Exhibit 2.2
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SHARE EXCHANGE AGREEMENT
This Share Exchange Agreement ("AGREEMENT"), is made and entered into as
of the 31st day of October 2006 by and among OPTIMUM INTERACTIVE (USA) LTD., a
Delaware corporation ("OTMI"); DIAMOND DECISIONS, INC., a Nevada corporation
("DIAMOND"); and XXXXXXX X. XXXXX ("XXXXX"), XXXXXXX XXXXXX ("XXXXXX"), and
XXXXXX XXXXXXXX ("XXXXXXXX"). Xxxxx, Xxxxxx and Xxxxxxxx, together with other
Persons who are members of Diamond management and who may be receive shares of
Diamond Common Stock from Xxxxx, Xxxxxx and Xxxxxxxx prior to the Closing Date,
are collectively referred to herein as the "DIAMOND PRINCIPAL SHAREHOLDERS."
OTMI, DIAMOND and the DIAMOND PRINCIPAL SHAREHOLDERS are hereinafter sometimes
collectively referred to as the "PARTIES."
RECITALS:
A. OTMI desires to acquire all of the issued and outstanding capital
stock of DIAMOND, through an exchange (the "SHARE EXCHANGE") of OTMI voting
capital stock for 100% of the outstanding capital stock of DIAMOND (the "DIAMOND
SHARES").
B. It is the intention of the parties hereto that the Share Exchange
shall qualify as a transaction in securities exempt from registration or
qualification under the Securities Act of 1933, as amended, and under the
applicable securities laws of each state or jurisdiction where the Diamond
Principal Shareholders reside.
C. The board of directors of each of OTMI and DIAMOND and the DIAMOND
PRINCIPAL SHAREHOLDERS each deem it to be in the best interests of OTMI and
DIAMOND and their respective shareholders to consummate the Share Exchange, as a
result of which OTMI shall acquire all of the issued and outstanding DIAMOND
SHARES and the DIAMOND PRINCIPAL SHAREHOLDERS shall be issued the "EXCHANGE
SHARES" (as hereinafter defined), to represent a majority of the "OTMI
FULLY-DILUTED COMMON STOCK" (as hereinafter defined).
D. DIAMOND (a) has heretofore sold one hundred and fifty thousand
dollars ($150,000) of Diamond Notes (the "INITIAL DIAMOND NOTES"), and (b) is in
the process of completing the sale in a private placement of units of securities
consisting of (i) a maximum of five million five hundred thousand dollars
($5,666,667) of additional Diamond Notes (excluding the Initial Diamond Notes
previously sold), and (ii) a maximum of five million one hundred and sixty six
thousand six hundred and sixty seven (5,666,667) shares of Diamond common stock.
Prior to the "CLOSING DATE" of the Share Exchange and as a result of such
private placements, DIAMOND shall have received from unaffiliated third parties
the sum of up to five million one hundred and sixty six thousand six hundred and
sixty seven thousand dollars ($5,666,667) in consideration for DIAMOND'S
issuance of a maximum aggregate amount of up to $5,666,667 of 4% Diamond Notes
and 5,666,667 shares of DIAMOND COMMON Stock.
E. Immediately following the Closing Date of the Share Exchange (a) the
DIAMOND PRINCIPAL SHAREHOLDERS shall own approximately Fifty One and 56/100
Percent (51.56%) of the OTMI Fully-Diluted Common Stock, and (b) all other
holders of capital stock or other securities of OTMI, including all holders of
the securities in connection with the Diamond Financing, the "HIGHLAND
STOCKHOLDERS" and the "ADDITIONAL DIAMOND STOCKHOLDERS" (as hereinafter
defined), shall own the remaining Forty Eight and 44/100 percent (48.44%) of the
OTMI Fully-Diluted Common Stock.
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained in this Agreement, the parties hereto
agree as follows:
DEFINITIONS
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As used in this Agreement, the following terms shall have the meanings set
forth below:
"APPLICABLE LAW" means any domestic or foreign law, statute, regulation,
rule, policy, guideline or ordinance applicable to the businesses of the
Parties, the Share Exchange and/or the Parties.
"ADDITIONAL DIAMOND STOCKHOLDERS" shall mean the collective reference to
those Persons (a) who prior to the Closing Date shall have purchased up to an
aggregate of $5,816,667 of Diamond Notes and 5,816,667 shares of Diamond Common
Stock in connection with the Diamond Financing.
"AFFILIATE" means any one or more Person controlling, controlled by or
under common control with any other Person or their affiliate.
"BUSINESS DAY" shall mean any day, excluding Saturday, Sunday and any
other day on which national banks located in New York, New York shall be closed
for business.
"CLOSING DATE" shall mean the date upon which the Share Exchange shall be
consummated.
"DOLLAR" and "$" means lawful money of the United States of America.
"DIAMOND COMMON STOCK" means the 250,000,000 shares of common stock,
$0.001 par value per share, of Diamond authorized pursuant to its certificate of
incorporation, as amended, through the Closing Date.
"DIAMOND FINANCING" shall mean the aggregate sum of up to Five Million
Eight Hundred Sixteen Thousand Six Hundred and Sixty Seven Dollars ($5,816,667),
or such lesser amount as shall be acceptable to the Diamond Principal Executive
Officer in the exercise of her sole discretion, that has been received and shall
be received by DIAMOND on or before the Closing Date of the Share Exchange, in
consideration for DIAMOND'S issuance of $5,816,667 of Diamond Notes and
5,816,667 shares of DIAMOND Common Stock.
"DIAMOND FULLY-DILUTED COMMON STOCK" means the maximum number shares of
Diamond Common Stock that are issued and outstanding at the Closing Date of the
Share Exchange, plus all additional shares of Diamond Common Stock that would be
issuable at the Closing Date of the Share Exchange upon the conversion of all of
the Diamond Notes and the exercise of all outstanding options, warrants or other
rights to purchase shares of Diamond capital stock.
"DIAMOND NOTES" shall mean the maximum $5,816,667 of 4% Diamond notes due
and payable on March 31, 2008 and convertible by the holders at $0.50 per share
that have and will be issued in connection with the Diamond Financing; which
Diamond Notes shall on the Closing Date be exchanged for OTMI Exchange Notes
that shall be convertible into a maximum of 11,633,334 shares of OTMI Common
Stock.
"DIAMOND PRINCIPAL EXECUTIVE OFFICER" shall mean Xxxxx, in her capacity as
President and Chief Executive Officer of DIAMOND.
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"DIAMOND PRINCIPAL SHAREHOLDERS" means the collective reference to Xxxxx,
Xxxxxx and Xxxxxxxx.
"DIAMOND STOCKHOLDERS" means the collective reference to the Diamond
Principal Shareholders and the Additional Diamond Stockholders.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXCHANGE SHARES" shall mean the collective reference to (a) the Twenty
Seven Million Eight Hundred and Ten Thousand (27,810,000) shares of OTMI Capital
Stock to be issued to the DIAMOND PRINCIPAL SHAREHOLDERS on the Closing Date, or
such other number of shares of OTMI Common Stock as shall represent not less
than Fifty One and 56/100 Percent (51.56%) of the OTMI FULLY-DILUTED COMMON
STOCK, as contemplated by this Agreement, and (b) the maximum Five Million Eight
Hundred and Sixteen Thousand Six Hundred and Sixty Seven (5,816,667) additional
shares of OTMI Common Stock to be issued to the Additional Diamond Stockholders
on the Closing Date; PROVIDED, HOWEVER, that the term "Exchange Shares" shall
not mean or include the maximum of Eleven Million Six Hundred Thirty Three
Thousand Three Hundred Thirty Four (11,633,334) shares of OTMI Common Stock that
may be issued on or following the Closing Date to holders of OTMI Exchange
Notes.
"GAAP" means generally accepted accounting principles in the United States
of America as promulgated by the American Institute of Certified Public
Accountants and the Financial Accounting Standards Board or any successor
Institutes concerning the treatment of any accounting matter.
"HIGHLAND STOCKHOLDERS" means Highland Partners LLC and its assignees,
Affiliates and business associates.
"KNOWLEDGE" means the knowledge after reasonable inquiry.
"LIEN" means, with respect to any property or asset, any mortgage, lien,
pledge, charge, security interest, encumbrance or other adverse claim of any
kind in respect of such property or asset.
"MATERIAL ADVERSE EFFECT" with respect to any entity or group of entities
means any event, change or effect that has or would have a materially adverse
effect on the financial condition, business or results of operations of such
entity or group of entities, taken as a consolidated whole.
"OTMI COMMON STOCK" shall mean the shares of common stock of OTMI, $0.10
par value per share.
"OTMI EXCHANGE NOTES" shall mean the reference to the maximum $5,816,667
principal amount of 4% notes of OTMI due March 31, 2008 and convertible at any
time prior to the maturity date by the holders into shares of OTMI Common Stock
at a conversion price of $0.50 per share; which OTMI Exchange Notes shall (i) be
unconditionally guaranteed as to payment by Diamond, and (ii) be issued on the
Closing Date to the holders of the Diamond Notes in exchange for such Diamond
Notes.
