ASSET PURCHASE AGREEMENT
This
ASSET PURCHASE AGREEMENT (the “Agreement”)
is
made and entered into as of 12:01 a.m. on February 13, 2006 (the “Effective
Time”),
by
and between Bluestar Health, Inc.,
a
Colorado corporation maintaining
an address at 00000 Xxxxxxxxx Xxxxxxx, Xxxxx Xxxx, XX 00000 (“Bluestar”)
and
Bluestar Acquisition, Inc., a Texas corporation and a subsidiary of Bluestar
(the “Purchaser”),
on
the one hand, and Gold Leaf Homes, Inc., a Texas corporation maintaining
business offices at 0000 XX 0000, Xxxxxxxx, XX 00000, (“Seller”)
and
Xxx
Xxxxxx
(the
“Shareholder”)
(hereinafter the Seller and the Shareholder are sometimes referred to,
individually as a “Seller
Party”
and
collectively as the “Seller
Parties”),
on
the other hand.
BACKGROUND
INFORMATION
Seller
is
in the business of building custom homes (the “Business”),
and
the Shareholder is the owner of all of the capital stock in Seller. This
Agreement sets forth the terms and conditions upon which Purchaser is acquiring
from Seller, and Seller is selling and delivering to Purchaser, certain assets
of the Business.
OPERATIVE
PROVISIONS
In
consideration of the mutual covenants and conditions hereinafter set forth,
and
other good and valuable consideration, the receipt and sufficiency of which
are
hereby acknowledged, Seller, the Shareholder and Purchaser hereby mutually
agree
as follows:
1. SALE
AND TRANSFER OF ASSETS; CLOSING.
1.1. Assets.
Upon
the terms and subject to the conditions set forth in this Agreement, at the
Closing (hereinafter defined), Seller shall sell, convey, assign, transfer
and
deliver to Purchaser, and Purchaser shall purchase and acquire from Seller,
all
of Sellers’ right, title, and interest in and to certain of Seller’s property
and assets, real, personal or mixed, tangible and intangible, of every kind
and
description, wherever located as specifically set forth on Exhibit
A
(the
“Assets”),
but
excluding the Excluded Assets (hereinafter defined). Notwithstanding anything
herein to the contrary, the transfer of the Assets pursuant to this Agreement
will remain subject to the Security Interest presently held by each of the
construction lenders listed in Exhibit
B.
1.2. Excluded
Assets.
Notwithstanding anything to the contrary contained in Section 1.1 or elsewhere
in this Agreement, the following assets of Seller (collectively, the
“Excluded
Assets”)
are
not part of the sale and purchase contemplated hereunder, are excluded from
the
Assets and shall remain the property of Seller after the Effective
Time.
1.2.1 all
minute books, stock records and corporate seals;
1.2.2 any
equity securities of Seller held in treasury;
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1.2.3 all
personnel records and other records that Seller is required by law to retain
in
its possession;
1.2.4 all
rights in connection with and assets of any employee benefit plans maintained
by
Seller;
1.2.5 cash
and
bank deposits of Seller as of the Effective Time;
1.2.6 all
rights of Seller under this Agreement; and
1.2.7 all
assets, if any, specifically set forth on Schedule
1.2.
1.3. Consideration.
The
consideration for the purchase of the Assets (the “Purchase
Price”)
will
be Thirty
Seven Million (37,000,000) shares of Purchaser’s common stock (the “Shares”).
1.4. Liabilities.
At the
Closing, Purchaser shall assume and agree to discharge only the obligations
of
Seller set forth in Exhibit
B
(the
“Assumed
Liabilities”).
Except for the Assumed Liabilities, Purchaser shall not assume any Liabilities
of Seller or the Shareholder; and Seller shall pay, perform and discharge all
of
such Liabilities in accordance with their terms. For purposes of this Agreement,
the term “Liabilities”
means
any existing or future liability, obligation, debt, account payable, lease
obligation, contract, agreement, duty or commitment of Seller or Shareholder
of
any kind, character or description, whether known or unknown, absolute or
contingent, accrued or unaccrued, disputed or undisputed, liquidated or
unliquidated, secured or unsecured, joint or several, due or to become due,
vested or unvested, executory, determined, determinable or otherwise, and
whether or not the same is required to be accrued on the financial statements
of
Seller or the Shareholder.
