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CONTRIBUTION AND EXCHANGE AGREEMENT
THIS CONTRIBUTION AND EXCHANGE AGREEMENT (this "Agreement") is made and
entered into to be effective as of June 28, 2011 (the "Effective Date"), by and
between MEDINA INTERNATIONAL HOLDINGS, INC., a California corporation ("MIHI")
and WINTEC PROTECTIVE SYSTEMS, INC., a Texas corporation ("WinTec").
W I T N E S S E T H:
WHEREAS, MIHI has agreed to issue to WinTec three million (3,000,000)
shares of common stock of MIHI, $0.0001 par value per share (the "Contribution
Shares"), as a contribution to the capital of WinTec; and
WHEREAS, in exchange for the Contribution Shares, WinTec has agreed to
issue to MIHI twenty million four hundred thousand (20,400,000) shares of common
stock of WinTec, $0.001 par value per share (the "Exchange Shares"); and
WHEREAS, the contribution of the Contribution Shares in MIHI to WinTec
is intended to qualify as a nontaxable capital contribution and should be
treated as such pursuant to Section 351 of the Internal Revenue Code of 1986, as
amended.
NOW, THEREFORE, in consideration of the mutual promises herein
contained, the parties hereby agree as follows:
ARTICLE I
EXCHANGE AND ISSUANCE OF STOCK
1.1 Issuance of Stock. Upon full execution of this Agreement, MIHI
shall sell and issue the Contribution Shares to WinTec, and WinTec shall sell
and issue the Exchange Shares to MIHI. Each of the Contribution Shares and the
Exchange Shares shall be fully paid and non-assessable shares.
1.2 Acceptance of Bylaws. WinTec hereby unconditionally and irrevocably
(i) accepts and assumes, as of the Effective Date, all of the obligations now or
hereafter existing as a holder of the Contribution Shares pursuant to the terms
and provisions of the Bylaws of MIHI (the "MIHI Agreement"), and (ii) agrees to
be bound by the terms and conditions of the MIHI Agreement. MIHI hereby
unconditionally and irrevocably (a) accepts and assumes, as of the Effective
Date, all of the obligations now or hereafter existing as a holder of the
Exchange Shares pursuant to the terms and provisions of the Bylaws of WinTec
(the "WinTec Agreement"), and (b) agrees to be bound by the terms and conditions
of the WinTec Agreement.
1.3 Admission of Shareholders. The parties hereby agree that from and
after the Effective Date, and for all purposes under the MIHI Agreement, WinTec
shall become and be admitted as the owner of the Contribution Shares, all
references to shareholders in the MIHI Agreement shall be deemed to refer to
WinTec as the owner of the Contribution Shares, and WinTec shall be entitled to
the full benefits and be bound thereby as a member to the same extent as if an
original party thereto. The parties hereby agree that from and after the
Effective Date, and for all purposes under the WinTec Agreement, MIHI shall
become and be admitted as the owner of the Exchange Shares, all references to
shareholders in the WinTec Agreement shall be deemed to refer to MIHI as the
owner of the Exchange Shares, and MIHI shall be entitled to the full benefits
and be bound thereby as a member to the same extent as if an original party
thereto.
1.4 Recognition of Contribution. WinTec agrees to characterize the
contribution of the Contribution Shares by MIHI as a contribution to the capital
of WinTec, and to issue and deliver the appropriate documents, if any, to MIHI,
recognizing such contribution. WinTec further acknowledges and agrees that the
issuance of the Exchange Shares to MIHI pursuant to this Agreement is consented
to under the provisions of the WinTec Agreement and that all actions required by
the WinTec Agreement have been satisfied or waived.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF MIHI
MIHI hereby represents and warrants to WinTec as follows:
2.1 Organization and Standing. MIHI is a corporation duly incorporated,
validly existing, and in good standing under the laws of the State of
California, and has the requisite corporate power to own its properties and to
carry on its business as presently conducted. MIHI is duly qualified as a
foreign corporation to do business and is in good standing in each jurisdiction
where the nature of the business conducted or property owned by it makes such
qualification necessary, other than those jurisdictions in which the failure to
so qualify would not have a Material Adverse Effect. For purposes of this
Agreement, a "Material Adverse Effect" means any material adverse effect on the
business, operations, properties, or financial condition of a party and its
Subsidiaries individually, or in the aggregate and/or any condition,
circumstance, or situation that would prohibit or otherwise materially interfere
with the ability of such party to perform any of its obligations under this
Agreement in any material respect. For purposes of this Agreement, "Subsidiary"
means, with respect to any entity at any date, any corporation, limited or
general partnership, limited liability company, trust, estate, association,
joint venture or other business entity of which more than 30% of (i) the
outstanding capital stock having (in the absence of contingencies) ordinary
voting power to elect a majority of the Board of Directors or other managing
body of such entity, (ii) in the case of a partnership or limited liability
company, the interest in the capital or profits of such partnership or limited
liability company or (iii) in the case of a trust, estate, association, joint
venture or other entity, the beneficial interest in such trust, estate,
association or other entity business is, at the time of determination, owned or
controlled directly or indirectly through one or more intermediaries, by such
entity.
2.2 Authorization and Power. MIHI has the requisite power and authority
to enter into and perform this Agreement, and to issue the Contribution Shares
to WinTec and acquire the Exchange Shares. The execution, delivery, and
performance of this Agreement by MIHI and the consummation by it of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action, and no further consent or authorization of MIHI or its Board
of Directors is required. This Agreement has been duly authorized, executed, and
delivered by MIHI and constitutes a valid and binding obligation of MIHI,
enforceable against MIHI in accordance with the terms hereof.
