Exhibit 1.1
MASTER STOCK PURCHASE AGREEMENT
This Master Stock Purchase
Agreement (this “Agreement”) dated as of May 17, 2022, is entered into between YEVGENIY CHSHERBININ, an individual, (“Chsherbinin”)
VICTOR NAZAROV, an individual, (“Nazarov,” and together with Chsherbinin, “Sellers” and individually,
a “Seller”), and FB PRIMESOURCE ACQUISITION, LLC, a Delaware limited liability company (“Buyer”).
Capitalized terms used in this Agreement have the meanings given to such terms herein.
RECITALS
A. Sellers
own all the issued and outstanding shares of common stock (the “Shares”) of Prime Source, a Kazakhstani corporation,
(“Prime Source”) and Prime Source’s affiliates consisting of Prime Source Innovation, Prime Source – Analytical
Systems, Digitalism, and InFin-IT Solution (with Prime Source, each a “Company” and together, the “Companies”).
B.
Sellers wish to sell to Buyer, and Buyer wishes to purchase from Sellers, the Shares, subject to the terms and conditions set forth herein.
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:
AGREEMENT
ARTICLE I
Purchase and sale
Section
1.01 Purchase and Sale. Subject to the terms and conditions set forth herein, at the Closing, Sellers shall sell to Buyer,
and Buyer shall purchase from Sellers, the Shares, free and clear of any mortgage, pledge, lien, charge, security interest, claim, community
property interest, option, equitable interest, restriction of any kind (including any restriction on use, voting, transfer, receipt of
income, or exercise of any other ownership attribute), or other encumbrance (each, an “Encumbrance”), other than as imposed
by the Collateral Assignment and the Security Agreement in favor of each Seller, in the form attached hereto as Exhibit A (the “Collateral
Assignment”) and Exhibit B (“Security Agreement”).
Section
1.02 Purchase Price. The aggregate purchase price for the Shares shall be $18,000,000 (the “Purchase Price”).
Buyer shall pay the Purchase Price to Sellers as described in Section 1.03 “Payment Schedule” below.
Section
1.03 Payment Schedule.
[The information in Section
1.03 is redacted for this 8-K filing exhibit due to confidential deal and business purposes.]
Section
1.04 Compliance with Kazakhstani Law. The Companies are located in the Republic
of Kazakhstan. Accordingly, the Buyer and Sellers acknowledge that the sale of the Shares of the Companies by Sellers to Buyer also must
be documented to allow the sale fully to comply with the laws of the Republic of Kazakhstan. To comply with the laws of the Republic
of Kazakhstan, the Buyer and each Seller must enter into the following documents, which completion must be undertaken in compliance with
the laws of the Republic of Kazakhstan (the “Kazakhstani
Agreements”):
(a)
A stock purchase agreement for each Seller with respect to and to the extent of his interest in each
Company in the form of Exhibit E; and
(b)
A pledge of the Shares of each Seller’s interest in each Company’s capital stock in the
form of Exhibit F
Each
of the Kazakhstani Agreements shall be reviewed by a notary regulated by the laws of the Republic of Kazakhstan, shall be registered
as may be allowed and required by the laws of the Republic of Kazakhstan to “perfect” the transfer of the Shares to Buyer,
and to secure the Sellers’ collateral security interests created by each Collateral Assignment and each Security Agreement, and
shall otherwise be completed as required by the laws of the Republic of Kazakhstan.
Notwithstanding
the compliance with Kazakhstani law required under this Section 1.04, the Sellers and the Buyer agree that the beneficial ownership of
the Shares is transferred to Buyer on the Initial Closing Date, and that the shares held of record by Sellers are held for the exclusive
benefit of Buyer on and after the Initial Closing Date, and that the Sellers are unconditionally obligated to complete the stock purchase
agreement under Kazakhstani Law as well as the pledges of the Shares by Buyer to Sellers. From and after the Initial Closing Date, the
covenants in Sections 5.02 and 5.03 shall govern.
Section 1.05 Disclosure
Schedules. The term “Disclosure Schedules” means the disclosure schedules, attached hereto and made a part
hereof, delivered by Sellers and Buyer concurrently with the execution, closing, and delivery of this Agreement.
ARTICLE II
CLOSING
Section 2.01 Closing.
The Initial Closing Date activities shall take place as set forth in Sections 1.03 and 1.04, above. The final closing of the transactions
contemplated by this Agreement (the “Closing”) shall be carried out as soon as practicable after the Initial Closing Date,
but in no even more than twenty (20) days thereafter, remotely by exchange of documents and signatures (or their electronic counterparts).
Section 2.02 Seller
Closing Deliverables. At the Closing, Sellers shall deliver to Buyer the following:
(a) Certificates
evidencing the Shares, free and clear of all Encumbrances (other than the Collateral Assignments and the Security Agreements), duly endorsed
in blank or accompanied by stock powers or other instruments of transfer duly executed in blank.
