EX-10.4
5
ex104.htm
EXHIBIT 10.4
Exhibit 10.4
STOCK PURCHASE AND
RECAPITALIZATION AGREEMENT
This
Agreement this i6 day of July, 2009 by and among Optimum Interactive (USA) LTD,
a Delaware Company (the "Parent") and VComm Network, Inc., a
Delaware corporation (the "Company") and Xxx
Xxxx, majority shareholder of the Company ("Seller").
RECITALS
A. The
respective Boards of Directors of each of the Company, and Parent, have approved
and declared advisable the merger of the Company with into Parent (the "Acquisition") and
approved the Merger upon the teiiiis and subject to the conditions set forth in
this Agreement, whereby each issued and outstanding share of the common stock of
the Company (a "Company Common Share"
or, collectively, the "Company Common Shares"),
will be converted into 18,000,000 shares of common stock, $0.0001 par
value, of Parent ("Parent Common Stock") which,
after giving effect to the Acquisition, shall equal, in the aggregate, 56.25% of
the total issued and outstanding common stock of Parent and an aggregate of
4,500,000 shares of Class A Preferred Stock of Parent with the provisions,
rights and designations set forth herein. Following the Acquisition, the Parent
will have 8,000,000 Company A Preferred Shares outstanding. In addition, the
Parent will have an aggregate of 3,200,000 Class A Preferred Shares available to
be issued upon conversion of an aggregate of $1,600,000 of debt either currently
outstanding or contemplated. The Company also has one (1) share of Class B
Preferred Stock outstanding which shall be converted into one share of Class B
Preferred Stock of the Parent with the provisions, rights and designations set
forth herein. The Company Common Shares, the Company B Preferred Shares and the
Company A Preferred shares are referred to herein, collectively, as the "Company
Shares".
B. The
respective Boards of Directors of the Company, Buyer and Parent have determined
that the Acquisition is in furtherance of and consistent with their respective
long-term business strategies and is fair to and in the best interests of their
respective stockholders.
C. It is
intended that, for federal income tax purposes, the Acquisition shall qualify as
a reorganization under the provisions of Section 368(a) of the Internal Revenue
Code of 1986, as amended, and the rules and regulations promulgated thereunder
(the "Code");
D. For
financial accounting purposes, it is intended that the Acquisition will be
accounted for as a "purchase";
NOW, THEREFORE, in
consideration of the premises, and of the representations, warranties, covenants
and agreements contained herein, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE
I
THE
ACQUISITION; CLOSING; EFFECT OF ACQUISITION
SECTION
1.1 The Acquisition.
Upon the terms and subject to the conditions set forth in this Agreement
and in accordance with the laws of the state of Delaware ("Delaware Law") at the
Effective Time, the Company shall be acquired by the Parent and the Company will
become a wholly-owned subsidiary of the Parent. The Parent shall be deemed the
surviving corporation in the Acquisition (sometimes hereinafter referred to as
the "Surviving
Corporation"),
and the separate corporate existence of the Company shall therefrom
cease, except as set forth herein. The result will be that the Company will be a
wholly-owned subsidiary of Parent.
SECTION
1.2 Closing. Subject to the terms and conditions of this Agreement, the closing
of the Acquisition and the consummation of the other transactions contemplated
hereby (the "Closing")
shall take place at the offices of Xxxxx & Xxxxxxx LLP 00 Xxxxx
Xxxxxx, 00xx Xxxxx,
Xxx Xxxx 00000 not later than July 14, 2009 and at such other date, time and
place as the parties hereto shall agree.
SECTION
1.3 Effective Time.
On the date of Closing, the Parent will become the owner of 100% of the
Common Stock of the Company (the "Effective
Time").
SECTION
1.4 Certificate of
Incorporation. The certificate of incorporation of the Parent as in
effect immediately prior to the Effective Time shall remain as the certificate
of incorporation of the Parent (the "Certificate of
Incorporation"), until duly amended as provided therein or by applicable
law.
SECTION
1.5 By-Laws.
The by-laws of the Parent in effect immediately prior to the Effective
Time shall remain the by-laws (the "By-Laws"), until
thereafter amended as provided therein or by applicable law.
SECTION
1.6 Directors.
The directors of the Company shall, from and after the Effective Time, be
Xxxxxx XxXxxxxx, Xxxxxxx Xxxx, and Xxxxxxx Xxxx until his successor have been
duly elected or appointed and qualified or until his earlier death, resignation
or removal in accordance with the Certificate of Incorporation and the By-Laws.
As of the Effective Time, the authorized number of directors comprising the
Board of Directors of Parent shall consist of not less than 3 and not more than
5 individuals. The following individuals shall be elected to the Board Directors
of Parent at the Effective Time: (i) Xxxxxxx Xxxx; (ii) Xxx Xxxx; and (iii)
Xxxxxx XxXxxxxx (Chairman of the Board).
SECTION
1.7 Officers.
The officers of the Parent shall, from and after the Effective Time, be
Xxxx Xxxx (Chief Executive Officer and President), Xxx Xxxx, (Treasurer), and
Xxxxxxx Xxxxx (Secretary), until their successors have been duly elected or
appointed
and qualified or until their earlier death, resignation or removal in accordance
with the Certificate of Incorporation and the By-Laws.
SECTION
1.8 Effect on Capital
Stock. At the Effective Time, as a result of the Acquisition and without
any action on the part of the holder of any capital stock of the
Company:
(a) Merger
Consideration.
(i) Each
Company Common Share issued and outstanding immediately prior to the Effective
Time shall be converted into, and become exchangeable for thirty validly issued,
fully paid and nonassessable shares of Parent Common Stock (the "Parent Common Shares")
and .25 shares of Preferred Stock of Parent ("Parent Preferred Stock")
which shall have the rights and preferences as set forth on Schedule 1.8
attached hereto. In addition, a designee of management of the Company shall
receive one share of Class B Preferred Stock of the Parent. The Class B
Preferred Stock shall have the rights and preferences set forth on Schedule 1.8
attached hereto.
(ii) The
Parent Common Shares and the Parent Preferred Shares, collectively, are referred
to herein as the "Parent Merger Stock",
and the conversion of the Company Shares into Parent Stock is referred to
as the "Acquisition
Purchase Price");
(b) At
the Effective Time, all Company Shares shall be canceled and the Company shall
cease to exist, and each certificate (a "Certificate")
formerly representing:
(i) any
Company Common Shares shall thereafter represent only the right to receive the
shares of Parent Common Stock into which such Company Common Shares have been
converted; and
SECTION
1.9 Exchange of
Certificates for Shares.
(a) Exchange. At Closing,
Parent shall deliver or cause to be delivered to each respective owner of
Company Shares and in each of their respective names certificates representing
Parent Stock into which the Company Shares that such shareholders owns are to be
converted as set forth on Schedule 1.9 attached
hereto.
(b) Fractional Shares. No
certificates or scrip representing fractional shares of Parent Common Stock or
Parent Preferred Stock shall be issued upon the surrender for exchange of
Certificates pursuant to this Article I; no dividend or other distribution by
Parent and no stock split, combination or reclassification shall relate to any
such fractional share; and no such fractional share shall entitle the record or
beneficial owner thereof to vote or to any other rights of a stockholder of
Parent. In lieu of any such factional share, each holder of Company Shares who
would otherwise have been entitled thereto upon the surrender of Certificate(s)
for exchange pursuant to this Article I will be paid an additional share of
Parent Common Stock or Parent Preferred Stock.
(c) Adjustments of Conversion
Number. In the event that Parent changes the number of shares of Parent
Common Stock or Parent Preferred Stock , issued and outstanding prior to the
Effective Time as a result of a reclassification, stock split (including a
reverse split), dividend or distribution, recapitalization, merger (other than
the Acquisition, Stock Purchase or the cancellation of options previously
granted by the Company), subdivision, or other similar transaction with a
dilutive effect, or if a record date with respect to any of the foregoing shall
occur prior to the Effective Time, the conversion number shall be equitably
adjusted.
ARTICLE
II
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY AND SELLER
Each of
the Company and Seller represents, warrants and covenants to Parent as follows
and acknowledges that Parent is relying upon such representations and warranties
in connection with the Contemplated Transactions (as hereinafter
defined):
SECTION
2.1 Capitalization.
The outstanding and issued capital stock of the Company consists of
600,000 shares of common stock. Schedule 1.9 sets
forth the name of each record and beneficial shareholder of the Company (each a
"Shareholder"
and collectively the "Shareholders") and
the number of Company Shares held by each such person. The Company does not and,
at the Closing, the Company will not, have outstanding any capital stock or
other securities or any rights, warrants or options to acquire securities of the
Company, or any convertible or exchangeable securities and, other than Parent
pursuant to this Agreement, no person has or, at Closing will have, any right to
purchase or otherwise acquire any securities of the Company. There are, and at
Closing there will be, no outstanding obligations of the Company to repurchase,
redeem or otherwise acquire any securities of the Company. All of the Company
Shares are, and at Closing will be, duly authorized, duly and validly issued,
fully paid and non-assessable, and none were issued in violation of any
preemptive rights, rights of first refusal or any other contractual or legal
restrictions of any kind. The Company has two subsidiaries VComm Network Canada
Inc. an Ontario company and VCN Celect, Org, LLC, a California Limited Liability
Company (collectively the "Subsidiaries"), which have minimal assets and
operations. The Subsidiaries are 100% owned by the Company.