2.3 No Conflicts. The execution, delivery, and performance of this
Agreement and the consummation by MIHI of the transactions contemplated hereby
or relating hereto do not and will not (a) result in a violation of MIHI's
charter documents or bylaws or other organizational documents, or (b) conflict
with, or constitute a default (or an event which, with notice or lapse of time
or both would become a default) under, or give to others any rights of
termination, amendment, acceleration, or cancellation, of any agreement,
indenture, or instrument or obligation to which MIHI is a party or by which its
properties or assets are bound, or result in a violation of any law, rule, or
regulation, or any order, judgment, or decree of any court or governmental
agency applicable to MIHI or its properties (except for such conflicts,
defaults, and violations as would not, individually or in the aggregate, have a
Material Adverse Effect on MIHI). MIHI is not required to obtain any consent,
authorization, or order of, or make any filing or registration with, any court
or governmental agency, or the Over the Counter Bulletin Board (the "Bulletin
Board"), in order for it to execute, deliver, or perform any of its obligations
under this Agreement or to acquire the Exchange Shares in accordance with the
terms hereof, provided that for purposes of the representation made in this
sentence, MIHI is assuming and relying upon the accuracy of the relevant
representations and agreements of WinTec herein.
2.4 Acquisition for Investment. MIHI is acquiring the Exchange Shares
solely for its own account for the purpose of investment and not with a view to
or for resale in connection with a distribution. MIHI does not have a present
intention to sell the Exchange Shares, nor a present arrangement (whether or not
legally binding) or intention to effect any distribution of the Exchange Shares
to or through any person or entity; provided, however, that by making the
representations herein and subject to Section 2.8 below, MIHI does not agree to
hold the Exchange Shares for any minimum or other specific term and reserves the
right to dispose of the Exchange Shares at any time in accordance with Federal
and state securities laws applicable to such disposition. MIHI acknowledges that
it is able to bear the financial risks associated with an investment in the
Exchange Shares and that it has been given full access to such records of WinTec
and to the officers of WinTec and received such information as it has deemed
necessary or appropriate to conduct is due diligence investigation of WinTec and
has sufficient knowledge and experience in investing in companies similar to
WinTec in terms of WinTec's stage of development so as to be able to evaluate
the risks and merits of its investment in WinTec. MIHI further acknowledges that
the purchase of the Exchange Shares involves substantial risk.
2.5 Information on WinTec. MIHI has been furnished with or had access
to such information concerning the operations, financial condition, and other
matters regarding WinTec as MIHI has requested in writing, and considered all
factors that MIHI deems material in deciding on the advisability of investing in
the Exchange Shares.
2.6 Opportunities for Additional Information. MIHI acknowledges that it
has had the opportunity to ask questions of and receive answers from, or obtain
additional information from, the executive officers of WinTec concerning the
financial and other affairs of WinTec.
2.7 Information on MIHI. MIHI is, and will be on the date of issuance
of the Exchange Shares, an "accredited investor", as such term is defined in
Regulation D promulgated by the Securities and Exchange Commission (the "SEC")
under the Securities Act of 1933 (the "Act"), is experienced in investments and
business matters, has made investments of a speculative nature and has Exchange
Shares of corporations domiciled in the United States in the past and, with its
representatives, has such knowledge and experience in financial, tax, and other
business matters as to enable MIHI to utilize the information made available by
WinTec to evaluate the merits and risks of and to make an informed investment
decision with respect to the purchase of the Exchange Shares, which represents a
speculative investment. MIHI has the authority and is duly and legally qualified
to purchase and own the Exchange Shares. MIHI is able to bear the risk of such
investment for an indefinite period of time and to afford a complete loss
thereof. The information set forth in this Agreement regarding MIHI is accurate.
2.8 Compliance with the Act. MIHI understands and agrees that the
Exchange Shares has not been registered under the Act or any applicable state
securities laws, by reason of its issuance in a transaction that does not
require registration under the Act (based in part on the accuracy of the
representations and warranties of MIHI contained herein), and that such Exchange
Shares must be held indefinitely unless a subsequent disposition is registered
under the Act or any applicable state securities laws or is exempt from such
registration. MIHI acknowledges that it is familiar with Rule 144 of the SEC's
rules and regulations, as amended, promulgated pursuant to the Act ("Rule 144"),
and that MIHI has been advised that Rule 144 permits resales only under certain
circumstances. MIHI understands that to the extent that Rule 144 is not
available, MIHI will be unable to sell any Exchange Shares without either
registration under the Act or the existence of another exemption from such
registration requirement.
2.9 Legend. The Exchange Shares shall bear the following or
similar legend:
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, NOR APPLICABLE STATE SECURITIES LAWS.
THESE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED, OR ASSIGNED IN THE ABSENCE OF (A) AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH
COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID
ACT OR PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT, OR
OTHERWISE. NOTWITHSTANDING THE FOREGOING, THESE SECURITIES MAY
BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR
OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THESE
SECURITIES.
2.10 Communication of Offer. The offer to sell the Exchange Shares was
directly communicated to MIHI by WinTec. At no time was MIHI presented with or
solicited by any leaflet, newspaper or magazine article, radio or television
advertisement, or any other form of general advertising or solicited or invited
to attend a promotional meeting otherwise than in connection and concurrently
with such communicated offer.
