STOCK PURCHASE AGREEMENT among KASIAN FRANKS and EVELYN MEADOWS and FASHION NET, INC. Dated as of January 8, 2010
Exhibit
16.1
among
XXXXXX
XXXXXX
and
XXXXXX
XXXXXXX
and
FASHION
NET, INC.
Dated as
of January 8, 2010
THIS STOCK PURCHASE AGREEMENT,
dated as of January 8, 2010, by and among Xxxxxx Xxxxxx (the “Buyer”) and Xxxxxx
Xxxxxxx, with principal address at 0000 XxXxxxxx Xxx., Xxx Xxxxx, Xxxxxx 00000
(the “Seller”), and Fashion Net, Inc., a Nevada corporation with principal
address at 0000 XxXxxxxx Xxx., Xxx Xxxxx, Xxxxxx 00000 (the
“Company”). As used herein, the term “Parties” shall be used to refer
to the Buyer, the Seller, and the Company jointly.
WHEREAS:
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A.
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The
Buyer seeks to acquire Ten Million (10,000,000) shares of the Company’s
Common Stock (par value $0.001) from the
Seller.
|
|
B.
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The
Seller is willing to sell and transfer Ten Million (10,000,000) shares of
the Company’s Common Stock (par value $0.001) to the
Buyer.
|
|
C.
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The
Company has approved the private sale and transfer of Ten Million
(10,000,000) shares of the Company’s Common Stock (par value $0.001) to
the Buyer.
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NOW,
THEREFORE, in consideration of the premises and the mutual promises herein made,
and in consideration of the representations, warranties, and covenants herein
contained, the parties agree as follows:
ARTICLE
I
DEFINITIONS
SECTION 1.1. Definitions. The
following terms shall have the following meanings for the purposes of this
Agreement.
“Adverse Consequences”
means all actions, suits, proceedings, hearings, investigations, charges,
complaints, claims, demands, injunctions, judgments, orders, decrees, rulings,
damages, dues, penalties, fines, costs, amounts paid in settlement, Liabilities,
obligations, Taxes, liens, losses, expenses, and fees, including court costs and
attorneys’ fees and expenses where the aggregate sum of said amount does not
exceed forty-Thousand Dollars ($40,000).
“Affiliate” means, with
respect to any specified Person, a Person that directly or indirectly, through
one or more intermediaries, controls or is controlled by, or is under common
control with, the Person specified.
“Affiliated Group” means any
affiliated group within the meaning of Code §1504(a) or any similar group
defined under a similar provision of state, local or foreign Law.
“Agreement” means this Stock
Purchase Agreement, including all exhibits and schedules hereto, as it may be
amended from time to time.
“Authority” means any
governmental regulatory or administrative body, governmental agency,
governmental subdivision or authority, any court or judicial authority, any
public, private or industry governmental regulatory authority, whether foreign,
national, federal, state or local or otherwise, or any Person lawfully empowered
by any of the foregoing to enforce or seek compliance with any
regulation.
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“Backlog” means orders for
which there is a specific delivery date for a specified product at a specified
price.
“Business” means with respect
to the Company, the business and assets of the Company as currently conducted as
of the date of this Agreement.
“Buyer” has the meaning set
forth in the preface above.
“Buyer’s Representatives” has
the meaning set forth in Section 5.4 below.
“Buyer Indemnified Parties”
has the meaning set forth in Section 8.2 below.
“Cash Amount” means Two
Hundred Thirty-six Thousand Dollars ($236,000.00).
“Closing” has the meaning set
forth in Section 2.4 below.
“Closing Date” has the meaning
set forth in Section 2.4 below.
“Code” means the Internal
Revenue Code of 1986, as amended.
“Confidential
Information” means any information concerning the Business and affairs of
the Company that is not already generally available to the public.
“Contract“ means any contract,
lease, commitment, understanding, sales order, purchase order, agreement,
indenture, mortgage, note, bond, right, warrant, instrument, plan, permit or
license, whether written or oral, which is intended or purports to be binding
and enforceable.
“Directors” shall mean all of
the members of the Board of Directors of the Company.
“Divestiture” means the
Company’s sale and transfer of all of the Assets as owned and the Business as
conducted by the Company immediately prior to this Agreement.
“Employee” means each employee
and leased employee regardless of whether the term is initially
capitalized.
“Employee Benefit Plan” means
any (a) nonqualified deferred compensation or retirement plan or arrangement,
(b) qualified defined contribution retirement plan or arrangement which is an
Employee Pension Benefit Plan, (c) qualified defined benefit retirement plan or
arrangement which is an Employee Pension Benefit Plan (including any
Multiemployer Plan), or (d) Employee Welfare Benefit Plan or material fringe
benefit or other retirement, bonus, or incentive plan or program.
“Employee Pension Benefit
Plan” has the meaning set forth in ERISA §3(2).
“Employee Welfare Benefit
Plan” has the meaning set forth in ERISA §3(1).
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“Environmental Laws” mean all
federal, state, provincial, local and foreign statutes, regulations, ordinances
and other provisions having the force or effect of law, all judicial and
administrative orders and determinations, all contractual obligations and all
common law concerning public health and safety, worker health and safety, and
pollution or protection of the environment including, without limitation, all
those relating to the presence, use, production, generation, handling,
transportation, treatment, storage, disposal, distribution, labeling, testing,
processing, discharge, release, threatened release, control, or cleanup of any
Hazardous Substances, materials or wastes, chemical substances or mixtures,
pesticides, pollutants, contaminants, toxic chemicals, petroleum products or
byproducts, asbestos, polychlorinated biphenyls, noise or radiation, each as
amended and as now or hereafter in effect, including (but not limited to) the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
the Superfund Amendments and Reauthorization Act of 1986, as amended, the
Resource Conservation and Recovery Act of 1976, as amended, the Toxic Substances
Control Act of 1976, as amended, the Federal Water Pollution Control Act
Amendments of 1972, the Clean Water Act of 1977, as amended, and any other
similar federal, state, or local statutes.
“ERISA” means the Employee
Retirement Income Security Act of 1974, as amended.
“Escrow Agent” means Law
Offices of Xxxx Xxxxxxxxxx, PLC.
“ERISA Affiliate” means, with
respect to the Company, any other Person that, together with the Company, would
be treated as a single employer under Section 414 of the Code.
“Escrow Agreement” shall mean
the Escrow Agreement entered into by and among the Buyer, the Seller and the
Escrow Agent with respect to the Escrowed Funds, in the form attached hereto as
Exhibit
A with only such changes as shall be in form and substance satisfactory
to the parties, acting reasonably.
“Escrowed Funds” has the
meaning set forth in Section 2.3 below.
“Financial Statements” means
the following:
(a) the
audited financial statements of the Company for the fiscal years ending December
31, 2006, December 31, 2007, and December 31, 2008, which are included in Schedule
3.9 consisting of the balance sheet at such dates and the related
statements of earnings and cash flows for the twelve (12) month periods then
ended; and
“GAAP” means United States
generally accepted accounting principles as in effect from time to time as
consistently applied by the Company.
“Hazardous Substance” means
any material or substance which (i) constitutes a hazardous substance, toxic
substance or pollutant (as such terms are defined by or pursuant to any
Environmental Laws) or (ii) is regulated or controlled as a hazardous substance,
toxic substance, pollutant or other regulated or controlled material, substance
or matter pursuant to any Environmental Laws.
“Hold Back Amount” means the
sum of Forty Thousand Dollars ($40,000). Any amounts for the audit that is more
than $3,000 will be subtracted from this amount.
“Hold Back Period” means until
a financial audit for the years ending December 31, 2008 and 2009 by a PCAOB
register auditor.
“Indemnified Party” has the
meaning set forth in Section 8.4 below.
“Indemnifying Party” has the
meaning set forth in Section 8.4 below.
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“Intellectual Property” means
(a) all inventions (whether patentable or unpatentable and whether or not
reduced to practice), all improvements thereto, and all patents, patent
applications, and patent disclosures, together with all reissuances,
continuations, continuations-in-part, revisions, extensions, and reexaminations
thereof, (b) all trademarks, service marks, trade dress, logos, trade names, and
corporate names, together with all translations, adaptations, derivations, and
combinations thereof and including all goodwill associated therewith, and all
applications, registrations, and renewals in connection therewith, (c) all
copyrightable works, all copyrights, and all applications, registrations, and
renewals in connection therewith, (d) all mask works and all applications,
registrations, and renewals in connection therewith, (e) all trade secrets and
confidential business information (including ideas, research and development,
know-how, formulas, compositions, manufacturing and production processes and
techniques, technical data, designs, drawings, specifications, customer and
supplier lists, pricing and cost information, and business and marketing plans
and proposals), (f) all computer software (including data and related
documentation), (g) all other proprietary rights, and (h) all copies and
tangible embodiments thereof (in whatever form or medium).
“Knowledge” means what is
known or should have been known after reasonable investigation.
“Latest Balance Sheet” means
the unaudited balance sheet of the Company dated as of December 31, 2009
attached hereto as Exhibit
B.
“Law” means any law, statute,
regulation, ordinance, rule, order, decree, judgment, consent decree, settlement
agreement or governmental requirement enacted, promulgated, entered into, agreed
or imposed by any Authority.
“Leased Property” has the
meaning set forth in Section 3.14(a) below.
“Leases” has the meaning set
forth in Section 3.14(a) below.
“Liability” means any
liability (whether known or unknown, whether asserted or unasserted, whether
absolute or contingent, whether accrued or unaccrued, whether liquidated or
unliquidated, and whether due or to become due), including any liability for
Taxes.
“Lien” means any mortgage,
lien (except for any lien for Taxes not yet due and payable), charge,
restriction, pledge, security interest, option, lease or sublease, claim, right
of any third party, easement, encroachment or encumbrance.
“Material Adverse
Effect” shall mean any circumstances, developments or matters whose
effect on the Company, its prospects, either alone or in the aggregate, is or
would reasonably expected to be materially adverse.