SECTION
2.2 Title to the
Shares. Seller is the beneficial owner and holds good and valid title to
its Company Shares free and clear of any Lien. Upon consummation of the
Contemplated Transactions and the satisfaction of the conditions to Closing set
forth herein, Parent will own all of the issued and outstanding shares of
capital stock of the Company, free and clear of any Lien. At the Closing, Seller
and each Shareholder of the Company will deliver the Company Shares to Parent
free and clear of any Lien, other than restrictions imposed by the Securities
Act of 1933, as amended, (the "Securities Act") and
applicable securities Laws including the laws of the State of
Delaware.
SECTION
2.3 Authority Relative
to this Agreement. At the Closing, the Company will have full power,
capacity and authority to execute and deliver each Transaction Document to which
it is or, at Closing, will be, a party and to consummate the
transactions
contemplated
hereby and thereby (the "Contemplated
Transactions"). The execution, delivery and performance by the Company
and Seller of each Transaction Document and the consummation of the Contemplated
Transactions to which the Company and/or Seller are, or at Closing, will be, a
party will have been duly and validly authorized by the Company and Seller and
no other acts by or on behalf of the Company or Seller will be necessary or
required to authorize the execution, delivery and performance by each of the
Company and Seller of each Transaction Document and the consummation of the
Contemplated Transactions to which it, he or she, is or, at Closing, will be, a
party. This Agreement and the other Transaction Documents to which the Company
or Seller is a party have been duly and validly executed and delivered by the
Company or Seller, respectively, and (assuming the valid execution and delivery
thereof by the other parties thereto) will constitute the legal, valid and
binding agreements of the Company and Seller, respectively, enforceable against
the Company and Seller in accordance with their respective terms, except as such
obligations and their enforceability may be limited by applicable bankruptcy and
other similar Laws affecting the enforcement of creditors' rights generally and
except that the availability of equitable remedies is subject to the discretion
of the court before which any proceeding therefore may be brought (whether at
law or in equity).
SECTION
2.4 No Conflicts;
Consents. The execution, delivery and performance by the Company of each
Transaction Document to which it is a party and the consummation of the
Contemplated Transactions to which the Company is a party, upon approval of the
Shareholders will not: (i) violate any provision of the certificate of
incorporation or memorandum of association of the Company; (ii) require the
Company to obtain any consent, approval or action of or waiver from, or make any
filing with, or give any notice to, any Governmental Body or any other person;
(iii) violate, conflict with or result in a breach or default under (with or
without the giving of notice or the passage of time or both), or permit the
suspension or termination of, any material Contract (including any Real Property
Lease) to which the Company is a party or by which it or any of its assets is
bound or subject, or to the best of Company's knowledge and information result
in the creation of any Lien upon any of the Company Shares or upon any of the
Assets of the Company; (iv) violate any Order, any Law, of any Governmental Body
against, or binding upon, the Company or upon any of their respective assets or
the Business; or (v) violate or result in the revocation or suspension of any
Permit.
SECTION
2.5 Corporate
Existence and Power. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, and has
all requisite powers, authority and all Permits required to own and/or operate
its Assets and to carry on the Business as now conducted, including all
qualifications under any statute in effect in any state or foreign jurisdiction
in which the Company operates its Business. The Company is duly qualified to do
business and is in good standing in each state of the United States and in each
other jurisdiction where the character of the property owned or leased by it or
the nature of its activities makes such qualification necessary.
SECTION
2.6 Charter Documents
and Corporate Records. The Company has heretofore delivered to Parent
true and complete copies of the Articles of Incorporation, By-Laws and minute
books, or comparable instruments, of the Company as in effect on the date
hereof. The stock transfer books of the Company have been made available to
Parent for its inspection and are true and complete in all
respects.
SECTION
2.7 Financial
Statements.
(a) Schedule 2.7A sets
forth true, complete and correct copies of: (i) the Company's unaudited
financial statements as of and for the fiscal years ended December 31, 2008 and
December 31, 2007 (the "Annual Statements"); (ii) the Company's financial
statements as of and for the three months ended March 31, 2009 (the "Interim Statements");
and (iii) all management letters, management representation letters and
attorney response letters issued in connection with the Annual Statements and
the Interim Statements. Each of the Annual Statements and the Interim Statements
present fairly and accurately in all material respects the financial position of
the Company and the Subsidiary as of its date, and the earnings, changes in
stockholders' equity and cash flows thereof for the periods then ended in
accordance with GAAP, consistently applied. Each balance sheet contained therein
or delivered pursuant hereto fully sets forth all consolidated Assets and
Liabilities of the Company existing as of its date which, under GAAP, should be
set forth therein, and each statement of earnings contained therein or delivered
pursuant hereto sets forth the items of income and expense of the Company which
should be set forth therein in accordance with GAAP.
(b) All
financial, business and accounting books, ledgers, accounts and official and
other records relating to the Company have been properly and accurately kept and
completed, and the Company has no knowledge, notice belief or information there
are any material inaccuracies or discrepancies contained or reflected
therein.
SECTION
2.8 Liabilities.
The Company has not incurred any Liabilities since December 31, 2008(the
"Latest Balance Sheet
Date") except (i) current Liabilities for trade or business obligations
incurred in connection with the purchase of goods or services in the ordinary
course of the Business and consistent with past practice, (ii) professional fees
related to this Transaction and (iii) Liabilities reflected on any balance sheet
referred to in Section 2.7(a).
SECTION
2.9 Company
Receivables. Except to the extent of the amount of the allowance for
doubtful accounts reflected in the Annual Statements and the Interim Statements,
all the Receivables of the Company reflected therein, and all Receivables that
have arisen since the Latest Balance Sheet Date (except Receivables that have
been collected since such date), are valid and enforceable Claims subject to no
known defenses, offsets, returns, allowances or credits of any kind, and
constitute bona fide Receivables collectible in the ordinary course of the
Business except as enforceability may be limited by applicable bankruptcy,
reorganization, insolvency, moratorium, fraudulent conveyance or similar laws or
principles of equity affecting the enforcement of creditors rights
generally.
SECTION
2.10 Absence of
Certain Changes. (a) Since December 31, 2008, the Company has conducted
the Business in the ordinary course consistent with past practice, except as
disclosed on Schedule
2.10 hereof, and there has not been:
(i)Any
material adverse change in the Condition of the Business;
(ii) Any
material damage, destruction or other casualty loss (whether or not covered by
insurance), condemnation or other taking affecting the Business or the Assets of
the Company;
(iii) Any
change in any method of accounting or accounting practice by the
Company;
(iv) Except
for normal increases granted in the ordinary course of business, any increase in
the compensation, commission, bonus or other direct or indirect remuneration
paid, payable or to become payable to any officer, stockholder, director,
consultant, agent or employee of the Company, or any alteration in the benefits
payable or provided to any thereof;
(v) Any
material adverse change in the relationship of the Company with its employees,
customers, suppliers or vendors;
(vi) Except
for any changes made in the ordinary course of Business, any material change in
any of the Company's business policies, including advertising, marketing,
selling, pricing, purchasing, personnel, returns or budget
policies;
(vii) Any
agreement or arrangement whether written or oral to do any of the
foregoing.
(viii)
The Company has no Liability that is past due and which, individually or in the
aggregate, exceeds $10,000, except as shown on the Annual Statements or the
Interim Statements and the $500,000 of convertible debt that the Company has
recently raised.
SECTION
2.11 Leased Real
Property. (a) The Company has no fee interest, purchase options or rights
of first refusal in any real property and the Company has no leasehold or other
interest in any real property, except as set forth on Schedule 2.11 (the
"Leased Real
Property"),
and all leases including all amendments, modifications, extensions,
renewals and/or supplements thereto (collectively, "Real Property Leases")
are described on Schedule
2.11.
SECTION
2.12 Personal
Property; Assets. The Company has good and valid title to (or valid
leasehold interest in) all of its personal property and Assets, free and clear
of all Liens, except the Permitted Liens and as indicated on Schedule 2.12. The
machinery, equipment, computer software and other tangible personal property
constituting part of the Assets and all other Assets (whether owned or leased)
are in good condition and repair (subject to normal wear and tear) and are
reasonably sufficient and adequate in quantity and quality for the operation of
the Business as previously and presently conducted. Schedule 2.12
contains a list and description of all tangible personal property owned
or leased by the Company with a book value (before depreciation) of $25,000 or
more. The Assets constitute all of the assets, which are necessary to operate
the Business of the Company as currently conducted.