2.11 Restricted Securities. MIHI understands that the Exchange Shares
has not been registered under the Act and MIHI will not sell, offer to sell,
assign, pledge, hypothecate or otherwise transfer any of the Exchange Shares
unless pursuant to an effective registration statement under the Act, or unless
an exemption from registration is available. Notwithstanding anything to the
contrary contained in this Agreement, MIHI may transfer (without restriction and
without the need for an opinion of counsel) the Exchange Shares to its
Affiliates (as defined below) provided that each such Affiliate is an
"accredited investor" under Regulation D and such Affiliate agrees to be bound
by the terms and conditions of this Agreement. For the purposes of this
Agreement, an "Affiliate" of any person or entity means any other person or
entity directly or indirectly controlling, controlled by or under direct or
indirect common control with such person or entity. Affiliate includes each
Subsidiary of MIHI. For purposes of this definition, "control" means the power
to direct the management and policies of such person or firm, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise.
2.12 No Governmental Review. MIHI understands that no United States
Federal or state agency or any other governmental or state agency has passed on
or made recommendations or endorsement of the Exchange Shares or the suitability
of the investment in the Exchange Shares nor have such authorities passed upon
or endorsed the merits of the offering of the Exchange Shares.
2.13 Correctness of Representations. MIHI represents that the foregoing
representations and warranties are true and correct as of the date hereof and as
of the date of issuance of the Exchange Shares. MIHI understands that the
Exchange Shares is being offered and sold in reliance on a transactional
exemption from the registration requirement of Federal and state securities laws
and WinTec is relying upon the truth and accuracy of the representations,
warranties, agreements, acknowledgments and understandings of MIHI set forth
herein in order to determine the applicability of such exemptions and the
suitability of MIHI to acquire the Exchange Shares.
2.14 Outstanding Stock. All issued and outstanding shares of capital
stock and equity interests in MIHI, including the Contribution Shares, have been
duly authorized and validly issued and are fully paid and non-assessable.
2.15 Contribution Shares. The Contribution Shares, upon issuance:
(a) are, or will be, free and clear of any security interests,
liens, claims or other encumbrances, subject only to restrictions upon
transfer under the Act and any applicable state securities laws;
(b) have been, or will be, duly and validly authorized and on
the date of issuance of the Contribution Shares, the Contribution
Shares will be duly and validly issued, fully paid and nonassessable or
if resold in a transaction registered pursuant to the Act and pursuant
to an effective registration statement or exempt from registration will
be free trading, unrestricted and unlegended;
(c) will not have been issued or sold in violation of any
preemptive or other similar rights of the holders of any securities of
MIHI or rights to acquire securities of MIHI; and
(d) will not subject the holders thereof to personal liability
by reason of being such holders.
2.16 Litigation. There is no pending or, to the best knowledge of MIHI,
threatened action, suit, proceeding or investigation before any court,
governmental agency or body, or arbitrator having jurisdiction over MIHI, or any
of its Affiliates that would affect the execution by MIHI or the complete and
timely performance by MIHI of its obligations under this Agreement.
2.17 No Market Manipulation. MIHI and its Affiliates have not taken,
and will not take, directly or indirectly, any action designed to, or that might
reasonably be expected to, cause or result in stabilization or manipulation of
the price of the common stock to facilitate the sale or resale of the
Contribution Shares or affect the price at which the Contribution Shares may be
issued or resold.
2.18 Defaults. MIHI is not in material violation of its articles of
incorporation or bylaws. MIHI is (i) not in default under or in violation of any
other material agreement or instrument to which it is a party or by which it or
any of its properties are bound or affected, which default or violation would
have a Material Adverse Effect, (ii) not in default with respect to any order of
any court, arbitrator or governmental body or subject to or party to any order
of any court or governmental authority arising out of any action, suit or
proceeding under any statute or other law respecting antitrust, monopoly,
restraint of trade, unfair competition or similar matters which default would
have a Material Adverse Effect, or (iii) not in violation of any statute, rule
or regulation of any governmental authority which violation would have a
Material Adverse Effect.
2.19 No Integrated Offering. Neither MIHI, nor any of its Affiliates,
nor any person acting on its or their behalf, has directly or indirectly made
any offers or sales of any security of MIHI nor solicited any offers to buy any
security of MIHI under circumstances that would cause the issuance of the
Contribution Shares pursuant to this Agreement to be integrated with prior
offerings by MIHI for purposes of the Act or any applicable stockholder approval
provisions, including, without limitation, under the rules and regulations of
the Bulletin Board. No prior offering will impair the exemptions relied upon in
this Agreement or MIHI's ability to timely comply with its obligations
hereunder. Neither MIHI nor any of its Affiliates will take any action or steps
that would cause the offer or issuance of the Contribution Shares to be
integrated with other offerings which would impair the exemptions relied upon in
this Agreement or MIHI's ability to timely comply with its obligations
hereunder. MIHI will not conduct any offering other than the transactions
contemplated hereby that may be integrated with the offer or issuance of the
Contribution Shares that would impair the exemptions relied upon in this
Agreement or MIHI's ability to timely comply with its obligations hereunder.
2.20 No General Solicitation. Neither MIHI, nor any of its Affiliates,
nor to its knowledge, any person acting on its or their behalf, has engaged in
any form of general solicitation or general advertising (within the meaning of
Regulation D or Regulation S under the Act) in connection with the offer or sale
of the Contribution Shares.
2.21 Dilution. MIHI's executive officers and directors understand the
nature of the Contribution Shares being sold hereby and recognize that the
issuance of the Contribution Shares will have a potential dilutive effect on the
equity holdings of other holders of MIHI's equity or rights to receive equity of
MIHI. The Board of Directors of MIHI has concluded, in its good faith business
judgment that the issuance of the Contribution Shares is in the best interests
of MIHI. MIHI specifically acknowledges that its obligation to issue the
Contribution Shares is binding upon MIHI and enforceable regardless of the
dilution such issuance may have on the ownership interests of other shareholders
of MIHI or parties entitled to receive equity of MIHI.