(b) A
good standing certificate (or its equivalent) for the Company (including each of its constituent entities) from the Governmental Authority
of the Republic of Kazakhstan. The term “Governmental Authority” means the government or political subdivision of the
Republic of Kazakhstan responsible for certifying the existence and standing of the Company.
(c) Each
Seller’s Collateral Assignment, executed by Seller as required.
(d) Each
Seller’s Security Agreement executed by Seller as required.
(e) The
Kazakhstani Agreements, executed by each Seller as required.
In addition, each Seller shall
repay out of the closing date sale proceeds hereunder to the Company any loan or other amount owed by such Seller to the Company.
Section 2.03 Buyer’s
Deliveries. At the Closing, Buyer shall deliver the following to Seller:
(a) A
certificate of the Secretary (or other officer) of Buyer certifying: (i) that attached thereto are true and complete copies of all resolutions
of the board of directors of Buyer authorizing the execution, delivery, and performance of this Agreement, the Collateral Assignments,
the Security Agreements, and the Kazakhstani Agreements (collectively, the “Transaction Documents”), and the consummation
of the transactions contemplated hereby and thereby, and that such resolutions are in full force and effect; and (ii) the names, titles,
and signatures of the officers of Buyer authorized to sign this Agreement and the other Transaction Documents to which it is a party.
(b) The
Collateral Assignments executed by Buyer as required, with the certificates evidencing the Shares as pledged pursuant to the Collateral
Assignments.
(c) The
Security Agreements executed by Buyer as required.
(d) The
Kazakhstani Agreements, each executed by Buyer as required.
Section
2.04 Failure to Close. If for any reason caused by Sellers the Closing shall
not have occurred within twenty (20) days after the Initial Closing Date, this Agreement shall be terminated and the Purchase Price shall
be returned to Buyer, including both the Immediately Available Funds and the Notes.
ARTICLE III
Representations and warranties of sellerS
Each Seller represents and
warrants to Buyer that the statements contained in this ARTICLE III are true and correct
as of the date hereof to the standard of knowledge set forth in each. For purposes of this ARTICLE III, “Seller’s knowledge,”
“knowledge of Seller,” and any similar phrases shall mean the knowledge of the Seller making such representations and
warranty.
Section
3.01 Organization and Authority. Seller is an individual, and Sellers together own 100% of the Company. Seller has full
authority to enter into this Agreement and the other Transaction Documents to which the Seller is a party, to carry out Seller’s
obligations hereunder and thereunder, and to consummate the transactions contemplated hereby and thereby. This Agreement and each Transaction
Document to which Seller is a party constitutes a legal, valid, and binding obligation of Seller enforceable against Seller in accordance
with their respective terms.
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 the Republic of Kazakhstan 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 duly licensed or qualified to do business and is in good standing in the Republic of Kazakhstan.
Section
3.03 Capitalization.
(a) The
authorized Shares, and the number of Shares outstanding, and the record owners of such Shares, are set forth on Schedule 3.03 attached
hereto. All the Shares of Seller have been duly authorized, are validly issued, fully paid and nonassessable, and are owned of record
and beneficially by the Seller, free and clear of all Encumbrances. Upon the transfer, assignment, and delivery of the Shares and payment
therefor in accordance with the terms of this Agreement, Buyer shall own all the Shares, free and clear of all Encumbrances, except as
further described in the Collateral Assignment and the Security Agreement.
(b) All
the Shares were issued in compliance with applicable Laws. None of the Shares were issued in violation of any agreement or commitment
to which Seller or the Company is a party or is subject to or in violation of any preemptive or similar rights of any individual, corporation,
partnership, joint venture, limited liability company, Governmental Authority, unincorporated organization, trust, association, or other
entity (each, a “Person”).
(c) There
are no outstanding or authorized options, warrants, convertible securities, stock appreciation, phantom stock, profit participation, or
other rights, agreements, or commitments relating to the Shares or obligating Seller or the Company to issue or sell any shares of, or
any other interest in, the Company. There are no voting trusts, stockholder agreements, proxies, or other agreements in effect with respect
to the voting or transfer of any of the Shares.