“Multiemployer Plan” has the
meaning set forth in ERISA §3(37).
“Ordinary Course of Business”
means the ordinary course of business consistent with past custom and practice
(including with respect to quantity and frequency).
“Owned Property” has the
meaning set forth in Section 3.14(a) below.
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“PBGC” means the Pension
Benefit Guaranty Corporation.
“Permitted Liabilities” means
Liabilities owed to trade creditors, to employees for wages, to governmental
entities for payroll and personal property taxes and other like Liabilities
incurred in the Ordinary Course of Business with maturities of less than one (1)
year and Liabilities for income and franchise taxes for the fiscal year
beginning in 2001 not in excess of the amount of the Reserve for Tax
Liability.
“Person” means an individual,
a partnership, a corporation, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization, or a governmental entity (or any
department, agency, or political subdivision thereof).
“Purchase Price” means
Two Hundred Thirty-Six Thousand Dollars ($236,000).
“Reserve for Tax Liability”
means the reserve for unpaid state and federal income determined in accordance
with Section 8.2(b).
“Schedules” means the
disclosure schedules accompanying this Agreement.
“Securities Act” means the
Securities Act of 1933, as amended.
“Securities Exchange Act”
means the Securities Exchange Act of 1934, as amended.
“Seller” has the meaning set
forth in the preface above.
“Shares” means the Company’s
Common Stock (par value $0.001).
“Subject Shares” means the Ten
Million (10,000,000) shares of common stock, par value $0.001 per share, of the
Company held of record by the Seller.
“Subsidiary” means any
corporation, partnership or limited liability company with respect to which a
specified Person (or a Subsidiary thereof) owns a majority of the common stock
or has the power to vote or direct the voting of sufficient securities to elect
a majority of the directors.
“Tax” means any federal,
state, local, or foreign income, gross receipts, license, payroll, employment,
excise, severance, stamp, occupation, premium, windfall profits, environmental
(including taxes under Code §59A), customs duties, capital stock, franchise,
profits, withholding, social security (or similar), unemployment, disability,
real property, personal property, sales, use, transfer, registration, value
added, alternative or add-on minimum, estimated, or other tax of any kind
whatsoever, including any interest, penalty, or addition thereto, whether
disputed or not.
“Tax Return” means any return,
declaration, report, claim for refund, or information return or statement
relating to Taxes, including any schedule or attachment thereto, and including
any amendment thereof.
“Third Party Claim” has the
meaning set forth in Section 8.4 below.
“Threshold Amount” has the
meaning set forth in Section 8.2(a) below.
“Transaction” means the
acquisition by the Buyer of all of the Shares of the Company from the Seller,
which is the subject of this Agreement.
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ARTICLE
II
PURCHASE
AND SALE OF SHARES
SECTION
2.1. Basic
Transaction. On and subject to the terms and conditions of
this Agreement, the Buyer agrees to purchase from the Seller, and the Seller
agrees to sell, or cause to be sold, to the Buyer, all of the Subject Shares for
the Purchase Price specified herein.
SECTION
2.2. Payment of Purchase
Price. On the Closing Date by 2 pm PST, in consideration for
the Shares, the Buyer shall pay to the Seller the Cash Amount less the Hold Back
Amount. The Cash Amount shall be paid to the Seller by means of a
wire to the account set forth in Exhibit C.
SECTION
2.3. Escrow. On the
Closing Date, the Buyer shall deposit with the Escrow Agent the Hold Back Amount
(the “Escrowed Funds”) in a non-interest-bearing escrow account (the “Escrow
Account”) which amount shall be held therein for Hold Back Period, in accordance
with the Escrow Agreement.
SECTION
2.4.
The
Closing. The closing of this Transaction (the “Closing”) shall
take place at Fashion Net, Inc., commencing at 10:00 a.m. Las Vegas time on the
earlier of (i) January 15, 2010 or (ii) three (3) business days following the
satisfaction or waiver of all conditions to the obligations of the parties to
consummate this Transaction (other than conditions with respect to actions the
respective parties will take at the Closing itself) or such other date as the
parties may mutually determine, but in any event no later than January 15, 2010
(the “Closing Date”). It is the intent of the parties that the Buyer
shall assume control of the Company immediately at the Closing.
SECTION 2.5. Closing Deliveries by the
Seller. To effect the transfer referred to in Section 2.1
hereof and the delivery of the Purchase Price, the Seller shall deliver the
following at the Closing:
(a) stock
certificate(s) evidencing the Subject Shares, free and clear of any and all
Liens, duly endorsed in blank by the Seller for transfer and accompanied by
stock powers duly executed in blank with signature guaranteed under Medallion
seal;
(b) all
consents, approvals, releases and waivers from governmental Authorities and
other third parties required or necessary to consummate this Transaction
satisfactory in form and substance to the Buyer and its counsel;
(c) the
executed Escrow Agreement duly executed by the Seller;
(d) manually
executed Action of the Board of Directors of the Company electing the Buyer’s
nominee as the sole Director of Company’s Board of Directors and accepting the
resignation of all current Directors of the Company’s Board of Directors; and
officers of the Company;
(e) INTENTIONALLY
OMMITTED;
(f)
manually-executed resignations of each of the Company’s current
officers;
(g) all
documents, instruments, and utilities to allow the Buyer and the Buyer’s nominee
to upload filings for the Company with xxxxxxxxxx.xxx;
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(h) a
copy of all of the Company’s state and federal tax returns, as filed with the
the U.S. Internal Revenue Service, respectively, for each of the two (2) fiscal
years immediately preceding the date of this Agreement;
(h) a
copy of all Board and Shareholder minutes and actions from inception of the
Company (and each predecessor of the Company) to the present;
(i)
Intentionally omitted;
(j)
Intentionally omitted;
(k) all
other documents required to be delivered to the Buyer pursuant to Article VI
hereof not specifically mentioned above in this Section 2.5; and
all
instruments and documents executed and delivered to the Buyer pursuant hereto
shall be in form and substance and shall be executed in a manner satisfactory to
the Buyer and its counsel.
SECTION
2.6. Closing Deliveries by the
Buyer. To effect the transfer referred to in Section 2.1
hereof and the delivery of the Purchase Price, the Buyer shall deliver the
following at the Closing:
(a)
wire transfer to account set forth in Section 2.2 equal to the Cash Amount less
the Hold Back Amount payable to the Seller and its assignee.
(b)
reasonable
evidence of the Escrowed Funds deposited with the Escrow Agent;
(d) the
Escrow Agreement duly executed by the Buyer;
(e) all
other documents required to be delivered to the Seller pursuant to Article VII
hereof not specifically mentioned above in this Section 2.6; and
all
instruments and documents executed and delivered to the Seller pursuant hereto
shall be in form and substance, and shall be executed in a manner, satisfactory
to the Seller and his counsel.
ARTICLE
III
REPRESENTATIONS
OF THE SELLER
The
Seller hereby represents and warrants to the Buyer that the statements contained
in this Article III are correct and complete as of the date of this Agreement,
and except as amended pursuant to Section 5.8, will be correct and complete as
of the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Article III),
except as set forth in the Schedules hereto. Nothing in the Schedules
shall be deemed adequate to disclose an exception to a representation or
warranty made herein, however, unless the Schedule identifies the exception with
reasonable particularity. Without limiting the generality of the
foregoing, the mere listing (or inclusion of a copy) of a document or other item
shall not be deemed adequate to disclose an exception to a representation or
warranty made herein (unless the representation or warranty has to do with the
existence of the document or other item itself). An item disclosed in
any Schedule shall be deemed disclosed for purposes of all
Schedules.
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SECTION
3.1. Authorization of
Transaction. The Seller has full power and authority to
execute and deliver this Agreement and to perform his obligations
hereunder. This Agreement constitutes the valid and legally binding
obligation of the Seller, enforceable in accordance with its terms and
conditions. The Seller need not give any notice to, make any filing
with, or obtain any authorization, consent, or approval of any government or
governmental agency in order to consummate this Transaction.
SECTION
3.2.
Brokers’
Fees. Neither the Seller nor the Company has any Liability or
obligation to pay any fees or commissions to any broker, finder, or agent with
respect to this Transaction for which the Buyer could become
liable.
SECTION
3.3. Shares. Except as
set forth on Schedule
3.3, the Seller holds of record and owns beneficially all of the Shares,
free and clear of any restrictions on transfer (other than any restrictions
under the Securities Act and state securities Laws), Taxes, Liens, options,
warrants, purchase rights, Contracts, commitments, equities, claims, and
demands. The Seller is not a party to any option, warrant, purchase
right, or other Contract or commitment that could require the Seller to sell,
transfer, or otherwise dispose of any Shares (other than this
Agreement). Except as set forth on Schedule
3.3, the Seller is not a party to any voting trust, proxy, or other
agreement or understanding with respect to the voting of any
Shares.
SECTION
3.4. Organization, Qualification, and
Corporate Power.
(a) The
Company is a corporation duly organized, validly existing, and in good standing
under the Laws of the State of Nevada. The Company is duly authorized
to conduct business and is in good standing under the Laws of each jurisdiction
except where the failure to be so qualified would not have a Material Adverse
Effect on the Company. The Company has full corporate power and
authority and all licenses, Permits, and authorizations necessary to carry on
the Business in which it is engaged and to own and use the properties owned and
used by it. The copies of the Certificate of Incorporation and Bylaws
of the Company (as amended to date) which have been (or will be) delivered to
the Buyer are correct and complete. The minute books (containing the
records of meetings of the stockholders, the board of directors, and any
committees of the board of directors), the stock certificate books, and the
stock record books of the Company are correct and complete. The
Company is not in default under or in violation of any provision of its
Certificate of Incorporation or Bylaws. The Company does not own or
have any interest in any Subsidiaries.