2.22 Foreign Corrupt Practices. Neither MIHI, nor to the knowledge of
MIHI, any agent or other person acting on behalf of MIHI, has (a) directly or
indirectly, used any funds for unlawful contributions, gifts, entertainment or
other unlawful expenses related to foreign or domestic political activity, (b)
made any unlawful payment to foreign or domestic government officials or
employees or to any foreign or domestic political parties or campaigns from
corporate funds, (c) failed to disclose fully any contribution made by MIHI (or
made by any person acting on its behalf of which MIHI is aware) which is in
violation of law, or (d) violated in any material respect any provision of the
Foreign Corrupt Practices Act of 1977, as amended (the "FCPA").
2.23 Reporting Company. MIHI is a publicly-held company subject to
reporting obligations pursuant to Section 13 of the Securities Exchange Act of
1934, as amended (the "1934 Act"). Pursuant to the provisions of the 1934 Act,
MIHI has timely filed all reports and other materials required to be filed
thereunder with the SEC during the preceding twelve (12) months.
2.24 Listing. MIHI's common stock is quoted on the Bulletin Board
currently under the symbol "MIHI". MIHI has not received any oral or written
notice that its common stock is not eligible nor will become ineligible for
quotation on the Bulletin Board nor that its common stock does not meet all
requirements for the continuation of such quotation. MIHI satisfies all the
requirements for the continued quotation of its common stock on the Bulletin
Board.
2.25 Sarbanes-Oxley Act. MIHI is in material compliance with the
applicable provisions of the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley
Act"), and the rules and regulations promulgated thereunder, that are effective
and for which material compliance by MIHI is required as of the date hereof.
2.26 PFIC. Neither MIHI nor any of its Subsidiaries is or intends to
become a "passive foreign investment company" within the meaning of Section 1297
of the U.S. Internal Revenue Code of 1986, as amended.
2.27 OFAC. Neither MIHI nor any of its Subsidiaries nor, to the
knowledge of MIHI, any director, officer, agent, employee, Affiliate or person
acting on behalf of any of MIHI or any of its Subsidiaries, is currently subject
to any U.S. sanctions administered by the Office of Foreign Assets Control of
the U.S. Treasury Department ("OFAC"); and MIHI will not directly or indirectly
use the proceeds of the sale of the Contribution Shares, or lend, contribute or
otherwise make available such proceeds to any subsidiary of MIHI, joint venture
partner or other person or entity, towards any sales or operations in Cuba,
Iran, Syria, Sudan, Myanmar or any other country sanctioned by OFAC or for the
purpose of financing the activities of any person currently subject to any U.S.
sanctions administered by OFAC.
2.28 Money Laundering Laws. The operations of each of MIHI and its
Subsidiaries are and have been conducted at all times in compliance with the
money laundering requirements of all applicable governmental authorities and any
related or similar rules, regulations or guidelines, issued, administered or
enforced by any governmental authority (collectively, the "Money Laundering
Laws") and no action, suit or proceeding by or before any court or governmental
authority or any arbitrator involving any of MIHI or any of its Subsidiaries
with respect to the Money Laundering Laws is pending or, to the best knowledge
of MIHI, threatened.
2.29 Stop Orders. MIHI will advise WinTec, within twenty-four (24)
hours after it receives notice of issuance by the SEC, any state securities
commission, or any other regulatory authority of any stop order or of any order
preventing or suspending any offering of any securities of MIHI, or of the
suspension of the qualification of the common stock of MIHI for offering or sale
in any jurisdiction, or the initiation of any proceeding for any such purpose.
MIHI will not issue any stop transfer order or other order impeding the sale,
resale or delivery of any of the Contribution Shares, except as may be required
by any applicable federal or state securities laws and unless contemporaneous
notice of such instruction is given to WinTec.
2.30 Listing/Quotation. MIHI will maintain the quotation or listing of
its common stock on the Bulletin Board, or any successor exchange, and will
comply in all respects with MIHI's reporting, filing and other obligations under
the bylaws or rules of the Bulletin Board, as applicable, as long as any
Contribution Shares are outstanding. MIHI will provide WinTec with copies of all
notices it receives notifying MIHI of the threatened and actual delisting of the
common stock from the Bulletin Board.
2.31 Market Regulations. If required, MIHI shall notify the SEC, the
Bulletin Board and applicable state authorities, in accordance with their
requirements, of the transactions contemplated by this Agreement, and shall take
all other necessary action and proceedings as may be required and permitted by
applicable law, rule and regulation, for the legal and valid issuance of the
Contribution Shares to WinTec and promptly provide copies thereof to WinTec.
2.32 Filing Requirements. From the date of this Agreement and until the
last to occur of (a) one (1) year after Effective Date, or (b) until the
Contribution Shares can be resold or transferred by WinTec pursuant to Rule
144(b)(1)(i) (the date of such latest occurrence being the "End Date"), MIHI
will (i) comply in all respects with its reporting and filing obligations under
the 1934 Act, and (ii) comply with all requirements related to any registration
statement filed pursuant to this Agreement. MIHI will use its best efforts not
to take any action or file any document (whether or not permitted by the Act or
the 1934 Act or the rules thereunder) to terminate or suspend such registration
or to terminate or suspend its reporting and filing obligations under said acts
until the End Date. Until the End Date, MIHI will continue the listing or
quotation of the common stock on the Bulletin Board and will comply in all
respects with MIHI's reporting, filing and other obligations under the bylaws or
rules of the Bulletin Board. MIHI agrees to timely file a Form D with respect to
the Contribution Shares if required under Regulation D and to provide a copy
thereof to WinTec promptly after such filing.