1.5. Closing.
The
closing (the “Closing”)
of the
transactions contemplated by this Agreement (the “Contemplated
Transactions”)
shall
take place at the offices of the Purchaser on February 13, 2006, (the
“Closing
Date”)
or at
such other time and place as the parties shall agree. At
the
Closing the parties shall deliver the following documents:
1.5.1 Selling
Parties’ Deliveries at the Closing.
Seller
and the Shareholder shall deliver to Purchaser at the Closing the following
items:
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(i)
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a
Xxxx of Sale from Seller to Purchaser in form and substance acceptable
to
Purchaser;
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(ii)
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a
copy of the resolutions duly adopted by Seller’s Board of Directors and
Shareholder authorizing the execution, delivery, and performance
of this
Agreement and the consummation of the Contemplated Transactions,
certified
by an officer of Seller;
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(iii)
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unaudited
financial statements and management reports for each monthly financial
period subsequent to December 31, 2005 and prior to the Effective
Time;
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(iv)
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evidence
that any and all security interests covering the Assets have been
released
by Seller’s lenders or transferred to Purchaser;
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(v)
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a
signed copy of that certain Transitional Agreement dated February
13, 2006
(the “Transitional
Agreement”),
a copy of which is attached hereto as Exhibit
C;
and
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(vi)
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all
other documents or instruments required by this Agreement or reasonably
required by Purchaser’s counsel to consummate the Contemplated
Transactions.
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1.5.2 Purchaser’s
Deliveries at the Closing.
At the
Closing, or as otherwise set forth below, Purchaser shall deliver the
following:
1.5.2.1 Purchaser
shall deliver to Seller:
(i) a
copy of
the resolutions duly adopted by the Board of Directors of Purchaser authorizing
the execution, delivery, and performance of this Agreement and the consummation
of the Contemplated Transactions, certified by an officer of
Purchaser; and
(ii) all
other
documents or instruments required by this Agreement or reasonably required
by
Purchaser’s counsel to consummate the Contemplated
Transactions.
1.5.2.2 Purchaser
shall deliver the Shares to The Lebrecht Group, APLC (the “Escrow
Agent”a)
to be
distributed pursuant to that certain Escrow Agreement dated as of the Closing
Date (the “Escrow
Agreement”),
a
copy of which is attached hereto as Exhibit
D.
2. REPRESENTATIONS
AND WARRANTIES OF THE SELLER PARTIES.
The
Seller Parties, jointly and severally, represent and warrant to Purchaser as
follows, which representations and warranties shall survive the consummation
of
the Contemplated Transactions:
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2.1. Organization;
Power; Authority.
Seller
is
a corporation duly organized, validly existing, and in good standing under
the
laws of the State of Texas, with full power and authority to carry
on
the Business as now being conducted and to own, operate and lease (as the case
may be) the Assets
and to
perform all of its obligations. Seller
has the corporate power and authority to sell, assign, transfer, convey and
deliver to Purchaser the Assets as contemplated by this Agreement, and the
execution, delivery and performance of this Agreement and the Contemplated
Transactions have been properly and duly authorized by Seller. Shareholder
has
the authority to enter into this Agreement and consummate the Contemplated
Transactions. This Agreement and all other agreements executed in connection
with the Contemplated Transactions constitute, or will constitute upon
execution, the legal, valid and binding obligations of Seller and Shareholder,
enforceable in accordance with their respective terms.
2.2. No
Conflict or Violation;
Approvals.
The
execution, delivery and performance of this Agreement and the Contemplated
Transactions will not (a) violate or conflict with Seller’s articles of
incorporation or by-laws; (b) cause a breach of, or a default under, or create
any right for any party to accelerate, terminate, modify or require notice
under
or cancel, any contract, permit, authorization or concession that Seller or
the
Shareholder is a party or by which any of the Assets are bound; (c) violate
by
Seller or Shareholder any law, rule, regulation, constitution, injunction,
judgment, order, decree, ruling or other restriction of any government,
government agency or court; or (d) impose any encumbrance, restriction or charge
on the Business or on any of the Assets. No consent, approval or authorization
of, or declaration, filing or registration with, any authority, or any other
person or entity, is required to be made or obtained by Seller or Shareholder
in
connection with the execution, delivery and performance of the Agreement and
the
Contemplated Transactions, except
as
have been received by Seller or Shareholder prior to the Closing.