SECTION
3.5. Capitalization.
(a) The
entire authorized capital stock of the Company consists of seventy-five million
(75,000,000) shares of common stock, $0.001 par value, of which Ten Million One
Hundred Seventy Thousand (10,170,000) shares are issued and outstanding and no
shares are held in treasury. All of the issued and outstanding Shares
of the Company have been duly authorized, are validly issued, fully paid, and
nonassessable, and Ten Million (10,000,000) shares are held of record by the
Seller. Except as set forth on Schedule
3.5(a),there are no outstanding or authorized options, warrants, purchase
rights, subscription rights, conversion rights, exchange rights, or other
Contracts or commitments that could require the Company to issue, sell, or
otherwise cause to become outstanding any of the Shares of the
Company. There are no outstanding or authorized stock appreciation,
phantom stock, profit participation, or similar rights with respect to the
Shares of the Company. There are no voting trusts, proxies, or other
agreements or understandings with respect to the voting of the Shares of the
Company.
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(b) The
assignments, endorsements, stock powers and other instruments of transfer
delivered by the Seller to the Buyer at the Closing will be sufficient to
transfer the Seller’s entire interest, legal and beneficial, in the Subject
Shares and, after such transfer, the Buyer shall own all of the Subject
Shares. The Seller has full power and authority (including full
corporate power and authority) to convey good and marketable title to all of the
Subject Shares, and upon transfer to the Buyer of the certificates representing
such Subject Shares, the Buyer will receive good and marketable title to the
Subject Shares, free and clear of all Liens.
SECTION
3.6. Noncontravention. Neither
the execution and the delivery of this Agreement, nor the consummation of this
Transaction will (i) violate any constitution, Law, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which the Company is subject or any
provision of the Certificate of Incorporation or Bylaws of the Company, or (ii)
except as set forth on Schedule
3.6, conflict with, result in a breach of, constitute a default under,
result in the acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, or require any notice under any Contract, lease,
license, instrument, or other arrangement to which any of the Company is a party
or by which it is bound or to which any of its assets is subject (or result in
the imposition of any Lien upon any of its assets). The Company need not give
any notice to, make any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency in order for the parties to
consummate this Transaction.
SECTION
3.7. Intentionally
ommitted
SECTION
3.8.
Subsidiaries. The
Company does not have any direct or indirect Subsidiaries, either wholly or
partially owned and the Company does not have any direct or indirect economic,
voting or management interest in any Person or own any securities issued by any
Person.
SECTION
3.9. Financial
Statements. The Financial Statements of the Company are set
forth on Schedule
3.9. The Financial Statements have been and will be prepared
in accordance with GAAP and present fairly the financial position, assets and
Liabilities of the Company as of the dates thereof and the revenues, expenses,
results of operations of the Company for the periods covered
thereby. The Financial Statements were prepared from the books and
records of the Company and do not reflect any transactions which are not bona
fide transactions.
SECTION
3.10
Events Subsequent to
Latest Balance Sheet. Since the date of the Latest Balance
Sheet, there has not been any change in the Business, financial condition,
operations, results of operations, or future prospects of the Company or in any
item set forth on any of the Schedules attached hereto, which would have a
Material Adverse Effect on the Company. Without limiting the
generality of the foregoing, since that date and except as set forth in Schedule
3.10:
(a) the
Company has not sold, leased, transferred, or assigned any of its assets,
tangible or intangible, other than for a fair consideration in the Ordinary
Course of Business to which the Company is or will be bound on or after the
Closing;
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(b) the
Company has not entered into any Contract, lease, or license (or series of
related Contracts, leases, and licenses) involving more than One Hundred Dollars
($100.00) or outside the Ordinary Course of Business to which the Company is or
will be bound on or after the Closing;
(c) no
party (including the Company) has accelerated, terminated, modified, or canceled
any agreement, Contract, lease or license (or series of related Contracts,
leases and licenses) to which the Company is a party or by which it is or will
be bound on or after the Closing;
(d) the
Company has not imposed any Lien, upon any of its assets, tangible or intangible
to which the Company is or will be bound on or after the Closing;
(e) the
Company has not made any capital investment in, any loan to, or any acquisition
of the securities or assets of, any other Person (or series of related capital
investments, loans, and acquisitions) to which the Company is or will be bound
on or after the Closing;
(f)
the Company has not issued any note, bond, or other debt security or
created, incurred, assumed, or guaranteed any indebtedness for borrowed money or
capitalized lease obligation involving more than One Hundred Dollars ($100.00)
either individually or in the aggregate to which the Company is or will be bound
on or after the Closing which does not include the Note;
(g) the
Company has not delayed or postponed the payment of accounts payable and other
Liabilities outside the Ordinary Course of Business to which the Company is or
will be bound on or after the Closing;
(h) the
Company has not cancelled, compromised, waived, or released any right or claim
(or series of related rights and claims) either involving more than One Hundred
Dollars ($100.00) or outside the Ordinary Course of Business to which the
Company is or will be bound on or after the Closing;
(i)
the Company has not granted any license or sublicense of any rights under
or with respect to any Intellectual Property to which the Company is or will be
bound on or after the Closing;
(j)
there has been no change made or authorized in the Certificate of
Incorporation or Bylaws of the Company and there are no commitments or
arrangements which would reasonably cause or result in such change;
(k) the
Company has not issued, sold, or otherwise disposed any of its capital stock, or
granted any options, warrants, or other rights to purchase or obtain (including
upon conversion, exchange, or exercise) any of its capital stock to which the
Company is or will be bound on or after the Closing;
(l)
the Company has not declared, set aside, or paid any dividend or made any
distribution with respect to its capital stock (whether in cash or in kind) or
redeemed, purchased, or otherwise acquired any capital stock;
(m)
Intentionally omitted
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(n) the
Company does not have any outstanding any loan from, or entered into any other
transaction with, any of its Directors, officers, employees or Affiliates other
than any amounts owed Xxxxxxx Xxxx which will be released with the transfer of
preclosing operations, assets and liabilities;
(o) the
Company is not a party to any employment Contract or collective bargaining
agreement, written or oral, or modified the terms of any existing such Contract
or agreement;
(p) at
Closing, the Company will not have any obligation to any Person for any
employment compensation, consulting fees, or any taxes arising out of or related
thereto;
(r) the
Company has no outstanding bonus, profit sharing, incentive, severance, or other
plan, Contract, or commitment for the benefit of any of its Directors, officers,
and employees (or taken any such action with respect to any other Employee
Benefit Plan);
(s) the
Company is a “Shell Company” within the meaning of Rule 405 of the Securities
Act or within the meaning of Rule 12b-2 of the Exchange Act; and
(t) there
has not been any other occurrence, event, incident, action, failure to act, or
transaction outside the Ordinary Course of Business any of the Company except
that arising out of or resulting from the Divestiture.
SECTION
3.11.
Undisclosed
Liabilities. Except as set forth on Schedule
3.11, the Company has no Liability (and to the Knowledge of the Seller
and the Directors and officers of the Company, there is no basis for any present
or future action, suit, proceeding, hearing, investigation, charge, complaint,
claim, or demand against it giving rise to any Liability), except for
Liabilities set forth on the face of the Latest Balance Sheet (rather than in
any notes thereto) (none of which results from, arises out of, relates to, is in
the nature of, or was caused by any breach of Contract, breach of warranty,
tort, infringement, or violation of Law or arose out of any charge, complaint,
actions, suit, claim, proceeding or demand).
SECTION
3.12.
Legal Compliance.
Except as set forth on Schedule
3.12, the Company has complied with all applicable Laws (including rules,
regulations, codes, plans, injunctions, judgments, orders, decrees, rulings, and
charges thereunder) of federal, state, local, and foreign governments (and all
agencies thereof), and, to the Knowledge of the Seller and the Directors and
officers the Company, no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, demand, or notice has been filed or commenced against
any of them alleging any failure so to comply.
SECTION
3.13. Tax
Matters.
(a)
Except as shown on Schedule
3.13, The Company has duly and timely filed all Tax Returns that it has
been required to file for all periods through and including the Closing
Date. All such Tax Returns were correct and complete in all
respects. All Taxes owed by the Company (whether or not shown on any
Tax Return) have been timely paid. The Company has not requested or
been granted any extension of time within which to file any Tax
Return. The Company has maintained adequate provision for all unpaid
Liabilities for Taxes, whether or not disputed, that have accrued with respect
to or are applicable to the period ended on and including the Closing Date or to
any years and periods prior thereto and for which the Company may be directly or
contingently liable in its own right or as a transferee of the assets of, or
successor to, any Person. The Company has not incurred any Tax
Liabilities other than in the Ordinary Course of Business for any taxable year
for which the applicable statute of limitations has not expired. No
claim has ever been made by an Authority in a jurisdiction where the Company
does not pay Taxes or file Tax Returns and is or may be subject to taxation by
that jurisdiction. There are no Liens on any of the assets of any of
the Company that arose in connection with any failure (or alleged failure) to
pay any Tax.
11
(b) Since
January 1, 2007, none of the Tax Returns of the Company have ever been audited
or investigated by any taxing Authority, and no facts exist which would
constitute grounds for the assessment of any additional Taxes by any taxing
Authority with respect to the taxable years covered in such Tax
Returns. No issues have been raised in any examination by any taxing
Authority with respect to the businesses and operations of the Company which, by
application of similar principals, reasonably could be expected to result in a
proposed adjustment to the Liability for Taxes for any other period not so
examined. Neither the Seller nor the Directors and officers (and
employees responsible for Tax matters) of the Company have received, or expect
to receive, from any taxing Authority any written notice of a proposed
adjustment, deficiency, underpayment of Taxes or any other such notice which has
not been satisfied by payment or been withdrawn, and no claims have been
asserted relating to such Taxes against the Company.
(c) Schedule
3.13 lists all federal, state, local, and foreign income Tax Returns
filed with respect to the Company for taxable periods for which the applicable
statue of limitations has not expired, indicates those Tax Returns that have
been audited, and indicates those Tax Returns that currently are the subject of
audit. The Seller has delivered to the Buyer correct and complete
copies of all federal, state, local and foreign income Tax Returns, examination
reports, and statements of deficiencies assessed against or agreed to by the
Company for taxable periods for which the applicable statute of limitations has
not expired. The Company has not waived any statute of limitations in
respect of Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency.