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"OTMI FULLY-DILUTED COMMON STOCK" means, as at the time in question, the
53,936,320 maximum number of shares of OTMI Common Stock that are issued and
outstanding and issuable as at the Closing Date, AFTER GIVING EFFECT TO:
(a) the issuance of all 5,581,170 shares of OTMI Common Stock to be
owned by the Highland Stockholders;
(b) the 1,395,150 shares of OTMI Common Stock owned by Persons, other
than the Highland Stockholders;
(c) the issuance of all 27,810,000 Exchange Shares to the Diamond
Principal Stockholders;
(d) the issuance of a maximum of 5,816,667 shares of OTMI Common Stock
on the Closing Date to holders of Diamond Notes and Initial Diamond Notes;
(e) the issuance of a maximum of 11,633,334 shares of OTMI Common Stock
that are issuable upon conversion of all OTMI Exchange Notes issued on the
Closing Date; and
(f) the issuance of up to 1,700,000 shares of OTMI Common Stock that are
issuable upon the exercise of warrants to be issued to Xxxxxx Xxxxxxx, Inc. or
its affiliates;
PROVIDED, HOWEVER, that, as used in this Agreement, the term "OTMI FULLY-DILUTED
COMMON STOCK" shall NOT mean or include any shares of OTMI Common Stock issued
or issuable upon conversion of any OTMI notes or shares of OTMI preferred stock,
or upon the exercise of options, warrants or other rights to purchase shares of
OTMI capital stock, to the extent such securities are issued or issuable (i) in
connection with any one or more financings subsequent to the Diamond Financing,
(ii) in connection with any purchase of the assets, securities or the businesses
of any other persons or for any other valid business purpose approved by the
Board of Directors, or (iii) in connection with any stock options or other
incentive equity securities issued to any employees, board members or
consultants of OTMI or Diamond in consideration of services to be rendered
subsequent to the Closing Date of the Share Exchange.
"OTMI STOCK PURCHASE AGREEMENT" means that certain agreement dated as of
October 31, 2006, by and among (a) OTMI, (b) Aurora Capital Group Ltd. and
Berlin Capital Investments, Inc., who owned as at such date an aggregate of
8,110,000 shares of OTMI Common Stock (collectively, the "OTMI SELLING
STOCKHOLDERS"), and (c) the HIGHLAND STOCKHOLDERS, providing for the purchase by
the HIGHLAND STOCKHOLDERS of a total of 7,905,850 shares of OTMI Common Stock
from the OTMI SELLING STOCKHOLDERS in consideration for the payment of $525,000
in cash.
"PERSON" means any individual, corporation, partnership, trust or
unincorporated organization or a government or any agency or political
subdivision thereof.
"TAX" (and, with correlative meaning, "TAXES" and "TAXABLE") means:
(i) any income, alternative or add-on minimum tax, gross receipts
tax, sales tax, use tax, ad valorem tax, transfer tax, franchise tax, profits
tax, license tax, withholding tax, payroll tax, employment tax, excise tax,
severance tax, stamp tax, occupation tax, property tax, environmental or
windfall profit tax, custom, duty or other tax, impost, levy, governmental fee
or other like assessment or
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charge of any kind whatsoever together with any interest or any penalty,
addition to tax or additional amount imposed with respect thereto by any
governmental or Tax authority responsible for the imposition of any such tax
(domestic or foreign), and
(ii) any liability for the payment of any amounts of the type
described in clause (i) above as a result of being a member of an affiliated,
consolidated, combined or unitary group for any Taxable period, and
(iii) any liability for the payment of any amounts of the type
described in clauses (i) or (ii) above as a result of any express or implied
obligation to indemnify any other person.
"TAX RETURN" means any return, declaration, form, claim for refund or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
THE SHARE EXCHANGE
SECTION 1. THE SHARE EXCHANGE; OFFICERS AND DIRECTORS
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1.1 THE SHARE EXCHANGE.
(a) On the Closing Date and subject to and upon the terms and conditions
of this Agreement, the DIAMOND STOCKHOLDERS shall sell, assign, transfer and
exchange (collectively, "TRANSFER") to OTMI all of their issued and outstanding
shares of Diamond Common Stock, and all rights to receive shares of Diamond
Common Stock held by the Additional Diamond Stockholders (collectively, the
"DIAMOND SHARES").
(b) On the Closing Date, and in exchange for the Transfer to it of the
Diamond Shares, OTMI shall issue to the DIAMOND PRINCIPAL SHAREHOLDERS and the
ADDITIONAL DIAMOND STOCKHOLDERS the following EXCHANGE SHARES:
(i) THE DIAMOND PRINCIPAL SHAREHOLDERS shall receive an aggregate
of 27,810,000 shares of OTMI Common Stock, or such other number of Exchange
Shares as shall represent approximately Fifty One and 56/100 Percent (51.56%) of
the 53,936,320 shares of OTMI Fully-Diluted Common Stock; and
(ii) the ADDITIONAL DIAMOND STOCKHOLDERS shall receive a maximum
aggregate of 5,816,667 shares of OTMI Common Stock, or one share of OTMI Common
Stock for $1.00 principal amount of Diamond Notes held by them as at the Closing
Date; PROVIDED, THAT the sum of: (A) the total maximum number of 5,816,667
shares of OTMI Common Stock issued on the Closing Date to the Additional Diamond
Stockholders, and (B) the maximum of 11,633,334 additional shares of OTMI Common
Stock that may be issued to the Additional Diamond Stockholders on or following
the Closing Date upon conversion of the $5,816,667 maximum principal amount of
OTMI Exchange Notes shall represent approximately Thirty-Two and 35/100 Percent
(32.35%) of the 53,936,320 shares of OTMI Fully-Diluted Common Stock.
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(c) any outstanding warrants to purchase shares of Diamond Common Stock
and all options entitling the holder to purchase shares of Diamond Common Stock
as at the Closing Date shall be cancelled and retired and cease to exist as at
the Closing Date.
1.2 OTMI EXCHANGE NOTES. In connection with the transactions contemplated by
this Agreement, all of the maximum $5,816,667 principal amount of Diamond Notes
outstanding at the Closing Date shall, by their terms and pursuant to this
Agreement, be exchanged for a like principal amount of OTMI Exchange Notes. Such
OTMI Exchange Notes shall, by their terms, be convertible at the option of the
holders, at any time on or before the March 31, 2008 Maturity Date, at $0.50 per
share, into a maximum of 11,633,334 additional shares of OTMI Common Stock.
1.3 EXEMPTION FROM REGISTRATION. The Parties intend that (i) the Exchange
Shares to be issued by OTMI to the Diamond Principal Shareholders and the
Additional Diamond Stockholders, (ii) the OTMI Exchange Notes, and (iii) the
shares of OTMI Common Stock issuable upon conversion of the OTMI Exchange Notes
(collectively, the "OTMI SECURITIES") shall be exempt from the registration
requirements of the Securities Act pursuant to Section 4(2) of the Securities
Act to Diamond Stockholders and the rules and regulations promulgated
thereunder.
1.4 CLOSING.
The closing of the Share Exchange (the "CLOSING") will take place at the
offices of Xxxxxxx Xxxx LLP, counsel to Diamond, at its office in New York, New
York, within ten days following the delivery of satisfaction or waiver of the
conditions precedent set forth in Section 4 or at such other date as OTMI and
the Diamond Principal Shareholders shall agree (the "CLOSING DATE"), but in no
event shall the Closing Date occur later than June 30, 2007, unless such date
shall be extended by mutual agreement of OTMI and the Diamond Principal
Shareholders. In the event that on the Closing Date all of the issued and
outstanding Diamond Shares shall not have been validly Transferred and exchanged
for OTMI Exchange Shares, the Parties shall cause the Rollup Merger contemplated
by Section 5.14 below to be consummated and will cause the Articles of Merger to
be filed at such Closing with the Secretary of State of the State of Nevada.
1.5 CERTIFICATE OF INCORPORATION AND BYLAWS. Prior to the Closing Date of the
Share Exchange:
(a) The Certificate of Incorporation of OTMI and the Bylaws of OTMI,
shall be amended in such a manner as shall be acceptable to the Diamond
Principal Stockholders.
(b) The initial board of directors of OTMI and its Diamond subsidiary
subsequent to the Share Exchange shall be as set forth in Section 5.8 of this
Agreement. Such initial members of the board of directors shall serve until the
earlier of their death, resignation or removal or until the next annual meeting
of the stockholders of OTMI, when their respective successors are duly elected
and qualified. The officers of OTMI subsequent to the Share Exchange shall be
the current officers of Diamond.
1.6 CHANGE OF CORPORATE NAME. On or promptly following the Closing Date OTMI
shall change its corporate name to "APPAREL TECHNOLOGIES, INC." or such other
corporate name as shall be acceptable to the DIAMOND PRINCIPAL SHAREHOLDERS.
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1.7 RESTRICTIONS ON RESALE
The Exchange Shares and the shares of OTMI Common Stock issued to the
Highland Stockholders under the OTMI Stock Purchase Agreement will not be
registered under the Securities Act, or the securities laws of any state, and
cannot be transferred, hypothecated, sold or otherwise disposed of until: (i) a
registration statement with respect to such securities is declared effective
under the Securities Act, or (ii) OTMI receives an opinion of counsel for the
stockholder, reasonably satisfactory to counsel for OTMI, that an exemption from
the registration requirements of the Securities Act is available.
The certificates representing the Exchange Shares under the OTMI Stock
Purchase Agreement shall contain a legend substantially as follows:
"THE SECURITIES WHICH ARE REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
MAY NOT BE SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE DISPOSED OF
UNTIL A REGISTRATION STATEMENT WITH RESPECT THERETO IS DECLARED
EFFECTIVE UNDER SUCH ACT, OR APPAREL TECHNOLOGIES, INC. (FORMERLY,
OPTIMUM INTERACTIVE (USA) LTD.) RECEIVES AN OPINION OF COUNSEL FOR
THE HOLDER REASONABLY SATISFACTORY TO COUNSEL FOR APPAREL
TECHNOLOGIES, INC. (FORMERLY, OPTIMUM INTERACTIVE (USA) LTD.) THAT
AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT IS
AVAILABLE."