SECTION
2,13 Contracts.
(a) Schedule
2.13 sets forth an accurate and complete list of all Contracts to which
the Company is a party or by which it or its Assets are bound or subject that:
(i) cannot be canceled upon 30 days' notice without the payment or penalty of
less than One Thousand Dollars ($1,000); or (ii) involve aggregate annual future
payments by or to any person of more than Five Thousand Dollars ($5,000). True
and complete copies of all written Contracts (including all amendments thereto
and waivers in respect thereof) and summaries of the material provisions of all
oral Contracts so listed have been made available to Buyer.
(b) All
Contracts to which the Company is a party are valid, subsisting, in full force
and effect and binding upon the Company and the other parties thereto, in
accordance with their terms, except that no representation or warranty is given
as to the enforceability of any oral Contracts. Except as set forth on Schedule 2.13, the
Company is not in default (or alleged default) under any such
Contract.
SECTION
2.14 Patents and
Intellectual Property Rights. (a) Schedule 2.14 sets forth a list of each
patent, trademark, trade name, service xxxx, brand xxxx, brand name, and
registered copyright as well as all registrations thereof and pending
applications therefor, and each license or other contract relating thereto
(collectively, the "Intellectual Property")
owned or used in connection with the Business by the Company and
indicates, with respect to each item of Company's Intellectual Property that is
licensed by the Company, the name of the licensor thereof and, with respect to
oral Contracts, the terms of such license relating thereto. The use of the
foregoing by the Company does not conflict with, infringe upon, violate or
interfere with or constitute an appropriation of any right, title, interest or
goodwill, including, without limitation, any intellectual property right,
patent, trademark, trade name, service xxxx, brand name, computer program,
database, industrial design, trade secret, copyright or any pending application
thereto of any other person and there have been no claims made and the Company
has not received any notice or otherwise know that any of the foregoing is
invalid or conflicts with the asserted rights of other Persons or have not been
used or enforced or have been failed to be used or enforced in a manner that
would result in the abandonment, cancellation or unenforceability of the
Intellectual Property, except as set forth on Schedule
2.14A.
(b) The
Company owns or has rights to use all Intellectual Property, know-how, formulae
and other proprietary and trade rights necessary to conduct the Business as it
is now conducted. The Company has not forfeited or otherwise relinquished any
such Intellectual Property, know-how, formulae or other proprietary right used
in the conduct of the Business as now conducted.
(c) To the
extent used in the conduct of the Business by the Company, each of the licenses
or other contracts relating to the Company's Intellectual Property
(collectively, the "Intellectual Property
Licenses") is in full force and effect and is valid and enforceable in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally, and subject, as to enforceability, to general principles of
equity (regardless of whether enforcement is sought in a proceeding at law or in
equity), and there is no notice or claim of default
under any Intellectual Property License either by the Company or, to the
Company's knowledge, by any other party thereto, and to the Company's knowledge,
no event has occurred that with the lapse of time or the giving of notice or
both would constitute a default by the Company thereunder.
SECTION
2.15 Claims and
Proceedings. There are no outstanding Orders of any Governmental Body
against or involving the Company, its Assets, the Business, or the Company
Shares. There are no actions, suits, claims or counterclaims, examinations,
Company Required Consents or legal, administrative, governmental or arbitral
proceedings or investigations (collectively, "Claims") (whether or
not the defense thereof or Liabilities in respect thereof are covered by
insurance), pending or, to the best of the Company's knowledge, threatened on
the date hereof, against or involving the Company, its Assets, the Business or
the Company Shares.
SECTION
2.16 Taxes. (a)
Except as set forth in Schedule
2.16:
(i) The
Company has timely filed or, if not yet due but due before Closing, will timely
file all Tax Returns required to be filed by it for all taxable periods ending
on or before the date of Closing and all such Tax Returns are or, if not yet
filed, will be, upon filing, true, correct and complete in all material
respects;
(ii) the
Company has paid, or if payment is not yet due but due before Closing, will
promptly pay when due to each appropriate Tax Authority, all Taxes of the
Company shown as due on the Tax Returns required to be filed by it for all
taxable periods ending on or before the date of Closing;
(iii) the
accruals for Taxes currently payable as well as for deferred Taxes shown on the
financial statements of the Company as of the date of the Annual Statements, the
Interim Statements or the date of any financial statements delivered hereunder:
(A) adequately provide for all contingent Tax Liabilities of the Company as of
the date thereof; and (B) accurately reflect, as of the date thereof, all unpaid
Taxes of the Company whether or not disputed, in each case as required to be
reflected thereon in order for such statements to be in accordance with
GAAP;
(iv) no
extension of time has been requested or granted for the Company to file any Tax
Return that has not yet been filed or to pay any Tax that has not yet been paid
and the Company has not granted a power of attorney that remains outstanding
with regard to any Tax matter;
(v) the
Company has not received notice of a determination by a Tax Authority that Taxes
are currently owed by the Company (such determination to be referred to as a
"Tax Deficiency")
and, to the Company's knowledge, no Tax Deficiency is proposed or
threatened;
(vi) all Tax
Deficiencies have been paid or finally settled and all amounts determined by
settlement to be owed have been paid;
(vii) there are
no Tax Liens on or pending against the Company or any of the Assets, other than
those which constitute Permitted Liens;
(viii) there are
no presently outstanding waivers or extensions or requests for a waiver or
extension of the time within which a Tax Deficiency may be asserted or
assessed;
(ix) no issue
has been raised in any examination, investigation, Company Required Consents,
suit, action, claim or proceeding relating to Taxes (a "Tax Company Required
Consents") which, by application of similar principles to any past,
present or future period, would result in a Tax Deficiency for such
period;
(x) there are
no pending or threatened Tax audits of the Company;
(xi) the
Company has no deferred intercompany gains or losses that have not been fully
taken into income for income Tax purposes;
(xii) there are
no transfer or other taxes (other than income taxes) imposed by any state on the
Company by virtue of the Contemplated Transactions; and
(xiii) no claim
has been made by any Tax Authority that the Company is subject to Tax in a
jurisdiction in which the Company is not then paying Tax of the type
asserted.
Each
reference to a provision of the Code in this Section 2.16 shall be treated for
state and local Tax purposes as a reference to analogous or similar provisions
of state and local law.
(b) To
the Company's knowledge, the Company has collected and remitted to the
appropriate Tax Authority all sales and use or similar Taxes required to be
collected on or prior to the date of Closing and has been furnished properly
completed exemption certificates for all exempt transactions and has no
information otherwise or notice of any claim by any government or jurisdiction
with regards thereto. The Company has maintained and has in its possession all
records, supporting documents and exemption certificates required by applicable
sales and use Tax statutes and regulations to be retained in connection with the
collection and remittance of sales and use Taxes for all periods up to and
including the date of Closing. With respect to sales made by the Company prior
to the date of Closing for which sales and use Taxes are not yet due as of the
date of Closing, all applicable sales and use Taxes payable
with respect to such sales will have been collected or billed by the Company and
will be included in the Assets of the Company as of the date of
Closing.
SECTION
2.17 Compliance with
Laws. The Company is not in violation of any order, judgment, injunction,
award, citation, decree, consent decree or writ (collectively, "Orders") and to the
best of the Company's knowledge, belief and information, any Laws of any
Governmental Bodies affecting the Company, the Company Shares or the
Business.
SECTION
2.18 Permits.
The Company has obtained all licenses, permits, certificates,
certificates of occupancy, orders, authorizations and approvals (collectively,
"Permits"), and
has made all required registrations and filings with all Governmental Bodies,
that are necessary to the ownership of the Assets, the use and occupancy of the
Leased Real Property, as presently used and operated, and the conduct of the
Business or otherwise required to be obtained by the Company. All Permits
required to be obtained or maintained by the Company are listed on Schedule 2.18 and are
in full force and effect; no violations are or have been recorded, nor have any
notices or violations thereof been received, in respect of any Permit; and no
proceeding is pending or threatened to revoke or limit any Permit; and the
consummation of the Contemplated Transactions will not (or with the giving of
notice or the passage of time or both will not) cause any Permit to be revoked
or limited.
SECTION
2.19 Environmental
Matters. To the best of the Company's knowledge, belief and information,
the Company is, and at all times has been, in full compliance with, and has not
been and is not in violation of or liable under, any Environmental
Law.
SECTION
2.20 Finders Fees.
Except as set forth on Schedule 2.20, there
is no investment banker, broker, finder or other intermediary which has been
retained by or is authorized to act on behalf of the Company who might be
entitled to any fee or commission from the Company in connection with the
consummation of the Contemplated Transactions.