(d) The
Company has withheld and paid all Taxes required to have been withheld and paid
including, without limitation, sales and use taxes, and all Taxes in connection
with amounts paid or owing to any employee, independent contractor, creditor,
stockholder, or other third party.
(e) The
Company has not filed a consent to the application of Section 341(f) of the
Code.
(f) The
Company will not be required, as a result of (i) a change in accounting method
for a Tax period beginning on or before the Closing Date, to include any
adjustment under Section 481(c) of the Code (or any corresponding provision of
state, local or foreign Tax Law) in taxable income for any Tax period beginning
on or after the Closing Date, or (ii) any “closing agreement,” as described in
Section 7121 of the Code (or any corresponding provision of state, local or
foreign Tax Law), to include any item of income in, or exclude any item of
deduction from, any Tax period beginning on or after the Closing
Date.
12
(g) The
Company has disclosed on its income Tax Returns all positions taken therein that
could give rise to an accuracy-related penalty under Section 6662 of the Code
(or any corresponding provision of Tax law).
(h) The
Company has not made any payments, is obligated to make any payments or is a
party to any agreement that under certain circumstances could obligate it to
make any “excess parachute payment” as defined in Section 280G of the Code or
any payments that will not be deductible under Section 162(m) of the
Code.
(i)
The Company is not a party to any Tax allocation
or sharing agreement. The Company is not subject to any joint
venture, partnership or other arrangement or Contract which is treated as a
partnership for federal income Tax purposes.
(j)
None of the assets of the Company constitutes tax-exempt bond
financed property or tax-exempt use property within the meaning of Section 168
of the Code, and none of the assets reflected on the Financial Statements is
subject to a lease, safe harbor lease or other arrangement as a result of which
the Company holding legal title to the asset is not treated as the owner for
federal income Tax purposes.
(k) The
basis of all depreciable or amortizable assets, and the methods used in
determining allowable depreciation or amortization (including cost recovery)
deductions of the Company, are correct and in compliance with the Code and the
regulations there under in all material respects.
(l)
The Seller is not a “foreign person” as defined in Section 1445(f)(3) of
the Code.
(m) The
Company has not: (A) been a member of an Affiliated Group filing a consolidated
federal income Tax Return or (B) any Liability for the Taxes of any Person
(other than itself) under Treas. Reg. §1.1502-6 (or any similar provision of
state, local, or foreign Law), as a transferee or successor, by Contract, or
otherwise.
(n)
The Company is not a party to or otherwise subject to any arrangement
having the effect of or giving rise to the recognition of a deduction or loss in
a taxable period ending on or before the Closing Date and a corresponding
recognition of taxable income or gain in a taxable period ending after the
Closing Date, or any other arrangement that would have the effect of or give
rise to the recognition of taxable income or gain in a taxable period ending
after the Closing Date without the receipt of or entitlement to a corresponding
amount of cash.
SECTION
3.14. Real
Property.
(a) The Company does not own or hold any interest
in any real property. In addition, the Company does not own or hold
any leases, subleases, licenses, concessions, or other Contracts, written or
oral, granting to any party or parties the right of use or occupancy of any
portion of the parcel of Owned Property. The Company does not hold
any real property leased or subleased to it (the “Leased
Property”).
13
SECTION
3.15.
Intellectual Property.
(a) All of the Company’s Intellectual
Property, as currently owned or used pursuant to license, sublicense, Contract,
or permission all Intellectual Property necessary for the operation of its
business shall be sold and transferred via the Divestiture.
(b) To
the Knowledge of the Seller and the Company there are no outstanding or
threatened claims asserting that the Company has interfered with, infringed
upon, misappropriated, or otherwise come into conflict with, any Intellectual
Property rights of third parties as a result of the continued operation of the
Company’s Businesses as presently conducted.
SECTION
3.16. Tangible
Assets. The Company owns all machinery, equipment, and other
tangible assets necessary for the conduct of its Businesses as presently
conducted and the same shall be sold and transferred pursuant to the planned
Divestiture.
SECTION
3.17.
Inventory. All
inventory of the Company shall be sold and transferred pursuant to the planned
Divestiture.
SECTION
3.18.
Contracts. All
Contracts of the Company shall be sold and transferred pursuant to the
Divestiture.
SECTION
3.19.
Notes and Accounts
Receivable. All notes and accounts receivable of the Company
shall be sold and transferred pursuant to the planned Divestiture.
SECTION
3.20.
Powers of
Attorney. There are no outstanding powers of attorney executed
on behalf of the Company.
SECTION
3.21.
Insurance.
At all times since January 1, 2007, the Company has maintained insurance
policies (including policies providing property, casualty, Liability, and
workers’ compensation coverage and bond and surety arrangements) with such
coverage in scope and amount customary and reasonable for the Company’s
Business. At no time since January 1, 2007 has the Company been a
party to any self-insurance arrangements affecting the Company. There are no
known claims, if any, made against the Company that are not covered by
insurance.
SECTION
3.22. Litigation. The
Company is not a party to any Litigation and is not (i) is subject to any
outstanding injunction, judgment, order, decree, ruling, or charge or (ii) is a
party or to the Knowledge of the Seller and the officer of the Company is
threatened to be made a party to any action, suit, proceeding, baring, or
investigation of, in, or before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction or before any
arbitrator. There are no known actions, suits, proceedings, hearings,
and investigations which would reasonably be expected to result in any adverse
change in the business, financial condition, operations, results of operations,
or future prospects of the Company. Neither the Seller nor the
officer of the Company have any reason to believe that any such action, suit,
proceeding, hearing, or investigation may be brought or threatened against the
Company. Neither the Seller nor the Company has any Liability with
respect to any claims or threatened claims by third parties relating to any sale
or proposed sale of the Subject Shares. Neither the Seller, nor the
Company is a party to any litigation relating to such claims and, to the
Knowledge of the Seller and the officer of the Company, no such litigation is
threatened.
14
SECTION
3.23.
Product
Warranty. The Company has not manufactured, sold, leased, or
delivered any products.
SECTION
3.24.
Product Liability. The Company
does not have Liability (whether known or unknown, whether asserted or
unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, and whether due or to become due) arising
out of any injury to individuals or property as a result of the ownership,
possession, or use of any product manufactured, sold, leased or delivered by the
Company.
SECTION
3.25.
Employees. All
Liability for all amounts due to each and every employee, consultant,
contractor, and other person will, pursuant to the Divestiture, not be assumed
by the Company. The Company is not a party to or bound by any
collective bargaining agreement, nor has it experienced any strikes, grievances,
claims of unfair labor practices, or other collective bargaining disputes. The
Company has not committed any unfair labor practice.
SECTION
3.26.
Employee Benefits.
(a) General. The Company is not a
plan sponsor of, maintains, contributes to, has contributed to, participates in
or has participated in, or has any Liability or contingent Liability with
respect to:
(i)
any Employee Welfare Benefit Plan or Employee Pension Benefit Plan;
(ii) any
retirement or deferred compensation plan, incentive compensation plan, stock
plan, unemployment compensation plan, vacation pay, severance pay, bonus or
benefit arrangement, insurance or hospitalization program or any other fringe
benefit arrangements for any current or former employee, director, consultant or
agent, whether pursuant to Contract, arrangement, custom or informal
understanding, which does not constitute an Employee Welfare Benefit Plan or
Employee Pension Benefit Plan; or
(iii) any
employment agreement.
(b)
Compliance with Employee
Benefit Laws; Liabilities. The Company has no Liability under any
Employee Benefit Plans and the Company has no Liability or contingent Liability
for providing, under any Employee Benefit Plan or otherwise, any post-retirement
medical or life insurance benefits, other than statutory Liability for providing
group health plan continuation coverage under Part 6 of Title I of ERISA and
section 4980B of the Code. The Company does not contribute to, has contributed
to, participates in, or has participated in, or has any Liability or contingent
Liability with respect to any Multiemployer Plan.
15
SECTION
3.27. Environmental
Matters.
(a) The
Company and its Affiliates has complied and is in compliance with all
Environmental Laws and no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, demand or notice has been filed or, to the Knowledge
of the Seller and the Company, commenced against any of them alleging any such
failure to comply.
(b) The
Company has obtained and complied with, and is in compliance with, all Permits,
licenses and other authorizations that are required pursuant to Environmental
Laws; and
(c) has
complied in all material respects with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules and
timetables which are contained in the Environmental Laws.
(d)
the Company has not received any written or oral notice,
report or other information regarding any actual or alleged violation of
Environmental Laws, or any Liabilities or potential Liabilities (whether known
or unknown, whether asserted or unasserted, whether absolute or contingent,
whether accrued or unaccrued, whether liquidated or unliquidated, and whether
due or to become due), including any investigatory, remedial or corrective
obligations, relating to any of them or its facilities arising under
Environmental Laws.
(e) The
Company has not treated, stored, disposed of, arranged for or permitted the
disposal of, transported, handled, or released any substance, including without
limitation any Hazardous Substance, or owned or operated any property or
facility (and no such property or facility is contaminated by any such
substance) in a manner that has given or would give rise to Liabilities,
including any Liability for response costs, corrective action costs, personal
injury, property damage, natural resources damages or attorney fees, or any
investigative, corrective or remedial obligations, pursuant to Environmental
Laws.
SECTION
3.28 to SECTION 3.33. INTENTIONALLY OMMITTED
SECTION
3.34. Improper
and Other Payments.
(a) The
Company or any Affiliate or any Person acting on behalf of either of them, has
made, paid or received any bribes, kickbacks or other similar payments to or
from any Person, whether lawful or unlawful;
(b) No
contributions have been made, directly or indirectly, to a domestic or foreign
political party or candidate.
(c) No
improper foreign payment (as defined in the Foreign Corrupt Practices Act) has
been made; and
(d) The
internal accounting controls of the Company are adequate to detect any of the
foregoing.
