partnership (which
ever the case may be) and is in good standing in each jurisdiction in which the
failure to qualify would have material adverse effect on the business,
properties or condition (financial or otherwise) of the corporate, limited
liability company or partnership Stockholder.
Section 3.3 Authorization. If the Stockholder is a person, then he or
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she is of the full age of majority, with full power, capacity and authority to
enter into this Agreement and perform the obligations contemplated hereby by and
for himself or herself and his or her spouse, if any. If the Stockholder is a
corporation, limited liability company or partnership, then all corporate,
limited liability company or partnership action on the part of the corporate,
limited liability company or partnership Shareholder necessary for the
authorization, execution, delivery and performance of this Agreement and the
transactions contemplated hereby has been taken or will be taken prior to the
Closing. All action on the part of the Stockholder necessary for the
authorization, execution, delivery and performance of this Agreement by the
Stockholder has been taken or will be taken prior to the Closing. This
Agreement constitutes a valid and binding obligation of the Stockholder,
enforceable against the Stockholder in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, and other laws of general application
relating to or affecting creditors' rights and to general equitable principles.
Section 3.4 Pending Claims. There is no claim, suit, action or
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proceeding, whether judicial, administrative or otherwise, pending or, to the
best of the Stockholder's knowledge, threatened that would preclude or restrict
the transfer to FCAI of the ADEVIS Stock owned by the Stockholder or the
performance of this Agreement by the Stockholder.
Section 3.5 No Default. The execution, delivery and performance of
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this Agreement by the Stockholder does not and will not constitute a violation
or default under or conflict with any contract, agreement, understanding or
commitment to which such Stockholder is a party or by which such Stockholder is
bound.
Section 3.6 Acquisition of Stock for Investment. The Stockholder
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understands that the issuance of FCAI Stock will not have been registered under
the Securities Act of 1933, as amended (the "Act"), or any national or state
securities acts, and, accordingly, are restricted securities, and that he/she
represents and warrants to FCAI that his/her present intention is to receive and
hold the FCAI Stock for investment only and not with a view to the distribution
or resale thereof.
Stock Exchange Agreement -- 2
<PAGE>
Additionally, the Stockholder understands that any sale by the Stockholder
of any of the FCAI Stock received under this Agreement will, under current law,
require either (a) the registration of the FCAI Stock under the Act and
applicable national or state securities acts; (b) compliance with Rule 144 of
the Act; or (c) the availability of an exemption from the registration
requirements of the Act and applicable national or state securities acts. The
Stockholder understands that FCAI has not undertaken and does not presently
intend to file a Registration Statement to register the FCAI Stock to be issued
to the Stockholder. The Stockholder hereby agrees to execute, deliver, furnish
or otherwise provide to FCAI an opinion of counsel reasonably acceptable to FCAI
prior to any subsequent transfer of the FCAI Stock, that such transfer will not
violate the registration requirements of the federal or national or state
securities acts. The Stockholder further agrees to execute, deliver, furnish or
otherwise provide to FCAI any documents or instruments as may be reasonably
necessary or desirable in order to evidence and record the FCAI Stock acquired
hereby.
To assist in implementing the above provisions, the Stockholder hereby
consents to the placement of the legend, or a substantially similar legend, set
forth below, on all certificates
representing ownership of the FCAI Stock acquired hereby until the FCAI Stock
has been sold, transferred, or otherwise disposed of, pursuant to the
requirements hereof. The legend shall read substantially as follows:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES ACTS. THESE
SECURITIES MUST BE ACQUIRED FOR INVESTMENT, ARE RESTRICTED AS TO
TRANSFERABILITY, AND MAY NOT BE SOLD, HYPOTHECATED, OR OTHERWISE
TRANSFERRED WITHOUT COMPLIANCE WITH THE REGISTRATION AND QUALIFICATION
PROVISIONS OF APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR APPLICABLE
EXEMPTIONS THEREFROM."
Section 3.7 Stockholders Access to Information. The Stockholder hereby
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confirms and represents that he/she: (a) has been afforded the opportunity to
ask questions of and receive answers from representatives of FCAI concerning the
business and financial condition, properties, operations and prospects of FCAI
and has asked such questions as he/she desires to ask and all such questions
have been answered to the full satisfaction of the Stockholder; (b) has such
knowledge and experience in financial and business matters so as to be capable
of evaluating the relative merits and risks of the transactions contemplated
hereby; (c) has had an opportunity to engage and is represented by an attorney
of his/her choice; (d) has had an opportunity to negotiate the terms and
conditions of this Agreement; (e) has been given adequate time to evaluate the
merits and risks of the transactions contemplated hereby; and (f) has been
provided with and given an opportunity to review ALL CURRENT INFORMATION ABOUT
FCAI.
