EXHIBIT 2.1
S T O C K E X C H A N G E A G R E E M E N T
a n d P L A N o f R E O R G A N I Z A T I O N
This Agreement ("Agreement") is made and entered into on August 20, 2002,
among NEWSEARCH, INC., a Colorado corporation, as buyer (the "Company");
PANACHE, INC., a Colorado corporation doing business as "The Xxxxx Collection,"
as the acquired company ("Acquired Company" or "Panache"); and certain persons
executing this Agreement in their capacity as shareholders of Panache (the
"Panache Holders").
R E C I T A L S:
A. The Panache Holders collectively own of record and beneficially
4,970,000 shares of common stock without par value, of Panache (collectively,
the "Panache Shares"), which constitute over 90% of the shares of Panache
capital stock issued and outstanding; and
B. The Panache Holders desire to sell to the Company, and the Company
desires to purchase from the Panache Holders, all of the Panache Shares, on the
terms and subject to the conditions of this Agreement; and
C. The respective boards of directors of Panache and the Company have
approved the execution of this Agreement and performance of the parties'
respective obligations herein.
NOW THEREFORE, for and in consideration of the premises and the mutual
promises and undertakings contained herein, and for other good and valuable
consideration, and subject to the terms and conditions of this Agreement, the
parties hereto agree as follows:
1. THE EXCHANGE.
1.1 Sale and Purchase of the Panache Shares. On the terms and subject
to conditions of this Agreement, at the Closing (defined below), the Panache
Holders shall sell, transfer, assign, convey and deliver to the Company, free
and clear of all adverse claims, security interests, liens, claims and
encumbrances (other than restrictions under applicable securities laws or as
expressly agreed to herein by the Company), and the Company or its subsidiary
shall purchase, accept and acquire, all of the Panache Shares from the Panache
Holders, such purchase and sale being herein sometimes referred to as the
"Exchange." The Company shall receive good and merchantable title to the Panache
Shares. No cash shall be due to the Panache Holders. It is intended among all
the parties that the Exchange shall constitute a tax free reorganization within
the meaning of Sections 351 and 368(a)(1)(B) of the Internal Revenue Code of
1986, as amended ("Code").
1.2 Issuance of Exchange Shares. In full payment for the Panache
Shares, the Company shall ratably issue and deliver to the Panache Holders in
proportion to their respective ownership of the Panache Shares, as set forth on
SCHEDULE 1.1 to this Agreement, attached hereto and incorporated herein, an
aggregate of Seven Hundred Thousand (700,000) shares of the Company's common
stock, no par value per share (the "Exchange Shares"), being approximately one
(1) Exchange Share for every 7.1 Panache Shares conveyed to the Company.
The Exchange Shares will, when issued, be validly issued, fully paid, and
nonassessable; the sale, issuance and delivery of the Exchange Shares on the
terms herein contemplated has been authorized by all requisite corporate action
of the Company; and the Exchange Shares will not be subject to any preemptive
rights, options or similar rights on the part of any shareholder or creditor of
the Company or any other person. The Exchange Shares shall be issued to the
Panache Holders in the respective denominations set forth on SCHEDULE 1.2 to
this Agreement.
1.3 Exchange Shares Not Registered. The Exchange Shares when issued
will not be registered under the Securities Act of 1933, as amended ("Act"), or
the securities laws of any state or states, but shall be issued in reliance upon
the exemptions from registration provided by Section 4(2) of the Act and/or Rule
505 or 506 of Regulation D under the Act and under analogous state securities
laws, on the grounds that the Exchange does not involve any public offering. The
Exchange Shares will be "restricted securities" as that term is defined in Rule
144(a) of the General Rules and Regulations under the Act and must be held
indefinitely, unless they are subsequently registered under the Act or an
exemption from the Act's registration requirements is available for their
resale. The prior written consent of the Company will be necessary for any
transfer of any or all of the Exchange Shares, unless the shares have been duly
registered under the Act or the transfer is made in accordance with Rule 144 or
other available exemption under the Act. Nothing in this Agreement, however,
precludes the subsequent registration of the Exchange Shares under the Act for
resale on any appropriate form. All certificates evidencing the Exchange Shares
shall, unless and until removed in accordance with law, bear a restrictive
legend substantially in the following form:
"The shares represented by this Certificate have not been registered
under the Securities Act of 1933, as amended (the "Act"), and are
"restricted securities" as that term is defined in Rule 144 under the Act.