16
SECTION
3.35. Investments/Loans;
Affiliates. On the Closing Date the Company shall have
no equity interests in, or loans or other advances to or from any third party
which shall not include the Note.
SECTION
3.36. Taxes. On the
Closing Date the Company shall have no Liability for any Taxes with respect to
any periods ending on or before January 15, 2010.
SECTION
3.37. Pension. On the Closing Date,
the Company shall have made all contributions required under the terms of all
Employee Benefit Pension Plans and shall have made all contributions which have
accrued on its books as of the Closing Date.
SECTION
3.38. Debt. On the
Closing Date, the Company will not have any Liabilities other than Permitted
Liabilities unless the Buyer’s written consent thereto has been delivered by the
Buyer to the Seller before the Closing Date.
SECTION
3.39. Accuracy of
Statements. Neither this Agreement nor any Schedule, exhibit,
statement, list, document, certificate or other information furnished or to be
furnished by the Seller to the Buyer or any of the Buyer’s Representatives or
any Affiliate of the Buyer in connection with this Agreement or this Transaction
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact necessary to make the statements contained
herein or therein, in light of the circumstances in which they are made, not
misleading.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF THE BUYER
The Buyer
represents and warrants to the Seller that the statements contained in this
Article IV are correct and complete as of the date of this Agreement and
will be correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this Article IV).
SECTION
4.1. Organization of the
Buyer. The Buyer is a corporation duly organized, validly
existing, and in good standing under the laws of its domicile. The Buyer is not
in default under or in violation of any provision of its articles of
incorporation or bylaws.
SECTION
4.2. Authorization of
Transaction. The Buyer has full power and authority (including
full corporate power and authority) to execute and deliver this Agreement and to
perform its obligations hereunder. This Agreement constitutes the valid and
legally binding obligation of the Buyer, enforceable in accordance with its
terms and conditions. The Buyer need not give any notice to, make any
filing with, or obtain any authorization, consent, or approval of any government
or governmental agency in order to consummate this Transaction.
SECTION
4.3. Noncontravention. Neither
the execution and the delivery of this Agreement, nor the consummation of this
Transaction, will (i) violate any constitution, Law, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which the Buyer is subject or any
provision of its charter or bylaws or (ii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice or
consent under any agreement, Contract, lease, license, instrument, or other
arrangement to which the Buyer is a party or by which it is bound or to which
any of its assets is subject.
17
SECTION
4.4. Brokers’ Fees. The
Buyer has no Liability or obligation to pay any fees or commissions to any
broker, finder, or agent with respect to this Transaction for which the Seller
could become liable or obligated.
SECTION
4.5. Accuracy of
Statements. Neither this Agreement nor any Schedule, exhibit,
statement, list, document, certificate or other information furnished or to be
furnished by or on behalf of the Buyer to the Seller or any representative or
Affiliate of the Seller in connection with this Agreement or this Transaction
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact necessary to make the statements contained
herein or therein, in light of the circumstances in which they are made, not
misleading.
SECTION
4.6. Nominee. The
Nominee shall be such person as shall, by prior expertise and background possess
the character and skill for the position and not have any prior background as
would disqualify them under Rule 262 of Regulation A of the Securities Act of
1933.
ARTICLE
V
COVENANTS
SECTION
5.1. General. Each of
the parties will use his or its best efforts to take all action and to do all
things necessary in order to consummate and make effective this Transaction
(including satisfaction, but not waiver, of the closing conditions set forth in
Articles VI and VII below).
SECTION
5.2. Notices and
Consents. The Seller will cause the Company to give any
notices to third parties, and will cause the Company to obtain any third party
consents, that the Buyer may reasonably request.
SECTION
5.3. Operation of
Business. From the date of this Agreement until the Closing
Date, the Seller shall cause the Company to be operated in the Ordinary Course
of Business and to use commercially reasonable efforts to preserve intact the
present business organization and personnel of the Company, preserve the
business relationships of the Company with other Persons material to the
operation of the Company, and not permit any action or omission which would
cause any of the representations or warranties of the Company contained herein
to become inaccurate or any of the covenants of the Company to be
breached. Without limiting the generality of the foregoing, prior to
the Closing and without the prior written consent of the Buyer, the Seller shall
cause the Company to:
(a) not
incur any obligation or enter into any Contract outside the Ordinary Course of
Business or which (i) requires a payment by any party in excess of, or a series
of payments which in the aggregate exceed, One Hundred Dollars ($100.00) and
(ii) has a term of, or requires the performance of any obligations by the
Company over a period in excess of one week;
(b) not
take any action, or enter into or authorize any Contract or transaction
involving more than One Hundred Dollars ($100.00), other than this
Transaction;
(c) not
sell, transfer, convey, assign or otherwise dispose of any of its assets or
properties;
18
(d) not
waive, release or cancel any claims against third parties or debts owing to it,
or any other rights;
(e) not
make any changes in its accounting systems, policies, principles or
practices;
(f)
not enter into, authorize, or permit any transaction with the Seller
or any Affiliate thereof, or enter into any Contract relating to compensation or
benefits with any Person, or, modify any compensation amounts or levels of any
officer or employee;
(g) except
as required for this Transaction, not change or amend its Certificate of
Incorporation or Bylaws;
(h) not
authorize for issuance, issue, sell, deliver or agree or commit to issue, sell
or deliver (whether through the issuance or granting of options, warrants,
convertible or exchangeable securities, commitments, subscriptions, rights to
purchase or otherwise) any shares of capital stock or any other securities of
the Company, or amend any of the terms of any such capital stock or other
securities, except as required for this Transaction;
(i)
not split, combine, or reclassify any shares of its capital stock, declare, set
aside or pay any dividend or other distribution in property other than cash in
respect of its capital stock, or redeem or otherwise acquire any capital stock
or other securities of the Company;
(j)
not make any borrowings, incur any debt, or assume, guarantee, endorse or
otherwise become liable (whether directly, contingently or otherwise) for the
obligations of any other Person, or make any payment or repayment in respect of
any indebtedness in excess of One Hundred Dollars ($100.00);
(k) not
make any loans, advances or capital contributions to, or investments in, any
other Person or the operating assets of any Person;
(l)
not enter into, adopt, amend or terminate any bonus, profit sharing,
compensation, termination, stock option, stock appreciation right, restricted
stock, performance unit, pension, retirement, deferred compensation, employment,
severance or other employee benefit agreements, trusts, plans, funds or other
arrangements for the benefit or welfare of any Director, manager, officer or
employee, or increase in any manner the compensation or fringe benefits of any
Director, manager, officer or employee or pay any benefit not required by any
existing plan and arrangement or enter into any Contract, agreement, commitment
or arrangement to do any of the foregoing;
(m) not
acquire, lease, encumber or otherwise impose a Lien on any assets, whether
tangible or intangible;
(n) not
authorize or make any capital expenditures which individually or in the
aggregate are in excess of One Hundred Dollars ($100.00);
(o) not
make any Tax election or settle or compromise any federal, state, local or
foreign income Tax Liability, or waive or extend the statute of limitations in
respect of any such Taxes;
19
(p) not
pay any amount, perform any obligation or agree to pay any amount or perform any
obligation, in settlement or compromise of any suits or claims of Liability
against the Company or any of its Directors, managers, officers, employees or
agents;
(q) not
terminate, modify, amend or otherwise alter or change any of the terms or
provisions of any agreement, or pay any amount not required by Law or by any
Contract;
(r)
other than overnight deposits or money market instruments and investments
existing on the date hereof, not make any investments with cash or the proceeds
of existing investments;
(s)
not declare set aside or pay any dividend or make any distribution with
respect to the Shares;
(t)
not grant, award or pay any bonuses to any employees, independent
contractors or other representatives in excess of One Hundred Dollars ($100.00)
in the aggregate; and
(u) make
all contributions required under the terms of any employee benefit Pension Plan
and make all contributions which have been accrued on the books of the
Company.
SECTION
5.4. Full Access. The
Seller will permit and cause the Company to permit, representatives of the Buyer
(including, but not limited to, accountants, appraisers, attorneys, engineers,
etc.) hired by the Buyer to assist in performing a due diligence investigation
of the Company and the assets or Business of the Company relative to this
Transaction (collectively, “Buyer’s Representatives”) to have full access to all
premises, properties, personnel, books, records (including Tax records),
Contracts, and documents of or pertaining to the Company and shall make the
officers and employees of the Company available to the Buyer’s Representatives
as the Buyer’s Representatives shall from time to time reasonably request, in
each case to the extent that such access and disclosure would not obligate the
Company to take any actions that would disrupt the normal course of its business
or violate the terms of any agreement to which the Company is bound or any
applicable Law or regulation. The Seller will deliver to the Buyer or
the Buyer’s Representatives correct and complete copies of the Certificate of
Incorporation, Bylaws, and minutes and actions of the Company’s Board of
Directors, Shareholders, and all committees of each thereof, and will also cause
Florida Atlantic Stock Transfer, the Company’s stock transfer agent to deliver a
recent complete and accurate list of all of the Company’s stockholders
reasonably acceptable to the Buyer. The Buyer’s Representatives will
not use any of the Confidential Information received from the Company except in
connection with this Agreement, and, if this Agreement is terminated for any
reason whatsoever, the Buyer’s Representatives will return to the Company all
tangible embodiments (and all summaries and copies, including electronically
stored information) of the Confidential Information that they receive from the
Company which are in its possession and will only use such Confidential
Information in the defense of any litigation related to this Agreement; provided, however, that the
Buyer’s Representatives shall not be responsible for the confidentiality of any
information (i) which, at the time of disclosure, is available publicly, through
no fault of the Buyer (ii) which, after disclosure, becomes available publicly
through no fault of the Buyer’s Representatives, or (iii) which the Buyer’s
Representatives knew or to which the Buyer’s Representatives had access prior to
disclosure.