2.33 Registration Rights.
(a) Registration Statement Requirements. MIHI shall file with
the SEC a Form S-1 registration statement (the "Registration
Statement") (or such other form that it is eligible to use) in order to
register all or such portion of the Contribution Shares as permitted by
the SEC (provided that MIHI shall use diligent efforts to advocate with
the SEC for the registration of all of the Contribution Shares)
pursuant to Rule 415 for resale and distribution under the Act on or
before the date which is forty five (45) calendar days after the
Effective Date (the "Required Filing Date"), and use its best efforts
to cause the Registration Statement to be declared effective by the
date (the "Required Effective Date") which is not later than the
earlier of (x) one hundred twenty (120) calendar days after the
Effective Date, or (y) three (3) business days after oral or written
notice to MIHI or its counsel from the SEC that it may be declared
effective. MIHI will register not less than all of the Contribution
Shares. The Registration Statement shall also state that, in accordance
with Rules 416 and 457 under the Act, it also covers such indeterminate
number of additional shares of common stock as may become issuable with
respect to the Contribution Shares to prevent dilution resulting from
stock splits, stock dividends or similar transactions.
(b)Registration Procedures. If and whenever MIHI is required
by the provisions of Section 2.33(a) to effect the registration of
any Contribution Shares under the Act, MIHI will, as expeditiously as
possible:
(i) subject to the timelines provided in this
Agreement, prepare and file with the SEC a Registration
Statement required by Section 2.33, with respect to such
securities and use its best commercially reasonable efforts to
cause such Registration Statement to become and remain
effective, and promptly provide to WinTec copies of all
filings and SEC letters of comment and notify WinTec on or
before the second business day thereafter that MIHI receives
notice that (i) the SEC has no comments or no further comments
on the Registration Statement, and (ii) the Registration
Statement has been declared effective;
(ii) prepare and file with the SEC such amendments
and supplements to such Registration Statement as may be
necessary to keep such Registration Statement effective until
such Registration Statement has been effective for the later
of (a) a period of one (1) year, or (b) until the Contribution
Shares can been sold by WinTec pursuant to Rule 144 without
volume restrictions;
(iii) furnish to WinTec such number of copies of the
Registration Statement as WinTec reasonably may request in
order to facilitate the public sale or their disposition of
the Contribution Shares or make them electronically available;
(iv) use its reasonable best efforts to register or
qualify the Contribution Shares under the securities or "blue
sky" laws of such jurisdictions as WinTec shall request in
writing, provided, however, that MIHI shall not for any such
purpose be required to qualify to transact business as a
foreign corporation in any jurisdiction where it is not so
qualified or to consent to service of process in any such
jurisdiction; and
(v) list the Contribution Shares with any
securities exchange on which the common stock of MIHI is
then listed.
(c) Provision of Documents. It shall be a condition precedent
to the obligations of MIHI to complete the registration pursuant to
this Agreement with respect to the Contribution Shares that WinTec
shall furnish to MIHI in writing such information and representation
letters with respect to itself as MIHI may reasonably request to assure
compliance with Federal and applicable state securities laws.
(d) Non-Registration Events. MIHI and WinTec agree that WinTec
will suffer damages if the Registration Statement is not filed by the
Required Filing Date and not declared effective by the SEC by the
Required Effective Date or if, after it is declared effective, its
effectiveness is not maintained in the manner and within the time
periods contemplated by Section 2.33 hereof, and it would not be
feasible to ascertain the extent of such damages with precision.
Accordingly, if (i) the Registration Statement is not filed on or
before the Required Filing Date, (ii) the Registration Statement is not
declared effective on or before the Required Effective Date, or (iii)
the Registration Statement is declared effective but shall thereafter
cease to be effective for a period of time which shall exceed forty
(40) days in the aggregate per year (defined as a period of 365 days
commencing on the date the Registration Statement is declared
effective) (each such event referred to in clauses i through iii of
this Section 2.33(d), a "Non-Registration Event"), then MIHI shall
deliver to WinTec, as liquidated damages ("Liquidated Damages"), an
amount equal to one-half percent (0.5%) of the fair market value of the
Contribution Shares on the first business day after the
Non-Registration Event and for each subsequent thirty (30) day period
(pro rata for any period less than thirty (30) days) which are subject
to such Non-Registration Event. The maximum aggregate Liquidated
Damages payable to WinTec under this Agreement shall be nine percent
(9%) of the aggregate fair market value of the Contribution Shares.
MIHI must pay the Liquidated Damages in cash. In the event a
Registration Statement is filed by the Required Filing Date but is
withdrawn prior to being declared effective by the SEC, then such
Registration Statement will be deemed to have not been filed.
(e) Expenses. All expenses incurred by MIHI in complying with
Section 2.33, including, without limitation, all registration and
filing fees, printing expenses (if required), fees and disbursements of
counsel and independent public accountants for MIHI, fees and expenses
(including reasonable counsel fees) incurred in connection with
complying with state securities or "blue sky" laws, fees of the FINRA,
transfer taxes, and fees of transfer agents and registrars, are called
"Registration Expenses". MIHI will pay all Registration Expenses in
connection with any registration statement described in Section2.33.
(f) Indemnification and Contribution.