Section 3.8 Disclosure. To the best of the Stockholder's knowledge, no
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representation or warranty of the Stockholder contained in this Agreement
(including the exhibits and schedules hereto) contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements contained herein or therein, in light of the circumstances under
which they were made, not misleading.
Section 3.9 Indemnification by Stockholder. The Stockholder recognizes
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that the Exchange being conducted with FCAI is based, to a material degree, upon
the representations and warranties of Stockholder as set forth and contained
herein and the Stockholder hereby agrees to indemnify and hold harmless FCAI
against all damages, costs, or expenses (including reasonable attorney's fees)
arising as a result of any breach of representation or warranty or omission made
herein by the Stockholder.
If any action is brought against FCAI in respect of which indemnity may be
sought against the Stockholder pursuant to the foregoing paragraph, FCAI shall
promptly notify the Stockholder in writing of the institution of such action
(but the omission to so notify the Stockholder shall not relieve it from any
liability that it may have to FCAI except to the extent the Stockholder is
materially prejudiced or otherwise forfeit substantive rights or defenses by
reason of such failure), and the Stockholder shall assume the defense of such
action, including the employment of counsel to be chosen by the Stockholder to
be reasonably satisfactory to FCAI, and payment of expenses. FCAI shall have the
right to employ the Stockholder's or their own counsel in any such case, but the
fees and expenses of such counsel shall be at FCAI expense, unless the
employment of such counsel shall have been authorized in writing by the
Stockholder in connection with the defense of such action, or the Stockholder
shall not have employed counsel to take charge of the defense of such action, or
Stock Exchange Agreement -- 3
<PAGE>
counsel employed by the Stockholder shall not be diligently defending such
action, or FCAI shall have reasonably concluded that there may be defenses
available to it which are different from or additional to those available to the
Stockholder, or that representation of FCAI by the same counsel would be
inappropriate under applicable standards of professional conduct due to actual
or potential differing interests between them (in which case the Stockholder
shall not have the right to direct the defense of such action on behalf of
FCAI), in any of which event such fees and expenses shall be borne by the
Stockholder. Anything in this paragraph to the contrary notwithstanding, the
Stockholder shall not be liable for any settlement of, or any expenses incurred
with respect to, any such claim or action effected without the Stockholder's
written consent, which consent shall not be unreasonably withheld. The
Stockholder shall not, without the prior written consent of FCAI effect any
settlement of any proceeding in respect of which FCAI is a party and indemnity
has been sought hereunder unless such settlement includes an unconditional
release of FCAI from all liability on claims that are the subject matter of such
proceeding.
Section 3.10 Organization and Capitalization. ANDEVIS is a corporation
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duly organized, validly existing and in good standing under the laws of the
Republic of Estonia, with full power and authority and all necessary
governmental and regulatory licenses, permits and authorizations to carry on the
businesses in which it is engaged, to own the properties that it owns currently
and will own at the Closing. ANDEVIS is qualified as a foreign corporation and
is in good standing in each jurisdiction in which the failure to qualify would
have a material adverse effect on the business, properties or condition
(financial or otherwise) of ANDEVIS. ANDEVIS does not have any subsidiaries or
any other investments or ownership interest in any corporation, partnership,
joint venture or other business enterprise, except as set forth in Schedule
3.10. The authorized capital stock of ANDEVIS consists of 5,125 shares of common
stock 100 EEK par value per share, of which 5,125 shares are validly issued and
outstanding. All of such issued and outstanding shares of ANDEVIS Stock have
been duly authorized and validly issued and are fully paid and non-assessable.
None of the shares were issued in violation of any preemptive rights. Except as
set forth in Schedule 3.10, there are no existing warrants, options, rights of
first refusal, conversion rights, calls, commitments or other agreements of any
character pursuant to which ANDEVIS is or may become obligated to issue any of
its stock or securities. ANDEVIS has no obligation to repurchase, reacquire or
redeem any of its outstanding capital stock.
Section 3.11 Subsidiaries. Schedule 3.11 sets forth a complete and
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accurate list of all Subsidiaries of ANDEVIS , showing (as to each such
Subsidiary) the date of its incorporation and the jurisdiction of its
incorporation. All of the outstanding capital stock of, or other ownership
interests in, each Subsidiary is owned by ANDEVIS directly or indirectly, free
and clear of any lien or any other limitation or restriction (including
restrictions on the right to vote). All outstanding shares of the capital stock
of each Subsidiary have been duly authorized and validly issued and are fully
paid and non-assessable and are free of any preemptive rights. There are no
outstanding securities of any Subsidiary convertible into or evidencing the
right to purchase or subscribe for any shares of capital stock of any
Subsidiary, there are no outstanding or authorized options, warrants, calls,
subscriptions, rights, commitments or any other agreements of any character
obligating any Subsidiary to issue any shares of its capital stock or any
securities convertible into or evidencing the right to purchase or subscribe for
any shares of such stock, and there are no agreements or understandings with
respect to the voting, sale, transfer or registration of any shares of capital
stock of any Subsidiary.
