Memorandum of Understanding
This
is a
legally binding Memorandum of Understanding (“MOU”), dated September 18,
2006 by and between Juma Technology, LLC a New York limited liability company,
with an address at 000 Xxxxxx Xxxxxx, Xxxxxxxxxxx, XX 00000 (“JUMA”), and X and
O Cosmetics, Inc, formerly known as Elite Cosmetics, Inc, with an address
at 000
Xx. Xxxxxxx'x Xxxxxx Xxxxxxxxxxxxxx, XX 00000 (“XO”, together with JUMA, the
“Parties”).
Recitals.
WHEREAS,
JUMA and XO are entering into this MOU to set forth their respective rights
and
obligations in connection with a contemplated reverse merger transaction
pursuant to which JUMA will use its best efforts to cause all of its members
to
exchange their interest memberships for shares of Common Stock of XO (the
“Reverse Merger”);
WHEREAS,
the Parties acknowledge that
this
MOU is binding subject only to (i) the Reverse Merger qualifying as a tax-free
transaction under section 351 of the internal revenue code (“IRC 351”), (ii) the
issuance of a favorable tax opinion (the “Tax Opinion”) provided by JUMA’s
counsel, (iii) the satisfaction of the members of JUMA as to any other tax
issues resulting from the Reverse Merger, and (iv) the satisfactory completion
of a due diligence review by each of the Parties of one another, and (v)
compliance with applicable securities law; and
WHEREAS,
the Parties anticipate executing and delivering definitive documents pertaining
to the Reverse Merger within the next 30 days from the date of the MOU (the
“Definitive Agreement”);
NOW
THEREFORE, in consideration of the mutual promises set forth below and other
good and valuable consideration, the sufficiency and receipt of which is
hereby
acknowledged, the parties agree as follows.
1.
Agreement of the Parties.
The
Parties agree to the following terms and conditions:
1.1 JUMA
will
use its best efforts to cause all of its members to exchange their membership
interests for shares of XO Common Stock.
1.2 The
Parties agree that this MOU is binding only if: (i) the exchange of Juma’s
Membership Interests for XO’s shares qualifies under IRC 351; (ii)
Juma
obtains a favorable tax opinion from its counsel regarding the proposed
transaction; and (iii) all other tax consequences affecting the members of
Juma
resulting from the transaction are resolved to the satisfaction of Juma and
its
members.
1
1.3 The
Parties agree to enter into a definitive agreement on commercially reasonable
terms and costmary representations, warranties and undertakings subject as
aforesaid to compliance with IRC 351 and without any other adverse tax
consequences to JUMA or its members (“Definitive Agreement”). In connection with
the Definitive Agreement, the Parties shall provide to each other the customary
representations and warranties, including, but not limited to, the
following:
| a. |
That
the Parties have full power and authority to enter into the Definitive
Agreement.
|
| b. |
That
XO is a valid and subsisting corporation in good standing under the
laws
of the jurisdiction of its formation and in each jurisdiction in
which it
does business.
|
| c. |
That
neither the execution nor delivery of the Definitive Agreement nor
the
consummation of the transactions contemplated by the final contract,
will
conflict with, result in the breach of, or accelerate, the performance
required by any agreement to which it is a
party.
|
2.
Binding Effect.
2.1
This
MOU
is intended by the Parties to be a binding contract, notwithstanding that
some
specific terms and conditions relating to the performance of the parties
are
still to be negotiated and documented.
Provided
that the MOU is not terminated by either Party as provided herein, the Parties
will enter into the Definitive Agreement prior to October 15, 2006.
2.2 Upon
the
execution of the Definitive Agreement, this MOU shall automatically terminate
and shall be of no further force or effect. In connection with the Definitive
Agreement, the Parties shall provide to each other the customary representations
and warranties, including, but not limited to, the following:
That
the
Parties have full power and authority to enter into the Definitive Agreement.
That XO is a valid and subsisting corporation in good standing under the
laws of
the jurisdiction of its formation and in each jurisdiction in which they
do
business.
That
neither the execution nor delivery of the Definitive Agreement nor the
consummation of the transactions contemplated by the final contract, will
conflict with, result in the breach of or accelerate the performance required
by
any agreement to which it is a party.
3.
Termination.
3.1
Termination
for Breach. Either party may terminate this MOU upon ten (10) days’ written
notice in the event that the other party is in breach of its obligations;
provided, however, that if the party in breach cures its breach during the
10-day period, the MOU shall remain in full force and effect.
2
3.2 Failure
of the Parties to Execute Definitive Agreement. At the election of either
Party,
this MOU may be terminated immediately upon written notice, without liability
on
behalf of either party, in the event that the parties do not execute and
deliver
the Definitive Agreement on or before October 15, 2006 (the “Termination
date”).
4.
Standstill.
4.1
The
Parties are prohibited from entering into another transaction or negotiations
with any third party relating to a similar or related transaction prior to
October 15, 2006.
5.
Miscellaneous.
5.1 If
any
part or parts of this MOU are held to be invalid, the remaining parts of
it will
continue to be valid and enforceable.
5.2 This
MOU
will be governed by and construed in accordance with the laws of the State
of
New York. Venue for any legal dispute shall be in the courts of New York
State.
5.3 The
headings in this MOU are for reference purposes only; they will not affect
the
meaning or construction of the terms of it.
5.4 This
MOU
is the complete and exclusive understanding of the parties with respect to
the
matters contained herein. No waiver, alteration or modification of any of
the
provisions of this MOU will be binding unless in writing and signed by a
duly
authorized representative of the party to be bound. Neither the course of
conduct between the parties nor trade usage will act to modify or alter the
provisions of this MOU.
5.5 JUMA
and
XO mutually agree not to circumvent each other in accomplishing directly
or
indirectly any project or opportunity regarding the Reverse Merger.
IN
WITNESS WHEREOF, intending to be legally bound by the terms and conditions
of
this Memorandum of Understanding, the parties have caused their duly authorized
agents to execute this memorandum by signing below.
|
Juma
Technology,
LLC
|
X
and O Cosmetics, Inc
|
|
By:
/s/ Xxxxx Xxxxxxxx
|
By:
/s/ Xxxx Xxxxxx
|
|
Xxxxx
Xxxxxxxx
|
Xxxx
Xxxxxx,
CEO
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