SECTION
2.21 Disclosure.
Neither this Agreement, the Schedules hereto, nor any reviewed or
unaudited financial statements, documents or certificates furnished or to be
furnished to Buyer or Parent by or on behalf of the Company or Seller pursuant
to this Agreement contains or will contain any untrue statement of a material
fact or omits or will omit to state a material fact necessary in order to make
the statements contained herein or therein not misleading. Except for general
current economic conditions effecting the entire economy or the Company's entire
industry and not specific to the Business, there are no events, transactions or
other facts known by the Company, which, either individually or in the
aggregate, may give rise to circumstances or conditions which would have a
material adverse effect on the general affairs or Condition of the
Business.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF PARENT
Buyer
jointly and severally represent, warrant and covenant to the Company as follows
and acknowledge that the Company and Seller are relying upon such
representations and warranties in connection with the Contemplated
Transactions:
SECTION
3.1 Authority Relative
to this Agreement. Parent have full power and authority to execute and
deliver each Transaction Document to which they are or, at Closing, will be, a
party and to consummate the Contemplated Transactions. Following the approval of
the boards of directors of Parent with respect to the Contemplated Transactions,
the execution, delivery and performance by Buyer and Parent of each Transaction
Document and the consummation of the Contemplated Transactions to which they are
or, at Closing, will be, a party have been duly and validly authorized and
approved by Parent and no other acts by or on behalf of Parent are necessary or
required to authorize the execution, delivery and performance by Parent of each
Transaction Document and the consummation of the Contemplated Transactions to
which they are or, at Closing, will be a party. This Agreement and the other
Transaction Documents to which Parent are a party have been, duly and validly
executed and delivered by Buyer and Parent and (assuming the valid execution and
delivery thereof by the other parties thereto) constitutes, or will, at the
Closing, constitute, as the case may be, the legal, valid and binding agreements
of Parent enforceable against each of them in accordance with their respective
terms, except as such obligations and their enforceability may be limited by
applicable bankruptcy and other similar Laws affecting the enforcement of
creditors' rights generally and except that the availability of equitable
remedies is subject to the discretion of the court before which any proceeding
therefore may be brought (whether at law or in equity).
SECTION
3.2 No Conflicts;
Consents. The execution, delivery and performance by Parent of each
Transaction Document to which they are a party and the consummation of the
Contemplated Transactions to which Parent are a party does not and will not: (i)
violate any provision of the certificate of incorporation or by-laws of Parent,
as the case may be; (ii) require Parent to obtain any consent, approval or
action of or waiver from, or make any filing with, or give any notice to, any
Governmental Body or any other person, except as set forth on Schedule 3.2 (the
"Buyer Required
Consents"); (iii) except as set forth in Schedule 3.2,
violate, conflict with or result in the breach or default under (with or
without the giving of notice or the passage of time), or permit the suspension
or termination of, any material Contract to which Parent are a party or any of
them or any of their assets is bound or subject or result in the creation or any
Lien upon any of Parent Merger Stock or upon any assets of Parent; or (iv)
violate any Order or, to Buyer's knowledge, any Law of any Governmental Body
against, or binding upon, Parent, or upon any of their respective assets or
businesses.
SECTION
3.3 Corporate
Existence and Power of Parent. Parent is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
and has all requisite corporate powers and all material governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted.
SECTION
3.4 The Parent
Acquisition Stock. At the closing, the Parent Acquisition Stock will have
been duly authorized by Parent and, when issued to Shareholders pursuant to this
Agreement, will be duly issued, fully paid and non-assessable shares of Parent
Acquisition Stock. The Parent Acquisition Stock, when issued pursuant hereto:
(i) will not be issued in violation of or subject to any preemptive rights,
rights of first refusal or, other than as set forth in this Agreement,
contractual restrictions of any kind; and (ii) will vest in Shareholders,
respectively, good title to Parent Acquisition Stock free and clear of all
Liens.
SECTION
3.5 Capitalization.
At the closing, the authorized capital stock of Parent consists of: (i)
500,000,000 shares of common stock, $0.001 par value; and (ii) 20,000,000 shares
of preferred stock, $0.0001 par value. Parent has: (i) 14,000,000 shares of
common stock; and (ii) 3,500,000 shares of preferred stock issued and
outstanding. To the knowledge of Parent, Parent will not have outstanding any
capital stock or other securities or any rights, warrants or options to acquire
securities of Parent or any convertible or exchangeable securities and, other
than Parent pursuant to this Agreement, to the knowledge of Parent, no person
has or at Closing will have, any right to purchase or otherwise acquire any
securities of Parent. There are, and at Closing there will be, to the knowledge
of Parent, no outstanding obligations of Parent to repurchase, redeem or
otherwise acquire any securities of Parent. All of Parent Stock is, and at
Closing will be, duly authorized, duly and validly issued, fully paid and
non-assessable, and to the knowledge of Parent, none were issued in violation of
any preemptive rights, rights of first refusal or any other contractual or legal
restrictions of any kind.
SECTION
3.6 Disclosure of
Information. Parent has been given the opportunity: (i) to ask questions
of, and to receive answers from, persons acting on behalf of the Company
concerning the terms and conditions of the Contemplated Transactions and the
business, properties, prospects and financial conditions of the Company; and
(ii) to obtain any additional information (to the extent the Company or any of
the Shareholders possesses such information or is able to acquire it without
unreasonable effort or expense and without breach of confidentiality
obligations) necessary to verify the accuracy of information provided about the
Company.
SECTION
3.7 Charter Documents
and Corporate Records. Parent and has heretofore delivered to the Company
true and complete copies of the certificate of incorporation, by-laws and minute
books, or comparable instruments, of Parent as in effect on the date hereof. A
stock list certified by Parent's Transfer Agent has been made available to the
Company for its inspection and the Parent represents that such list to its
knowledge is true and complete in all respects.
SECTION
3.8 Assets and
Liabilities. Except as set forth on Schedule 3.09, to the
knowledge of Parent, Parent has no any Liabilities and no Assets. To the best of
Parent's knowledge the financial statements of Parent are in a condition that
they can be audited.
SECTION
3.9 Absence of Certain
Changes. Since December 31, 2008, Parent has conducted its business in
the ordinary course consistent with past practice and except as disclosed on
Schedule 3.12
hereto there has not been:
(a) Any
change in any method of accounting or accounting practice by
Parent;
(b) Any
increase in the compensation, commission, bonus or other direct or indirect
remuneration paid, payable or to become payable to any officer, stockholder,
director, consultant, agent or employee of Parent, or any alteration in the
benefits payable or provided to any thereof;
(c) Any
material adverse change in the relationship of Parent with its employees,
customers, suppliers or vendors;
(d) Except
for any changes made in the ordinary course of business, any material change in
any of Parent's business policies, including advertising, marketing, selling,
pricing, purchasing, personnel, returns or budget policies;
(e) Any
agreement or arrangement whether written or oral to do any of the foregoing; and
(f) Parent
has no Liability that is past due.
SECTION
3.10 Contracts.
(a) To the
knowledge of Parent there are no Contracts to which Parent is a party or by
which it or its assets are bound or subject that: (i) cannot be canceled upon 30
days' notice without the payment or penalty of less than One Thousand Dollars
($1,000); or (ii) involve aggregate annual future payments by or to any person
of more than Five Thousand Dollars ($5,000). True and complete copies of all
written Contracts (including all amendments thereto and waivers in respect
thereof) and summaries of the material provisions of all oral Contracts so
listed have been made available to the Company.
(b) All
Contracts to which Parent is a party, to the knowledge of Parent are valid,
subsisting, in full force and effect and binding upon Parent and the other
parties thereto, in accordance with their terms, except that no representation
or warranty is given as to the enforceability of any oral Contracts. To the best
of Parent's knowledge and belief, Parent is not in default (or alleged default)
under any such Contract. Schedule 3.11 sets forth an accrue and complete list of
all Contracts to which the Parent is a party or by which it or its Assets are
bound or subject to (i) that cannot be canceled upon 30 days notice without the
payment or penalty of less than $1,000; or (ii) involve aggregate annual future
payments by or to any person of more than $5,000. All Contracts to which the
Company is a party are valid, subsisting, in full force and effect and binding
upon the Company and the other parties thereto, in accordance with their terms,
except that no representation or warranty is given as to the enforceability of
any oral Contracts. The Parent is not in default (or alleged default) under any
such Contract.
SECTION
3.11 Claims and
Proceedings. To the knowledge of Parent, there are no outstanding Orders
of any Governmental Body against or involving Parent, its assets or its
business. To the knowledge of Parent, there are no Claims (whether or not the
defense thereof or Liabilities in respect thereof are covered by insurance),
pending or, to the best of Parent's and knowledge, threatened on the date
hereof, against or involving Parent, its assets or its business. The Parent is
not subject to any SEC or FINRA order or investigation and has no outstanding
comments pending with the SEC or FINRA.