2.3. Capitalization.
The
Shareholder owns 100% of the outstanding capital stock of Seller free and clear
of all encumbrances. No other person has a contract right, whether by issuance,
sale, transfer, or otherwise to any capital stock of Seller. Seller has no
subsidiaries.
2.4. Financial
Statements.
Seller
has delivered to the Purchaser complete and correct copies of audited financial
statements of Seller for the periods ended as of December 31, 2004 and December
31, 2005 (the “Financial
Statements”).
The
Financial Statements were prepared in accordance with GAAP consistently applied
throughout the periods indicated; are consistent with the books and records
of
the Business; and present fairly the financial condition and results of
operations of the Business as of the date thereof and the period then ended.
There has not been any change in the assets, liabilities, financial condition
or
operations of Seller from that reflected in the Financial Statements for the
period ending as of the Closing Date, except changes in the ordinary course
of
business that have not been, individually or in the aggregate, materially
adverse. Except to the extent reflected or reserved against or noted in the
Financial Statements, Seller had, as of the date thereof, no material
liabilities or obligations of any nature, whether accrued, absolute, contingent
or otherwise, including without limitation tax liabilities, whether incurred
in
respect to or measured by Seller’s income for any period prior to the date of
such Financial Statements, or arising out of transactions entered into, or
any
set of facts existing prior thereto. There exists no basis for the assertion
against Seller or the Business as of the date hereof or as of the date of the
Financial Statements, of any material liability of any nature or in any amount
not fully reflected or reserved against or noted in the Financial
Statements.
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2.5. Title.
Seller
has good and marketable title to all of the Assets, free and clear of all liens,
assignments, security interests, claims, mortgages, encumbrances or charges
of
any kind or nature (“Liens”).
As of
the Closing Date, Purchaser shall acquire good and marketable title to all
of
the Assets free and clear of all Liens, except those set forth in Exhibit
B.
The
Assets constitute all of the assets (tangible and intangible, and including,
but
not limited to, all intellectual property assets) necessary to operate the
Business in the manner presently operated by Sellers and
each of
the Assets is in good operating condition and repair, normal wear and tear
excepted. Without
limitation the Assets include all of Seller’s right, title, and interest in and
to the following (in each case except for the Excluded Assets), wherever
located:
2.5.1 All
of
Seller’s
office equipment and furniture (collectively,
the “Equipment”),
including, without limitation, the Equipment disclosed in Exhibit
A.
2.5.2 All
inventories of Seller and all goods and supplies, in each case to the extent
used directly or indirectly in or otherwise relating primarily to the Business
(the “Inventory”).
All
items included in the Inventory consist of a quality and quantity usable and,
with respect to finished goods, saleable, in the ordinary course of business
of
Seller except for obsolete items and items of below-standard quality, all of
which have been written off or written down to net realizable value in the
Financial Statements, as the case may be.
2.6 Material
Contracts.
Other
than as set forth in Schedule
2.6,
Seller
is not a party to any contract under which Seller paid (a)
$10,000 or more during the 12 month period ending December 31, 2005, (b)
received $10,000 or more during the 12 month period ending December 31, 2005,
or
(c) would, absent this Agreement and the Contemplated Transactions, reasonably
expect to pay or receive $10,000 or more for the 12 month period immediately
following the Closing Date.
Neither
the Seller nor the Shareholder is subject to any contract: (i) that contains
covenants limiting the freedom of Seller or the Shareholder to compete in any
line of business in any geographic area; (ii) that requires Seller to share
any
profits, or requires any payments or other distributions based on profits,
revenues or cash flows; (iii) pursuant to which third parties have been provided
with products that can be returned to Seller in the event they are not sold
and
which could involve products valued at $10,000 or more (invoice price) in the
aggregate; or (iv) that has had or, assuming that Purchaser complies with its
obligations thereunder, may in the future have a material adverse effect upon
the business, earnings, financial condition, or prospects of
Purchaser.
2.7 Litigation.
There
are no claims, actions, suits, proceedings or investigations pending or, to
the
knowledge of the Seller Parties, threatened against or affecting the Assets
or
the operation of the Business before any foreign, federal, state, local or
other
governmental authority or agency, or involving any private parties.
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2.8
Compliance
with Laws.