(i) In the event of a registration of any Contribution
Shares under the Act pursuant to Section 2.33, MIHI will, to
the extent permitted by law, indemnify and hold harmless
WinTec, each of the officers, directors, agents, Affiliates,
members, managers, control persons, and principal shareholders
of WinTec, each underwriter of such Contribution Shares
thereunder and each other person, if any, who controls WinTec
within the meaning of the Act, against any losses, claims,
damages or liabilities, joint or several, to which WinTec, or
such underwriter or controlling person may become subject under
the Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement
of any material fact contained in any Registration Statement
under which such Contribution Shares was registered under the
Act pursuant to Section 2.33, or arise out of or are based upon
the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances
when made, and will subject to the provisions of Section
2.33(f)(iii) reimburse WinTec, each such underwriter and each
such controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action;
provided, however, that MIHI shall not be liable to WinTec to
the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission so made in
conformity with information furnished by WinTec in writing
specifically for use in such Registration Statement.
(ii) In the event of a registration of any of the
Contribution Shares under the Act pursuant to Section 2.33,
WinTec will, to the extent permitted by law, indemnify and hold
harmless MIHI, and each person, if any, who controls MIHI
within the meaning of the Act, each officer of MIHI who signs
the Registration Statement, each director of MIHI, each
underwriter and each person who controls any underwriter within
the meaning of the Act, against all losses, claims, damages or
liabilities, joint or several, to which MIHI or such officer,
director, underwriter or controlling person may become subject
under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Registration
Statement under which such Contribution Shares were registered
under the Act pursuant to Section 2.33, or arise out of or are
based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to
make the statements therein not misleading, and will reimburse
MIHI and each such officer, director, underwriter and
controlling person for any legal or other expenses reasonably
incurred by them in connection with investigating or defending
any such loss, claim, damage, liability or action, provided,
however, that WinTec will be liable hereunder in any such case
if and only to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made
in reliance upon and in conformity with information pertaining
to WinTec furnished in writing to MIHI by WinTec specifically
for use in such Registration Statement, and provided, further,
however, that the liability of WinTec hereunder shall be
limited to the net proceeds actually received by WinTec from
the sale of Contribution Shares pursuant to such Registration
Statement.
(iii) Promptly after receipt by an indemnified party
hereunder of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be
made against the indemnifying party hereunder, notify the
indemnifying party in writing thereof, but the omission so to
notify the indemnifying party shall not relieve it from any
liability which it may have to such indemnified party other
than under this Section 2.33(f)(iii) and shall only relieve it
from any liability which it may have to such indemnified party
under this Section 2.33(f)(iii), except and only if and to the
extent the indemnifying party is prejudiced by such omission.
In case any such action shall be brought against any
indemnified party and it shall notify the indemnifying party of
the commencement thereof, the indemnifying party shall be
entitled to participate in and, to the extent it shall wish, to
assume and undertake the defense thereof with counsel
satisfactory to such indemnified party, and, after notice from
the indemnifying party to such indemnified party of its
election so to assume and undertake the defense thereof, the
indemnifying party shall not be liable to such indemnified
party under this Section 2.33(f)(iii) for any legal expenses
subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of
investigation and of liaison with counsel so selected,
provided, however, that, if the defendants in any such action
include both the indemnified party and the indemnifying party
and the indemnifying party shall have reasonably concluded that
there may be reasonable defenses available to indemnified party
which are different from or additional to those available to
the indemnifying party or if the interests of the indemnified
party reasonably may be deemed to conflict with the interests
of the indemnifying party, the indemnified parties, as a group,
shall have the right to select one separate counsel, reasonably
satisfactory to the indemnified and indemnifying party, and to
assume such legal defenses and otherwise to participate in the
defense of such action, with the reasonable expenses and fees
of such separate counsel and other expenses related to such
participation to be reimbursed by the indemnifying party as
incurred.
(iv) In order to provide for just and equitable
contribution in the event of joint liability under the Act in
any case in which either (i) WinTec, or any controlling person
of WinTec, makes a claim for indemnification pursuant to this
Section 2.33(f) but it is judicially determined (by the entry
of a final judgment or decree by a court of competent
jurisdiction and the expiration of time to appeal or the denial
of the last right of appeal) that such indemnification may not
be enforced in such case notwithstanding the fact that this
Section 2.33(f) provides for indemnification in such case, or
(ii) contribution under the Act may be required on the part of
WinTec or controlling person of WinTec in circumstances for
which indemnification is not provided under this Section
2.33(f); then, and in each such case, MIHI and WinTec will
contribute to the aggregate losses, claims, damages or
liabilities to which they may be subject (after contribution
from others) in such proportion so that WinTec is responsible
only for the portion represented by the percentage that the
public offering price of its securities offered by the
Registration Statement bears to the public offering price of
all securities offered by such Registration Statement,
provided, however, that, in any such case, (y) WinTec will not
be required to contribute any amount in excess of the public
offering price of all such securities sold by it pursuant to
such Registration Statement; and (z) no person or entity guilty
of fraudulent misrepresentation (within the meaning of Section
10(f) of the Act) will be entitled to contribution from any
person or entity who was not guilty of such fraudulent
misrepresentation and provided, further, however, that the
liability of WinTec hereunder shall be limited to the net
proceeds actually received by WinTec from the sale of
Contribution Shares pursuant to such Registration Statement.
2.34 Survival. The foregoing representations and warranties shall
survive after the Effective Date.
2.35 No Brokers. Neither MIHI nor any Subsidiary has taken any action
which would give rise to any claim by any person for brokerage commissions,
finder's fees or similar payments relating to this Agreement or the transactions
contemplated hereby.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF WINTEC
WinTec hereby represents and warrants to MIHI as follows:
3.1 Organization and Standing. WinTec is a corporation duly
incorporated, validly existing, and in good standing under the laws of the State
of Texas, and has the requisite corporate power to own its properties and to
carry on its business as presently conducted.