SECTION
3.12 Compliance with
Laws. The Parent is not in violation of any Orders or any Laws related to
or promulgated under the Securities Act or the Exchange Act (15 USC § 78a et seq.) and to the best of
Parent's knowledge, belief and information, any Laws of any Governmental Bodies
affecting Parent or the Parent Acquisition Stock.
SECTION
3.13 Environmental
Matters. To the best of Parent's knowledge, belief and information,
Parent is, and at all times has been, in full compliance with, and has not been
and is not in violation of or liable under, any Environmental Law.
SECTION
3.14 Finders Fees.
Other than as set forth in Schedule 3.15, there
is no investment banker, broker, finder or other intermediary which has been
retained by or is authorized to act on behalf of Parent who might be entitled to
any fee or commission from Parent in connection with the consummation of the
Contemplated Transactions.
ARTICLE
IV
COVENANTS
AND AGREEMENTS
The
Company and Seller, jointly and severally, covenant to Buyer and Parent, and
Parent, jointly and severally, covenant to the Company and Seller
that:
SECTION
4.1 Filings and
Authorizations. The parties hereto shall cooperate and use their
respective best efforts to make, or cause to be made, all registrations,
filings, applications and submissions, to give all notices and to obtain all
governmental or other third party consents, transfers, approvals, Orders and
waivers necessary or desirable for the consummation of the Contemplated
Transactions in accordance with the terms of this Agreement; and shall furnish
copies thereof to each other party prior to such filing and shall not make any
such registration, filing, application or submission to which Parent or the
Company, as the case may be, reasonably objects in writing. All such filings
shall comply in form and content in all material respects with applicable Law.
The parties hereto also agree to furnish each other with copies of such filings
and any correspondence received from any Governmental Body in connection
therewith.
SECTION
4.2 Confidentiality.
Each Party (the "Receiving Party")
shall, and shall cause its respective Affiliates and Representatives to
(each such Affiliate or Representative of either the Company or the Parent, as
the case may be, a "Receiving Party
Representative") to, maintain in confidence all information received from
the other Party or a Company (the
"Disclosing Party")
(other than disclosure to that Person's Representatives in connection
with the evaluation and consummation of the Transactions), and such Disclosing
Party's Affiliates or Representatives (as the case may be, a "Disclosing Party
Representative") in connection with this Agreement or the transactions
contemplated by the Transaction Documents (including the existence and terms of
this Agreement and the such transactions) and use such information solely to
evaluate such transactions, unless i) such information can be shown to be
already known to the Receiving Party or a Receiving Party Representative before
the time of disclosure to such Person, ii) such information can be shown to be
subsequently disclosed to the Receiving Party or a Receiving Party
Representative by a third party that, to the knowledge of the Receiving Party or
such Receiving Party Representative, is not bound by a duty of confidentiality
to the Disclosing Party or any Disclosing Party Representative, iii) such
information is or becomes publicly available through no breach of this Agreement
by, or other fault of, the Receiving Party or any Receiving Party Representative
or iv) the Receiving Party or Receiving Party Representative in good faith
believes that the furnishing or use of such information is required by, or
necessary in connection with, any proceeding, Law or any listing or trading
agreement concerning its publicly traded securities (in which case the Receiving
Party or such Receiving Party Representative shall, as promptly as practicable,
advise the Disclosing Party in writing before making the disclosure and
cooperate with the Disclosing Party to limit the scope of such
disclosure).
SECTION
4.3 Expenses.
Parent and the Company and Seller shall bear their respective expenses,
in each case, incurred in connection with the preparation, execution and
perfotinance of the Transaction Documents and the Contemplated Transactions,
including, without limitation, all fees and expenses of their respective
Representatives, and the Company shall bear all the fees and expenses of any
Company's Representatives.
SECTION
4.4 Tax Matters.
The Company shall reasonably cooperate, and shall cause its
Representatives reasonably to cooperate, in preparing and filing all Tax
Returns, including maintaining and making available to each other all records
necessary in connection with the preparation and filing of Tax Returns, the
payment of Taxes and the resolution of Tax audits and Tax Deficiencies with
respect to all taxable periods. Refunds or credits of Taxes that were paid by
the Company with respect to any periods shall be for the account of the
Company.
SECTION
4.5 Further
Assurances. At any time and from time to time after the date of Closing,
upon the reasonable request of any party hereto, the other party(ies), shall do,
execute, acknowledge and deliver, or cause to be done, executed, acknowledged or
delivered, all such further documents, instruments or assurances, as may be
necessary, desirable or proper to carry out the intent and accomplish the
purposes of this Agreement.
SECTION
4.6 Restricted
Securities. The parties acknowledge and agree that the Company Shares and
Parent Acquisition Stock being issued or transferred pursuant to the
Contemplated Transactions are being issued or transferred pursuant to the
exemption from the registration requirements of the Securities Act and
constitute "restricted securities" within the meaning of the Securities Act.
Such securities may not be transferred absent compliance with the provisions of
the Securities Act, other applicable Laws, and all stock certificates evidencing
such
securities shall bear a legend to such effect and to the effect that such shares
are subject to the terms and provisions of this Agreement; provided, however,
that it is anticipated that for purposes of Rule 144 of the Securities Act, that
the holding period of Parent Acquisition Stock for each shareholder of the
Company shall be determined to commence on the date of acquisition of the
Company Shares (as converted pursuant to this Agreement) for each such
respective holder.
SECTION
4.7 Due Diligence.
Prior to the Closing Date, Parent agrees that the Company shall be
entitled, through its Representatives, to make such investigation of the
properties, businesses and operations of Parent and such examination of the
books, records and financial condition of Parent, as the Company reasonably
deems necessary. Any such investigation and examination shall be conducted at
reasonable times, under reasonable circumstances and upon reasonable notice. No
investigation by Parent shall diminish or obviate any of the representations,
warranties, covenants or agreements of Parent contained in this
Agreement.
ARTICLE
V
CONDITIONS
TO CLOSING
SECTION
5.1 Conditions to the
Obligations of the Parties. The obligations of the Parties to consummate
the Contemplated Transactions are subject to the satisfaction of the following
conditions:
(a) No Injunction. No
provision of any applicable Law and no Order shall prohibit the consummation of
the Contemplated Transactions.
(b) No Proceedings or
Litigation. No Claim instituted by any person (other than the Company,
Shareholders or their respective Affiliates) shall have been commenced or
pending against any Shareholder, the Company or any of their respective
Affiliates, officers or directors, which Claim seeks to restrain, prevent,
change or delay in any respect the Contemplated Transactions or seeks to
challenge any of the terms or provisions of this Agreement or seeks damages in
connection with any of such transactions.
SECTION
5.2 Conditions to the
Obligations of the Company and Seller . The obligations of the Company
and Seller hereunder to consummate the Contemplated Transactions are subject, at
the option of the Company, to the fulfillment prior to or at the Closing of each
of the following further conditions:
(a) Performance. Buyer
shall have performed and complied in all material respects with all agreements,
obligations and covenants required by this Agreement to be performed or complied
with by it at or prior to the Closing Date.
(b) Representations and
Warranties. The representations and warranties of Parent contained in
this Agreement and in any certificate or other writing delivered by Parent
pursuant hereto shall be true in all material respects at and as of the Closing
Date as if made at and as of such time (except for those representations and
warranties made as of a specific date which shall be true in all material
respects as of the date made).
(c) No Material Adverse Change.
From the date hereof through the Closing, there shall not have occurred
any event or condition that has had or could have a material adverse effect on
Parent.
(d) Documentation. There
shall have been delivered to the Company the following:
(1) A
certificate, dated the Closing Date, of the Chairman of the Board and the
President of Parent confirming the matters set forth in Section 5.2(a) (b) and
(c) hereof; and
(ii)
Parent Acquisition Stock certificates, registered in the name of each
Shareholder as set forth on Schedule 1.9 attached
hereto, (with the appropriate restrictive legends as applicable), evidencing
satisfaction of the Acquisition Purchase Price in accordance with Section
1.9;
SECTION
5.3 Conditions to the
Obligations of Buyer and Parent. All obligations of Parent to consummate
the Contemplated Transactions hereunder are subject, at the option of Parent, to
the fulfillment prior to or at the Closing of each of the following further
conditions:
(a) Performance. Each of
the Company and Seller shall have performed and complied in all material
respects with all agreements, obligations and covenants required by this
Agreement to be performed or complied with by them at or prior to the Closing
Date.
(b) Representations and
Warranties. The representations and warranties of the Company and Seller,
contained in this Agreement and in any certificate or other writing delivered by
the Company and Seller pursuant hereto shall be true in all material respects at
and as of the Closing Date as if made at and as of such time (except for those
representations and warranties made as of a specific date which shall be true in
all material respects as of the date made).