20
SECTION
5.5. Exclusivity. Until
January 15, 2010, the Seller will not (and the Seller will not cause or permit
the Company to: (i) solicit, initiate, or encourage the submission of any
proposal or offer from any Person relating to the acquisition of any capital
stock or other voting securities, or any substantial portion of the assets, of
the Company (including any acquisition structured as a merger, consolidation, or
share exchange) or (ii) participate in any discussions or negotiations
regarding, furnish any information with respect to, assist or participate in, or
facilitate in any other manner any effort or attempt by any Person to do or seek
any of the foregoing. The Seller will not vote his Shares in favor of
any such acquisition structured as a merger, consolidation, or share
exchange. The Seller will notify the Buyer immediately if any Person
makes any proposal, offer, inquiry, or contact with respect to any of the
foregoing.
SECTION
5.6.
Efforts.
(a) Subject
to the terms and conditions hereof, each party hereto shall use all reasonable
efforts to consummate this Transaction as promptly as practicable. An
undertaking of a Person under this Agreement to use such Person’s commercially
reasonable efforts shall not require such Person to incur unreasonable expenses
or obligations in order to satisfy such undertaking.
(b) The
Seller and the Buyer will, and the Seller shall cause the Company, to, as
promptly as practicable (i) make the required filings with, and use their
respective best efforts to obtain all required authorizations, approvals,
consents and other actions of, governmental Authorities and (ii) use their
respective commercially reasonable efforts to obtain all other required consents
of other Persons, with respect to this Transaction.
(c) The
Buyer will use commercially reasonable efforts to obtain the financing necessary
to consummate this Transaction.
SECTION
5.7.
Maintenance of
Insurance. Not Applicable
SECTION
5.8. Notice and Supplemental
Information. The Seller and the Buyer shall each give prompt
notice to the other parties of any material adverse development causing a breach
of any of their respective representations and warranties in Articles III and IV
respectively, and of their respective covenants contained in this Article
V. In addition, the Seller will, from time to time, as necessary,
within a reasonable period of time preceding the Closing, by notice in
accordance with the terms of this Agreement, supplement or amend the Schedules,
including one or more supplements or amendments to correct any matter which
would constitute a breach of any representation, warranty, agreement or covenant
contained herein. If the Seller supplements or amends the Schedules
with facts or circumstances that would reasonably be expected to have a Material
Adverse Effect on the Company, the sole remedy of the Buyer under this Section
5.8 shall be termination of the Agreement as provided for in Section
10.1(e).
SECTION
5.9. Press Releases and Public
Announcements. No party shall issue any press release or make
any public announcement relating to the subject matter of this Agreement without
the prior written approval of the Buyer and the Seller; provided, however, that any
party may make any public disclosure it believes in good faith is required by
applicable Law or any listing or trading agreement concerning its
publicly-traded securities (in which case the disclosing party will use its best
efforts to advise the other parties prior to making the
disclosure).
21
SECTION
5.10. Consistent Tax
Reporting. The Seller and the Buyer shall treat and report
this Transaction in all respects consistently for purposes of any federal,
state, local or foreign Tax. The parties hereto shall not take any
actions or positions inconsistent with the obligations set forth
herein.
SECTION
5.11. Resignation of Officers and
Directors. The Seller shall cause each officer and Director of the
Company to tender his or her resignation from such position, effective as of the
Closing.
SECTION
5.12. Transition. Except as may be
reasonably required by the planned Divestiture, the Seller will not take any
action, and the Seller will cause the Company not to take any action, that is
designed or intended to have the effect of discouraging any lessor, licensor,
customer, supplier, or other business associate of the Company from maintaining
the same business relationships with the Company after the Closing as it
maintained with the Company prior to the Closing.
SECTION
5.13. Post-Closing Covenants. The
Seller and the Buyer agree as follows with respect to the period following the
Closing:
(a) In
case at any time after the Closing any further action is necessary or desirable
to carry out the purposes of this Agreement, each of the parties will take such
further action (including the execution and delivery of such further instruments
and documents) as any other party hereto reasonably may request, all at the sole
cost and expense of the requesting party (unless the requesting party is
entitled to indemnification therefor under Article VIII). From and
after the Closing the Buyer will be entitled to access all documents, books,
records, agreements, and financial data of any sort relating to the Company that
was not received by the Buyer at the Closing.
(b) In
the event and for so long as any party hereto actively is contesting or
defending against any charge, complaint, action, suit, proceeding, hearing,
investigation, claim, or demand in connection with (i) this Transaction or (ii)
any fact, situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior
to the Closing Date involving the Company, each of the other parties hereto will
cooperate with him or it and his or its counsel in the contest or defense, make
available their personnel, and provide such testimony and access to their books
and records as shall be necessary in connection with the contest or defense, all
at the sole cost and expense of the contesting or defending party (unless the
contesting or defending party is entitled to indemnification therefor under
Article VIII).
ARTICLE
VI
CONDITIONS
TO OBLIGATION OF THE BUYER
The
obligation of the Buyer to consummate this Transaction is subject to
satisfaction of the following conditions:
22
SECTION
6.1. Representations and Warranties True
as of Closing Date. The representations and warranties set
forth in Article III shall have been accurate, true and correct on and as of the
date of this Agreement, and shall also be accurate, true and correct on and as
of the Closing Date with the same force and effect as though made on and as of
the Closing Date.
SECTION
6.2. Compliance with
Covenants. The Seller shall have performed and complied with
all of the covenants hereunder in all material respects through the
Closing.
ARTICLE
VII
CONDITIONS
TO OBLIGATION OF THE SELLER
The
obligation of the Seller to consummate this Transaction is subject to
satisfaction of the following conditions:
SECTION
7.1. Representations and Warranties True
as of Closing. The representations and warranties set forth in
Article IV shall have been accurate, true and correct on and as of the date of
this Agreement, and shall also be accurate, true and correct on and as of the
Closing Date with the same force and effect as though made on and as of the
Closing Date.
SECTION
7.2.
Compliance with
Covenants. The Buyer shall have performed and complied with
all of its covenants hereunder in all material respects through the
Closing.
SECTION
7.3. Actions or
Proceedings. No action, suit, or proceeding shall be pending
before any court or quasi judicial or administrative agency of any federal,
state, local, or foreign jurisdiction wherein an unfavorable injunction,
judgment, order, decree, ruling, or charge would (A) prevent consummation of
this Transaction or (B) cause this Transaction to be rescinded following
consummation (and no such injunction, judgment, order, decree, ruling, or charge
shall be in effect).
SECTION
7.4. Certificate. The
Buyer shall have delivered to the Seller a certificate to the effect that each
of the conditions specified above in Sections 7.1 - 7.3 is satisfied in all
respects.
SECTION
7.5. Documents. All
actions to be taken by the Buyer in connection with the consummation of this
Transaction and all certificates, opinions, instruments, and other documents
required to effect this Transaction will be reasonably satisfactory in form and
substance to the Seller.
ARTICLE
VIII
SURVIVAL
AND REMEDY; INDEMNIFICATION
SECTION
8.1. Survival of Representations and
Warranties. All of the terms and conditions of this Agreement,
together with the warranties, representations, agreements and covenants
contained herein or in any instrument or document delivered or to be delivered
pursuant to this Agreement, shall survive the execution of this Agreement and
the Closing Date, notwithstanding any investigation heretofore or hereafter made
by or on behalf of any party hereto; provided, however, that
unless otherwise stated, the agreements and covenants set forth in this
Agreement shall survive and continue for a period until the financial statements
for the years ending December 31, 2008 and 2009 are signed off by the PCAOB
auditors which shall be completed by February 28, 2010 (the “Indemnification
Period”).
23
SECTION
8.2. Indemnification
by the Seller.
(a) In
the event that, during the Indemnification Period there is (i) a breach (or an
alleged breach) of any of the representations or warranties made by, or any
breach of or failure to perform any covenant, agreement or obligation of, the
Seller in this Agreement or any other document contemplated hereby, or in any
document relating hereto or thereto or contained in any exhibit or Schedule to
this Agreement, (ii) any Liabilities, Adverse Consequences or remediation,
clean-up or similar obligations or costs under Environmental Laws and relating
to the Business and activities or the ownership, operation or lease by the
Company of facilities in respect of any periods prior to the Closing, or (iii)
any demands, assessments, judgments, costs and reasonable legal and other
expenses or other Adverse Consequences arising from, or in connection with, any
investigation, action, suit, proceeding or other claim incident to any of the
foregoing and, if there is an applicable survival period pursuant to Section
8.1, then, in each case, provided that the Buyer made a written claim for
indemnification and provided that Buyer incurs an aggregate of Five Hundred
Dollars ($500.00) in out-of-pocket expenses and costs in connection with any of
the foregoing (the “Threshold Amount”), then thereafter the Seller agrees
(subject to the limitations set forth in this Section 8.2) to indemnify the
Buyer and its Affiliates from and against the entirety of any Adverse
Consequences the Buyer Indemnified Parties may suffer through and after the date
of the claim for indemnification resulting from, arising out of, relating to, in
the nature of, or caused by any breach (or alleged breach) of the foregoing up
to a maximum of Forty Thousand Dollars ($40,000) (the “Limit
Amount”).
(b) Subject
to the provisions of Section 8.2(a), the Seller agrees to indemnify the Buyer
from and against the entirety of the Limit Amount the Buyer may suffer resulting
from, arising out of, relating to, in the nature of, or caused by any Liability
of the Company for any Taxes of the Company.
(c) Subject
to the provisions of Section 8.2(a), the Seller agrees to indemnify the Buyer
from and against the entirety of any Adverse Consequences up to the Limit Amount
the Buyer may suffer resulting from, arising out of, relating to, in the nature
of, or caused by any unknown, undisclosed, or contingent debts or
obligations (including, but not limited to, environmental, legal and
employee benefit Liability exposures) of the Company to the extent such debts or
obligations relate to any time periods prior to the Closing Date or after the
Closing Date to the extent that they are not assumed by third parties pursuant
to the planned Divestiture.
SECTION
8.3.