"PURSUANT TO THE SHARE EXCHANGE AGREEMENT DATED AS OF OCTOBER 31,
2006, BY AND AMONG DIAMOND DECISIONS, INC., A NEVADA CORPORATION
("DIAMOND"), OPTIMUM INTERACTIVE (USA) LTD., A DELAWARE CORPORATION
("OTMI") AND CERTAIN OF THE SHAREHOLDERS AND EXECUTIVE OFFICERS OF
DIAMOND, THE SECURITIES WHICH ARE REPRESENTED BY THIS CERTIFICATE
MAY NOT BE SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE DISPOSED OF,
EXCEPT IN ACCORDANCE WITH THE TERMS AND CONDITIONS SET FORTH IN A
LOCK-UP AGREEMENT BY AND BETWEEN THE HOLDER HEREOF AND OTMI."
1.8 EXCHANGE OF CERTIFICATES.
(a) On the Closing Date the Diamond Stockholders shall be required to
surrender all their Diamond Shares to OTMI, and the Diamond Stockholders shall
be entitled upon such surrender to receive in exchange therefor certificates
representing the proportionate number of Exchange Shares into which the Diamond
Shares theretofore surrendered shall have been exchanged pursuant to this
Agreement. Until so surrendered, each outstanding certificate which, prior to
the Closing Date, represented Diamond Shares shall be deemed for all corporate
purposes, subject to the further provisions of this Article I, to evidence the
ownership of the number of whole Exchange Shares for which such Diamond Shares
have been so exchanged. No dividend payable to holders of Exchange Shares of
record as of any date subsequent to the Closing Date shall be paid to the owner
of any certificate which, prior to the Closing Date, represented Diamond Shares,
until such certificate or certificates representing all the relevant Diamond
Shares, together with a stock transfer form, are surrendered as provided in this
Article I.
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(b) All Exchange Shares for which the Diamond Shares shall have been
exchanged pursuant to this Article I shall be deemed to have been issued in full
satisfaction of all rights pertaining to the Diamond Shares.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF DIAMOND AND DIAMOND PRINCIPAL
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STOCKHOLDERS.
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DIAMOND and the DIAMOND PRINCIPAL SHAREHOLDERS hereby jointly and severally
represent and warrant to OTMI as follows:
2.1 ORGANIZATION AND GOOD STANDING: OWNERSHIP OF SHARES. DIAMOND is a
corporation duly organized and validly existing under the laws of the State of
Nevada. There are no outstanding subscriptions, rights, options, warrants or
other agreements obligating DIAMOND to issue, sell or transfer any stock or
other securities of DIAMOND except the warrants listed on SCHEDULE 2.1 attached
hereto and made a part hereof.
2.2 CORPORATE AUTHORITY. Each of the Diamond Principal Shareholders
individually has the power and authority, and DIAMOND has the corporate power to
enter into this Agreement and to perform their respective obligations hereunder.
The execution and delivery of this Agreement and the consummation of the
transaction contemplated hereby have been duly authorized by the Board of
Directors of DIAMOND and his hereby authorized by the Diamond Principal
Stockholders. The execution and performance of this Agreement will not
constitute a material breach of any agreement, indenture, mortgage, license or
other instrument or document to which DIAMOND is a party and will not violate
any judgment, decree, order, writ, rule, statute, or regulation applicable to
DIAMOND or its properties. The execution and performance of this Agreement will
not violate or conflict with any provision of the respective Articles of
Incorporation or by-laws of DIAMOND.
2.3 OWNERSHIP OF DIAMOND SECURITIES.
(a) The Diamond Principal Shareholders and the Additional Diamond
Stockholders set forth on SCHEDULE 2.3 are the owners of record and beneficially
of all of the issued and outstanding shares of Diamond Common Stock, options and
warrants to purchase shares of Diamond Common Stock (collectively, "DIAMOND
SECURITIES"), which Diamond Securities, to the best of Diamond's knowledge, are
owned free and clear of all rights, claims, liens and encumbrances, and have not
been sold, pledged, assigned or otherwise transferred except pursuant to this
Agreement.
(b) Prior to the Closing Date, Diamond shall amend its Certificate of
Incorporation to authorize 50,000,000 shares of Diamond Common Stock, and shall
consummate a split of the outstanding Diamond capital stock, so that upon
completion thereof,
(i) the Diamond Principal Shareholders shall own of record an
aggregate of 27,810,000 shares of Diamond Common Stock; and
(ii) the ADDITIONAL DIAMOND STOCKHOLDERS shall own of record or
have the right to receive one share of Diamond Common Stock for each $1.00 of
Diamond Notes purchased by them, or a maximum of 5,816,667 shares of Diamond
Common Stock. In addition, the holders of the 4% Diamond Notes shall have a
right to convert such Diamond Notes into a maximum of 11,633,334 additional
shares of Diamond Common Stock.
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2.4 FINANCIAL STATEMENTS, BOOKS AND RECORDS.
(a) SCHEDULE 2.4 consists of the audited financial statements (balance
sheet, income statement, notes) of DIAMOND as of December 31, 2004 and December
31, 2005 and for the two (2) fiscal years then ended (the "ANNUAL FINANCIAL
STATEMENTS"), and (b) the unaudited financial statements of Diamond as of June
30, 2006 and for the six months then ended (the "INTERIM 2006 FINANCIAL
STATEMENTS" and together with the Annual Financial Statements, the "FINANCIAL
STATEMENTS"). The Financial Statements fairly represent the financial position
of DIAMOND as at such dates and the results of their operations for the periods
then ended. The Financial Statements were prepared in accordance with generally
accepted accounting principles applied on a consistent basis with prior periods
except as otherwise stated therein and except that the Interim 2006 Financial
Statements may not include all footnotes normally included under such generally
accepted accounting principles. The books of account and other financial records
of DIAMOND are in all respects complete and correct in all material respects and
are maintained in accordance with good business and accounting practices.
(b) The Annual Financial Statements and the Interim 2006 Financial
Statements are capable of being audited in accordance with generally accepted
accounting principles and Regulation S-B, as promulgated under the Securities
Act of 1933, as amended.
(c) DIAMOND will engage services of Xxxxxx & Kleigman, PC, or such other
firm of independent auditors as are qualified by the Public Company Accounting
Oversight Board, to reaudit the Annual Financial Statements and to audit the
financial statements of DIAMOND as at December 31, 2006 and for the fiscal year
then ended (collectively, the "AUDITS"). DIAMOND shall use its best efforts to
cooperate with such auditors to enable them to complete their audits of such
financial statements and issue their Audit report thereon as soon as practicable
following the date of this Agreement, but in no event later than May 31, 2007
(the "OUTSIDE AUDIT DATE").
2.5 ACCESS TO RECORDS. The corporate financial records, minute books and other
documents and records of DIAMOND have been made available to OTMI prior to the
Closing hereof.
2.6 NO MATERIAL ADVERSE CHANGES. Except as otherwise described on SCHEDULE 2.6
hereto, since December 31, 2005 there has not been:
(a) any material adverse change in the financial position of
DIAMOND except changes arising in the ordinary course of business, which
changes will in no event materially and adversely affect the financial
position of DIAMOND;
(b) any damage, destruction or loss materially affecting the
assets, prospective business, operations or condition (financial or
otherwise) of DIAMOND whether or not covered by insurance;
(c) any declaration, setting aside or payment of any dividend or
distribution with respect to any redemption or repurchase of DIAMOND
capital stock;
(d) any sale of an asset (other than in the ordinary course of
business) or any mortgage or pledge by DIAMOND of any properties or
assets, other than as set forth in Section 2.13 below; or
(e) adoption of any pension, profit sharing, retirement, stock
bonus, stock option or similar plan or arrangement.
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2.7 TAXES. DIAMOND as of December 31, 2005, has filed all material tax,
governmental and/or related forms and reports (or extensions thereof) due or
required to be filed and has (or will have) paid or made adequate provisions for
all taxes or assessments which had become due as of December 31, 2005, and there
are no deficiency notices outstanding.
2.8 COMPLIANCE WITH LAWS. Except as set forth on Schedule 2.8, DIAMOND has
complied with all federal, state, county and local laws, ordinances,
regulations, inspections, orders, judgments, injunctions, awards or decrees
applicable to it or its business which, if not complied with, would materially
and adversely affect the business of DIAMOND.
2.9 NO BREACH. The execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby will not:
(a) violate any provision of the Articles of Incorporation or By-Laws of
DIAMOND;
(b) violate, conflict with or result in the breach of any of the terms
of, result in a material modification of, otherwise give any other contracting
party the right to terminate, or constitute (or with notice or lapse of time, or
both constitute) a default under any contract or other agreement to which
DIAMOND is a party or by or to which it or any of its assets or properties may
be bound or subject;
(c) violate any order, judgment, injunction, award or decree of any
court, arbitrator or governmental or regulatory body against, or binding upon,
DIAMOND or upon the properties or business of DIAMOND; or
(d) violate any statute, law or regulation of any jurisdiction
applicable to the transactions contemplated herein which could have a materially
adverse effect on the business or operations of DIAMOND.
2.10 ACTIONS AND PROCEEDINGS. DIAMOND is not a party to any material pending
litigation or, to its knowledge, any governmental investigation or proceeding
not reflected in the DIAMOND Financial Statements, and to its best knowledge, no
material litigation, claims, assessments or Non-governmental proceedings are
threatened against DIAMOND except as set forth on Schedule 2.10 attached hereto
and made a part hereof.
2.11 AGREEMENTS. Schedule 2.11 sets forth any material contract or arrangement
to which DIAMOND is a party or by or to which it or its assets, properties or
business are bound or subject, whether written or oral.
2.12 BROKERS OR FINDERS. No broker's or finder's fee will be payable by DIAMOND
in connection with the transactions contemplated by this Agreement, nor will any
such fee be incurred as a result of any actions by DIAMOND or any of its
Shareholders.
2.13 REAL ESTATE. Except as set forth on Schedule 2.13, DIAMOND owns no real
property nor is a party to any leasehold agreement.