(c) No Material Adverse Change.
From the date hereof through the Closing, there shall not have occurred
any event or condition that has had or could have a material adverse effect on
the Company.
(d) Documentation. There
shall have been delivered to Parent the following:
(i) A
certificate, dated the Closing Date, of the Chairman of the Board, the President
or Chief Financial Officer of the Company confirming the matters set forth in
Section 5.3(a) (b) and (c) hereof;
(ii) A
certificate, dated the Closing Date, of the Secretary of the Company certifying,
among other things, that attached or appended to such certificate: (i) is a true
and correct copy of the Company's certificate of incorporation and all
amendments thereto, if any, as of the date thereof certified by the Secretary of
State of the State of Delaware; and (ii) is a true and correct copy of the
Company's memorandum of association as of the date thereof;
(iii)
Company Share certificates representing the number of Company Shares duly
endorsed in blank or accompanied by stock powers duly endorsed in blank and in
suitable form for transfer to Parent by delivery.
ARTICLE
VI
INDEMNIFICATION
SECTION
6.1 Survival of
Representations, Warranties and Covenants. Notwithstanding any right of
Buyer and Parent fully to investigate the affairs of the Company and the rights
of the Company and Seller to fully investigate the affairs of Parent, and
notwithstanding any knowledge of facts determined or determinable by Parent, the
Company or Seller, pursuant to such investigation or right of investigation,
Parent, the Company and Seller, have the right to rely fully upon the
representations, warranties, covenants and agreements of the Company and Seller,
and Buyer and Parent respectively, contained in this Agreement, or listed or
disclosed on any Schedule hereto or in any instrument delivered in connection
with or pursuant to any of the foregoing. All such representations, warranties,
covenants and agreements shall survive the execution and delivery of this
Agreement and the Closing hereunder, Notwithstanding the foregoing, all
representations and warranties of the Company and Seller, and Parent
respectively, contained in this Agreement, on any Schedule hereto or in any
instrument delivered in connection with or pursuant to this Agreement shall
terminate and expire twelve (12) months after the date of Closing; provided,
however, that liability any party shall not terminate as to any specific claim
or claims which arise or result from or are related to a Claim for
fraud.
SECTION
6.2 Notice and
Opportunity to Defend Third Party Claims.
(a)
Within ten (10) days following receipt by any party hereto (the "Indemnitee") of
notice of any demand, claim, circumstance or Tax audit which would or might give
rise to a claim, or the commencement (or threatened commencement) of any action,
proceeding or investigation that may result in a Loss (an "Asserted Liability"),
the Indemnitee shall give notice thereof (the "Claims Notice") to
the party or parties obligated to provide indemnification pursuant to Sections
6.2, or 6.3 (collectively, the "Indemnifying Party").
The Claims Notice shall describe the Asserted Liability in reasonable
detail and shall indicate the amount
(estimated, if necessary, and to the extent feasible) of the Loss that has been
or may be suffered by the Indemnitee.
(b) The
Indemnifying Party may elect to defend, at its own expense and with its own
counsel, any Asserted Liability unless: (i) the Asserted Liability includes a
Claim seeking an Order for injunction or other equitable or declaratory relief
against the Indemnitee, in which case the Indemnitee may at its own cost and
expense and at its option defend the portion of the Asserted Liability seeking
equitable or declaratory relief against the Indemnitee, or (ii) the Indemnitee
shall have reasonably, and in good faith, after consultation with the
Indemnifying Party, concluded that: (x) there is a conflict of interest between
the Indemnitee and the Indemnifying Party which could prevent or negatively
influence the Indemnifying Party from impartially or adequately conducting such
defense; or (y) the Indemnitee shall have one or more defenses not available to
the Indemnifying Party but only to the extent such defense cannot legally be
asserted by the Indemnifying Party on behalf of the Indemnitee. If the
Indemnifying Party elects to defend such Asserted Liability, it shall within ten
(10) days (or sooner, if the nature of the Asserted Liability so requires)
notify the Indemnitee of its intent to do so, and the Indemnitee shall
cooperate, at the expense of the Indemnifying Party, in the defense of such
Asserted Liability. If the Indemnifying Party elects not to defend the Asserted
Liability, is not permitted to defend the Asserted Liability by reason of the
first sentence of this Section 6.4(b), fails to notify the Indemnitee of its
election as herein provided or contests its obligation to indemnify under this
Agreement with respect to such Asserted Liability, the Indemnitee may pay,
compromise or defend such Asserted Liability at the sole cost and expense of the
Indemnifying Party. Notwithstanding the foregoing, neither the Indemnifying
Party nor the Indemnitee may settle or compromise any claim over the reasonable
written objection of the other, provided that the Indemnitee may settle or
compromise any claim as to which the Indemnifying Party has failed to notify the
Indemnitee of its election under this Section 6.4(b) or as to which the
Indemnifying Party is contesting its indemnification obligations hereunder. If
the Indemnifying Party desires to accept a reasonable, final and complete
settlement of an Asserted Liability so that such Indemnitee's Loss is paid in
full and the Indemnitee refuses to consent to such settlement, then the
Indemnifying Party's liability to the Indemnitee shall be limited to the amount
offered in the settlement. The Indemnifying Party will exercise good faith in
accepting any reasonable, final and complete settlement of an Asserted
Liability. In the event the Indemnifying Party elects to defend any Asserted
Liability, the Indemnitee may participate, at its own expense, in the defense of
such Asserted Liability. In the event the Indemnifying Party is not permitted by
the Indemnitee to defend the Asserted Liability, it may nevertheless participate
at its own expense in the defense of such Asserted Liability. If the
Indemnifying Party chooses to defend any Asserted Liability, the Indemnitee
shall make available to the Indemnifying Party any books, records or other
documents within its control that are necessary or appropriate for such defense.
Any Losses of any Indemnitee for which an Indemnifying Party is liable for
indemnification hereunder shall be paid upon written demand
therefor.
SECTION
6.3 Limits on
Indemnification.
(a)
Notwithstanding the foregoing or the limitations set forth in Section 6.5(b)
below, in the event such Losses arise out of any fraud related matter on the
part of any
Indemnifying
Party, then such Indemnifying Party shall be obligated to indemnify the
Indemnitee in respect of all such Losses.
(b) The
Company and Seller shall not be liable to indemnify Parent pursuant to Section
6.2 above and Parent shall not be liable to indemnify the Company and
Shareholders pursuant to Section 6.3 above: (i) unless a Claims Notice
describing the loss is delivered to the Indemnifying Party within 12 months
after the Closing (except for Losses arising out of an Indemnifying Party's
fraud); (ii) with respect to special, consequential or punitive damages; and
(iii) in respect of any individual Loss of less than $25,000.
SECTION
6.4 Exclusive Remedy.
The parties agree that the indemnification provisions of this Article VI
shall constitute the sole or exclusive remedy of any party in seeking damages or
other monetary relief with respect to this Agreement and the Contemplated
Transactions, provided that, nothing herein shall be construed to limit the
right of any party to seek: (i) injunctive relief for a breach of this
Agreement; (ii) legal or equitable relief for a Claim for fraud; or (iii)
indemnity under the bylaws of Parent if they are or have been a director or
officer of Parent.
ARTICLE
VII
SPECIFIC
PERFORMANCE; TERMINATION
SECTION
7.1 Specific
Performance. The Company, Seller and Parent, acknowledges and agrees
that, if any of the Company, Parent, or Buyer fails to proceed with the Closing
in any circumstance other than those described in clauses (a), (b), (c) or (d)
of Section 7.2 below, the others will not have adequate remedies at law with
respect to such breach. In such event, and in addition to each party's right to
terminate this Agreement, each party shall be entitled, without the necessity or
obligation of posting a bond or other security, to seek injunctive relief, by
commencing a suit in equity to obtain specific performance of the obligations
under this Agreement or to xxx for damages, in each case, without first
terminating this Agreement. The Company or Parent specifically affirms the
appropriateness of such injunctive, other equitable relief or damages in any
such action.
SECTION
7.2 Termination.
This Agreement may be terminated and the Contemplated Transactions may be
abandoned at any time prior to the Closing:
(a) By mutual
written consent of the Company and Parent;
(b) By the
Company or Seller if: (i) there has been a misrepresentation or breach of
warranty on the part of Parent in the representations and warranties contained
herein and such misrepresentation or breach of warranty, if curable, is not
cured within thirty days after written notice thereof from the Company or
Seller, respectively; (ii) Parent has committed a breach of any covenant imposed
upon it hereunder and fails to cure such breach within thirty days after written
notice thereof from the Company or Seller, respectively; or (iii) any
condition
to the
Company's or Seller's obligations under Section 5.2 becomes incapable of
fulfillment through no fault of the Company or Seller, respectively, and is not
waived by Parent;
(c) By
Parent, if: (i) there has been a misrepresentation or breach of warranty on the
part of the Company or Seller in the representations and warranties contained
herein and such misrepresentation or breach of warranty, if curable, is not
cured within thirty days after written notice thereof from Parent, respectively;
(ii) the Company or the Seller has committed a breach of any covenant imposed
upon it hereunder and fails to cure such breach within thirty days after written
notice thereof from Parent, respectively; or (iii) any condition to Parent's
obligations under Section 5.3 becomes incapable of fulfillment through no fault
of Parent or Buyer and is not waived by the Company; and
(d) By the
Company, Seller or Parent, if any condition under Section 5.1 becomes incapable
of fulfillment through no fault of the party seeking termination and is not
waived by the party seeking termination.