Indemnification by the
Buyer. Provided that the Seller makes a written claim for
indemnification against the Buyer within the survival period set forth in
Section 8.1 and that the amount sought by Buyer, together with amounts
previously sought by Seller pursuant to this Section 8.3, is in excess of the
Threshold Amount, the Buyer agrees to indemnify the Seller against, and agrees
to hold him harmless from, any and all Adverse Consequences up to the Limit
Amount the Seller may suffer through and after the date of the claim for
indemnification (including any Adverse Consequences the Seller may suffer
through and after the end of the applicable survival period) resulting from,
arising out of, relating to, in the nature of, or caused by (i) any breach of or
any inaccuracy in any representation or warranty made by the Buyer pursuant to
this Agreement, any agreement, or instrument contemplated hereby, any document
relating hereto or thereto or contained in any exhibit or Schedule to this
Agreement; (ii) any breach of or failure by the Buyer to perform any agreement,
covenant or obligation of the Buyer set out in this Agreement, any agreement, or
instrument contemplated hereby, any document relating hereto or thereto or
contained in any exhibit or Schedule to this Agreement; and (iii) any
obligations and Liabilities in respect of the Company from and after the Closing
Date.
24
SECTION
8.4. Third-Party
Claims.
(a) If
any third party shall notify any party (the “Indemnified Party”) with respect to
any matter (a “Third Party Claim”) which may give rise to a claim for
indemnification against any other party (the “Indemnifying Party”) under this
Article VIII, then the Indemnified Party shall promptly notify each Indemnifying
Party thereof in writing; provided, however, that no
delay on the part of the Indemnified Party in notifying any Indemnifying Party
shall relieve the Indemnifying Party from any obligation hereunder unless (and
then solely to the extent) the Indemnifying Party thereby is
prejudiced.
(b) Any
Indemnifying Party will have the right to defend the Indemnified Party against
the Third Party Claim with counsel of its choice reasonably satisfactory to the
Indemnified Party so long as (A) the Indemnifying Party notifies the Indemnified
Party in writing within forty-five (45) days after the Indemnified Party has
given notice of the Third Party Claim that the Indemnifying Party will indemnify
the Indemnified Parry from and against the entirety of any Adverse Consequences
the Indemnified Party may suffer resulting from, arising out of, relating to, in
the nature of, or caused by the Third Party Claim, (B) the Indemnifying Party
provides the Indemnified Party with evidence reasonably acceptable to the
Indemnified Party that the Indemnifying Party will have the financial resources
to defend against the Third Party Claim and fulfill its indemnification
obligations hereunder, (C) the Third Party Claim involves only money damages and
does not seek an injunction or other equitable relief, (D) settlement of, or an
adverse judgment with respect to, the Third Party Claim is not, in the good
faith judgment of the Indemnified Party, likely to establish a precedential
custom or practice materially adverse to the continuing business interests of
the Indemnified Party, and (E) the Indemnifying Party conducts the defense of
the Third Party Claim actively and diligently.
(c)
So long as the Indemnifying Party is conducting the defense of the Third Party
Claim in accordance with Section 8.4(b) above, (A) the Indemnified Party may
retain separate co-counsel at its sole cost and expense and participate in the
defense of the Third Party Claim, (B) the Indemnified Party will not consent to
the entry of any judgment or enter into any settlement with respect to the Third
Party Claim without the prior written consent of the Indemnifying Party (not to
be withheld unreasonably), and (C) the Indemnifying Party will not consent to
the entry of any judgment or enter into any settlement with respect to the Third
Party Claim without the prior written consent of the Indemnified Party (not to
be withheld unreasonably).
(d)
In the event any of the conditions in Section 8.4(b) above is or becomes
unsatisfied in the reasonable judgment of the Indemnified Party, however, (A)
the Indemnified Party may defend against, and consent to the entry of any
judgment or enter into any settlement with respect to, the Third Party Claim in
any manner it reasonably may deem appropriate (and the Indemnified Party need
not consult with, or obtain any consent from, any Indemnifying Party in
connection therewith), (B) the Indemnifying Party will reimburse the Indemnified
Party promptly and periodically for the reasonable costs of defending against
the Third Party Claim (including attorneys’ fees and expenses), and (C) the
Indemnifying Party will remain responsible for any Adverse Consequences the
Indemnified Party may suffer resulting from, arising out of, relating to, in the
nature of, or caused by the Third Party Claim to the fullest extent provided in
this Article IX.
25
SECTION
8.5. Other
Indemnification Provisions.
(a)
The liability of any party under this Article VIII shall be in addition to, and
not exclusive of any other liability that such party may have at law or equity
based on a party’s fraudulent acts or omissions. None of the
provisions of this Agreement shall be deemed a waiver of any defenses which may
be available in respect of actions or claims for fraud including, but not
limited to, defenses of statutes of limitations or limitations of
damages.
(b) The
Seller hereby agrees that he will not make any claim for indemnification against
the Company by reason of the fact that he was a director, manager, officer,
employee, or agent of any such entity or was serving at the request of any such
entity as a partner, member, trustee, director, manager, officer, employee, or
agent of another entity (whether such claim is for judgments, damages,
penalties, fines, costs, amounts paid in settlement, losses, expenses, or
otherwise and whether such claim is pursuant to any statute, charter document,
bylaw, agreement, or otherwise) with respect to any action, suit, proceeding,
complaint, claim, or demand brought by the Buyer against the Seller (whether
such action, suit, proceeding, complaint, claim, or demand is pursuant to this
Agreement, applicable Law, or otherwise).
(c) Indemnification
claims shall be reduced, by and to the extent, that an Indemnified Party shall
be entitled to receive proceeds under insurance policies, risk sharing pools, or
similar arrangements specifically as a result of, and in compensation for, the
subject matter of an indemnification claim by such Indemnified Party, net of any
increased premiums or similar costs arising out of the making of such claims
against such arrangements; provided, however, that
indemnification claims shall be reduced by Tax benefits, if any.
(d) The
Buyer shall have the right to offset indemnification amounts due them from the
Seller pursuant to this Agreement against payments due to the Seller pursuant to
this Agreement or any other agreement between the Buyer and the
Seller.
ARTICLE
IX
TAX
MATTERS
SECTION
9.1. Tax Matters. The
following provisions shall govern the allocation of responsibility as between
the Buyer and the Seller for certain tax matters following the Closing
Date:
SECTION
9.2. Tax Periods Ending on or Before the
Closing Date. The Seller shall prepare or cause to be prepared
and file or cause to be filed all Tax Returns for the Company for all periods
ending on or prior to the Closing Date. The Seller shall permit the Buyer to
review and comment on each such Tax Return described in the preceding sentence
prior to filing. The Buyer and the Seller shall attempt in good faith
to resolve any disagreements regarding such Tax Returns; provided, however, that the
final decision regarding any such Tax Return shall rest with the
Seller.
26
SECTION
9.3. Tax Periods Beginning Before and
Ending After the Closing Date. The Buyer shall prepare or
cause to be prepared and file or cause to be filed any Tax Returns of the
Company for Tax periods which begin before the Closing Date and end after the
Closing Date. The Buyer shall permit the Seller to review and comment
on each such Tax Return described in the preceding sentence prior to
filing. The Buyer and the Seller shall attempt in good faith to
resolve any disagreements regarding such Tax Returns; provided, however, that the
final decision regarding any such Tax Return shall rest with the
Buyer. For purposes of this Section, in the case of any Taxes that
are imposed on a periodic basis and are payable for a Tax period that includes
(but does not end on) the Closing Date, the portion of such Tax which relates to
the portion of such Tax period ending on the Closing Date shall (x) in the case
of any Taxes other than Taxes based upon or related to income or receipts, be
deemed to be the amount of such Tax for the entire Tax period multiplied by a
fraction the numerator of which is the number of days in the Tax period ending
on the Closing Date and the denominator of which is the number of days in the
entire Tax period, and (y) in the case of any Tax based upon or related to
income or receipts be deemed equal to the amount which would be payable if the
relevant Tax period ended on the Closing Date. Any credits relating
to a Tax period that begins before and ends after the Closing Date shall be
taken into account as though the relevant Tax period ended on the Closing
Date. All determinations necessary to give effect to the foregoing
allocations shall be made in a manner consistent with prior practice of the
Company.
SECTION
9.4. Cooperation
on Tax Matters.
(a) The
Buyer and the Seller shall cooperate fully, as and to the extent reasonably
requested by the other party, in connection with the filing of Tax Returns
pursuant to this Article IX and any audit, litigation or other proceeding
with respect to Taxes. Such cooperation shall include the retention
and (upon the other party’s request) the provision of records and information
which are reasonably relevant to any such audit, litigation or other proceeding
and making employees available on a mutually convenient basis to provide
additional information and explanation of any material provided
hereunder. The Seller agrees (A) to retain all books and records with
respect to Tax matters pertinent to the Company, as the case may be, relating to
any taxable period beginning before the Closing Date until the expiration of the
statute of limitations (and, to the extent notified by the Buyer or the Seller,
any extensions thereof) of the respective taxable periods, and to abide by all
record retention agreements entered into with any taxing Authority, and (B) to
give the other party reasonable written notice prior to transferring, destroying
or discarding any such books and records and, if the other party so requests,
the Seller, as the case may be, shall allow the other party to take possession
of such books and records.
(b) The
Buyer and the Seller further agree, upon request, to use their reasonable
efforts to obtain any certificate or other document from any governmental
Authority or any other Person as may be necessary to mitigate, reduce or
eliminate any Tax that could be imposed (including, but not limited to, with
respect to this Transaction); provided, however, that no
party shall be required to take any action which would reasonably be expected to
have an adverse effect on such party.
(c) The
Buyer and the Seller further agree, upon request, to provide the other party
with all information that either party may be required to report pursuant to
Section 6043 of the Code and all Treasury Department Regulations promulgated
thereunder.