Section
3.04 No Conflicts or Consents. The execution, delivery, and performance by Seller of this Agreement and the other Transaction
Documents to which he is a party, and the consummation of the transactions contemplated hereby and thereby, do not and will not: (a) violate
or conflict with any provision of the certificate of incorporation, by-laws, or other governing documents of the Company; (b) violate
or conflict with any provision of any statute, law, ordinance, regulation, rule, code, treaty, or other requirement of any Governmental
Authority (collectively, “Law”) or any order, writ, judgment, injunction, decree, determination, penalty, or award by
or with any Governmental Authority (“Governmental Order”) applicable to Sellers or the Company; (c) require the consent,
notice, or filing with or other action by any Person or require any Permit, license, or Governmental Order; (d) violate or conflict with,
result in the acceleration of, or create in any party the right to accelerate, terminate, or modify any contract, lease, deed, mortgage,
license, instrument, note, indenture, joint venture, or any other agreement, commitment, or legally binding arrangement, whether written
or oral (collectively, “Contracts”), to which Seller or the Company is a party or by which Seller or the Company is bound
or to which Seller’s or the Company’s properties and assets are subject; or (e) result in the creation or imposition of any
Encumbrance on any properties or assets of the Company.
Section
3.05 Financial Statements. Complete copies of the Company’s financial statements consisting of the balance sheet of the
Company as at December 31 in each of the years 2019, 2020, and 2021, and the related statements of income and retained earnings, stockholders’
equity, and cash flow for the years then ended (the “Financial Statements”) are included in the Disclosure Schedules/have
been delivered to Buyer. The Financial Statements are based on the books and records of the Company and fairly present 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 balance sheet of the Company as of 2021, is referred to herein as the “Balance Sheet” and the date thereof as the
“Balance Sheet Date.” The Company maintains a standard system of accounting established and administered in accordance
with the accounting rules and regulations of the Republic of Kazakhstan.
Section
3.06 Undisclosed Liabilities. The Company has no liabilities, obligations, or commitments of any nature whatsoever, whether
asserted, known, absolute, accrued, matured, or otherwise (collectively, “Liabilities”), except: (a) those that are adequately
reflected or reserved against in the Balance Sheet as of the Balance Sheet Date; and (b) those that have been incurred in the ordinary
course of business consistent with past practice since the Balance Sheet Date and that are not, individually or in the aggregate, material
in amount.
Section
3.07 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, specifically with respect to the Company, any change, event, condition,
or development that is, or could reasonably be expected to be, individually or in the aggregate, materially adverse to the business, results
of operations, condition (financial or otherwise), or assets of the Company.
Section
3.08 Material Contracts.
(a) Section
3.08(a) of the Disclosure Schedules lists each Contract that is material to the Company (such Contracts, together with all Contracts concerning
the occupancy, management, or operation of any Real Property (as defined in Section 3.09(a)),
being “Material Contracts”), including the following:
(i) each
Material Contract of the Company involving aggregate consideration in excess of One Hundred Thousand Dollars ($100,000) and that, in each
case, cannot be cancelled by the Company without penalty or without more than thirty (30) days’ notice;
(ii) all
Material Contracts that provide for the indemnification by the Company of any Person or the assumption of any Tax (as defined in Section
3.15(a)), environmental, or other Liability of any Person;
(iii) all
Material Contracts relating to Intellectual Property (as defined in Section 3.10(a)), including all licenses, sublicenses, settlements,
coexistence agreements, covenants not to sue, and permissions;
(iv) except
for Material Contracts relating to trade payables, all Contracts relating to indebtedness (including, without limitation, guarantees)
of the Company; and
(v) all
Material 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.
(b) To
Seller’s actual knowledge, each Material Contract is valid and binding on the Company in accordance with its terms and is in full
force and effect. To Seller’s actual knowledge, neither the Company nor any other party thereto is in breach of or default under
(or is alleged to be in breach of or default under), in any material respect, or has provided or received any notice of any intention
to terminate, any Material Contract. To Seller’s actual knowledge, 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
3.09 Real Property; Title to Assets.
(a) To
the best of Seller’s knowledge, Section 3.09(a) of the Disclosure Schedules lists all real property in which the Company has an
ownership or leasehold (or subleasehold) interest (together with all buildings, structures, and improvements located thereon, the “Real
Property”), including: (i) the street address of each parcel of Real Property; (ii) for Real Property that 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, and any termination or renewal rights of any party to the lease; and (iii) the current use of each parcel of Real Property.
To the best of Seller’s knowledge, the Company has delivered or made available to Buyer true, correct, and complete copies of all
Material Contracts, title insurance policies, and surveys relating to the Real Property and, to Seller’s actual knowledge, such
copies are true, correct, and complete copies of the applicable Material Contracts.
(b) To
Seller’s actual knowledge, the Company has a valid leasehold interest in, all Real Property and personal property and other assets
reflected in the 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). To Seller’s actual knowledge,
all Real Property and such personal property and other assets (including leasehold interests) are free and clear of Encumbrances except
for those items set forth in Section 3.10(b) of the Disclosure Schedules.
(c) The
Company is not a sublessor or grantor under any sublease or other instrument granting to any other Person any right to possess, lease,
occupy, or use any leased Real Property. To Seller’s actual knowledge, the use of the Real Property in the conduct of the Company’s
business does not violate in any material respect any Law, covenant, condition, restriction, easement, license, permit, or Contract and
no material improvements constituting a part of the Real Property encroach on real property owned or leased by a Person other than the
Company.