SECTION
7.3 Effect of
Termination; Right to Proceed. Subject to the provisions of Section 7.1
hereof, in the event that this Agreement shall be terminated pursuant to Section
7.2, all further obligations of the parties under this Agreement shall terminate
without further liability of any party hereunder except that: (i) the agreements
contained in Section 4.2 shall survive the termination hereof; and (ii)
termination shall not preclude any party from seeking relief against any other
party for breach of Section 4.2. In the event that a condition precedent to its
obligation is not met, nothing contained herein shall be deemed to require any
party to terminate this Agreement, rather than to waive such condition precedent
and proceed with the Contemplated Transactions.
ARTICLE
VIII
MISCELLANEOUS
SECTION
8.1 Representations
and Warranties for Purposes of this Agreement Only. The
representations and warranties in this Agreement were made for the purposes of
allocated contractual risk between the parties and not as a means of
establishing facts, This Agreement may have different standards of materiality
than standards of materiality under applicable securities laws. Only parties to
this Agreement and specified third-party beneficiaries (if any) have a right to
enforce this Agreement
SECTION
8.2 Notices.
(a) Any notice or other communication required or permitted hereunder
shall be in writing and shall be delivered personally by hand or by recognized
overnight courier, or mailed (by registered or certified mail, postage prepaid
return receipt requested) as follows:
If to
Parent, one copy to:
00
Xxxxxxxx Xxxxxxxxx
Xxx
Xxxxx, XX 00000
If to the
Company, one copy to:
V Comm
Network, Inc.
0000
Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx
Xxxxx, Xxxxxxxxxx 00000
Attn:
Xxxx Xxxx, CEO
With a
copy to:
Xxxxxxx
Xxxxxx LLP
000
Xxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx,
Xxx Xxxx 00000
Attn:
Xxxxxx X. Xxxxxx, Esq.
(b) Each
such notice or other communication shall be effective when delivered at the
address specified in Section 8.1(a). Any party by notice given in
accordance. with this
Section 8.1 to the other parties may designate another address or person for
receipt of notices hereunder. Notices by a party may be given by counsel to such
party.
SECTION
8.3 Entire Agreement.
This Agreement (including the Schedules and Exhibits hereto) and the
collateral agreements executed in connection with the consummation of the
Contemplated Transactions contain the entire agreement among the parties with
respect to the subject matter hereof and related transactions and supersede all
prior agreements, written or oral, with respect thereto.
SECTION
8.4 Waivers and
Amendments; Non-Contractual Remedies; Preservation of Remedies.
This Agreement may be amended, superseded, cancelled, renewed or extended
only by a written instrument signed by the Company and Parent. The provisions
hereof may be waived in writing by the Company or Parent, as the case may be.
Any such waiver shall be effective only to the extent specifically set forth in
such writing. No failure or delay on the part of any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof. Nor shall
any waiver on the part of any party of any such right, power or privilege, nor
any single or partial exercise of any such right, power or privilege, preclude
any other or further exercise thereof or the exercise of any other such right,
power or privilege. Except as otherwise provided herein, the rights and remedies
herein provided are cumulative and are not exclusive of any rights or remedies
that any party may otherwise have at law or in equity.
SECTION
8.5 Governing Law,
This Agreement shall be governed and construed in accordance with the
laws of the State of Delaware applicable to agreements made and to be performed
entirely within such State without regard to the conflict of laws rules
thereof.
SECTION
8.6 Binding Effect No
Assignment. This Agreement and all of its provisions, rights and
obligations shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors, heirs and legal representatives. This
Agreement may not be assigned (including by operation of Law) by any party
hereto without the express written consent of the Company or the Parent and any
purported assignment, unless so consented to, shall be void and without
effect.
SECTION
8.7 Exhibits.
All Exhibits and Schedules attached hereto are hereby incorporated by
reference into, and made a part of, this Agreement.
SECTION
8.8 Severability.
If any provision of this Agreement for any reason shall be held to be
illegal, invalid or unenforceable, such illegality shall not affect any other
provision of this Agreement, this Agreement shall be amended so as to enforce
the illegal, invalid or unenforceable provision to the maximum extent permitted
by applicable law, and the parties shall cooperate in good faith to further
modify this Agreement so as to preserve to the maximum extent possible the
intended benefits to be received by the parties.
SECTION
8.9 Counterparts.
The Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original as against any party whose signature
appears thereon, and all of which shall together constitute one and the same
instrument. This Agreement shall become binding when one or more counterparts
hereof, individually or taken together, shall bear the signatures of all of the
parties reflected hereon as the signatories.
SECTION
8.10 Third Parties.
Except as specifically set forth or referred to herein, nothing herein
express or implied is intended or shall be construed to confer upon or give to
any person other than the parties hereto and their permitted heirs, successors,
assigns and legal representatives, any rights or remedies under or by reason of
this Agreement or the Contemplated Transactions.
ARTICLE
IX
DEFINITIONS
SECTION
9.1 Definitions.
The following terms, as used herein, have the following
meanings:
"Affiliate" of any
person means any other person directly or indirectly through one or more
intermediary persons, controlling, controlled by or under common control with
such person.
"Agreement" or "this Agreement"
shall mean, and the words "herein", "hereof'
and "hereunder"
and words of similar import shall refer to, this agreement as it from
time to time may be amended.
"Assets" shall mean
all cash, instruments, properties, rights, interests and assets of every kind,
real, personal or mixed, tangible and intangible, used or usable in the
Business.
The term
"audit" or
"audited" when
used in regard to financial statements shall mean an examination of the
financial statements by a firm of independent certified public accountants in
accordance with generally accepted auditing standards for the purpose of
expressing an opinion thereon.
"Business" shall mean
the ownership and operation of the business of the Company.
"Condition of the Business"
shall mean the financial condition, prospects or the results of
operations of the Business, the Assets or the Company.
"Contract" shall mean
any contract, agreement, indenture, note, bond, lease, conditional sale
contract, mortgage, license, franchise, instrument, commitment or other binding
arrangement, whether written or oral.
The term
"control", with
respect to any person, shall mean the power to direct the management and
policies of such person, directly or indirectly, by or through stock ownership,
agency or otherwise, or pursuant to or in connection with an agreement,
arrangement or understanding (written or oral) with one or more other persons by
or through stock ownership, agency or otherwise; and the terms "controlling" and
"controlled"
shall have meanings correlative to the foregoing.
"GAAP" shall mean
generally accepted accounting principles in effect on the date hereof (or, in
the case of any opinion rendered in connection with an audit, as of the date of
the opinion) as set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as may be approved by a significant
segment of the accounting profession of the United States.
"Governmental Bodies"
shall mean any government, municipality or political subdivision thereof,
whether federal, state, local or foreign, or any governmental or
quasi-governmental agency, authority, board, bureau, commission, department,
instrumentality or public body, or any court, arbitrator, administrative
tribunal or public utility.
"knowledge" with
respect to: (a) any individual shall mean actual knowledge of such individual;
and (b) any corporation shall mean the actual knowledge of the directors and
executive officers of such corporation; and "knows" and "known" has a
correlative meaning. The terms "any Shareholder's knowledge," and "Shareholder's
knowledge," including any correlative meanings, shall mean the knowledge of any
Shareholder,
"Laws" shall mean any
law, statute, code, ordinance, rule, regulation or other requirement of any
Governmental Bodies.
"Liability" shall
mean any direct or indirect indebtedness, liability, assessment, claim, loss,
damage, deficiency, obligation or responsibility, fixed or unfixed, xxxxxx or
inchoate,
liquidated
or unliquidated, secured or unsecured, accrued, absolute, actual or potential,
contingent or otherwise (including any liability under any guaranties, letters
of credit, performance credits or with respect to insurance loss
accruals).
"Lien" shall mean any
mortgage, lien (including mechanics, warehousemen, laborers and landlords
liens), claim, pledge, charge, security interest, preemptive right, right of
first refusal, option, judgment, title defect, covenant, restriction, easement
or encumbrance of any kind.
"person" shall mean
an individual, corporation, partnership, joint venture, limited liability
company, association, trust, unincorporated organization or other entity,
including a government or political subdivision or an agency or instrumentality
thereof.