2.14 TANGIBLE ASSETS. Except as set forth on Schedule 2.14 hereto, DIAMOND has
full title and interest in all machinery, equipment, furniture, leasehold
improvements, fixtures, projects, owned or leased by
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DIAMOND, any related capitalized items or other tangible property material to
the business of DIAMOND (the "Tangible Assets"). DIAMOND holds all rights, title
and interest in all the Tangible Assets owned by it on the Balance Sheet or
acquired by it after the date on the Balance Sheet free and clear of all liens,
pledges, mortgages, security interests, conditional sales contracts or any other
encumbrances. All of the Tangible Assets are in good operating condition and
repair and are usable in the ordinary course of business of DIAMOND and conform
to all applicable laws, ordinances and government orders, rules and regulations
relating to their construction and operation, except as set forth on Schedule
2.14 hereto.
2.15 LIABILITIES. DIAMOND did not have any direct or indirect indebtedness,
liability, claim, loss, damage, deficiency, obligation or responsibility, known
or unknown, fixed or unfixed, liquidated or unliquidated, secured or unsecured,
accrued or absolute, contingent or otherwise, including, without limitation, any
liability on account of taxes, any governmental charge or lawsuit (all of the
foregoing collectively defined to as "LIABILITIES"), which are not fully, fairly
and adequately reflected on the Financial Statement except for a specific
Liabilities set forth in the Unaudited Financial Statements or on SCHEDULE 2.15
attached hereto and made a part hereof. As of the date of Closing, DIAMOND will
not have any Liabilities, other than Liabilities fully and adequately reflected
on the Financial Statements except for Liabilities incurred in the ordinary
course of business and as set forth in SCHEDULE 2.15. There is no circumstance,
condition, event or arrangement which may hereafter give rise to any Liabilities
not in the ordinary course of business.
2.16 OPERATIONS OF DIAMOND. From December 31, 2005 through the Closing Date,
DIAMOND has not and will not have:
(a) incurred any indebtedness or borrowed money, except for the Diamond
Notes;
(b) declared or paid any dividend or declared or made any distribution
of any kind to any shareholder, or made any direct or indirect redemption,
retirement, purchase or other acquisition of any shares in its capital stock;
(c) made any loan or advance to any shareholder, officer, director,
employee, consultant, agent or other representative or made any other loan or
advance otherwise than in the ordinary course of business;
(d) except in the ordinary course of business, incurred or assumed any
indebtedness or liability (whether or not currently due and payable);
(e) disposed of any assets of DIAMOND except in the ordinary course of
business, except as described in SCHEDULE 2.16;
(f) materially increased the annual level of compensation of any
executive employee of DIAMOND;
(g) increased, terminated, amended or otherwise modified any plan for
the benefit of employees of DIAMOND;
(h) issued any equity securities or rights to acquire such equity
securities; or
(i) except in the ordinary course of business, entered into or modified
any contract, agreement or transaction.
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2.17 CAPITALIZATION. On the Closing Date, the authorized capital stock of
DIAMOND consists of 50,000,000 shares of Diamond Common Stock, $.001 per share
par value, of which (a) 27,810,000 shares of Diamond Common Stock will be owned
by the Diamond Principal Shareholders and up to 5,816,667 shares of Diamond
Common Stock will be owned by Additional Diamond Stockholders. DIAMOND has not
granted, issued or agreed to grant, issue or make any warrants, options,
subscription rights or any other commitments of any character relating to the
issued or unissued shares of capital stock of DIAMOND.
2.18 DIAMOND NOTES. As at the date hereof, the outstanding amount of all
Diamond Notes is approximately $4,500,000. Prior to or on the Closing Date,
Diamond may issue up to an additional $1,166,667 of additional Diamond Notes.
2.19 FULL DISCLOSURE. No representation or warranty by DIAMOND in this
Agreement or in any document or schedule to be delivered by them pursuant
hereto, and no written statement, certificate or instrument furnished or to be
furnished by DIAMOND pursuant hereto or in connection with the negotiation,
execution or performance of this Agreement contains or will contain any untrue
statement of a material fact or omits or will omit to state any fact necessary
to make any statement herein or therein not materially misleading or necessary
to a complete and correct presentation of all material aspects of the business
of DIAMOND.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF OTMI
--------------------------------------------------
OTMI hereby represents and warrants to the Diamond Stockholders, as
follows:
3.1 ORGANIZATION AND GOOD STANDING. OTMI is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
OTMI has the corporate power to own its own property and to carry on its
business as now being conducted and is duly qualified to do business in any
jurisdiction where so required except where the failure to so qualify would have
no material negative impact.
3.2 CORPORATE AUTHORITY. OTMI has the corporate power to enter into this
Agreement and to perform their respective obligations hereunder. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by the Board of Directors and
stockholders of OTMI as required by Delaware law. The execution and performance
of this Agreement will not constitute a material breach of any agreement,
indenture, mortgage, license or other instrument or document to which OTMI is a
party and will not violate any judgment, decree, order, writ, rule, statute, or
regulation applicable to OTMI or its properties. The execution and performance
of this Agreement will not violate or conflict with any provision of the
respective Certificate of Incorporation or by-laws of OTMI.
3.3 OTMI CAPITALIZATION. As of the date of this Agreement, OTMI is authorized
to issue 50,000,000 shares of OTMI Common Stock, $0.001 par value per share. An
aggregate of 9,301,000 shares of OTMI Common Stock are issued and outstanding,
and no other shares of OTMI Common Stock are reserved for issuance pursuant to
any convertible securities, options or warrants. Subject to the provisions of
the OTMI Stock Purchase Agreement, as at the date of this Agreement, the OTMI
SELLING STOCKHOLDERS own in the aggregate 8,110,000 outstanding shares of OTMI
Common Stock. Prior to the Closing Date of the Share Exchange, OTMI shall effect
the Charter Amendment contemplated by SECTION 5.6 of this Agreement.
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3.4 OTMI 2005 BALANCE SHEET; ASSETS AND LIABILITIES.
(a) The Form 10KSB/A of OTMI for the fiscal year ended December 31, 2005
includes the audited balance sheet, statement of operations and statement of
cash flows of OTMI as at December 31, 2005 and for the fiscal year then ended
(the "OTMI 2005 AUDITED FINANCIAL STATEMENTS"). The Form 10QSB/A of OTMI for the
quarter ended June 30, 2006, includes the unaudited balance sheet, statement of
operations and statement of cash flows of OTMI as at June 30, 2006 and for the
six months then ended (the "OTMI 2006 FINANCIAL STATEMENTS"). Except as set
forth on the OTMI Balance Sheet as at June 30, 2006 or otherwise disclosed on
SCHEDULE 3.4, as at June 30, 2006 and for all periods subsequent thereto, OTMI
has no other assets and has incurred no other liabilities, debts or obligations,
whether fixed, contingent or otherwise required to be set forth on a balance
sheet prepared in accordance with GAAP. The books of account and other financial
records of OTMI are in all respects complete and correct in all material
respects and are maintained in accordance with good business and accounting
practices.
(b) OTMI has no operating assets or liabilities, and has not conducted
any trade or business activities whatsoever, other than as set forth on SCHEDULE
3.4 annexed hereto.
3.5 NO MATERIAL ADVERSE CHANGES. Since June 30, 2006:
(a) except for indebtedness of approximately $18,000 that will be
outstanding as at the Closing Date, there has not been any liabilities or other
indebtedness incurred by OTMI;
(b) there has not been any material adverse changes in the financial
position of OTMI except changes arising in the ordinary course of business,
which changes will in no event materially and adversely affect the financial
position of OTMI, and will be consistent with the representations made by OTMI
hereunder.
(c) there has not been any damage, destruction or loss materially
affecting the assets, prospective business, operations or condition (financial
or otherwise) of OTMI whether or not covered by insurance;
(d) there has not been any declaration setting aside or payment of any
dividend or distribution with respect to any redemption or repurchase of OTMI
capital stock;
(e) there has not been any sale of an asset (other than in the ordinary
course of business) or any mortgage pledge by OTMI of any properties or assets;
or
(f) there has not been adoption or modification of any pension, profit
sharing, retirement, stock bonus, stock option or similar plan or arrangement.
(g) there has not been any loan or advance to any shareholder, officer,
director, employee, consultant, agent or other representative or made any other
loan or advance otherwise than in the ordinary course of business;
(h) there has not been any increase in the annual level of compensation
of any executive employee of OTMI;
(i) except in the ordinary course of business, OTMI has not entered into
or modified any contract, agreement or transaction; and
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(j) OTMI has not issued any equity securities or rights to acquire
equity securities.
3.6 TAXES. OTMI has timely filed all material tax, governmental and/or related
forms and reports (or extensions thereof) due or required to be filed and has
paid or made adequate provisions for all taxes or assessments which have become
due as of the Closing Date, and there are no deficiencies outstanding.
3.7 COMPLIANCE WITH LAWS. OTMI has complied with all federal, state, county
and local laws, ordinances, regulations, inspections, orders, judgments,
injunctions, awards or decrees applicable to it or its business, which, if not
complied with, would materially and adversely affect the business of OTMI or the
trading market for the OTMI Shares and specifically, and OTMI has complied with
provisions for registration under the Securities Act of 1933 and all applicable
blue sky laws in connection with its public stock offering and there are no
outstanding, pending or threatened stop orders or other actions or
investigations relating thereto.
3.8 ACTIONS AND PROCEEDINGS. OTMI is not a party to any material pending
litigation or, to its knowledge, any governmental proceedings are threatened
against OTMI.
3.9 PERIODIC REPORTS. OTMI is current in the filing of all forms or reports
with the Securities and Exchange Commission ("SEC"), and has been a reporting
company under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). All such reports and statements filed by OTMI with the SEC (collectively,
"SEC REPORTS") did not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstance under which they were made, not
misleading.