These shares may not be offered for sale, sold or otherwise transferred
except pursuant to an effective registration statement under the Act, or
pursuant to an exemption from registration under the Act."
1.4 Closing. Subject to the conditions precedent set forth herein, the
consummation of the Exchange and any other transactions herein contemplated
("Closing") shall take place either at the offices of Xxxxxxx & Company, 00
Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxx 00000 or by the exchange of
documents via courier, on or before September 1, 2002, which is herein referred
to as the "Closing Date". The parties may by unanimous agreement provide for one
or more postponements of the Closing.
1.5 Officers and Directors of the Company. At the Closing, the current
officers and directors of the Company shall resign as necessary, each
resignation to confirm in writing that the resigning persons do not owe and are
not owed anything by the Company, and the persons named below shall be elected
to the offices and directorships shown next to their respective names:
Name Position
---- --------
Xxxx Xxxxxx DIRECTOR, Chairman of the Board, President
Xxxxxxx X. Xxxxxxx DIRECTOR AND CHAIRMAN OF AUDIT COMMITTEE
Xxxxx "Xxx" Xxxxxxxxxx DIRECTOR
1.6 Further Assurances. Panache and the Panache Holders agree to
execute all documents and instruments and to take or to cause to be taken all
actions which the Company deems necessary or appropriate to complete the
transactions contemplated by this Agreement, whether before or after the
Closing.
2. OTHER AGREEMENTS OF THE PARTIES.
2.1 Change of the Company's Name; Reincorporation. The parties agree
that, as soon as reasonably possible following the Closing, a special meeting of
the Company's shareholders shall be called for the purpose of voting upon a
change of the Company's name to Panache Inc. or a substantially similar name,
and upon reincorporation of the Company from Colorado to Nevada. The Panache
Holders agree to vote their Exchange Shares in favor of the name change,
reincorporation and forward split.
2.2 Panache to Obtain Audited Financial Statements. Prior to the
Closing, Panache (including all Panache subsidiaries) shall obtain the audited
financial statements called for by Item 310 of Regulation S-B of the Securities
and Exchange Commission, including the required balance sheets, and statements
of cash flows, operations and changes in stockholders' equity, together with all
required footnotes and schedules, audited by certified public accountants who
are members of the SEC Practice Section of the AICPA. Such statements shall be
prepared in accordance with generally accepted accounting principles and
applicable SEC rules and regulations, applied on a consistent basis.
2.3 The Company's Capitalization at Closing; Sale of Certain Shares.
At the Closing, the Company shall have issued and outstanding not more than
450,200 shares of common stock. Other than such shares, at the Closing the
Company will not without the prior written consent of the Panache Holders have
issued or outstanding any other shares of stock, nor any options or other rights
to purchase its common stock, nor any instrument convertible into or
exchangeable for its common stock. No shareholder of the Company will have any
preemptive right or similar right to purchase the Exchange Shares or other stock
of the Company.