The
operation of the Business and the Assets conform to the requirements of all
applicable laws, rules, orders, ordinances, decrees and regulations of all
governmental agencies, whether national, state or local, having jurisdiction
there-over, and no material claim alleging nonconformity or noncompliance with
respect to such matters has been made or threatened against Seller and/or the
Assets or, to the Sellers’ Parties knowledge, may in the foreseeable future be
made by any such agency.
2.9
Employee
Benefit Plans.
Seller
has no formal or informal health, dental, vision, life, retirement, profit
sharing, deferred compensation, pension, stock options, sick leave or sick
time
employee benefit plans in effect.
2.10 Employee
Matters.
2.10.1 List
of Personnel.
Schedule
2.10.1
contains
a true and complete list of the names and current compensation levels of all
active employees involved in the Business as of the date hereof. Since December
31, 2005, there has been no increase in the compensation of the employees of
Seller.
2.10.2 Employee
Relations.
There
is no labor strike, dispute, slowdown, stoppage, similar activity pending or,
to
the knowledge of the Seller Parties, threatened against Seller pertaining to
the
Business or the employees involved in the Business. There are no charges,
investigations, administrative proceedings, or formal complaints of
discrimination (including discrimination based upon sex, age, marital status,
race, national origin, sexual preference, handicap or veteran status) pending
or, to the knowledge of the Seller Parties, threatened before the Equal
Employment Opportunity Commission or any federal, state, or local agency or
court against Seller or the Shareholder pertaining to the Business or the
employees of the Business, and, to the knowledge of the Seller Parties, no
basis
for any such charge, investigation, administrative proceeding, or complaint
exists.
2.10.3 No
Liabilities or Obligations.
Except
as reflected on the Financial Statements Seller has no liabilities or
obligations to any beneficiaries, governmental authorities, or any other parties
arising out of or relating to any employee claims.
2.10.4 Worker’s
Compensation Insurance Coverage and Claims.. Seller
has in full force and effect worker’s compensation coverage in each jurisdiction
in which Seller is required to maintain such coverage by applicable state law.
Seller has paid or accrued all workers’ compensation premiums required to be
paid in each jurisdiction in which Seller is required to maintain such coverage
by applicable state law.
2.11
Taxes.
The
Seller Parties have filed all required tax returns in connection with the
Assets
and the operation of the Business. All tax returns filed by Seller or the
Shareholder in connection with the Assets and the operation of the Business
are
true, correct, and complete. The Seller Parties have paid, or made provision
for
the payment of, all taxes that have or may have become due pursuant to
tax
returns that are or were required to be filed by Seller or the
Shareholder in connection with the Assets and the operation of the Business,
or
pursuant to any assessment received by Seller or the Shareholder. There
exists
no proposed tax assessment against Seller or any shareholder of the Seller
in
connection with the Assets and the operation of the Business. All taxes
that
Seller or the Shareholder is required to withhold or collect in connection
with
the operation of the Assets and the Business have been duly withheld or
collected and, to the extent required, have been paid to the proper governmental
body or other person.
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2.12
Environmental
Matters.
Seller
has duly complied with, and the Business and all Assets are in compliance
in all
Environmental Laws (hereinafter defined); there have been no citations, notices
or orders of noncompliance issued to Seller under any such Environmental
Laws.
For the purposes of this Agreement, “Environmental
Law”
means
any applicable law, order, regulation, decree, permit, license, ordinance
or
other federal. State, county, provincial, local or foreign governmental
requirements in effect as of the Closing Date relating to pollution, the
protection of human health and the environment, or the spill of any hazardous
substance in the environment. Environmental laws include, but are not limited
to, the following statutes (and their implementing regulations);Comprehensive
Environmental Response, compensation and Liability Act (42 U.S.C. 9601, et
seq.), the Resource Conservation and Recovery Act (42 U.S.C. 6901, et seq.),
the
Federal Water Pollution Control Act (33 U.S.C. 1251, et seq.), the clean
Air Act
(42 U.S.C. 7401, et seq.), the Toxic Substance Control Act (15 U.S.C. 2601,
et
seq.), the Emergency Planning Community Right to Know Act (42 U.S.C. 11001,
et
seq.), and the Occupational Safety and Health Act of 1970. “Hazardous
Substance”
means
any petroleum, petroleum by-products, polychlorinated biphenyl and any other
chemicals, materials, substances or wastes which are currently defined or
regulated as "hazardous substances, "hazardous materials," "hazardous wastes,"
"extremely hazardous wastes," "restricted hazardous wasted," "toxic substances,"
"toxic pollutants," "toxic air pollutants," "hazardous air pollutants,"
"pollutants," or "contaminants" under any Environmental Law.