3.10 DISCLOSURE. OTMI has (and at the Closing it will have) disclosed in
writing to Diamond all events, conditions and facts materially affecting the
business, financial conditions or results of operation of OTMI all of which have
been set forth herein. OTMI has not now and will not have, at the Closing,
withheld disclosure of any such events, conditions, and facts which they have
knowledge of or have reasonable grounds to know may exist.
3.11 ACCESS TO RECORDS. The corporate financial records, minute books, and
other documents and records of OTMI have been made available to DIAMOND prior to
the Closing hereof.
3.12 NO BREACH. The execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby will not:
(a) violate any provision of the Articles of Incorporation or By-Laws of
OTMI;
(b) violate, conflict with or result in the breach of any of the terms
of, result in a material modification of, otherwise give any other contracting
party the right to terminate, or constitute (or with notice or lapse of time or
both constitute) a default under, any contract or other agreement to which OTMI
is a party or by or to which it or any of its assets or properties may be bound
or subject;
(c) violate any order, judgment, injunction, award or decree of any
court, arbitrator or governmental or regulatory body against, or binding upon,
OTMI or upon the securities, properties or business to OTMI; or
14
(d) violate any statute, law or regulation of any jurisdiction
applicable to the transactions contemplated herein.
3.14 BROKERS OR FINDERS. Except as provided in the OTMI Stock Purchase
Agreement, no broker's or finder's fee will be payable by OTMI in connection
with the transactions contemplated by this Agreement, nor will any such fee be
incurred as a result of any actions of OTMI.
3.15 AUTHORITY TO EXECUTE AND PERFORM AGREEMENTS. OTMI has the full legal right
and power and all authority and approval required to enter into, execute and
deliver this Agreement and to perform fully its obligations hereunder. This
Agreement has been duly executed and delivered and is the valid and binding
obligation of OTMI enforceable in accordance with its terms, except as may be
limited by bankruptcy, moratorium, insolvency or other similar laws generally
affecting the enforcement of creditors' rights. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby and
the performance by OTMI of this Agreement, in accordance with its respective
terms and conditions will not:
(a) require the approval or consent of any governmental or regulatory
body or the approval or consent of any other person;
(b) conflict with or result in any breach or violation of any of the
terms and conditions of, or constitute (or with any notice or lapse of time or
both would constitute) a default under, any order, judgment or decree applicable
to OTMI, or any instrument, contract or other agreement to which OTMI is a party
or by or to which OTMI is bound or subject; or
(c) result in the creation of any lien or other encumbrance on the
assets or properties of OTMI.
3.16 FULL DISCLOSURE. No representation or warranty by OTMI in this Agreement
or in any document or schedule to be delivered by them pursuant hereto, and no
written statement, certificate or instrument furnished or to be furnished by
OTMI pursuant hereto or in connection with the negotiation, execution or
performance of this Agreement contains or will contain any untrue statement of a
material fact or omits or will omit to state any fact necessary to make any
statement herein or therein not materially misleading or necessary to complete
and correct presentation of all material aspects of the business of OTMI.
SECTION 4. CONDITIONS PRECEDENT
--------------------------------
4.1 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF DIAMOND AND THE DIAMOND
PRINCIPAL SHAREHOLDERS. All obligations of DIAMOND and the Diamond Principal
Shareholders under this Agreement are subject to the fulfillment, prior to or as
of the Closing Date, as indicated below, of each of the following conditions;
any one of which may be waived at Closing by Xxxxx, as the representative of the
Diamond Principal Shareholders (the "DIAMOND STOCKHOLDERS' REPRESENTATIVE):
(a) The representations and warranties by or on behalf of OTMI contained
in this Agreement or in any certificate or document delivered pursuant to the
provisions hereof shall be true in all material respects at and as of Closing
Date as though such representations and warranties were made at and as of such
time.
(b) OTMI shall have performed and complied in all material respects,
with all covenants,
15
agreements, and conditions set forth in, and shall have executed and delivered
all documents required by this Agreement to be performed or complied with or
executed and delivered by it prior to or at the Closing, including, without
limitation, all of the covenants and agreements of OTMI set forth in SECTION 5.6
of this Agreement..
(c) On the Closing Date, an executive officer of OTMI or one of the
Highland Stockholders shall have delivered to Diamond a certificate, duly
executed by such Person and certifying, that to the best of such Person's
knowledge and belief, the representations and warranties of OTMI set forth in
this Agreement are true and correct in all material respects.
(d) On or before the Closing, the Board of Directors of OTMI shall have
approved, in accordance with Delaware law, the execution, delivery and
performance of this Agreement and the consummation of the transaction
contemplated herein and authorized all of the necessary and proper action to
enable OTMI to comply with the terms of the Agreement.
(e) On or before the Closing Date, the Highland Stockholders shall have
contributed back to the treasury of OTMI an aggregate of 2,324,680 of the
7,905,850 shares of OTMI Common Stock then owned by them, thereby reducing the
aggregate number of shares of OTMI Common Stock owned by the Highland
Stockholders to 5,581,170 shares of OTMI Common Stock and the total number of
shares of OTMI Common Stock outstanding immediately prior to the Closing of the
transactions contemplated by this Exchange Agreement to 6,976,320 shares of OTMI
Common Stock.
(f) On or before the Closing Date, the Highland Stockholders shall have
entered into the voting agreement with Xxxxx contemplated by Section 5.13 of
this Agreement.
(g) On or before the Closing Date, the Board of Directors of OTMI and
the OTMI Selling Stockholders shall have filed with the SEC a Form 14C
Information Statement and shall have amended the certificate of incorporation of
OTMI to (i) increase to 250,000,000 shares of OTMI Common Stock the authorized
number of shares of OTMI Common Stock, (ii) authorize for issuance up to
25,000,000 shares of preferred stock, containing such rights, privileges and
preferences as the board of directors may, from time to time determine, and
(iii) change the corporate name of OTMI to APPAREL TECHNOLOGIES, INC. or such
other name as shall be acceptable to the Diamond Principal Shareholders (the
"CHARTER AMENDMENT") On the Closing Date, OTMI shall have sufficient authorized
shares of OTMI Common Stock authorized to complete the Share Exchange.
(h) An aggregate of approximately $4,950,000 (or such lesser amount as
shall be acceptable to the Diamond Principal Executive Officer, in the exercise
of her sole and absolute discretion), representing the net proceeds of the
Diamond Financing, on substantially the terms set forth in this Agreement or on
other terms as shall be acceptable to the Diamond Principal Shareholders, shall
have been received by Diamond on or before the Closing.
(i) At the Closing, all instruments and documents delivered to Diamond
and the Shareholders pursuant to provisions hereof shall be reasonably
satisfactory to legal counsel for DIAMOND.
(j) At the Closing, the Diamond Principal Shareholders shall have
received an opinion of Xxxxxxx Xxxx LLP dated as of the Closing to the effect
that:
(i) OTMI is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware;
16
(ii) This Agreement has been duly authorized, executed and
delivered by OTMI and is a valid and binding obligation of OTMI enforceable in
accordance with its terms;
(iii) OTMI, through its Board of Directors, has taken all corporate
action under Delaware law that is necessary for the performance by OTMI of its
obligations under this Agreement;
(iv) The Exchange Shares to be issued pursuant to Section 1.1
hereof will be duly and validly issued, fully paid and non-assessable;
(v) OTMI has the corporate power to execute, deliver the Exchange
Shares and perform under this Agreement; and
(vi) The capitalization of OTMI as at the Closing Date of the Share
Exchange is as set forth in SECTION 5.6 of this Agreement.
(k) The Exchange Shares will be validly issued, nonassessable and fully
paid under the Delaware General Corporation Law and will be issued in a
non-public offering and exempt merger transaction in compliance with all federal
and state securities laws, bearing a restrictive legend, as is more fully set
forth herein.
(l) OTMI shall have issued the Diamond Stockholders the OTMI Common
Stock comprising the Exchange Shares.
4.2 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF OTMI. All obligations of OTMI
under this Agreement are subject to the fulfillment, prior to or at Closing, of
each of the following conditions (any one of which may be waived at Closing by
OTMI):
(a) The representations and warranties by DIAMOND and the Diamond
Principal Shareholders contained in this Agreement or in any certificate or
document delivered pursuant to the provisions hereof shall be true in all
material respects at and as of the Closing as though such representations and
warranties were made at and as of such time;
(b) DIAMOND and the Diamond Principal Shareholders shall have performed
and complied with, in all material respects, with all covenants, agreements, and
conditions set forth in, and shall have executed and delivered all documents
required by this Agreement to be performed or complied or executed and delivered
by them prior to or at the Closing;
(c) Not later than May 31, 2007, DIAMOND and the Diamond Principal
Shareholders shall have caused to have been delivered to OTMI the balance sheets
of DIAMOND as at December 31, 2005 and December 31, 2006 and the related
statement of operations and statements of cash flows of DIAMOND for each of the
three (3) fiscal years ended December 31, 2006, together with the notes thereto,
as audited by Xxxxxx & Kleigman LLP or other independent auditors qualified
under the Public Company Accounting Oversight Board that are acceptable to
DIAMOND (the "REQUIRED FINANCIAL STATEMENTS") which Required Financial
Statements shall have been audited in accordance with Regulation S-X, as
promulgated under the Securities and Exchange Act of 1934, as amended.
17
(d) On the Closing Date, the Diamond Principal Executive Officer shall
have delivered to OTMI a certificate, duly executed by such Person and
certifying, that to the best of such Person's knowledge and belief, the
representations and warranties of Diamond set forth in this Agreement are true
and correct in all material respects.
(e) All Diamond Principal Shareholders receiving Exchange Shares shall
deliver to OTMI a letter commonly known as an "Investment Letter," or investment
representations acknowledging that the Exchange Shares are being acquired for
investment purposes.