2.4 Rescission Right of the Panache Holders. (a) Notwithstanding any
other provision of this Agreement, the Panache Holders shall have the right, at
their sole election, to unwind and rescind the Exchange if by the one (1) year
anniversary of the Closing (the "Measurement Date"), the Company has not both:
(i) raised a minimum of Nine Hundred Thousand Dollars (US$900,000.00) in cash
through the sale of its equity securities for use by Panache as operating
capital, and (ii) obtained quotation of its common stock on the OTC Bulletin
Board ("OTCBB"), or if the OTCBB is no longer in existence, on the Bulletin
Board Exchange or any other successor to the OTCBB. To exercise this rescission
right, the Panache Holders as a group must unanimously sign a writing delivered
to the Company and Panache demanding rescission of the Exchange in accordance
with this Section and must tender to the Company along with such demand all of
the Exchange Shares issued them at the Closing. Such written demand for
rescission must also confirm that neither Panache nor the Panache Holders is
owed any salary, sum of money nor other financial benefit or compensation of any
kind whatsoever by the Company. The rescission right set forth in this Section
is in addition to any other legal or equitable rights which the Panache Holders
may have to unwind or rescind the Exchange based on breach of this Agreement or
any other grounds whatsoever.
(b) Termination of Rescission Right. This rescission right shall
terminate on the date which is 180 days after the Measurement Date and may not
be extended by agreement of the parties or otherwise. The Panache Holders'
failure to timely exercise the rescission right will result in the irrevocable
waiver of the right, and no principle of law or equity shall extend such 180-day
period nor toll its running. However, the passing of such 180-th day shall not
affect or limit any rescission proceeding already commenced under this Section
2.4, nor any written demand for rescission proceedings under this Section 2.4
already received by the Company. In addition to such termination, this
rescission right shall terminate and no longer be exercisable if any of the
following events occur: (i) the Company raises equity or loan capital in any
amount intended or used directly or indirectly for operations of Panache, or
(ii) the Company takes on or assumes any debt or liability of Panache, or (iii)
the Company loans money to or guarantees or repays loans of Panache, any Panache
Holder, or any officer, director, employee, agent or affiliate of Panache.
Notwithstanding clauses (1) through (iii), the rescission right shall not be
terminated if any of the enumerated things are done by Panache itself, so long
as the Company is not liable or contingently liable for any such Panache
actions, and any equity or debt securities sold by Panache are not convertible
into or exchangeable for debt or equity securities of the Company.
(c) Upon receipt of proper rescission demand, the Company, Panache and
the Panache Holders shall promptly unwind the Exchange by doing the following
things:
(i) the Panache Holders shall return to the Company all of the
Exchange Shares delivered to them at Closing, which shall be free
of all claims, liens, encumbrances and interests of third parties
whatsoever ;
(ii) the Company shall deliver to the Panache Holders certificates
evidencing all of the Panache Shares, which shall be free of all
claims, liens, encumbrances and interests of third parties
whatsoever;
(iii) the Panache Holders shall resign all officerships and
directorships held by them with the Company;
(iv) the Panache Holders and Panache severally shall deliver to the
Company a complete and unequivocal release of all liabilities and
claims whatsoever against the Company;
(v) the Company shall deliver to the Panache Holders and Panache a
complete and unequivocal release of all liabilities and claims
whatsoever against them;
(vi) the Panache Holders or Panache shall pay off and discharge, in
full and in cash, or shall assume and obtain the complete release
of the Company from, all debts of the Company it assumes or
undertakes following the Closing for the benefit of Panache or
the Panache Holders; and Panache and the Panache Holders shall
deliver to the Company a notarized statement that no such debts
exist or that any ever existing have been satisfied in full as
called for in this clause;
(vii) If at the time of rescission bona fide liabilities are in fact
then owed by the Company to the Panache Holders or Panache for
expenses advanced or incurred on the Company's behalf or
otherwise, then they may be settled by the Panache Holders
keeping a portion of the Exchange Shares or repaid in cash or by
any other method mutually agreed upon by the Panache Holders owed
money, or Panache, as the case may be, and the Company.