2.13
Broker’s
or Finder’s Fees.
Neither
of the Seller
Parties has incurred, nor will either of them incur, directly or indirectly,
any
liability for brokerage or finders’ fees or any similar charges in connection
with this Agreement or the Contemplated Transactions.
2.14 Material
Misstatements or Omissions.
No
representations or warranties by the Seller Parties in this Agreement, nor
any
document, exhibit, statement, certificate or schedule furnished to Purchaser
pursuant hereto, contains, or with respect to other documents to be delivered
by
the Seller Parties at Closing, will contain any untrue statement of a material
fact, or omits to state any material fact necessary to make the statements
or
facts contained therein not misleading.
2.15 Information;
Suitability.
The
Seller Parties, along with their advisors have such knowledge and experience
in
financial and business matters that the Seller Parties are capable of evaluating
the merits and risks of the Purchase Price consideration and the Contemplated
Transactions. The Seller Parties are aware that The Lebrecht Group has
represented only the interests of Purchaser in connection with this Agreement
and the Contemplated Transactions and the Seller Parties have sought such
accounting, legal and tax advice as the Seller Parties have considered necessary
to make an informed decision with respect to the Contemplated Transactions
and
have determined that the Purchase Price Consideration and other terms and
conditions of the Contemplated Transaction are fair and reasonable to the
Seller
Parties.
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2.16 Intention.
The
Seller Parties have not entered into this Agreement or agreed to complete
the
Contemplated Transactions with the actual intent to hinder, delay, or defraud
any creditor of the Seller Parties.
2.17 Value
of Assets.
The
Seller Parties have received reasonably equivalent value in exchange for
the
obligations to be undertaken pursuant to the Contemplated Transactions. Giving
effect to the Contemplated Transactions, the fair market value of the Seller’s
assets exceeds the Sellers’ total liabilities, whether accrued, absolute,
contingent or otherwise. The Seller’s assets do not and, immediately following
the Contemplated Transactions, will not, constitute unreasonably small capital
to carry out the Seller’s business as conducted or as proposed to be
conducted.
2.18 No
Bankruptcy.
No
petition in bankruptcy has been filed against either the Seller or the
Shareholder or any affiliate of either of them during the last seven years,
and
neither the Seller, the Shareholder nor any affiliate of either of them in
the
last seven years has ever made an assignment for the benefit of creditors
or
taken advantage of any insolvency act for the benefit of debtors. Neither
the
Seller Parties nor any affiliate of the Seller Parties is contemplating the
filing of a petition under any state or federal bankruptcy or insolvency
laws.
None of the Seller Parties has any knowledge of any person contemplating
the
filing of any such petition against it or an affiliate of the Seller
Parties.
2.19 Restricted
Shares.
Seller
acknowledges that the Shares are restricted securities under Rule 144 of
the
Securities Act of 1933, and, therefore, when issued by the Purchaser will
contain a restrictive legend substantially similar to the
following:
THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “ACT”). THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER
THE ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED.
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3. REPRESENTATIONS
AND WARRANTIES OF PURCHASER.
Purchaser represents and warrants to the Seller Parties as follows:
3.1
Organization
and Power.
Purchaser is a duly organized and validly existing Colorado corporation.
Purchaser has the power and authority to carry on its business as now being
conducted and to own, operate and lease its properties in the places where
such
business is now conducted and where such properties are now owned, leased or
operated.
3.2 Authorization.
The
execution, delivery and performance of this Agreement by Purchaser and the
consummation of the Contemplated Transactions by the Purchaser have been
duly
authorized by the Purchaser. This Agreement constitutes the legal, valid
and
binding obligation of Purchaser, enforceable in accordance with its
terms.
3.3 Broker’s
or Finder’s Fees.
Purchaser
has not incurred, nor will it incur, directly or indirectly, any liability
for
brokerage or finders’ fees or any similar charges in connection with this
Agreement or the Contemplated Transactions.