SECTION
9.5. Certain Taxes. All
transfer, documentary, sales, use, stamp, registration and other such Taxes and
fees (including any penalties and interest) incurred in connection with this
Agreement, shall be paid by the Seller when due; and the Seller will, at its own
expense, file all necessary Tax Returns and other documentation with respect to
all such transfer, documentary, sales, use, stamp, registration and other Taxes
and fees, and, if required by applicable Law, the Buyer will, and will cause its
affiliates to, join in the execution of any such Tax Returns and other
documentation.
27
ARTICLE
X
TERMINATION
SECTION
10.1. Termination of
Agreement. Certain of the parties may terminate this Agreement
as provided below:
(a) the
Buyer and the Seller may terminate this Agreement by mutual written consent at
any time prior to the Closing;
(b) the
Buyer may terminate this Agreement by giving written notice to the Seller on or
before the second (2nd) day following the date of this Agreement, but prior to
the Closing, if the Buyer is not satisfied with the results of its continuing
business, legal, environmental, and accounting due diligence regarding the
Company;
(c) the
Buyer may terminate this Agreement by giving written notice to the Seller at any
time prior to the Closing (A) in the event the Seller has breached any material
representation, warranty, or covenant contained in this Agreement in any
material respect, the Buyer has notified the Seller of the breach, and the
breach has continued without cure for a period of ten (10) days after the notice
of breach, or (B) if the Closing shall not have occurred on or before January
15, 2010 by reason of the failure of any condition precedent under Article VI
hereof (unless the failure results primarily from the Buyer itself breaching any
representation, warranty, or covenant contained in this Agreement);
(d) the
Seller may terminate this Agreement by giving written notice to the Buyer at any
time prior to the Closing (A) in the event that the Buyer has breached any
material representation, warranty, or covenant contained in this Agreement in
any material respect, the Seller have notified the Buyer of the breach, and the
breach has continued without cure for a period of ten (10) days after the notice
of breach or (B) if the Closing shall not have occurred on or before January 15,
2010, by reason of the failure of any condition precedent under Article VII
hereof (unless the failure results primarily from the Seller breaching any
representation, warranty, or covenant contained in this Agreement;
(e) the
Buyer may terminate this Agreement by giving written notice to the Seller at any
time prior to the Closing in the event: (x) the Seller supplements or amends the
Schedules with facts or circumstances that would reasonably be expected to have
a Material Adverse Effect on the Company, or (y) the Company does anything
outside of the Ordinary Course of Business to affect the working capital of the
Company between the date hereof and the Closing Date; and
SECTION
10.2. Effect of
Termination. If any party terminates this Agreement pursuant
to Section 10.1 above, all rights and obligations of the parties hereunder shall
terminate other than those set forth in Sections 5.4, 5.9 and 5.13, without any
Liability of any party to any other party (except for any Liability of any party
then in breach).
28
ARTICLE
XI
MISCELLANEOUS
SECTION
11.1.
Expenses. Each party
will bear his or its own costs and expenses (including, but not limited to,
legal fees and expenses) incurred in connection with this Agreement and this
Transaction.
SECTION
11.2. No Third-Party
Beneficiaries. Subject to the provisions of Section 11.5, this
Agreement shall not confer any rights or remedies upon any Person other than the
parties and their respective successors and permitted assigns.
SECTION
11.3. Entire Agreement. This
Agreement (including the documents referred to herein) constitutes the entire
agreement among the parties and supersedes any prior understandings, agreements,
or representations by or among the parties, written or oral, to the extent they
related in any way to the subject matter hereof.
SECTION
11.4. Succession and
Assignment. This Agreement shall be binding upon and inure to
the benefit of the parties named herein and their respective successors and
permitted assigns. No party may assign either this Agreement or any of his or
its rights, interests, or obligations hereunder without the prior written
approval of the Buyer and the Seller; provided, however, that the
Buyer may, upon prior written notice (i) assign any or all of its rights and
interests hereunder to one or more of its Affiliates, (ii) designate one or more
of its Affiliates to perform its obligations hereunder (in any or all of which
cases the Buyer nonetheless shall remain responsible for the performance of all
of its obligations hereunder) and (iii) grant a security interest in respect of
its rights hereunder to its lenders.
SECTION
11.5 Counterparts. This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original but all of which together will constitute one and the same
instrument.
SECTION
11.6. Headings. The
section headings contained in this Agreement are inserted for convenience only
and shall not affect in any way the meaning or interpretation of this
Agreement.
SECTION
11.7. Notices. All
notices, requests, demands, claims, and other communications hereunder will be
in writing. Any notice, request, demand, claim, or other communication hereunder
shall be deemed duly given if (and then two (2) business days after) it is sent
by registered or certified mail, return receipt requested, postage prepaid, and
addressed to the intended recipient as set forth below:
(a) If
to the Seller, addressed as follows:
Xxxxxx
Xxxxxxx
0000
XxXxxxxx Xxx.
Xxx
Xxxxx, Xxxxxx 00000
with a
copy to:
Nascent
Group, Inc.
0000 Xx.
Xxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxx,
Xxxxxx 00000
Fax:
(000) 000-0000
29
|
(b)
|
If
to the Buyer, addressed as follows:
|
XXXXXX
XXXXXX
with a
copy to:
XXXXXX
XXXXXX
Fax:
Any party
may send any notice, request, demand, claim, or other communication hereunder to
the intended recipient at the address set forth above using any other means
(including personal delivery, expedited courier, messenger service, telecopy,
ordinary mail, or electronic mail), but no such notice, request, demand, claim,
or other communication shall be deemed to have been duly given unless and until
it actually is received by the intended recipient. Any party may
change the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other parties notice
in the manner herein set forth.
SECTION
11.8. Governing Law. This
Agreement shall be governed by and construed in accordance with the domestic
Laws of the State of Nevada as if this Agreement were fully performed and all
obligations recited herein were undertaken solely within the State of Nevada
without giving effect to any choice or conflict of Law provision or rule
(whether of the State of Nevada or any other jurisdiction) that would cause the
application of the Laws of any jurisdiction other than the State of
Nevada. Any dispute or claims made under this Agreement or any
attempt to enforce the terms of this Agreement shall be resolved in Las Vegas,
Nevada pursuant to Section 11.9 of this Agreement.
SECTION
11.9.
Arbitration. Any dispute or claim arising to or in any way
related to this Agreement shall be settled by arbitration in Las Vegas,
Nevada. All arbitration shall be conducted in accordance with the
rules and regulations of the American Arbitration Association
("AAA"). AAA shall designate an arbitrator from an approved list of
arbitrators following both parties' review and deletion of those arbitrators on
the approved list having a conflict of interest with either
party. Each party shall pay its own expenses associated with such
arbitration. A demand for arbitration shall be made within a
reasonable time after the claim, dispute or other matter has arisen and in no
event shall such demand be made after the date when institution of legal or
equitable proceedings based on such claim, dispute or other matter in question
would be barred by the applicable statutes of limitations. The
decision of the arbitrators shall be rendered within 60 days of submission of
any claim or dispute, shall be in writing and mailed to all the parties included
in the arbitration. The decision of the arbitrator shall be binding
upon the parties and judgment in accordance with that decision may be entered in
any court having jurisdiction thereof.
SECTION
11.10. Amendments and
Waivers. No amendment of any provision of this Agreement shall
be valid unless the same shall be in writing and signed by the Buyer and the
Seller. No waiver by any party of any default, misrepresentation, or
breach of warranty or covenant hereunder, whether intentional or not, shall be
deemed to extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
30
SECTION
11.11. Severability. Any
term or provision of this Agreement that is invalid or unenforceable in any
situation in any jurisdiction shall not affect the validity or enforceability of
the remaining terms and provisions hereof or the validity or enforceability of
the offending term or provision in any other situation or in any other
jurisdiction.
SECTION
11.12. Construction. The
parties have participated jointly in the negotiation and drafting of this
Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any of the provisions of
this Agreement. Any reference to any federal, state, local, or
foreign statute or Law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires
otherwise. The word “including” shall mean including without
limitation.
SECTION
11.13. Incorporation of Exhibits, Annexes,
and Schedules. The Exhibits and Schedules identified in this
Agreement are incorporated herein by reference and made a part
hereof.
[The
remainder of this page is intentionally left black. Signature page on
following page.]
31
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date
first above written.
“Buyer”
_________________________
By: ______________________________________
Name: ___________________,
President
“Seller”
Xxxxxx
Xxxxxxx
By:_______________________________________
Name: Xxxxxx Xxxxxxx
“Company”
Fashion
Net, Inc.
By:
______________________________________
Name: Xxxxxx Xxxxxxx
32
EXHIBIT A
ESCROW
AGREEMENT
(As
attached.)
33
EXHIBIT
B
FINANCIAL
STATEMENTS
34
Exhibit
C
Account:
|
|
Name:
|
Nascent
Group, Inc.
|
Account
Number:
|
151701733470
|
Account
Type:
|
Checking
|
Bank Information:
|
|
Name:
|
U.S.
Bank
|
Address:
|
Henderson,
Nevada
|
Swift
Code:
|
XXXXXX00XXX
|
ABA;
|
000000000
|
35
SCHEDULES
TO
3.3
|
Restrictions,
Taxes, Liens, options, warrants, purchase rights, Contracts, commitments,
equities, claims or demands on
Shares
|
|
None;
N/A
|
3.5
|
(A)
Outstanding or authorized options, warrants, purchase rights, subscription
rights, conversion rights, exchange rights or other Contracts or
commitments
|
|
None;
N/A
|
3.6
|
Noncontravention
|
|
None;
N/A
|
3.9
|
Financial
Statements
|
|
Enclosed
|
3.10
|
Subsequent
Events
|
|
None;
N/A
|
3.11
|
Undisclosed
Liabilities
|
None;
N/A
3.12
|
Legal
Compliance
|
|
None;
N/A
|
3.13
|
Tax
Returns
|
|
Enclosed
|
36
SCHEDULE
3.9
FINANCIAL
STATEMENTS
37
SCHEDULE
3.13
TAX
RETURNS
38