3.2 Authorization and Power. WinTec has the requisite power and
authority to enter into and perform this Agreement, and to issue the Exchange
Shares to MIHI and acquire the Contribution Shares. The execution, delivery, and
performance of this Agreement by WinTec and the consummation by it of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action, and no further consent or authorization of WinTec or its Board
of Directors is required. This Agreement has been duly authorized, executed, and
delivered by WinTec and constitutes a valid and binding obligation of WinTec,
enforceable against WinTec in accordance with the terms hereof.
3.3 No Conflicts. The execution, delivery, and performance of this
Agreement and the consummation by WinTec of the transactions contemplated hereby
or relating hereto do not and will not (a) result in a violation of WinTec's
charter documents or bylaws or other organizational documents, or (b) conflict
with, or constitute a default (or an event which, with notice or lapse of time
or both would become a default) under, or give to others any rights of
termination, amendment, acceleration, or cancellation, of any agreement,
indenture, or instrument or obligation to which WinTec is a party or by which
its properties or assets are bound, or result in a violation of any law, rule,
or regulation, or any order, judgment, or decree of any court or governmental
agency applicable to WinTec or its properties (except for such conflicts,
defaults, and violations as would not, individually or in the aggregate, have a
Material Adverse Effect on WinTec). WinTec is not required to obtain any
consent, authorization, or order of, or make any filing or registration with,
any court or governmental agency in order for it to execute, deliver, or perform
any of its obligations under this Agreement or to acquire the Contribution
Shares in accordance with the terms hereof, provided that for purposes of the
representation made in this sentence, WinTec is assuming and relying upon the
accuracy of the relevant representations and agreements of MIHI herein.
3.4 Compliance with the Act. WinTec understands and agrees that the
Contribution Shares has not been registered under the Act or any applicable
state securities laws, by reason of its issuance in a transaction that does not
require registration under the Act, and that such Contribution Shares must be
held indefinitely unless a subsequent disposition is registered under the Act or
any applicable state securities laws or is exempt from such registration. WinTec
acknowledges that it is familiar with Rule 144, and that WinTec has been advised
that Rule 144 permits resales only under certain circumstances. WinTec
understands that to the extent that Rule 144 is not available, WinTec will be
unable to sell any Contribution Shares without either registration under the Act
or the existence of another exemption from such registration requirement.
3.5 Restricted Securities. WinTec understands that the Contribution
Shares has not been registered under the Act and WinTec will not sell, offer to
sell, assign, pledge, hypothecate or otherwise transfer any of the Contribution
Shares unless pursuant to an effective registration statement under the Act, or
unless an exemption from registration is available. Notwithstanding anything to
the contrary contained in this Agreement, WinTec may transfer (without
restriction and without the need for an opinion of counsel) the Contribution
Shares to its Affiliates provided that each such Affiliate is an "accredited
investor" under Regulation D and such Affiliate agrees to be bound by the terms
and conditions of this Agreement.
3.6 Outstanding Stock. All issued and outstanding shares of capital
stock and equity interests in WinTec, including the Exchange Shares, have been
duly authorized and validly issued and are fully paid and non-assessable.
3.7 Exchange Shares. The Exchange Shares, upon issuance:
(a) are, or will be, free and clear of any security interests,
liens, claims or other encumbrances, subject only to restrictions upon
transfer under the Act and any applicable state securities laws;
(b) have been, or will be, duly and validly authorized and on
the date of issuance of the Exchange Shares, the Exchange Shares will
be duly and validly issued, fully paid and nonassessable or if resold
in a transaction registered pursuant to the Act and pursuant to an
effective registration statement or exempt from registration will be
free trading, unrestricted and unlegended;
(c) will not have been issued or sold in violation of any
preemptive or other similar rights of the holders of any securities of
WinTec or rights to acquire securities of WinTec; and
(d) will not subject the holders thereof to personal liability
by reason of being such holders.
3.8 Litigation. There is no pending or, to the best knowledge of
WinTec, threatened action, suit, proceeding or investigation before any court,
governmental agency or body, or arbitrator having jurisdiction over WinTec, or
any of its Affiliates that would affect the execution by WinTec or the complete
and timely performance by WinTec of its obligations under this Agreement.
3.9 No General Solicitation. Neither WinTec, nor any of its Affiliates,
nor to its knowledge, any person acting on its or their behalf, has engaged in
any form of general solicitation or general advertising (within the meaning of
Regulation D or Regulation S under the Act) in connection with the offer or sale
of the Exchange Shares.
3.10 Dilution. WinTec's executive officers and directors understand the
nature of the Exchange Shares being sold hereby and recognize that the issuance
of the Exchange Shares will have a potential dilutive effect on the equity
holdings of other holders of WinTec's equity or rights to receive equity of
WinTec. The Board of Directors of WinTec has concluded, in its good faith
business judgment that the issuance of the Exchange Shares is in the best
interests of WinTec. WinTec specifically acknowledges that its obligation to
issue the Exchange Shares is binding upon WinTec and enforceable regardless of
the dilution such issuance may have on the ownership interests of other
shareholders of WinTec or parties entitled to receive equity of WinTec.
3.11 Survival. The foregoing representations and warranties shall
survive after the Effective Date.
3.12 No Brokers. Neither WinTec nor any Subsidiary has taken any action
which would give rise to any claim by any person for brokerage commissions,
finder's fees or similar payments relating to this Agreement or the transactions
contemplated hereby.