(viii) Any employment, consulting or other agreement whatsoever
between the Company and Panache or the Company and any Panache
Holder, other than a settlement agreement entered into pursuant
to clause (vii) preceding, shall be cancelled without further
liability to the Company; and
(ix) the Panache Holders and Panache shall deliver to the Company, and
the Company shall deliver to the Panache Holders and Panache,
such representations, warranties and covenants as are deemed
necessary and advisable in regard to the above things and
deliveries, which shall include representations and warranties by
the Panache Holders that they are not aware of any debts or
liabilities of the Company of any kind then existing other than
as stated in the Company's most recent Form 10-KSB or 10-QSB
filing, whichever is more recent; and such representations and
warranties shall survive the rescission for a period of two (2)
years.
Once all such deliveries are made to the reasonable satisfaction of the parties
entitled to them, the rescission shall be completed. The rescission transaction
shall be deemed an unwinding of the Exchange which places the parties back in
their respective original positions, and not a repurchase or redemption of the
Exchange Shares or Panache Shares, nor a repurchase of Panache by the Panache
Holders. The parties each agree to take such further actions and execute such
other documents as may be necessary to carry out the intent and purpose of the
rescission, including but not limited to confirming in writing matters that are
set forth in this Section 2.4.
(d) Panache and the Panache Holders shall cooperate with the Company
as requested in preparing any report on Form 8-K or other report, press release
or other document which the Company in its discretion believes necessary to be
filed with the Securities and Exchange Commission or any other authority or
otherwise publicly disseminated in regard to the rescission, including reviewing
such reports and documents prior to filing. The Company shall give Panache and
the Panache Holders at least three business days' opportunity to review such
documents before their filing or public dissemination.
(e) In order that the Company is assured of information that may be
needed to prepare financial statements or other financial information for the
year ending December 31, 2001 and 2002 and for all quarters beginning with the
quarter in which the Closing takes place and ending with the quarter in which
the rescission is completed, Panache and the Panache Holders agree that they
shall at their expense for a period of two years following the effective date of
rescission make all of Panache's financial books and records for such periods
available to the Company upon request for examination and copying. If Panache or
any Panache Holder violates this provision, the Company may judicially enforce
this provision and in that event will be entitled to recover its actual costs
(including attorneys' fees) thereof from Panache and every Panache Holder in a
position to deliver such information and failing to do so. Panache and the
Panache Holders each agree to keep their books and records reflecting all
operations and events during such periods intact and available during the
two-year period following the effective date of the rescission.
(f) Panache and the Panache Holders each shall agree to defend,
indemnify and hold the Company harmless from and against any and all losses,
liabilities, damages, costs or expenses (including reasonable attorney's fees,
penalties and interest) arising from or incurred as a result of (a) any false
statement, representation or warranty respectively made by them in any document
delivered in connection with the rescission, or (b) the respective breach of any
agreement or covenant contained in this Section 2.4 in connection with the
rescission. The Company shall agree to defend, indemnify and hold Panache and
the Panache Holders harmless from and against any and all losses, liabilities,
damages, costs or expenses (including reasonable attorney's fees, penalties and
interest) arising from or incurred as a result of (a) any false statement,
representation or warranty made by it in any document delivered in connection
with the rescission, or (b) the breach of any agreement or covenant contained in
this Section 2.4 in connection with the rescission.
2.5 Rescission Right of the Company. Notwithstanding any other
provision of this Agreement, the Company shall have the right, at its sole
election, to unwind and rescind the Exchange if (i) Panache files a voluntary
petition in bankruptcy or is the subject of an involuntary petition in
bankruptcy that is not dismissed with prejudice within ninety (90) days of being
filed, or if (ii) Panache declares itself insolvent or makes any assignment for
the benefit of creditors. This right of rescission shall not be exercisable by
the Company's Board of Directors or officers but shall be exercised in the
following manner: any shareholder of the Company other than a holder or voting
trustee of Exchange Shares issued in the Exchange, upon obtaining reason to
believe that grounds exist under this Section for rescission of the Exchange by
the Company, may send written notice to the Company demanding rescission. Upon
receiving such written notice, the Board of Directors shall call a special
meeting of the Company's shareholders as soon as practicable. At such special
meeting, the shareholder(s) bringing the rescission demand shall have the right
to present their evidence for rescission, which shall not exceed two hours in
length, and the Company's officers shall have equal time to respond to the
shareholder presentation, and either side may present witnesses and other
evidence. Following both presentations, the shareholders shall vote on the
rescission, except that none of the Exchange Shares issued in the Exchange shall
have the right to vote on rescission and their votes if made shall not be
counted. The Panache Holders agree to this limitation on their right to vote the
Exchange Shares. Other matters may be presented or included at such meeting,
including a vote to recall directors or elect new directors, or any other
matter.