4. COVENANTS.
4.1 Funds
Received After Closing.
Any and
all funds received by Seller after the Closing in respect of the Business,
other
than amounts received in respect of the Excluded Assets, shall be remitted
to
the Purchaser immediately upon receipt. Any and all funds received by the
Purchaser after Closing in respect of the Excluded Assets shall be remitted
to
the Sellers immediately upon receipt.
4.2 Liabilities.
All
liabilities with respect to the operation of the Business not otherwise provided
for herein which are paid or become payable after the Closing (hereinafter
defined) shall be allocated between Purchaser and Seller according to the
accounting period to which they relate. Items relating to a time prior to
the
Closing Date shall be paid by Seller and those relating to a time thereafter
shall be paid by Purchaser. Obligations for taxes, rent, utilities, telephone
service and other items which relate to a period prior to and after the Closing
Date, will be prorated as of the Closing Date between Purchaser and Seller
and
adjusted between the parties as soon as possible after the invoices therefore
are received.
4.3 Certain
Employment Related Matters.
Prior
to the Closing, Seller will terminate all of its employees and Purchaser
shall
have the right, but not the obligation, to hire any or all of such employees.
Each such Employee that Purchaser elects to employ shall be employed by the
Purchaser on an “at-will” basis and may be terminated at any time with or
without cause.
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4.4 Tax
Matters.
4.4.1 The
Seller Parties
shall pay all taxes of whatsoever kind or nature imposed by the United States
or
by any state, municipality, subdivision or instrumentality of the United States
or by any other tax authority (including all applicable penalties and interest,
"Taxes") arising from or relating to the Contemplated Transactions if any,
due
as a result of the purchase, sale or transfer of the Assets in accordance
herewith whether imposed by law on the Seller Parties or the Purchaser, and
the
Seller Parties shall indemnify, reimburse and hold harmless the Purchaser in
respect of the liability for payment of or failure to pay any such Taxes or
the
filing of or failure to file any reports required in connection
therewith.
4.4.2 The
Seller Parties
on the one hand, and Purchaser, on the other hand, agree to furnish or cause
to
be furnished to each other, upon request, such information and assistance
(including access to books and records) relating to Seller and the Purchaser
as
is reasonably necessary for the preparation of any return, claim for refund
or
audit, and the prosecution or defense of any claim, suit or proceeding relating
to any proposed adjustment.
5. INDEMNIFICATION.
5.1 Survival
of Representations. Each representation, warranty, covenant and agreement
made
by any party within this Agreement or pursuant hereto shall survive the Closing
forever. All statements contained herein and in any certificate, schedule,
list
and other document described pursuant hereto or in connection with the
transactions contemplated hereby shall be deemed representations and warranties
within the meaning of this Section.
5.2 Indemnification
Of Purchaser.
Seller
and the Shareholder, jointly and severally, shall indemnify and hold harmless
Purchaser against and in respect of all demands, claims, actions, liabilities,
damages, losses, judgments, assessments, costs and expenses (including without
limitation interest, penalties and attorney fees) (individually a “Claim”
and
collectively the “Claims”)
asserted against, resulting to, imposed upon or incurred by Purchaser, directly
or indirectly, and arising out of or resulting from (a) a breach of any
representation, warranty, covenant or agreement made or to be performed by
Seller or the Shareholder under this Agreement, (b) any requirement that
Purchaser satisfy or perform any Liability of Seller or the Shareholder that
is
not an Assumed Liability, (c) any fraud or willful misconduct by the Seller
or
the Shareholder in connection with this Agreement or the Contemplated
Transactions or (d) the conduct of the Business prior to the Closing
Date.
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5.3 Notification
Purchaser if seeking indemnification hereunder shall hereinafter be referred
to
as the “Indemnified
Party”
and
Seller and the Shareholder shall hereinafter be referred to as the “Indemnifying
Parties.”
The
Indemnified Party shall, upon becoming aware or being put on notice of the
existence of a Claim with respect to which the Indemnified Parties may be
entitled to indemnification pursuant to this Section 5, promptly notify the
Indemnifying Parties in writing of such matter. The failure of the Indemnified
Party to notify the Indemnifying Parties of any Claim with respect to which
the
Indemnified Party may be entitled to indemnification hereunder will not relieve
the Indemnifying Parties of any liability that it may have to the Indemnified
Party except to the extent the Indemnifying Parties are materially prejudiced
thereby; provided, that the Indemnified Party shall be deemed to have notified
the Indemnifying Party by giving written notice of any such Claim to the Seller
or the Shareholder.