(f) RETENTION OF KEY EMPLOYEES. OTMI shall have received legal or other
assurances reasonably satisfactory to it that the key executive employees of
Diamond shall have elected to continue their employment with Diamond subsequent
to the Closing Date of the Share Exchange.
SECTION 5. COVENANTS
---------------------
5.1 CORPORATE EXAMINATIONS AND INVESTIGATIONS. Prior to the Closing Date, the
parties acknowledge that they have been entitled, through their employees and
representatives, to make such investigation of the assets, properties, business
and operations, books, records and financial condition of the other as they each
may reasonably require. No investigations, by a party hereto shall, however,
diminish or waive any of the representations, warranties, covenants or
agreements of the party under this Agreement.
5.2 FURTHER ASSURANCES. The parties shall execute such documents and other
papers and take such further actions as may be reasonably required or desirable
to carry out the provisions hereof and the transactions contemplated hereby.
Each such party shall use its best efforts to fulfill or obtain the fulfillment
of the conditions to the Closing, including, without limitation, the execution
and delivery of any documents or other papers, the execution and delivery of
which are necessary or appropriate to the Closing.
5.3 CONFIDENTIALITY. In the event the transactions contemplated by this
Agreement are not consummated, OTMI, the Diamond Principal Shareholders and the
Diamond Principal Executive Officer agree to keep confidential any information
disclosed to each other in connection therewith for a period of three (3) years
from the date hereof; provided, however, such obligation shall not apply to
information which:
(i) at the time of the disclosure was public knowledge;
(ii) is required to be disclosed publicly pursuant to any applicable
federal or state securities laws;
(iii) after the time of disclosure becomes public knowledge (except due to
the action of the receiving party);
(iv) the receiving party had within its possession at the time of
disclosure; or
(v) is ordered disclosed by a Court of proper jurisdiction.
5.4 STOCK CERTIFICATES. At the Closing, the Diamond Stockholders shall have
delivered the certificates representing the Diamond Securities duly endorsed (or
with executed stock powers) so as to make OTMI the sole owner thereof. At such
Closing, OTMI shall issue to the Diamond Stockholders the Exchange Shares.
18
5.5 INVESTMENT LETTERS. The Diamond Stockholders receiving Exchange Shares
shall have delivered to OTMI an "Investment Letter" agreeing that the shares are
being acquired for investment purposes only and not with the view to public
resale or distribution.
5.6 OTMI AMENDMENT TO CERTIFICATE OF INCORPORATION; OTMI STOCK PURCHASE
AGREEMENT AND PRO-FORMA CAPITALIZATION.
(a) Prior to the Closing Date of the Share Exchange, OTMI shall have
consummated the Charter Amendment and filed an amended and restated certificate
of incorporatioin of OTMI in form and content satisfactory to the Diamond
Decisions Principal Stockholders with the Secretary of State of the State of
Delaware.
(b) Prior to the Closing Date of the Share Exchange, OTMI shall have
consummated the transactions contemplated by the OTMI Stock Purchase Agreement.
(c) As a result of the consummation of the transactions contemplated by
the OTMI Stock Purchase Agreement and this Exchange Agreement, immediately
following the Closing Date the approximate maximum aggregate number of shares of
issued and outstanding OTMI Fully-Diluted Common Stock shall be owned or held by
the following stockholder groups:
STOCKHOLDER GROUP PERCENTAGE NO. OF FULLY-DILUTED
OTMI COMMON SHARES
Highland Stockholders 10.35% 5,581,170 shares
Other OTMI stockholders, including the public 2.59% 1,395,150 shares
Diamond Principal Shareholders 51.56% 27,810,000 shares
Holders of $5,816,667 of OTMI Convertible Notes 32.35% 17,450,000 shares
Xxxxxx Xxxxxxx, Inc. placement agent warrants 3.15% 1,700,000 shares
-----------------
Total: 53,936,320 shares
(d) As at the Closing Date OTMI shall have no outstanding expenses,
obligations, liabilities or contingencies of any kind.
(e) As at the Closing Date, there shall be no outstanding warrants,
issued stock options, stock rights or other commitments of any character
relating to the issued or unissued shares of either Common Stock or preferred
stock of OTMI.
(f) At the Closing, the Exchange Shares to be issued and delivered to
the DIAMOND Stockholders hereunder will, when so issued and delivered,
constitute valid and legally issued shares of OTMI Common Stock, fully paid and
nonassessable.
5.8 BOARDS OF DIRECTORS. At the Closing Date of the Share Exchange, the
initial Board of Directors of each of OTMI and Diamond shall initially consist
of a minimum of three (3) and a maximum of five (5) persons, all of whom shall
be Persons designated by the Diamond Principal Shareholders. In addition, as
soon as practicable following the Closing Date, two (2) additional persons
acceptable to the Diamond Principal Shareholders shall be added as independent
directors (as defined in the Sarbanes Oxley Act of 2002 or rules of the stock
exchange on which OTMI trades, including a financial expert).
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5.9 REQUIRED AUDITS AND FORM 8-K REGISTRATION STATEMENT. By not later than (a)
May 31, 2007, DIAMOND and the Diamond Principal Shareholders shall have caused
to have been delivered to OTMI the Required Financial Statements referred to in
Section 4.2(c) above, and (b) June 15, 2007, delivered to OTMI a definitive
final draft of a Form 8-K Current Report to include the Required Audits and all
appropriate disclosures of the business, management, risk factors,
capitalization and principal security holders of OTMI and its Diamond subsidiary
(after giving effect to the Share Exchange), as shall be required under the
Securities Exchange Act of 1934, as amended (the "FORM 8-K REPORT"). OTMI shall
cause the Form 8-K Current Report to be filed with the SEC not later than four
(4) Business Days after the delivery of the items referred to in clauses (a) and
(b) above. In connection with the foregoing, OTMI and the Highland Stockholders
shall assist and cooperate with Diamond in complying with the covenants set
forth in this Section 5.9.
5.10 LOCK-UP AGREEMENTS. On the Closing Date of the Share Exchange, each of the
Diamond Principal Shareholders shall execute and deliver to OTMI identical
agreements (the "LOCK-UP AGREEMENTS"), pursuant to which such Persons shall,
INTER ALIA, agree (a) not to effect any public sales of their OTMI Common Stock
for 18 months from the Closing Date, and (b) after 18 months from the Closing
Date of the Share Exchange, to the extent any Persons shall elect to make public
sales under Rule 144, such selling stockholders shall effect sales every ninety
(90) days in pro-rata percentages of their respective holdings in OTMI Common
Stock.
5.11 STOCK OPTION PLAN. Following the Closing Date of the Share Exchange, the
board of directors of OTMI shall form a compensation committee of the board of
directors which shall propose an incentive stock option plan for key employees,
directors, consultants and others providing services to OTMI and Diamond,
pursuant to which up to 5,000,000 shares of OTMI Common Stock shall be
authorized for issuance upon such terms and conditions as shall be recommended
by the compensation committee and approved by a majority of the members of the
board of directors (the "STOCK OPTION PLAN"). Such Stock Option Plan shall
thereafter be submitted to the OTMI stockholders for approval.
5.12 INDEMNIFICATION OF OFFICERS AND DIRECTORS. It is the intention of the
Parties that OTMI and Diamond shall indemnify its officers and directors to the
fullest extent permitted by Nevada and Delaware law, as applicable. In such
connection, the Parties agree not to amend the certificates of incorporation or
by-laws of either OTMI or Diamond if such amendment shall have the effect of
reducing, terminating or otherwise adversely affecting the indemnification
rights and privileges applicable to officers and directors of each of OTMI and
Diamond, as the same are in effect immediately prior to the Closing Date of the
Share Exchange.
5.13 VOTING AGREEMENT. On the Closing Date, certain of the Highland
Stockholders owning an aggregate of approximately 5,581,170 shares of OTMI
Common Stock will enter into a voting agreement with Xxxxxxx X. Xxxxx, pursuant
to which such Highland Stockholders shall agree that for so long as such persons
own of record their OTMI shares, they will vote such shares at any regular or
special meeting of OTMI stockholders or in connection with any written consents
required of OTMI stockholders in the same manner as Xx. Xxxxx votes her shares
of OTMI Common Stock. Such voting agreement will be binding upon any transferee
of such OTMI shares in a private transaction, but will terminate as to any OTMI
shares that are publicly sold by a Highland Stockholder or their transferees
pursuant to an effective registration statement or in connection with a Rule 144
brokers' transaction.
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5.14 ROLLUP MERGER. In the event that all of the Additional Diamond
Stockholders do not, pursuant to this Agreement, elect to exchange and deliver
to OTMI 100% of their shares of Diamond Common Stock and Diamond Notes for
shares of OTMI Common Stock and OTMI Exchange Notes, OTMI hereby agrees to (a)
create a newly formed Nevada subsidiary known as Diamond Merger Corp., and (b)
effect a statutory merger under Nevada law (the "ROLLUP MERGER") pursuant to
which (i) Diamond Merger Corp. shall be merged with and into Diamond, with
Diamond as the surviving corporation of such Rollup Merger, (ii) any remaining
Additional Diamond Stockholders holding shares Diamond Common Stock and/or
Diamond Notes shall receive in the Rollup Merger shares of OTMI Common Stock and
OTMI Exchange Notes as contemplated by Section 1.1(b)(iv) and Section 1.2
hereof.
5.15 VOTING FOR TRANSACTIONS. Each of the OTMI Selling Stockholders, the
Highland Stockholders and the Diamond Principal Shareholders hereby covenants
and agrees to vote all of their shares of OTMI Common Stock IN FAVOR of the
Charter Amendment, the Rollup Merger as well as all of the other transactions
contemplated by this Agreement and the OTMI Stock Purchase Agreement.