Section 3.12 Financial Information. ANDEVIS has delivered to FCAI the
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audited balance sheet of ANDEVIS as of 01.01.1999-31.12.1999, together with the
related statements of income, changes in shareholder's equity and cash flow for
the years then ended, including the related notes, all certified by an
independent Estonian certified auditor. Such Financial Statements, including the
related notes, are in accordance with the books and records of ANDEVIS and
fairly present the financial position of ANDEVIS and the results of operations
and changes in financial position of ANDEVIS as of the dates and for the periods
indicated, in each case in conformity with generally accepted accounting
principles applied on a consistent basis. Except as, and to the extent reflected
or reserved against in the Financial Statements, ANDEVIS , as of the date of the
Financial Statements, has no material liability or obligation of any nature,
whether absolute, accrued, continued or otherwise, not fully reflected or
reserved against in the Financial Statements. As of the Closing Date, there will
not have been any adverse change in the financial condition or other operations,
business, properties or assets of ANDEVIS other than liabilities incurred in the
ordinary course of business in which, in the aggregate, are not in excess of
$10,000 from that reflected in the latest Financial Statements of ANDEVIS
furnished to FCAI pursuant hereto.
Stock Exchange Agreement -- 4
<PAGE>
Section 3.13 Litigation. Except as disclosed in Schedule 3.13, there
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are no actions, suits or proceedings, formal or informal, pending or, to the
best knowledge of the Stockholder's, threatened against ANDEVIS , nor is ANDEVIS
subject to any order, judgment or decree, except in all cases, whether known or
unknown, for matters which, in the aggregate, would not result in a loss to
ANDEVIS in excess of $10,000.
Section 3.14 Taxes. Except as disclosed in Schedule 3.14, ANDEVIS has
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filed all tax returns and reports due or required to be filed, and has paid all
taxes, interest payments and penalties, if any, required to be paid with respect
thereto. ANDEVIS has made adequate provision for the payment of all taxes
accruable for all periods ending on or before the Closing Date to any taxing
authority and is not delinquent in the payment of any material tax or
governmental charge of any nature.
Section 3.15 Compliance with Laws. Except as set forth in Schedule
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3.15, ANDEVIS is, and at all times prior to the date hereof has been, to the
best of the Stockholder's knowledge, in compliance with all statutes, orders,
rules, and regulations applicable to it or to the ownership of its assets or the
operation of its business, except for failures to be in compliance that would
not have a material adverse effect on the business, properties, condition
(financial or otherwise) or prospects of ANDEVIS, and ANDEVIS has no basis to
expect to receive, and has not received, any order or notice of any such
violation or claim of violation of any such statute, order, rule, ordinance or
regulation.
Section 3.16 Books and Records. The books of account, minute books,
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stock record books and other records of ANDEVIS, all of which have been made
available to FCAI, are accurate and complete in all material respects and have
been maintained in accordance with sound business practices.
Section 3.17 Title to Properties; Encumbrances. ANDEVIS has good title
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to all of its properties and assets, real and personal, tangible and intangible,
that are material to the condition (financial or otherwise), business,
operations or prospects of ANDEVIS, free and clear of all mortgages, claims,
liens, security interests, charges, leases, encumbrances and other restrictions
of any kind and nature, except (i) as specifically disclosed in Schedule 3.17,
(ii) as disclosed in the financial statements of ANDEVIS, (iii) statutory liens
not yet delinquent, and (iv) such liens consisting of zoning or planning
restrictions, imperfections of title, easements, pledges, charges and
encumbrances, if any, as do not materially detract from the value or materially
interfere with the present use of the property or assets subject thereto or
affected thereby.
Section 3.18 Disclosure. To the best of the Stockholder's knowledge, no
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representation or warranty of the Stockholder contained in this Agreement
(including the exhibits and schedules hereto) contains any untrue statement or
omits to state a material fact necessary in order to make the statements
contained herein or therein, in light of the circumstances under which they were
made, not misleading.
Section 3.19 Insurance Section. ANDEVIS and its Subsidiaries maintain
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adequate insurance with respect to their respective businesses and are in
compliance with all material requirements and provisions thereof.