Section
3.10 Intellectual Property.
(a) The
term “Intellectual Property” means any and all of the following in any jurisdiction throughout the world: (i) issued
patents and patent applications; (ii) trademarks, service marks, trade names, and other similar indicia of source or origin, together
with the goodwill connected with the use of and symbolized by, and all registrations, applications for registration, and renewals of,
any of the foregoing; (iii) copyrights, including all applications and registrations; (iv) trade secrets, know-how, inventions (whether
or not patentable), technology, and other confidential and proprietary information and all rights therein; (v) internet domain names and
social media accounts and pages; and (vi) other intellectual or industrial property and related proprietary rights, interests, and protections.
(b) Section
3.11(b) of the Disclosure Schedules lists all issued patents, registered trademarks, domain names and copyrights, and pending applications
for any of the foregoing and all material unregistered Intellectual Property that are owned by the Company (the “Company IP Registrations”).
To Seller’s actual knowledge, the Company owns or has the valid and enforceable right to use all Intellectual Property used or held
for use in or necessary for the conduct of the Company’s business as currently conducted (the “Company Intellectual Property”),
free and clear of all Encumbrances. To Seller’s actual knowledge, all of the Company Intellectual Property is valid and enforceable,
and all Company IP Registrations are subsisting and in full force and effect. The Company has taken all reasonable and necessary steps
to maintain and enforce the Company Intellectual Property.
(c) To
Seller’s actual knowledge, the conduct of the Company’s business as currently and formerly conducted has not infringed, misappropriated,
or otherwise violated the Intellectual Property or other rights of any Person. To Seller’s actual knowledge, no Person has infringed,
misappropriated, or otherwise violated any Company Intellectual Property.
Section
3.11 Insurance. To the best of Seller’s knowledge, Section 3.11 of the Disclosure Schedules sets forth a true and
complete list of all current policies or binders of insurance maintained by the Company and relating to the assets, business, operations,
employees, officers, and directors of the Company (collectively, the “Insurance Policies”). To Seller’s actual
knowledge, such Insurance Policies: (a) are in full force and effect; (b) are valid and binding in accordance with their terms; (c) are
provided by carriers who are financially solvent; and (d) have not been subject to any lapse in coverage. To Seller’s actual knowledge,
neither Seller nor the Company have received any written notice of cancellation of, premium increase with respect to, or alteration of
coverage under, any of such Insurance Policies. To Seller’s actual knowledge, all premiums due on such Insurance Policies have been
paid. To Seller’s actual knowledge, neither Seller nor the Company is in default under, or has otherwise failed to comply with,
in any material respect, any provision contained in any Insurance Policy. To Seller’s actual knowledge, 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. For purposes of this Agreement: (x) “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; and (y) 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 or other ownership interests, by contract,
or otherwise.
Section
3.12 Legal Proceedings; Governmental Orders.
(a) To
Seller’s actual knowledge, there are no claims, actions, causes of action, demands, lawsuits, arbitrations, inquiries, audits, notices
of violation, proceedings, litigation, citations, summons, subpoenas, or investigations of any nature, whether at law or in equity (collectively,
“Actions”) pending or, threatened against or by the Company or either Seller: (i) relating to or affecting the Company
or any of the Company’s properties or assets; or (ii) that challenge or seek to prevent, enjoin, or otherwise delay the transactions contemplated
by this Agreement. To Seller’s actual knowledge, no event has occurred or circumstances exist that may give rise to, or serve as
a basis for, any such Action.
(b) To
Seller’s actual knowledge, there are no outstanding, and the Company is in compliance with all, Governmental Orders against, relating
to, or affecting the Company or any of its properties or assets.
Section
3.13 Compliance with Laws; Permits.
(a) To
Seller’s actual knowledge, the Company has complied, and is now complying, with all Laws applicable to it or its business, properties,
or assets.
(b) To
Seller’s actual knowledge, all permits, licenses, franchises, approvals, registrations, certificates, variances, and similar rights
obtained, or required to be obtained, from Governmental Authorities (collectively, “Permits”) for the Company to conduct
its business, including, without limitation, owning or operating any of the Real Property, have been obtained and are valid and in full
force and effect. Section 3.13(b) of the Disclosure Schedules lists all current Permits issued to the Company and no event has occurred
that would reasonably be expected to result in the revocation or lapse of any such Permit.
Section 3.14 Employment
Matters.