ARTICLE IV
INDEMNIFICATION
4.1 Indemnification by MIHI. Subject to the provisions of this Article
IV, MIHI shall indemnify and hold harmless WinTec and WinTec's shareholders,
directors, officers, subsidiaries, Affiliates, employees, representatives and
successors (collectively, the "WinTec Parties") from and against (i) its portion
of all material loss, costs, damage, liability, obligation, claim or expense
(including reasonable out-of-pocket professional fees and similar expenses)
(collectively the "Indemnified Losses") incurred or suffered by the WinTec
Parties as a result of (a) a material breach by MIHI of any material
representation or warranty made by MIHI in this Agreement or (b) a material
breach by MIHI of any material covenant or agreement made or to be performed by
MIHI set forth in this Agreement; or (ii) all taxes of MIHI and any and all
taxes (or the nonpayment thereof) imposed on WinTec based on a breach by MIHI of
this Agreement or any of the representations and warranties contained herein;
provided, however, MIHI shall not be liable and shall not provide
indemnification for any taxes assessed against WinTec due to subsequent actions
by WinTec that affected any such taxes.
4.2 Indemnification by WinTec. Subject to the provisions of this
Article IV, WinTec shall indemnify and hold harmless MIHI and MIHI's
shareholders, directors, officers, subsidiaries, Affiliates, employees,
representatives and successors (collectively, the "MIHI Parties") from and
against all Indemnified Losses incurred or suffered by the MIHI Parties as a
result of (i) a material breach by WinTec of any representation or warranty made
by WinTec in this Agreement, or (ii) a material breach by WinTec of any covenant
or agreement made or to be performed by WinTec set forth in this Agreement.
4.3 Material. For purposes of this Article IV, "material" shall be
defined to mean an amount, or an action that causes an amount, in excess of
Twenty-Five Thousand and No/100 Dollars ($25,000.00).
4.4 Limitations on Indemnification. Notwithstanding any other provision
of this Agreement, no party shall be liable for punitive, remote or speculative
damages, and each party hereby waives any right to seek recovery thereof.
ARTICLE V
MISCELLANEOUS
5.1 Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas, without regard
to principles or conflicts of law.
5.2 Counterpart Execution. This Agreement may be executed in any number
of counterparts and by different parties hereto in separate counterparts, either
original, electronic, or facsimile signatures, each of which when so executed
shall be deemed to be an original and all of which taken together shall
constitute but one and the same agreement.
5.3 Binding Effect. This Agreement and the rights and obligations
hereunder shall be binding upon and inure to the benefit of the parties hereto
and their respective heirs, legal representatives, successors and assigns.
5.4 Non-Agreement to Transfer. This Agreement shall not modify, alter
or grant any consent to transfer an interest in MIHI or WinTec, any further
transfer of the Contribution Shares and Exchange Shares being transferred
hereunder, except as otherwise expressly provided herein.
5.5 Severability. In the event that any term or provision of this
Agreement shall be finally determined to be superseded, invalid, illegal or
otherwise unenforceable pursuant to applicable law by an authority having
jurisdiction and venue, that determination shall not impair or otherwise affect
the validity, legality or enforceability: (i) by or before that authority of the
remaining terms and provisions of this Agreement, which shall be enforced as if
the unenforceable term or provision were deleted, or (ii) by or before any other
authority of any of the terms and provisions of this Agreement.
5.6 Notices. All notices, requests, instructions or other documents to
be given under this Agreement shall be in writing and shall be deemed given and
received, (i) three (3) business days following sending by registered or
certified mail, postage prepaid, (ii) when sent by facsimile; provided, however,
that the facsimile is promptly confirmed by telephone confirmation thereof,
(iii) when delivered, if delivered personally to the intended recipient, and
(iv) one (1) business day following sending by overnight delivery via an
internationally recognized courier service, and in each case, addressed to a
party at the following address for such party:
if to MIHI: Medina International Holdings, Inc.
Attn: __________________
1802 Pomona Rd., Corona, CA 92880
Facsimile: ______________
and a copy to: _______________________
Attn:_____________________
__________________________
__________________________
Facsimile: _______________
if to WinTec: WinTec Protective Systems, Inc.
Attn: Robert Doherty
14027 Memorial Drive, Suite 241
Houston, Texas 77079-6826
Facsimile: _______________
and a copy to: Rapp & Krock, PC
(which shall not
constitute notice) Attn: Bradley W. Rapp
3050 Post Oak Boulevrd, Suite 400
Houston, Texas 77056
Facsimile: (713) 759-9967
or to such other address or facsimile number as the party to whom notice is
given may have previously furnished to the other in writing in the manner set
forth above.
5.7 Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
5.8 Costs. Except as otherwise expressly set out in this Agreement,
each party shall bear its own costs in connection with the negotiation,
preparation and implementation of this Agreement.
5.9 Dispute Resolution. The prevailing party in any litigation,
arbitration, mediation, controversy, or other form of dispute resolution related
to this Agreement and the transactions contemplated hereby shall be entitled to
the award of all reasonable attorneys' fees, expert witness fees, costs, and
expenses related to the prosecution or defense of any such litigation,
arbitration, mediation, controversy, or other form of dispute resolution.
5.10 Amendment. This Agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the parties hereto and their
respective permitted successors and assigns. This Agreement shall not be amended
or modified, except pursuant to a writing executed by all parties hereto.
5.11 Further Assurances. From time to time, as and when requested by
any party hereto, any other party hereto shall execute and deliver, or cause to
be executed and delivered, such documents and instruments and shall take, or
cause to be taken, such further or other actions as may be reasonably necessary
to effect the transactions contemplated hereby.
[End of Agreement - Signatures on Following Page]
IN WITNESS WHEREOF, this Agreement has been executed and shall take
effect as of the Effective Date.
MIHI: WINTEC:
MEDINA INTERNATIONAL WINTEC PROTECTIVE SYSTEMS,
HOLDINGS, INC., a California INC., a Texas corporation
corporation
By: ______________________________
By: ________________________________ Robert Doherty
Daniel Medina Chief Executive Officer
President