Section 3.20 Material Agreements; Action. Except as set forth in Schedule
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3.20, there are no material contracts, agreements, commitments, understandings
or proposed transactions, whether written or oral, to which ANDEVIS or any of
its Subsidiaries is a party or by which it is bound that involve or relate to:
(i) any of their respective officers, directors, stockholders or partners or any
Affiliate thereof; (ii) the sale of any of the assets of ANDEVIS or any of its
Stock Exchange Agreement -- 5
<PAGE>
Subsidiaries other than in the ordinary course of business; (iii) covenants of
ANDEVIS or any of its Subsidiaries not to compete in any line of business or
with any person in any geographical area or covenants of any other person not to
compete with ANDEVIS or any of its Subsidiaries in any line of business or in
any geographical area; (iv) the acquisition by ANDEVIS or any of its
Subsidiaries of any operating business or the capital stock of any other Person;
(v) the borrowing of money or (vi) the expenditure of more than $10,000 in the
aggregate or the performance by ANDEVIS or any Subsidiary extending for a period
more than one year from the date hereof, other than in the ordinary course of
business. There have been made available to FCAI and its representatives true
and complete copies of all such agreements. All such agreements are in full
force and effect. Neither the Company nor any of its Subsidiaries is in default
under any such agreements nor is any other party to any such agreements in
default thereunder in any respect.
Section 3.21 Employee Benefit Plans. ANDEVIS is not a party to any
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employee benefit plan.
Section 3.22 No Pending Transactions. Except for the transactions
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contemplated by this Agreement, neither ANDEVIS nor any Subsidiary is a party to
or bound by or the subject of any agreement, undertaking, commitment or
discussions or negotiations with any person that could result in (i) the sale,
merger, consolidation or re-capitalization of ANDEVIS or any Subsidiary, (ii)
the sale of all or substantially all of the assets of ANDEVIS or any Subsidiary,
or (iii) a change of control of more than five percent of the outstanding
capital stock of ANDEVIS or any Subsidiary.
Section 3.23 No Undisclosed Liabilities. To the best of the
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Stockholder's knowledge, neither ANDEVIS nor or any Subsidiary has any
obligation or liability (contingent or otherwise) that would be required to be
reflected in the financial statements of the Company in accordance with Estonian
Accounting Law except as reflected in ANDEVIS's Balance Sheet.
ARTICLE IV
LIMITATION OF LIABILITY OF CERTAIN PERSONS
Section 33N of the Texas Securities Act, which applies to this Offering,
limits the liability of certain persons in connection with actions or series of
actions under Section 33 of the Texas Securities Act. Specifically, Section 33N
limits the liability of an attorney, an accountant, a consultant, or the firm of
the attorney, accountant, or consultant (collectively, the "Person") to an
amount equal to three times the fee paid by the Company or other seller to the
Person for the services related to the offer of securities, unless a court finds
the Person engaged in intentional wrong doing in providing the services.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF FCAI
FCAI hereby represents and warrant to the Stockholders as follows:
Section 5.1 Organization and Capitalization. FCAI is a corporation
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duly organized, validly existing and in good standing under the laws of the
State of Delaware, with full power and authority and all necessary governmental
and regulatory licenses, permits and authorizations to carry on the businesses
in which it is engaged, to own the properties that it owns currently and will
own at the Closing, and to perform its obligations under this Agreement. FCAI is
qualified as a foreign corporation and is in good standing in each jurisdiction
in which the failure to qualify would have a material adverse effect on the
business, properties or condition (financial or otherwise) of FCAI. FCAI does
not have any subsidiaries or any other investments or ownership interest in any
corporation, partnership, joint venture or other business enterprise, except as
set forth in Schedule 5.1. Immediately prior to the Closing Date the authorized
capital stock of FCAI consists of (i) 100,000,000 shares of common stock, $0.001
par value of which 72,634,000 shares are validly issued and outstanding at the
date hereon. All of such issued and outstanding shares of FCAI Stock have been
and all of the shares of FCAI Stock to be issued hereby will be, at the Closing,
duly authorized and validly issued and are and will be at the Closing fully paid
and non-assessable. None of the shares that were issued and none of the shares
to be issued hereby will be in violation of any preemptive rights. FCAI has no
obligation to repurchase, reacquire or redeem any of its outstanding capital
stock.