(a) To
the best of Seller’s knowledge, Section 3.14(a) of the Disclosure Schedules lists: (i) all employees, independent contractors, and
consultants of the Company; and (ii) for each individual described in clause (i), (A) the individual’s title or position, hire date, and
compensation, (B) any Contracts entered into between the Company and such individual, and (C) the fringe benefits provided to each such
individual. To Seller’s actual knowledge, all compensation payable to all employees, independent contractors, or consultants of
the Company for services performed on or prior to the Closing Date have been paid in full.
(b) The
Company is not, and has not been, a party to or bound by any collective bargaining agreement or other Contract with a union or similar
labor organization (collectively, “Union”), and no Union has represented or purported to represent any employee of the
Company. There has never been, nor has there been any threat of, any strike, work stoppage, slowdown, picketing, or other similar labor
disruption or dispute affecting the Company or any of its employees.
(c) To
Seller’s actual knowledge, the Company is and has been in compliance with: (i) all applicable employment Laws and agreements regarding
hiring, employment, termination of employment, plant closings and mass layoffs, employment discrimination, harassment, retaliation, and
reasonable accommodation, leaves of absence, terms and conditions of employment, wages and hours of work, employee classification, employee
health and safety, engagement and classification of independent contractors, payroll taxes, and immigration with respect to all employees,
independent contractors, and contingent workers; and (ii) all applicable Laws relating to
the relations between it and any labor organization, trade union, work council, or other body representing employees of the Company.
Section
3.15 Taxes.
(a) To
Seller’s actual knowledge, all returns, declarations, reports, information returns and statements, and other documents relating
to Taxes (including amended returns and claims for refund) (collectively, “Tax Returns”) required to be filed by the
Company on or before the Closing Date have been timely filed. To Seller’s actual knowledge, such Tax Returns are true, correct,
and complete in all respects. To Seller’s actual knowledge, all Taxes due and owing by the Company (whether or not shown on any
Tax Return) have been timely paid. To the best of Seller’s knowledge, no extensions or waivers of statutes of limitations have been
given or requested with respect to any Taxes of the Company. To the best of Seller’s knowledge, Buyer has received copies of all
Tax Returns and examination reports of the Company and statements of deficiencies assessed against, or agreed to by, the Company, for
all Tax periods ending after January 1, 2019, and before December 31, 2021. The term “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.
(b) The
Company has not been a member of an affiliated, combined, consolidated, or unitary Tax group for Tax purposes. To Seller’s actual
knowledge, the Company has no Liability for Taxes of any Person (other than the Company), as transferee or successor, by contract, or
otherwise.
(c) To
Seller’s actual knowledge, there are no liens for Taxes (other than for current Taxes not yet due and payable) upon the assets of
the Company.
Section
3.16 Books and Records. To Seller’s actual knowledge, the minute books and share record and transfer books of the
Company, all of which are in the possession of the Company and have been made available to Buyer, are complete and correct.
Section
3.17 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 Seller.
Section
3.18 Full Disclosure. No representation or warranty by Seller in this Agreement and, to Seller’s actual knowledge,
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
Buyer represents and warrants
to Sellers that the statements contained in this Article IV are true and correct as of the date hereof. For purposes of this Article IV,
“Buyer’s knowledge,” “knowledge of Buyer,” and any similar phrases shall mean the actual or constructive
knowledge of any director or officer of Buyer, after due inquiry.
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 Delaware. 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 and each Transaction Document constitute legal,
valid, and binding obligations of Buyer enforceable against Buyer in accordance with their respective terms.
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) violate
or conflict with any provision of the certificate of incorporation, by-laws, or other governing documents of Buyer; (b) violate or conflict
with any provision of any Law or Governmental Order applicable to Buyer; or (c) require the consent, notice, declaration, or filing with
or other action by any Person or require any Permit, license, or Governmental Order.
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 or any other security related thereto within the meaning
of the Securities Act of 1933, as amended (the “Securities Act”). Buyer acknowledges that Sellers have not registered
the offer and sale of the Shares under the Securities Act or any state securities laws, and that the Shares may not be pledged, transferred,
sold, offered for sale, hypothecated, or otherwise disposed of except pursuant to the registration provisions of the Securities Act 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 Bankruptcy
/ Insolvency. Buyer has not, and as of the Closing Buyer shall not have, (i) made a general assignment for the benefit of creditors,
(ii) filed any voluntary petition in bankruptcy or suffered the filing of any involuntary petition by Buyer’s creditors, (iii) suffered
the appointment of a receiver to take possession of all, or substantially all, of Buyer’s assets, that remains pending as of such
time, (iv) suffered the attachment or other judicial seizure of all, or substantially all, of Buyer’s assets, that remains pending
as of such time, (v) admitted in writing its inability to pay its debts as they come due, or (vi) made an offer of settlement, extension
or composition to its creditors generally. No petition has been filed by Buyer, nor has Buyer received written notice of any petition
filed against Buyer, under the Federal Bankruptcy Code of the United States or any similar state or federal law. Buyer is not now insolvent
and will not be rendered insolvent by reason of consummating any of the purchase of the Shares. As used in this Section, “insolvent”
means that the sum of the debts and other probable liabilities of Buyer exceeds the present fair saleable value of its assets. Immediately
after giving effect to the consummation of the transactions contemplated in this Agreement, Buyer will be able to pay its debts as they
become due in the ordinary course of its business, will not have unreasonably small capital with which to conduct its present or proposed
business activity, and will have assets (calculated at fair market value) that exceed its liabilities. Buyer will be able to satisfy all
reasonably anticipated final judgments against it with respect to all pending and threatened litigation promptly in accordance with their
terms (taking into account the maximum probable amount of such judgments in any such actions and the earliest reasonable time at which
such judgments might be rendered) as well as all their other respective obligations. The cash available to Buyer, after taking into account
all other anticipated uses of the cash, will be sufficient to pay all such debts and judgments promptly in accordance with their terms.