"Receivables" shall
mean as of any date any trade accounts receivable, notes receivable, sales
representative advances and other miscellaneous receivables of the
Company.
"Representative"
means, with respect to a particular Person, any director, officer,
employee, agent, consultant, advisor or other representative of such Person,
including legal counsel, accountants and financial advisors.
"Tax"
(including, with correlative meaning, the terms "Taxes" and "Taxable") shall
mean: (i)(A) any net income, gross income, gross receipts, sales, use, ad
valorem, transfer, transfer gains, franchise, profits, license, withholding,
payroll, employment, excise, severance, stamp, rent, recording, occupation,
premium, real or personal property, intangibles, environmental or windfall
profits tax, alternative or add-on minimum tax, customs duty or other tax, fee,
duty, levy, impost, assessment or charge of any kind whatsoever (including but
not limited to taxes assessed to real property and water and sewer rents
relating thereto), together with; (B) any interest and any penalty, addition to
tax or additional amount imposed by any Governmental Body (domestic or foreign)
(a "Tax Authority")
responsible for the imposition of any such tax and interest on such
penalties, additions to tax, fines or additional amounts, in each case, with
respect to any party hereto, the Business or the Assets (or the transfer
thereof); (ii) any liability for the payment of any amount of the type described
in the immediately preceding clause (i) as a result of a party hereto being a
member of an affiliated or combined group with any other person at any time on
or prior to the date of Closing; and (iii) any liability of a party hereto for
the payment of any amounts of the type described in the immediately preceding
clause (i) as a result of a contractual obligation to indemnify any other
person.
"Tax Return" shall
mean any return or report (including elections, declarations, disclosures,
schedules, estimates and information returns) required to be supplied to any Tax
Authority.
"Transaction Documents"
shall mean, collectively, this Agreement, and each of the other
agreements and instruments to be executed and delivered by all or some of the
parties hereto in connection with the consummation of the transactions
contemplated hereby.
SECTION
9.2 Interpretation.
Unless the context otherwise requires, the terms defined in this
Agreement shall be applicable to both the singular and plural forms of any of
the
terms
defined herein. All accounting terms defined in this Agreement, and those
accounting terms used in this Agreement except as otherwise expressly provided
herein, shall have the meanings customarily given thereto in accordance with
GAAP as of the date of the item in question. When a reference is made in this
Agreement to Sections, such reference shall be to a Section of this Agreement
unless otherwise indicated. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. The use of the neuter gender herein shall be
deemed to include the masculine and feminine genders wherever necessary or
appropriate, the use of the masculine gender shall be deemed to include the
neuter and feminine genders and the use of the feminine gender shall be deemed
to include the neuter and masculine genders wherever necessary or appropriate.
Whenever the words "include", "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation."
[THE
REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the
undersigned have executed this
Stock Purchase and Recapitalization Agreement as
of the date set forth above.
| |
THE
COMPANY
VComm Network, Inc
| |
| | | | |
|
|
By:
| /s/ Xxxxxx
X. XxXxxxxx | |
| | | Name:
Xxxxxx X. XxXxxxxx | |
| | | Title:
Executive Chairman | |
| | | | |
| | SELLER: | |
| | | | |
|
|
By:
| /s/ Xxx
Xxxx | |
| | | Xxx
Xxxx | |
| | | | |
| | | | |
| | THE
PARENT: | |
| | | | |
|
|
By:
| /s/ | |
| | | Name | |
| | | Title | |
| | | | |
Schedule
1.8
Rights and Preferences of
Class A Preferred Stock
Each
share of Class A Preferred Stock is convertible into four shares of common stock
at the option of the holder if all the following conditions have been
met:
1. The Class
A Preferred Stock has been held for 18 months;
2. The
Common Stock is trading on the Pink Sheets or a higher exchange;
3. The
Parent has a positive net worth;
4. The
Parent has at least $2.5 million in annual revenues; and 5. The Parent has an
operating EBITDA of break even or better.
The Class
A Preferred Stock will have a preference on liquidation of $1.00 per
share.
The Class
A Preferred Stock will have no rights to any dividends except as may be declared
by the Board of Directors in good faith and subject to Delaware
law.
The Class
A Preferred Stock will entitle the holders to vote on an as converted basis. The
Class A Preferred Stock will not be subject to dilution in the event of any
reverse stock split of the Company's common stock.
Rights and Preferences of
Class B Preferred Stock
The share
of Class B Preferred Stock shall have no dividend rights and no rights upon
liquidation.
The Share
of Preferred Stock shall entitle the holder to as many votes as are required to
represent 50.1% of the total voting capital stock of the Parent.
Schedule
1.9
| | |
Common
Stock
to
be issued
| | |
Class
A Preferred Stock
to
be issued
| | | Class
13 Preferred Stock to be issued | |
|
KeySoft
Consulting Group, LLC
| | | 8,400,000 | | | | 2,100,000 | | | | 1 | |
| Xxxxxxx
1. Xxxx | | | 1,725,000 | | | | 431,250 | | | | | |
| Xxxxxxx
X. Xxxxxx | | | 1,500,000 | | | | 375,000 | | | | | |
| VComm
Management Pool of Financiers | | | 210,000 | | | | 52,500 | | | | | |
| Xxxxxxx
X. Xxxx | | | 1,125,000 | | | | 281,250 | | | | | |
| AngloArnericanRMG,
LLC | | | 1,395,000 | | | | 348,750 | | | | | |
| Xxxxxx
X. XxXxxxxx | | | 1,305,000 | | | | 326,250 | | | | | |
| Xxxxxxx
X. Xxxxx | | | 67,500 | | | | 16,875 | | | | | |
| Xxxxxxx
Xxxxxx | | | 67,500 | | | | 16,875 | | | | | |
| Xxxx
Xxxxxx | | | 285,000 | | | | 71,250 | | | | | |
| Xxxx
Xxxxxxxx | | | 1,485,000 | | | | 371,250 | | | | | |
| Xxxxx
Xxxxxxxxxx | | | 435,000 | | | | 108,750 | | | | | |
| | | | 18,000,000 | | | | 4,500,000 | | | | | |
Schedule
2.11
Lease
with Cruttenden Partners which has a term of one year and a rent of $2,200 per
month. Schedule
2.12
Not
Applicable Schedule
2.13
Employment
Agreement with Xxxxxx XxXxxxxx
Employment
Agreement with Xxxx Xxxx
Employment
Agreement with Xxx Xxxx
Employment
Agreement with Xxxxxxx Xxxxx
Employment
Agreement with Xxxxx Xxxxxx
Employment
Agreement with Xxxxx Xxxxxx
Employment
Agreement with Xxxx Xxxx
VComm
Canada Employment Agreement with Xxxxx Xxxxxx
VComm
Canada Employment Agreement with Xxxx JohnsonVComm Canada Employment Agreement
with Xxx Xxxxxxxx
VComm
Canada Employment Agreement with Xxxxxx Xxxxxx
Lease
described in 2.11 above
Schedule 2.14 Not
Applicable Schedule
236
The
Company filed for a federal tax extension for the year ended December 31,
2008.
IN WITNESS WHEREOF, the
undersigned have executed this
Stock Purchase and Recapitalization Agreement as
of the date set forth above.
| |
THE
COMPANY
VComm Network, Inc
| |
| | | | |
|
|
By:
| /s/ Xxxxxx
X. XxXxxxxx | |
| | | Name:
Xxxxxx X. XxXxxxxx | |
| | | Title:
Executive Chairman | |
| | | | |
| | SELLER: | |
| | | | |
|
|
By:
| /s/ Xxx
Xxxx | |
| | | Xxx
Xxxx | |
| | | | |
| | | | |
| | THE
PARENT: | |
| | | | |
|
|
By:
| /s/ | |
| | | Name | |
| | | Title | |
| | | | |
AMENDMENT
The
undersigned hereby acknowledge and agree to amend the attached and fully
incorporated
Stock Purchase and Recapitalization Agreement ("Agreement") dated
July 16, 2009 as follows:
The
Effective Date of the Agreement, and Closing Date of the Agreement (section 1.2)
shall be July 27, 2009, 11:59 PM.
Acknowledged
and Agreed:
|
OPTIMUM
INTERACTIVE (USA) LTD.
| | | | |
| | | | | |
| | | | | |
|
/s/
Xxxxxx Xxxxx
| | |
| |
|
Name:
Xxxxxx Xxxxx
| | |
| |
|
Title:
CEO
| | |
| |
| VComm
Network, Inc | | | | |
| | | | | |
| | | | | |
|
/s/
Xxxxxx X. XxXxxxxx
| | |
| |
|
Name:
Xxxxxx X. XxXxxxxx
| | |
Name
| |
|
Title:
Executive Chairman
| | |
Title
| |