Stock Exchange Agreement -- 6
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Section 5.2 Subsidiaries. Schedule 5.2 sets forth a complete and
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accurate list of all Subsidiaries of FCAI, showing (as to each such Subsidiary)
the date of its incorporation and the jurisdiction of its incorporation. All of
the outstanding capital stock of, or other ownership interests in, each
Subsidiary is owned by FCAI, directly or indirectly, free and clear of any lien
or any other limitation or limitation or restriction (including restrictions on
the right to vote). All outstanding shares of the capital stock of any
Subsidiary have been duly authorized and validly issued and are fully paid and
non-assessable and are free of any preemptive rights. There are no outstanding
securities of any Subsidiary convertible into or evidencing the right to
purchase or subscribe for any shares of capital stock of any Subsidiary, there
are no outstanding or authorized options, warrants, calls, subscriptions,
rights, commitments or any other agreements of any character obligating any
Subsidiary to issue any shares of its capital stock or any securities
convertible into or evidencing the right to purchase or subscribe for any shares
of such stock, and there are no agreements or understandings with respect to the
voting, sale, transfer or registration of any shares of capital stock of any
Subsidiary.
Section 5.3 Authorization. All corporate action on the part of FCAI
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necessary for the authorization, execution, delivery and performance of this
Agreement by FCAI has been taken or will be taken prior to the Closing. FCAI has
the requisite corporate power and authority to execute, deliver and perform this
Agreement. This Agreement has been duly executed and delivered by FCAI, and
constitutes a valid and binding obligation of FCAI, enforceable against FCAI in
accordance with its terms, subject to bankruptcy, insolvency, reorganization,
and other laws of general application relating to or affecting creditors' rights
and to general equitable principles.
Section 5.4 Litigation. Except as set forth in Schedule 5.4, there are
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no claims, actions, suits or proceedings, formal or informal, pending or, to the
best knowledge of FCAI, threatened against FCAI, nor is FCAI subject to any
order, judgment or decree, except in either case for matters which, in the
aggregate, would not result in a loss to FCAI in excess of $100,000.
Section 5.5 Taxes. FCAI has filed all federal, state or local tax
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returns and reports due or required to be filed and has paid all taxes, interest
payments and penalties, if any, required to be paid with respect thereto, and
has made adequate provision for the payment of all taxes accruable for all
periods ending on or before the Closing Date to any taxing authority and is not
delinquent in the payment of any material tax or governmental charge of any
nature.
Section 5.6 Financial Information. FCAI has delivered to the
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Stockholders the audited balance sheet of FCAI as of December 31, 1999 and 1998,
together with the related statements of income, changes in shareholder's equity
and cash flow for the years then ended, including the related notes, all
certified by Ham, Langston & Brezina L.L.P., certified public accountants (the
"Financial Statements"). Such Financial Statements, including the related notes,
are in accordance with the books and records of FCAI and fairly present the
financial position of FCAI and the results of operations and changes in
financial position of FCAI as of the dates and for the periods indicated, in
each case in conformity with generally accepted accounting principles applied on
a consistent basis. Except as, and to the extent reflected or reserved against
in the Financial Statements, FCAI as of the date of the financial statements has
no material liability or obligation of any nature, whether absolute, accrued,
continued or otherwise, not fully reflected or reserved against in the Financial
Statements. As of the Closing Date, there will not have been any adverse change
in the financial condition or other operations, business, properties or assets
of FCAI in excess of $100,000 from that reflected in the latest financial
statements of FCAI furnished to the Stockholders pursuant hereto.
Stock Exchange Agreement -- 7
<PAGE>
Section 5.7 Compliance with Laws. Except as set forth in Schedule 5.7,
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FCAI is, and at all times prior to the date hereof has been, to the best of its
knowledge, in compliance with all statutes, orders, rules, ordinances and
regulations applicable to it or to the ownership of its assets or the operation
of its businesses, except for failures to be in compliance that would not have a
material adverse effect on the business, properties, condition (financial or
otherwise) or prospects of FCAI and FCAI has no basis to expect, nor has
received, any order or notice of any such violation or claim of violation of any
such statute, order, rule, ordinance or regulation.
Section 5.8 Title to Properties; Encumbrances. FCAI has good and
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marketable title to all of its properties and assets, real and personal,
tangible and intangible, that are material to the condition (financial or
otherwise), business, operations or prospects of FCAI, free and clear of all
mortgages, claims, liens, security interests, charges, leases, encumbrances and
other restrictions of any kind and nature, except (i) as specifically disclosed
in Schedule 5.8, (ii) as disclosed in the Financial Statements of FCAI, (iii)
statutory liens not yet delinquent, and (iv) such liens consisting of zoning or
planning restrictions, imperfections of title, easements, pledges, charges and
encumbrances, if any, as do not materially detract from the value or materially
interfere with the present use of the property or assets subject thereto or
affected thereby.
Section 5.9 Disclosure. To the best of FCAI knowledge, no
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representation or warranty of FCAI contained in this Agreement (including the
exhibits, and schedules hereto) contains any untrue statement of a material fact
or omits to state a material fact necessary in order to make the statements
contained herein or therein, in light of the circumstances under which they were
made, not misleading.