ARTICLE V
Covenants
Section 5.01 Confidentiality.
From and after the Closing, Sellers shall, and shall cause the Company and its respective directors, officers, employees, consultants,
counsel, accountants, and other agents (collectively, “Representatives”) to, hold in confidence any and all confidential
information, in any form, concerning the Company, except to the extent that Sellers can show that such information: (a) is generally available
to and known by the public through no fault of Sellers or their respective Representatives; or (b) is lawfully acquired by Sellers or
their respective Representatives from and after the Closing from sources that are not prohibited from disclosing such information by any
obligation. If Sellers or their respective Representatives are compelled to disclose any information by Governmental Order or Law, Sellers
shall promptly notify Buyer in writing and shall disclose only that portion of such information that is legally required to be disclosed;
provided, however, Sellers shall use reasonable best efforts to obtain as promptly as possible an appropriate protective order
or other reasonable assurance that confidential treatment will be accorded such information.
Section
5.02 Management and Governance. From and after the Closing, the Company shall
be managed by or at the direction of the Buyer. The Buyer will delegate the authority and responsibility to manage and direct the operation
of the Company, on the basis of an order appointing the executive body of the Company, in accordance with the corporate charter of the
Company and subject to Buyer’s supervision and control. Sellers, on behalf of themselves and the Company, agree with Buyer to effect
and file or record any amendment to the corporate charter of the Company which may be necessary or desirable to reflect the change of
ownership and the change in the form of management and governance contemplated by this Agreement. Notwithstanding
the foregoing, the Company shall be authorized to
take any of the following actions only upon the approval of both the Buyer and Sellers:
(a)
any sale, transfer, assignment, exchange, mortgage, financing, hypothecation or encumbrance of all of
any part of any real estate belonging to any of the Companies;
(b)
the acquisition of any real property or other material assets;
(c)
all matters relating to each Company’s compliance with environmental, health, access, and other
applicable laws other than in the ordinary course of business, including the adoption of and implementation of any environmental-related
operation and maintenance program or any other program to remove or otherwise remediate hazardous materials or other potential adverse
effects on Companies’ properties;
(d)
commencing, defending or settling any legal action, other than legal actions for amounts less than $50,000
and which relate to matters that commonly occur in the ordinary course of business;
(e)
forming any subsidiary;
(f)
filing of any petition or consenting to the filing of any petition that would subject the Companies,
or any individual asset of any of the Companies or any portion thereof to Bankruptcy; or
(g)
approving any transfer of the Buyer’s equity interest in the Company outside of this Agreement.
Section
5.03 Further Assurances. Following the Closing, each of the parties hereto shall, and shall cause their respective Affiliates
to, execute and deliver such additional documents and instruments 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 and the other Transaction Documents.
ARTICLE VI
Tax matters
Section
6.01 Tax Covenants.
(a) Without
the prior written consent of Buyer, each Seller agrees that he shall not, to the extent it may affect or relate to the Company: (i) make,
change, or rescind any Tax election; (ii) amend any Tax Return; (iii) take any position on any Tax Return; or (iv) 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 taxable period that begins after the Closing Date or, in respect of any taxable period
that begins before and ends after the Closing Date (each such period, a “Straddle Period”), the portion of any Straddle
Period beginning after the Closing Date.
(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 each Seller’s sale of the Shares shall be borne and paid by such Seller when due.
Seller shall, at his 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).
(c) Buyer
shall prepare, or cause to be prepared, all Tax Returns required to be filed by the Company after the Closing Date with respect to any
taxable period or portion thereof ending on or before the Closing Date. Any such Tax Return shall be prepared in a manner consistent with
past practice (unless otherwise required by Law) and without a change of any election or any accounting method.