5.16 EXPENSES. It is understood and agreed that following the execution of this
Agreement, any and all expenses with respect to any filings, documentation and
related matters with respect to the consummation of the transactions
contemplated hereby shall be the sole responsibility of Diamond, and neither
OTMI nor the OTMI Selling Stockholders shall be responsible for any such
expenses or fees associated with such filings; PROVIDED, HOWEVER, that OTMI and
the OTMI Selling Stockholders shall fully cooperate and execute all required
documents as indicated.
5.17 REGISTRATION RIGHTS. As soon as practicable following the Exchange and the
other transactions contemplated by this Agreement, the Diamond Principal
Shareholders shall cause OTMI to file a registration statement with the
Securities and Exchange Commission, to register for resale:
(a) all of the maximum 5,816,667 shares of OTMI Common Stock to be owned
by the Additional Diamond Stockholders and all of the 11,633,334 shares of OTMI
Common Stock issuable upon conversion of the OTMI Notes;
(b) all of the 5,581,170 shares of OTMI Common Stock to be owned by the
Highland Stockholders; PROVIDED, that the Highland Stockholders shall agree (i)
not to effect any public sales of their OTMI Common Stock for 12 months from the
Closing Date, and (ii) after 12 months from the Closing Date of the Share
Exchange, to the extent any of such Persons shall elect to make public sales
under Rule 144, such selling stockholders shall effect sales every ninety (90)
days in pro-rata percentages of their respective holdings in OTMI Common Stock;
and
(c) all of the 1,700,000 shares of OTMI Common Stock issuable to Xxxxxx
Xxxxxxx, Inc. or its Affiliates upon exercise of the placement agent's warrants;
PROVIDED, that such Persons shall agree (i) not to effect any public sales of
their OTMI Common Stock for 12 months from the Closing Date, and (ii) after 12
months from the Closing Date of the Share Exchange, to the extent any of such
Persons shall elect to make public sales under Rule 144, such selling
stockholders shall effect sales every ninety (90) days in pro-rata percentages
of their respective holdings in OTMI Common Stock.
5.18 SPECIFIC PERFORMANCE.
(a) Each of DIAMOND and the Diamond Principal Shareholders acknowledge
and agree that the DIAMOND Financing was predicated upon the consummation of the
transactions contemplated by this
21
Agreement and that the Additional Diamond Stockholders and holders of the
Diamond Notes purchased such Diamond Securities in reliance upon the fact that
they would be able to receive publicly traded securities by not later than June
30, 2007.
(b) Accordingly, each of DIAMOND and the Diamond Principal Shareholders
do hereby acknowledge and agree that, absent only a material breach by OTMI of
its representations and warrants or the failure on the part of OTMI to perform
any of its material covenants and agreements contained herein, if DIAMOND or the
Diamond Principal Shareholders shall fail or refuse to fully and timely perform
any of their covenants and agreements contained herein (including those set
forth this in Section 5) that would make it impossible or impracticable for OTMI
to consummate by June 30, 2007 the Share Exchange contemplated hereby, OTMI and
the Additional Diamond Stockholders would have no adequate remedy at law.
Accordingly, each of DIAMOND and the Diamond Principal Shareholders do hereby
agree that, in addition to any other remedies available to it or them at law or
in equity, OTMI and the Additional Diamond Stockholders or their legal
representative may seek and obtain from any federal or state court of competent
jurisdiction in Los Angeles County, California, specific performance of this
Agreement.
SECTION 6. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
-----------------------------------------------------
Notwithstanding any right of either party to investigate the affairs of
the other party and its Shareholders, each party has the right to rely fully
upon representations, warranties, covenants and agreements of the other party
and its Shareholders contained in this Agreement or in any document delivered to
one by the other or any of their representatives, in connection with the
transactions contemplated by this Agreement. All such representations,
warranties, covenants and agreements shall survive the execution and delivery
hereof and the closing hereunder for eighteen (18) months following the Closing.
SECTION 7. INDEMNIFICATION; DISPUTE RESOLUTION; NON-COMPETITION.
----------------------------------------------------------------
7.1 INDEMNIFICATION BY DIAMOND PRINCIPAL SHAREHOLDERS.
(a) From and after the Closing, the Diamond Principal Shareholders shall
indemnify and hold harmless OTMI, and their Affiliates, directors, officers and
employees (collectively, the "OTMI PARTIES") from and against any and all direct
Damages finally awarded arising out of, resulting from or in any way related to:
(i) a breach by Diamond or the Diamond Principal Shareholders of
their representations and warranties contained herein, or
(ii) the failure to perform or satisfy, when due, any of the
covenants and agreements made by Diamond and the Diamond Principal Shareholders
in this Agreement or in any other document or certificate delivered by Diamond
or the Diamond Principal Shareholders at the Closing pursuant hereto.
(b) Notwithstanding the foregoing, the indemnification obligations of
Diamond and the Diamond Principal Shareholders under Section 7.1(a)(i) above
shall (i) as to each individual Diamond Principal Shareholder be limited to the
extent by which their respective ownership of Diamond Shares immediately prior
to the Closing bears to each other, (ii) only arise if a claim for Damages shall
be made in writing by one or more OTMI Parties to Diamond or the Diamond
Principal Shareholders by
00
Xxxxxxxx 00, 0000, (xxx) only be applicable to Damages incurred by OTMI Parties
in excess of $150,000 (the "INDEMNITY FLOOR"), and (iv) not be applicable to
Damages incurred by OTMI Parties which shall be in excess of $5.5 million (the
"INDEMNITY CAP"). There shall be no Indemnity Cap with respect to the matters
contemplated by Section 7.1(a)(ii) above, and such indemnity obligations shall
survive indefinitely. Any payment made to any of OTMI Parties by the Diamond
Principal Shareholders pursuant to the indemnification obligations under this
Section 7.1 shall constitute a reduction in value of the Share Exchange paid
pursuant to this Agreement.
(c) In the event that any claim for Damages shall be asserted against
any of OTMI Parties for which the Diamond Principal Shareholders is liable to
indemnify against pursuant to this Section 7.1, the Diamond Principal
Shareholders shall have the sole right to conduct, at their expense, the defense
of any and all such claims with counsel of his choosing, and shall have the sole
right to effect any financial settlement of any such claims for Damages;
PROVIDED, HOWEVER, that if any such settlement would result in any injunction or
restrictions on the Business or any other activities of any of OTMI Parties, or
otherwise require any of OTMI Parties to pay any ongoing royalties or other
payments to any Person, no such settlement may be effected by the Diamond
Principal Shareholders without the prior written consent of the affected Parent
Party or Parties.
7.2 INDEMNIFICATION BY OTMI.
From and after the Closing, OTMI and the Highland Stockholders shall
indemnify and hold harmless the Diamond Stockholders and their Affiliates from
and against any and all direct Damages finally awarded arising out of, resulting
from or in any way related to:
(a) a breach by OTMI of its representations and warranties contained
herein, or
(b) the failure to perform or satisfy, when due, any of the covenants
and agreements made by OTMI in this Agreement or in any other document or
certificate delivered by OTMI at the Closing pursuant hereto.
(c) In the event that any claim for Damages shall be asserted against
any of the Diamond Principal Shareholders or their Affiliates for which OTMI is
liable to indemnify against pursuant to this Section 7.2, OTMI shall have the
sole right to conduct, at its or their expense, the defense of any and all such
claims with counsel of their choosing, and shall have the sole right to effect
any financial settlement of any such claims for Damages; PROVIDED, HOWEVER, that
if any such settlement would result in any injunction or restrictions on the
Diamond Principal Shareholders or their Affiliates, or otherwise require the
Diamond Principal Shareholders or their Affiliates to pay any ongoing royalties
or other payments to any Person, no such settlement may be effected by OTMI
without the prior written consent of the Diamond Principal Shareholders.
7.3 RESOLUTION OF DISPUTES. Except as otherwise provided in Section 5.17 above
or in Section 7.4 below, any dispute arising under this Agreement which cannot
be resolved among the Parties shall be submitted to final and binding
arbitration in accordance with the then prevailing rules and regulations of the
American Arbitration Association (the "AAA"), located in Los Angeles,
California. There shall be three arbitrators, one selected by the claimant, one
selected by the respondent and the third arbitrator selected by the AAA. The
decision and award of the arbitrators shall be final and binding upon all
Parties and may be enforced in any federal or state court of competent
jurisdiction. Service of process on any one or more Parties in connection with
any such arbitration may be made by registered or certified mail, return receipt
requested or by email or facsimile transmission.
23
7.4 NON-COMPETITION, NON-SOLICITATION AND NON-DISCLOSURE.
(a) GENERAL. In order to induce OTMI to enter into this Agreement and to
consummate the transactions contemplated hereby, each the Diamond Principal
Shareholders hereby acknowledges that he or she is a beneficiary of the OTMI
shares of Common Stock and Series A Preferred Stock, and the Diamond Principal
Shareholders hereby jointly and severally covenants and agrees as follows:
(i) Neither the Diamond Principal Shareholders, nor any of their
Affiliates (the "DIAMOND PRINCIPAL SHAREHOLDERS GROUP") shall (A) as to Xxxxx,
for a period of five (5) years from and after the Closing Date, and (B) as to
each of Xxxxxx and Xxxxxxxx for so long as they are offered employment by
Diamond, but not more than five years from and after the Closing Date: (1)
directly or indirectly acquire or own in any manner any interest in any person,
firm, partnership, corporation, association or other entity which engages or
plans to engage in the design, manufacture, sale or distribution of men's or
ladies fashions (the "BUSINESS") of a type that competes in any way with the
designs and fashions then being produced by OTMI or its Diamond subsidiary,
anywhere in the world (the "TERRITORY"); (2) be employed by or serve as an
employee, agent, officer, director of, or as a consultant to, any person, firm,
partnership, corporation, association or other entity which competes or plans to
compete in any way with the Business; (3) utilize her or his special knowledge
of the Business and her or his relationships with customers, suppliers and
others to compete with the Business conducted by Diamond or OTMI; PROVIDED,
HOWEVER, that nothing herein shall be deemed to prevent the Diamond Principal
Shareholders from acquiring through market purchases and owning, solely as an
investment, less than three (3%) percent in the aggregate of the equity
securities of any class of any issuer whose shares are registered under ss.12(b)
or 12(g) of the Securities Exchange Act of 1934, as amended, and are listed or
admitted for trading on any United States national securities exchange or are
quoted on the National Association of Securities Dealers Automated Quotation
System, or any similar system of automated dissemination of quotations of
securities prices in common use, so long as the Diamond Principal Shareholders
is not a member of any "control group" (within the meaning of the rules and
regulations of the United States Securities and Exchange Commission) of any such
issuer.