5.4 Settlement
and Defense of Claims.
Except
as hereinafter provided, upon receiving notice thereof in accordance with the
provisions of Section 5.3 hereof, the Indemnifying Parties shall have the right
to settle at its own cost and expense all Claims which are susceptible of being
settled or defended, and to defend, through counsel of its own choosing and
at
its own cost and expense, any third party action which may be brought in
connection therewith; provided, that the Indemnifying Parties shall be required
to keep the Indemnified Party fully and currently informed of all settlement
negotiations and of the progress of any litigation; and provided further that
the Indemnified Party shall have the right to fully participate in the defense
or settlement of any Claim at its own expense, except for its reasonable
attorneys fees which shall be paid by the Indemnifying Parties, if a third
legal
counsel chosen by the legal counsel of the Sellers and the Indemnified Party
determines that: (a) there are or may be legal defenses available to such
Indemnified Party that are different from or additional to those available
to
Indemnifying Parties and which could not be adequately advanced by counsel
chosen by the Indemnified Party, or (b) a conflict or potential conflict
exists between Indemnifying Parties and such Indemnified Party that would make
such separate representation advisable. The Indemnifying Parties shall not,
without the prior written consent of the Indemnified Party, which consent shall
not unreasonably be withheld, settle or compromise or consent to the entry
of
any judgment in any pending or the threatened claim, action or proceeding to
which such Indemnified Party is a party.
5.5 Cooperation
of Indemnified Party.
The
Indemnified Party shall cooperate with the Indemnifying Parties in connection
with the settlement or defense of any Claim. In addition, except as hereinafter
provided, the Indemnified Party shall not pay or voluntarily permit the
determination of any Claim while the Indemnifying Party is negotiating the
settlement thereof or litigating the Claim, except with the prior written
consent of the Indemnifying Party.
5.6 Assumption
by Indemnified Party.
Notwithstanding anything contained herein to the contrary, the Indemnified
Party
may, by releasing the Indemnifying Party from liability to him or it with
respect to such Claim, take over and assume the settlement and defense of any
Claim.
5.7 Purchaser
Indemnification.
In no
event shall the Purchaser have any liability whatsoever to the Seller Parties
in
connection with Section 5 of this Agreement or otherwise.
Page
11 of
16
6. General
Provisions.
6.1 Expenses.
Each
party shall pay its own legal, accounting and other expenses.
6.2 Headings.
Headings are for convenience and are not admissible as to
construction.
6.3 Notices.
All
notices or other communications required or permitted to be given pursuant
to
this Agreement shall be in writing and shall be considered as properly given
or
made if hand delivered or sent by overnight courier or delivery service or
facsimile transmission to the applicable address appearing in the preamble
to
this Agreement, or to such other address as either party may have designated
by
like notice forwarded to the other party hereto. All notices, except notices
of
change of address, shall be deemed given one business day if they have been
mailed by overnight courier or delivery service, or immediately if they have
been hand delivered or faxed, and notices of change of address shall be deemed
given when received. Notice shall be sent to the following addresses, unless
otherwise changed as set forth herein:
|
If
to
Seller:
|
||||||
|
0000
XX 0000
|
||||||
|
Xxxxxxxx,
XX 00000
|
||||||
|
Attn:
Xxx Xxxxxx
|
||||||
|
Facsimile:
(000) 000-0000
|
||||||
|
If
to
Shareholder:
|
Xxx
Xxxxxx
|
|||||
|
Facsimile:
|
||||||
|
If
to
Bluestar:
|
Bluestar
Health, Inc.
|
|||||
|
00000
Xxxxxxxxx Xxxxxxx
|
||||||
|
Xxxxx
Xxxx, XX 00000
|
||||||
|
Attn:
Xxxxxx Xxxxxxx
|
||||||
|
Facsimile:
(281) 207- 5486
|
||||||
|
If
to
Purchaser:
|
Bluestar
Health, Inc.