Section 6.02 Tax
Indemnification. Seller shall indemnify the Company, Buyer, and each Buyer Indemnitee (as defined in Section 7.01) and hold
them harmless from and against (a) any loss, damage, liability, deficiency, Action, judgment, interest, award, penalty, fine, cost or
expense of whatever kind (collectively, including reasonable attorneys’ fees and the cost of enforcing any right to indemnification under
this Agreement, “Losses”) attributable to any breach of or inaccuracy in any representation or warranty made by such
Seller in Section 3.15, but not to exceed the amount of the Purchase Price actually received by such Seller (the “Seller’s
Purchase Price”); (b) any Loss attributable to any breach or violation of, or failure fully to perform, any covenant, agreement,
undertaking, or obligation of such Seller in ARTICLE VI but not to exceed the amount of the Seller’s Purchase Price; (c) all Taxes
of the Company or relating to the business of the Company for all Pre-Closing Tax Periods (as defined below); (d) all Taxes of any member
of an affiliated, consolidated, combined, or unitary group of which a Company (or any predecessor of a 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. Seller shall reimburse
Buyer for any Taxes of the Company that are the responsibility of Sellers pursuant to this Section 6.02 within ten (10) business days
after payment of such Taxes by Buyer or the Company. The term “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.
Section
6.03 Cooperation and Exchange of Information. Each Seller 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 proceeding in respect of Taxes of the Company, including providing copies of relevant Tax Returns and accompanying documents.
Each Seller and Buyer shall retain all Tax Returns and other documents in its possession relating to Tax matters of the Company for any
Pre-Closing Tax Period (collectively, “Tax Records”) until the expiration of the statute of limitations of the taxable
periods to which such Tax Records relate.
Section
6.04 Survival. Notwithstanding anything in this Agreement to the contrary, the provisions of Section 3.15 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 sixty (60) days.
ARTICLE VII
Indemnification
Section
7.01 Indemnification by Seller. Subject to the other terms and conditions of this ARTICLE VII, each Seller 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, but not to exceed the amount of the Seller’s Purchase
Price, 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 Seller contained in this Agreement or the other Transaction Documents;
or
(b) any
breach or non-fulfillment of any covenant, agreement, or obligation to be performed by Seller pursuant to this Agreement or the other
Transaction Documents.
Section
7.02 Indemnification by Buyer. Subject to the other terms and conditions of this ARTICLE VII, Buyer shall indemnify and
defend each Seller their respective Representatives (collectively, the “Seller 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 Seller 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 Buyer contained in this Agreement or the other Transaction Documents;
or
(b) any
breach or non-fulfillment of any covenant, agreement, or obligation to be performed by Buyer pursuant to this Agreement.
Section 7.03 Indemnification
Procedures. Whenever any claim arises for indemnification hereunder, the party entitled to indemnification (the “Indemnified
Party”) promptly shall provide written notice of such claim to the other party (the “Indemnifying Party”). In
connection with any claim giving rise to indemnity hereunder resulting from or arising out of any Action by a Person who is not a party
to this Agreement, the Indemnifying Party, at its sole cost and expense and upon written notice to the Indemnified Party, may assume the
defense of any such Action with counsel reasonably satisfactory to the Indemnified Party. The Indemnified Party shall be entitled to participate
in the defense of any such Action, with its counsel and at its own cost and expense. If the Indemnifying Party does not assume the defense
of any such Action, the Indemnified Party may, but shall not be obligated to, defend against such Action in such manner as it may deem
appropriate, including settling such Action, after giving notice of it to the Indemnifying Party, on such terms as the Indemnified Party
may deem appropriate and no action taken by the Indemnified Party in accordance with such defense and settlement shall relieve the Indemnifying
Party of its indemnification obligations herein provided with respect to any damages resulting therefrom. The Indemnifying Party shall
not settle any Action without the Indemnified Party’s prior written consent (which consent shall not be unreasonably withheld or delayed).
Section 7.04 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 3.15, which are subject to ARTICLE VI) and all related rights to indemnification shall
survive the Closing, until the expiration of the statute of limitations for breach of contract and shall remain in full force and effect
until three hundred sixty five (365) days from the Closing Date; provided, however, the representations and warranties in Section
3.01, Section 3.02, Section 3.03, Section 3.17, Section 4.01, and Section 4.04 shall survive until the expiration of the statute of limitations
for breach of contract. Subject to ARTICLE VI, all covenants and agreements of the parties contained herein shall survive the Closing
until the expiration of the statute of limitations for breach of contract. Notwithstanding the foregoing, any claims that are timely asserted
in writing by notice from the non-breaching party to the breaching party prior to the expiration date of the applicable survival period
and promptly, if not thereafter resolved, the non-breaching party files a lawsuit for enforcement of such claims, shall not thereafter
be barred by the expiration of the relevant representation or warranty and such claims shall survive until finally resolved.