Section 5.10 No Default. The execution, delivery and performance of
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this Agreement by FCAI does not and will not constitute a violation or default
under or conflict with any contract, agreement, understanding or commitment to
which it is a party or by which it is bound or the Certificate of Incorporation
or By-Laws of FCAI or any statute, regulation, law, ordinance, judgment, decree,
writ, injunction, order or ruling of any government entity.
Section 5.11 Pending Claims. There is no claim, suit, action or
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proceeding, whether judicial, administrative or otherwise, pending or, to the
best of FCAI's knowledge, threatened that would preclude or restrict the
transfer to the Stockholders of the FCAI Stock or the performance of this
Agreement by FCAI.
Section 5.12 Insurance. FCAI and its Subsidiaries maintain adequate
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insurance with respect to their respective businesses and are in compliance with
all material requirements and provisions thereof.
Section 5.13 Employee Benefit Plans. FCAI is not a party to any
------------------------
employee benefit plan.
Section 5.14 No Pending Transactions. Except as set forth in Schedule
------------------------
5.14 and for the transactions contemplated by this Agreement, neither FCAI nor
any Subsidiary is a party to or bound by or the subject of any agreement,
undertaking, commitment or discussions or negotiations with any person that
could result in (i) the sale, merger, consolidation or recapitalization of FCAI
or any Subsidiary, (ii) the sale of all or substantially all of the assets of
FCAI or any Subsidiary, or (iii) a change of control of more than five percent
of the outstanding capital stock of FCAI or any Subsidiary.
Section 5.15 No Undisclosed Liabilities. To the best of its knowledge,
--------------------------
neither FCAI nor or any Subsidiary has any obligation or liability (contingent
or otherwise) that would be required to be reflected in the financial statements
of the Company in accordance with GAAP except as reflected in FCAI Balance
Sheet.
Section 5.16 Indemnification by FCAI. FCAI recognizes that the Exchange
-----------------------
being conducted with the Stockholders is based, to a material degree, upon the
representations and warranties of FCAI as set forth and contained herein and
FCAI hereby agrees to indemnify and hold harmless the Stockholders against all
damages, costs, or expenses (including reasonable attorney's fees) arising as a
result of any breach of representation or warranty or omission made herein by
FCAI.
Stock Exchange Agreement -- 8
<PAGE>
If any action is brought against FCAI, the Stockholders (collectively the
"Indemnified Parties") in respect of which indemnity may be sought against FCAI
pursuant to the foregoing paragraph, the Indemnified Parties shall promptly
notify FCAI in writing of the institution of such action (but the omission to so
notify FCAI shall not relieve it from any liability that it may have to such
Indemnified Parties except to the extent FCAI is materially prejudiced or
otherwise forfeits substantive rights or defenses by reason of such failure),
and FCAI shall assume the defense of such action, including the employment of
counsel to be chosen by FCAI to be reasonably satisfactory to the Indemnified
Parties, and payment of expenses. The Indemnified Parties shall have the right
to employ FCAI or their own counsel in any such case, but the fees and expenses
of such counsel shall be at the Indemnified Party's expense, unless the
employment of such counsel shall have been authorized in writing by FCAI in
connection with the defense of such action, or FCAI shall not have employed
counsel to take charge of the defense of such action, or counsel employed by
FCAI shall not be diligently defending such action, or the Indemnified Parties
shall have reasonably concluded that there may be defenses available to it which
are different from or additional to those available to FCAI, or that
representation of such Indemnified Party and FCAI by the same counsel would be
inappropriate under applicable standards of professional conduct due to actual
or potential differing interests between them (in which case FCAI shall not have
the right to direct the defense of such action on behalf of the Indemnified
Parties), in any of which event such fees and expenses shall been borne by FCAI.
Anything in this paragraph to the contrary notwithstanding, FCAI shall not be
liable for any settlement of, or any expenses incurred with respect to, any such
claim or action effected without FCAI written consent, which consent shall not
be unreasonably withheld. FCAI shall not, without the prior written consent of
the Indemnified Parties effect any settlement of any proceeding in respect of
which any Indemnified Parties is a party and indemnity has been sought hereunder
unless such settlement includes an unconditional release of such Indemnified
Parties from all liability on claims that are the subject matter of such
proceeding.
ARTICLE VI
CLOSING; DELIVERY
Section 6.1(a) Closing Documents of the Stockholders. The obligations
--------------------------------------
of FCAI to effect the transactions contemplated hereby are subject to the
delivery by the Stockholders at Closing of each of the following documents:
(i) The Stockholders shall have delivered certificates evidencing their
ANDEVIS Common Stock duly endorsed for transfer by the Stockholders to
FCAI as contemplated by this Agreement, in form and substance
satisfactory to counsel for FCAI.