The Diamond Principal Shareholders Group acknowledges and agrees that the
covenants provided for in this Section 7.4(a) are reasonable and necessary in
terms of time, area and line of business to protect Diamond's good will and
trade secrets. The Diamond Principal Shareholders Group further acknowledges and
agrees that such covenants are reasonable and necessary in terms of time, area
and line of business to protect the legitimate business interests of each of
OTMI and Diamond, which include their interests in protecting their (x) valuable
confidential business information, (y) substantial relationships with designers,
suppliers and customers throughout the world, and (z) customer goodwill
associated with the ongoing Business. The Diamond Principal Shareholders Group
expressly authorizes the enforcement of the covenants provided for in this
Section 7.4(a) by (A) OTMI, (B) Diamond, and (C) any successors to the Business
of OTMI or Diamond. To the extent that the covenants provided for in this
Section 7.4(a) may later be deemed by a court to be too broad to be enforced
with respect to its duration or with respect to any particular activity or
geographic area, the court making such determination shall have the power to
reduce the duration or scope of the provision, and to add or delete specific
words or phrases to or from the provision. The provision as modified shall then
be enforced.
(ii) The Diamond Principal Shareholders Group shall not for a
period of five (5) years from the Closing Date, directly or indirectly, for
themselves or for any other person, firm,
24
corporation, partnership, association or other entity (including the Diamond
Principal Shareholders Group), (i) attempt to employ or enter into any
contractual arrangement with any employee or former employee of the Business,
unless such employee or former employee has not been employed by the Business
for a period in excess of nine months, and/or (ii) call on or solicit any of the
actual or targeted prospective customers or clients of the Business, nor shall
the Diamond Principal Shareholders Group make known the names and addresses of
such customers or any information relating in any manner to the Diamond
Principal Shareholders Group's trade or business relationships with such
customers.
(iii) The Diamond Principal Shareholders Group shall not at any time
(except internally among the the Diamond Principal Shareholders Group) divulge,
communicate, use to the detriment of OTMI or Diamond, or for the benefit of any
other Person or Persons, or misuse in any way, any Confidential Information
pertaining to the Business. Any confidential information or data now known or
hereafter acquired by the Diamond Principal Shareholders Group with respect to
the Business shall be deemed a valuable, special and unique asset of OTMI and
Diamond and is received by the Diamond Principal Shareholders Group in
confidence and as a fiduciary, and the Diamond Principal Shareholders Group
shall remain a fiduciary to OTMI and Diamond with respect to all of such
information.
(b) INJUNCTION. It is recognized and hereby acknowledged by the parties
hereto that a breach or violation by the Diamond Principal Shareholders Group of
any or all of the covenants and agreements contained in this Section 7.4 may
cause irreparable harm and damage to OTMI and Diamond in a monetary amount which
may be virtually impossible to ascertain. As a result, the Diamond Principal
Shareholders Group recognizes and hereby acknowledges that OTMI and/or Diamond
shall be entitled to an injunction from any court of competent jurisdiction
enjoining and restraining any breach or violation of any or all of the covenants
and agreements contained in this Section 7.4 by the Diamond Principal
Shareholders Group and/or their associates, Affiliates, partners or agents,
either directly or indirectly, and that such right to injunction shall be
cumulative and in addition to whatever other rights or remedies OTMI or Diamond
may possess hereunder, at law or in equity. Nothing contained in this Section
7.4 shall be construed to prevent OTMI or Diamond from seeking and recovering
from the Diamond Principal Shareholders Group damages sustained by it as a
result of any breach or violation by the Diamond Principal Shareholders Group of
any of the covenants or agreements contained herein.
SECTION 8. MISCELLANEOUS
------------------------
8.1 WAIVERS. The waiver of a breach of this Agreement or the failure of any
party hereto to exercise any right under this Agreement shall in no way
constitute waiver as to future breach whether similar or dissimilar in nature or
as to the exercise of any further right under this Agreement.
8.2 AMENDMENT. This Agreement may be amended or modified only by an instrument
of equal formality signed by the parties or the duly authorized representatives
of the respective parties.
8.3 ASSIGNMENT. This Agreement is not assignable except by operation of law.
8.4 NOTICE. Until otherwise specified in writing, the mailing addresses and
fax numbers of the parties of this Agreement shall be as follows:
25
To: OTMI:
Optimum Interactive (USA) Ltd.
00 Xxxx 00xx Xxxxxx, Xxxxx 00X
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxxxxxx, President
By fax and Email only to:
fax: (000) 000-0000
email: xxxxxxxx@xxxxxx.xxx
with a copy to: Highland Partners LLC
000 Xxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxx, Member
To: DIAMOND AND THE DIAMOND PRINCIPAL SHAREHOLDERS:
Diamond Decisions, Inc.
0000 Xxxxxxxx, Xxxxx 00000
Xxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxx, President and CEO
(000) 000-0000
email: Xxxxxxx@xxxxxxxxxxx.xxx
cc: Xxxxxxx X. Xxxxx, Esq.
Xxxxxxx Xxxx, LLP
00 Xxxx 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
(000) 000-0000
email: xxxxxx@xxxxxxxxxxx.xxx
Any notice or statement given under this Agreement shall be deemed to have been
given if sent by registered mail addressed to the other party at the address
indicated above or at such other address which shall have been furnished in
writing to the addressor.
8.5 GOVERNING LAW. This Agreement shall be construed, and the legal relations
between the parties determined, in accordance with the laws of the State of
California, thereby precluding any choice of law rules which may direct the
application of the laws of any other jurisdiction.
8.6 PUBLICITY. No publicity release or announcement concerning this Agreement
or the transactions contemplated hereby shall be issued by either party hereto
at any time from the signing hereof without advance approval in writing of the
form and substance by the other party.
8.7 ENTIRE AGREEMENT. This Agreement (including the Schedules to be attached
hereto) and the collateral agreements executed in connection with the
consummation of the transactions contemplated herein contain the entire
agreement among the parties with respect to the transactions contemplated
hereby, and supersedes all prior agreements, written or oral, with respect
hereof.
26
8.8 HEADINGS. The headings in this Agreement are for reference purposes only
and shall not in any way affect the meaning or interpretation of this Agreement.
8.9 SEVERABILITY OF PROVISIONS. The invalidity or unenforceability of any
term, phrase, clause, paragraph, restriction, covenant, agreement or provision
of this Agreement shall in no way affect the validity or enforcement of any
other provision or any part thereof.
8.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed, shall constitute an original copy
hereof, but all of which together shall consider but one and the same document.
8.11 BINDING EFFECT. This Agreement shall be binding upon the parties hereto
and inure to the benefit of the parties, their respective heirs, administrators,
executors, successors and assigns.
8.12 PRESS RELEASES. The parties will mutually agree as to the wording and
timing of any informational releases concerning this transaction prior to and
through Closing.
[THE BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK - SIGNATURE PAGES FOLLOW]
27
IN WITNESS WHEREOF, the parties have executed this Agreement on the date first
above written.
ATTEST: OPTIMUM INTERACTIVE (USA) LTD.
(a Delaware corporation)
_______________________ By: /s/ Xxxxxx Xxxxxxxxx
--------------------
___________, Secretary Xxxxxx Xxxxxxxxx, President
ATTEST: DIAMOND DECISIONS, INC.
(a Nevada corporation)
______________________ By: /s/ Xxxxxxx X. Xxxxx
--------------------
Secretary Xxxxxxx X. Xxxxx,
President and CEO
DIAMOND PRINCIPAL STOCKHOLDERS:
/s/ Xxxxxxx X. Xxxxx
--------------------
XXXXXXX X. XXXXX
/s/ Xxxxxxx Xxxxxx
------------------
XXXXXXX XXXXXX
/s/ Xxxxxx Xxxxxxxx
-------------------
XXXXXX XXXXXXXX
ACCEPTED AND AGREED:
AURORA CAPITAL GROUP, LTD. HIGHLAND PARTNERS LLC
By: /s/ Xxxxxx Xxxxxxxxx By: /s/ Xxxxxx X. Xxxxx
-------------------- -------------------
Xxxxxx Xxxxxxxxx Xxxxxx X. Xxxxx,
President and sole shareholder Member
BERLIN CAPITAL INVESTMENTS, INC.
By: /s/ Xxxxxx Xxxxx
----------------
Xxxxxx Xxxxx, President
28
SCHEDULES
DIAMOND SCHEDULES
2.1 DIAMOND Warrants and Options currently in existence
2.4 DIAMOND Financial Statements
2.10 DIAMOND Claims, Litigation, Government actions pending
2.11 DIAMOND Significant contracts
2.12 DIAMOND Brokers Agreements due by DIAMOND contract
2.13 DIAMOND List of Real Estate Owned and List of Leases:
2.14 DIAMOND List of exceptions to the Tangible Assets on balance sheets.
2.15 DIAMOND List of undisclosed Liabilities
2.17 DIAMOND List of Subsidiaries
29