Section 7.05 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 3.15 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
7.06 Cumulative Remedies. The rights and remedies provided for in this ARTICLE VII (and in Article VI) are cumulative and
are in addition to and not in substitution for any other rights and remedies available at Law or in equity or otherwise.
ARTICLE VIII
Miscellaneous
Section
8.01 Expenses. All costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby
shall be paid by the party incurring such costs and expenses.
Section
8.02 Notices. All notices, claims, demands, 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 email 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 (3rd) day after the date mailed, by certified or registered mail, return receipt requested,
postage prepaid, if 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 8.02):
| If to Sellers: |
|
Yevgeniy Chsherbinin |
| |
|
_______________________ |
| |
|
_______________________ |
| |
|
_______________________ |
| |
|
|
| |
|
Viktor Nazarov |
| |
|
_______________________ |
| |
|
_______________________ |
| |
|
_______________________ |
| |
|
|
| If to Buyer: |
|
FB Primesource Acquisition LLC |
| |
|
_______________________ |
| |
|
_______________________ |
| |
|
_______________________ |
| |
|
|
| with a copy (which shall not constitute notice) to: |
|
Lex Nova Law
10 E. Stow Road, Suite 250
Marlton, NJ 08053
Attention: William Skinner
Email: wskinner@lexnovalaw.com |
Section
8.03 Interpretation; Headings. 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 headings in this Agreement are
for reference only and shall not affect the interpretation of this Agreement.
Section
8.04 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.
Section 8.05 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, and the 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
8.06 English Language Controls. Some of the Transaction Documents have executed and non-executed copies in both English
and Russian. In case of any ambiguity between the two versions, the English language copies that are a part of this Agreement (whether
separately executed or not) will control.
Section
8.07 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 8.08 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 failure to exercise, or delay in exercising, any right or remedy arising from this Agreement shall
operate or be construed as a waiver thereof. No single or partial exercise of any right or remedy hereunder shall preclude any other or
further exercise thereof or the exercise of any other right or remedy.
Section
8.09 Governing Law; Submission to Jurisdiction; Waiver of Jury Trial.
(a) All
matters arising out of or relating to this Agreement shall be governed by and construed in accordance with the internal laws of the State
of New York without giving effect to any choice or conflict of law provision or rule (whether of the State of New York or any other jurisdiction).
Any legal suit, action, proceeding, or dispute arising out of or related to this Agreement, the other Transaction Documents, or the transactions
contemplated hereby or thereby may be instituted in the federal courts of the United States of America or the courts of the State of New
York in each case located in the city of New York City and county of New York, and each party irrevocably submits to the exclusive jurisdiction
of such courts in any such suit, action, proceeding, or dispute. Buyer and each Seller hereby expressly WAIVE THE RIGHT TO ANY TRIAL BY
JURY IN CONNECTION WITH ANY LITIGATION OR JUDICIAL PROCEEDING relating to, directly or indirectly, or in any way concerning this Agreement
or the conduct, omission, action, obligation, duty, right, benefit, privilege, or liability of a party hereunder TO THE FULLEST EXTENT
PERMITTED BY LAW. This waiver of right of trial by jury is separately given and is knowingly, intentionally, and voluntarily made by Buyer
and each Seller, with and upon the advice of competent counsel. This waiver is intended to and does encompass each instance and each issue
as to which the right to a jury trial would otherwise accrue.
Section 8.10 Counterparts.
This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to
be one and the same agreement. A signed copy of this Agreement delivered by email or other means of electronic transmission shall be deemed
to have the same legal effect as delivery of an original signed copy of this Agreement.
IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be executed as of the date first written above.
| |
/s/ Yevgeniy Chsherbinin |
| |
Yevgeniy Chsherbinin |
| |
|
| |
/s/ Victor Nazarov |
| |
Victor Nazarov |
| |
|
| |
FB PRIMESOURCE ACQUISITION LLC |
| |
A Delaware limited liability company |
| |
|
| |
By: |
/s/ Peter Ritz |
| |
Peter Ritz |
| |
Chief Executive Officer |
Schedule 3.03
Capitalization
| Company |
Shareholder (beneficial) |
Shareholder (record) |
Number |
% |
| Prime Source |
Chsherbinin |
Chsherbinin |
|
50% |
| |
Nazarov |
Nazarov |
|
50% |
| Prime Source Innovation |
Chsherbinin |
Chsherbinin |
|
50% |
| |
Nazarov |
Nazarov |
|
50% |
| Prime Source Anal System |
Chsherbinin |
Chsherbinin |
|
30% |
| |
Nazarov |
Nazarov |
|
70% |
| Digitalism |
Chsherbinin |
Konstantin |
|
50% |
| |
Nazarov |
Konstantin |
|
50% |
| InFin-IT Solution |
Chsherbinin |
Kanat |
|
50% |
| |
Nazarov |
Kanat |
|
50% |
19