Section 6.1(b) Closing Documents of FCAI. The obligations of the
----------------------------
Stockholders to effect the transactions contemplated hereby are subject to each
of the following conditions:
(i) FCAI shall have delivered either (i) certificates evidencing FCAI
Common Stock, duly executed for issuance by FCAI to the Stockholders
as contemplated by this Agreement or (ii) letter of instructions from
a duly authorized officer of FCAI to OTC Stock Transfer, Inc. (FCAI's
transfer agent), instructing the transfer agent to duly issue stock
certificates evidencing the shares of Common Stock of FCAI to the
Stockholders, all as contemplated by this Agreement, in form and
substance satisfactory to counsel for the Stockholders.
Section 6.1 (c) Conditions to the Obligations of FCAI and the
----------------------------------------------------
Stockholders. The obligations of FCAI and the Stockholders to effect the
transactions contemplated hereby are further subject to the following condition:
(i) The Board of Directors of FCAI shall have approved and authorized
the transactions contemplated herein.
Stock Exchange Agreement -- 9
<PAGE>
(ii) No action, suit or proceeding by or before any court or any
governmental or regulatory authority shall have been commenced or
threatened, and no investigation by any governmental or regulatory
authority shall have been commenced or threatened, seeking to
restrain, prevent or challenge the transactions contemplated hereby or
seeking judgments against FCAI or the Stockholders.
ARTICLE VII
COVENANTS OF ANDEVIS AND THE STOCKHOLDERS
Conduct of Business. From the date hereof until the earlier of the Closing
---------------------
Date or termination of this Agreement pursuant to Article IX, ANDEVIS shall
conduct its business only in the ordinary course consistent with past practice
and shall not sell, lease, pledge, dispose of, grant a license in or otherwise
transfer or encumber any of its assets or properties other than in the usual and
ordinary course of its business or with the prior written consent of FCAI.
ARTICLE VIII
ADDITIONAL AGREEMENTS
Access to Information
-----------------------
8.1 ANDEVIS shall, and shall cause its officers, directors, employees and
agents to, afford FCAI complete access at all reasonable times from the date
hereof to the Closing Date, to the officers, employees, agents, properties,
books, records and contracts of ANDEVIS, and shall furnish to FCAI all
financial, operating and other data and information as FCAI may reasonably
request.
8.2 No investigation pursuant to this Section 8.1 shall affect any
representations or warranties of the parties contained herein.
ARTICLE IX
TERMINATION
This Agreement and the transactions contemplated hereby may be terminated
by FCAI at any time prior to Closing.
ARTICLE X
MISCELLANEOUS
Section 10.1 Notices. All notices and other communications provided for
-------
herein shall be in writing and shall be deemed to have been duly given if
delivered personally or sent by registered or certified mail, return receipt
requested, postage prepaid, or overnight air courier guaranteeing next day
delivery:
(a) If to FCAI:
Mr. Alex Genin, President
First Capital International, Inc.
5120 Woodway, Suite 9004
Houston, Texas 77056
fax (713) 629-4913
With a copy to:
Stock Exchange Agreement -- 10
<PAGE>
Robert D. Axelrod
Axelrod, Smith & Kirshbaum
5300 Memorial Drive, Suite 700
Houston, Texas 77007
Fax: (713) 552-0202
(b) If to the Stockholders, to:
The addresses listed on Exhibit A, attached hereto.
All notices and communications shall be deemed to have been duly given: at
the time delivered by hand, if personally delivered; three days after being
deposited in the mail, postage prepaid, sent certified mail, return receipt
requested, if mailed; and the next day after timely delivery to the courier, if
sent by overnight air courier guaranteeing next day delivery.
If a notice or communication is mailed in the manner provided above within
the time prescribed, it is duly given, whether or not the addressee receives it.
Section 10.2 Assignment. Neither this Agreement nor any of the rights,
----------
interests or obligations hereunder shall be assigned by any of the parties
without the prior written consent of the other parties, which consent will not
be unreasonably withheld. This Agreement will be binding upon, inure to the
benefit of and be enforceable by the parties and their respective heirs,
personal representatives, successors and assigns.
Section 10.3 Counterparts. This Agreement can be executed in any number
------------
of counterparts, which taken together shall constitute one and the same
instrument and each of which shall be considered an original for all purposes.
Section 10.4 Section Headings. The section headings contained in this
-----------------
Agreement are for convenient reference only and shall not in any way affect the
meaning or interpretation of this Agreement.