|
|||||
|
00000
Xxxxxxxxx Xxxxxxx
|
||||||
|
Xxxxx
Xxxx, XX 00000
|
||||||
|
Attn:
Xxxxxx Xxxxxxx
|
||||||
|
Facsimile:
(281) 207- 5486
|
||||||
Page
12 of
16
|
with
a copy to:
|
|||||
|
The
Lebrecht Group, APLC
|
|||||
|
0000
Xxxxxxxx Xxxxx
|
|||||
|
Xxxxxx,
XX 00000
|
|||||
|
Attn:
Xxxxx X. Xxxxxxxx, Esq.
|
|||||
|
Facsimile
(000) 000-0000
|
|||||
6.4 Severability.
Every
provision of this Agreement is intended to be severable. If any term or
provision hereof is illegal or invalid for any reason whatsoever, such
illegality or invalidity shall not affect the validity of the remainder of
this
Agreement.
6.5 Application
of Law; Venue.
This
Agreement, and the application or interpretation thereof, shall be governed
exclusively by its terms and by the laws of the State of Texas. Venue for any
cause of action brought relating to this Agreement or the Contemplated
Transactions shall be Xxxxxx County, Texas.
6.6 Counterparts.
This
Agreement may be executed in any number of counterparts, each of which shall
be
deemed an original, but all of which together shall constitute one and the
same
instrument.
6.7 No
Third-Party Beneficiaries.
Nothing
expressed or referred to in this Agreement will be construed to give any person
or entity other than the parties to this Agreement any legal or equitable right,
remedy or claim under or with respect to this Agreement or any provision of
this
Agreement.
6.8 Legal
Fees and Costs.
If a
legal action is initiated by any party to this Agreement against another,
arising out of or relating to the alleged performance or non-performance of
any
right or obligation established hereunder, or any dispute concerning the same,
the prevailing party shall be reimbursed by the non-prevailing party for all
reasonable expenses incurred in resolving such disputes, including reasonable
attorneys’ fees.
6.9 Binding
Agreements; Non Assignability.
Each of
the provisions and agreements herein contained shall be binding upon and inure
to the benefit of the personal representatives, heirs, devisees and successors
of the respective parties hereto; but none of the rights or obligations
attaching to either party hereunder shall be assignable, unless specifically
noted.
Page
13 of
16
6.10
Entire
Agreement; Waiver.
This
Agreement of the parties hereto with respect to the subject matter hereof,
along
with the exhibits and schedules hereto, constitutes the entire agreement between
the parties, and no amendment, waiver, modification or alteration of the terms
hereof shall be binding unless the same be in writing, dated subsequent to
the
date hereof and duly approved and executed by each party. No failure or delay
by
any party in exercising any right, power or privilege hereunder shall operate
as
a waiver thereof, nor shall any single or partial exercise thereof preclude
any
other or further exercise thereof of the exercise of any other right, power
or
privilege. The rights and remedies herein shall be cumulative and not exclusive
of any right or remedies provided by law.
[remainder
of page intentionally left blank; signature page to follow]
Page
14 of
16
IN
WITNESS WHEREOF,
the
parties have executed this Agreement effective as of the day and year first
above written.
|
“BLUESTAR”
|
||
|
BLUESTAR
HEALTH, INC.
|
||
|
By:
|
/s/
Xxxxxx Xxxxxxx
|
|
|
Xxxxxx
Xxxxxxx, President
|
||
|
“PURCHASER”
|
||
|
By:
|
/s/
Xxxxxx Xxxxxxx
|
|
|
Xxxxxx
Xxxxxxx, President
|
||
|
“SELLER”
|
||
|
By:
|
/s/
Xxx Xxxxxx
|
|
|
Xxx
Xxxxxx, President
|
||
|
“SHAREHOLDER”
|
||
|
/s/
Xxx Xxxxxx
|
||
| Xxx Xxxxxx | ||
Page
15 of
16
LIST
OF SCHEDULES AND EXHIBITS
|
Schedule
1.2
|
Excluded
Assets
|
|
|
Schedule
2.6
|
Material
Contracts
|
|
|
Schedule
2.10.1
|
Personnel
|
|
|
Exhibit
A
|
Assets
|
|
|
Exhibit
B
|
Assumed
Liabilities
|
|
|
Exhibit
C
|
Transitional
Agreement
|
|
|
Exhibit
D
|
Escrow
Agreement
|
Page
16 of
16