Section 10.5 Entire Agreement. This Agreement, the documents to be
-----------------
executed hereunder and the exhibits and schedules attached hereto constitute the
entire agreement among the parties hereto pertaining to the subject matter
hereof and supersede all prior agreements, understandings, negotiations and
discussions, whether oral or written, of the parties pertaining to the subject
matter hereof, and there are no warranties, representations or other agreements
among the parties in connection with the subject matter hereof except as
specifically set forth herein or in documents delivered pursuant hereto. No
supplement, amendment, alteration, modification, waiver or termination of this
Agreement shall be binding unless executed in writing by the parties hereto. All
of the exhibits and schedules referred to in this Agreement are hereby
incorporated into this Agreement by reference and constitute a part of this
Agreement.
Section 10.6 Validity. The invalidity or unenforceability of any
--------
provision of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, which shall remain in full force and
effect.
Section 10.7 Survival. The respective representations, warranties,
--------
covenants and agreements set forth in this Agreement shall survive the Closing
for a period of one year from the execution hereof.
Section 10.8 Public Announcements. The parties hereto agree that prior
--------------------
to making any public announcement or statement with respect to the transactions
contemplated by this Agreement, the party desiring to make such public
announcement or statement shall consult with the other parties hereto and
exercise their best efforts to (i) agree upon the text of a joint public
announcement or statement to be made by all of such parties or (ii) obtain
approval of the other parties hereto to the text of a public announcement or
statement to be made solely by the party desiring to make such public
announcement; provided, however, that if any party hereto is required by law to
make such public announcement or statement, then such announcement or statement
may be made without the approval of the other parties.
Stock Exchange Agreement -- 11
<PAGE>
Section 10.9 Gender. All personal pronouns used in this Agreement shall
------
include the other genders, whether used in the masculine, feminine or neuter
gender, and the singular shall include the plural, and vice versa, whenever
appropriate.
Section 10.10 Choice of Law. This Agreement shall be governed by, and
--------------
construed in accordance with, the laws of the State of Texas, U.S.A. without
regard to principles of conflict of laws.
Section 10.11 Costs and Expenses. FCAI and the Stockholders shall each
------------------
pay their own respective fees and disbursements incurred in connection with this
Agreement.
Section 10.12 Additional condition. In the event if ANDEVIS will be able
--------------------
to enrease it's pre-tax income for the year 2000. , FCAI will cause to issuie
additional shares to ANDEVIS based on the following formula:
[(NOI - 2)-(NOI-1) x 12 ] / future price per share
--------------------
NOI - 1 is the pre-tax operating income as per the presented Audit for the year
1999 Financial year;
NOI - 2 is the future pre-tax operating income as per the future GAAP Audit for
the 2000 Financial year; in USD , based on exchange rate at the time of audit
(12/31/2000)
*** Future price per share means the average 30 day price per share based on the
closing price between 15 December 2000 and 15 January 2001, less a 20% discount.
FCAI Shares means the current amount of FCAI Shares based upon the current
number of outstanding shares; however, any future splits (reverse or forward)
will adjust any number of shares in accordance with the split factor.
Additionally, FCAI will agree to guarantee to the current Key Management of
ANDEVIS, Employment Contracts, for a minimum of a 48 month period, and further
guarantee that the Seller's representative will be involved in the Software
marketing related corporate activities in the Baltic Region, Europe and the
United States and that FCAI will agree to recognize all current key employees of
ANDEVIS and their respective contractual rights as an integral part of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed or caused this
Agreement to be executed effective as of the day and year first above written.
FIRST CAPITAL INTERNATIONAL, INC.
By: /s/ Alex Genin
------------------------
Alex Genin, President
STOCKHOLDERS:
/s/ Valeri Seredenko
------------------------------------
Mr. Valeri Seredenko
/s/ Tatjana Tikerpuu
------------------------------------
Mrs. Tatjana Tikerpuu
Stock Exchange Agreement -- 12
<PAGE>
FOR THE PURPOSE OF ARTICLES VII AND VIII:
ANDEVIS
By: /s/ Valeri Seredenko
------------------------------
/ V.Seredenko/
By: /s/ Tatjana Tikerpuu
--------------------------------
/ T. Tikerpuu/
EXHIBIT A
---------
Shares of ANDEVIS to be Shares of FCAI to be
Delivered to FCAI Received from FCAI
Stockholder at Closing at Closing
----------------------------------------------------------------------------
Valeri Seredenko -4100- 286,280
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Address of the Stockholder
Valeri Seredenko, Tammsaare tee 103 - 69, 12913 Tallinn, Republic of Estonia
----------------------------------------------------------------------------
Tatjana Tikerpuu, -965- 67,990
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Tatjana Tikerpuu, Laanemere tee 35-22, 13914 Tallinn, Estonia
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<PAGE>