(b) Rescission Notice. The rescission notice shall cite the grounds
for rescission based on clauses (i), (ii) or (iii) of this Section 2.5 and the
specific facts underlying the grounds for rescission, and the notice shall
demand that a shareholder vote be taken on rescission. Such notice and demand
shall be addressed to the Company's Board of Directors or the corporate
Secretary and shall be delivered to the Company by messenger or courier service
or U.S. mail, postage prepaid and registered mail or return receipt requested,
to the Company's address as disclosed in its most recent filing with the
Securities and Exchange Commission. Such notice may but need not include a
proposal to recall or dismiss any incumbent director and elect new directors in
their stead, or elect additional directors, or any other lawful proposal.
(c) Termination of Rescission Right. This rescission right of the
Company shall terminate on the second anniversary of the Closing, except that
the passing of such date shall not affect or limit any rescission proceeding
already commenced under this Section 2.5, nor any written demand for rescission
proceedings under this Section 2.5 already received by the Company. The
rescission right set forth in this Section 2.5 is in addition to any other legal
or equitable rights which the Company may have to unwind or rescind the Exchange
based on breach of this Agreement or any other grounds whatsoever.
(d) Payment of Expenses. The shareholder(s) making or joining in the
rescission demand shall bear all expenses whatever related to calling and
holding the special meeting of shareholders to consider the rescission issue,
including expenses of the shareholders' counsel and all other expenses of the
shareholder(s), expenses of Company counsel to prepare, review or file any
documents related to the demand, printing, filing and mailing expenses, and
expenses of Company or Panache personnel incurred in handling such matters; and
such shareholder(s) shall pay in advance expenses of the Company which it
estimates in good faith will be incurred. The Company shall not be obligated to
process the rescission demand until it has received a deposit sufficient to
cover its estimated expenses. If additional costs are incurred or likely to be
incurred by the Company, it may require additional expense deposits . If the
Board of Directors, after receiving proper rescission notice, refuses or delays
in calling a special shareholder meeting to consider rescission, the
shareholder(s) making the rescission demand may bring an action in any Colorado
state court of proper jurisdiction to compel the calling of such meeting, and
shall be entitled to all reasonable expenses and court costs incurred in
bringing such action.
2.6 Grant of Stock and Options. Upon Closing, the Company shall grant
and issue the following common stock purchase options, pursuant to which
directors, officers, employees or advisors of the Company or Panache may acquire
an aggregate of 1,006,000 shares of the Company's authorized but unissued common
stock:
Name of Individual Options Relationship
------------------ ------- ------------
Xxxxx "Xxx" Xxxxxxxxxx 400,000 Director of Company
Xxxx Xxxxxx 200,000 Director, Officer of Company, Panache
Egin Bresnig 200,000 Director, Officer of Panache
Xxxx X. Xxxxxxx Xx. 200,000 Legal counsel to Company
Xxxx Xxxxxxx 6,000 Panache employee
TOTAL 1,006,000
Shares shall be issued only to officers, directors and employees of
the Company or Panache and to persons who are advisors or consultants to the
Company or Panache, provided that such advisors and consultants are natural
persons who render bona fide services that are not in connection with the offer
and sale of securities in a capital-raising transaction. These options shall
vest upon grant, shall be exercisable at a price of $.05 per share and shall
have a term of five (5) years.
3. PANACHE'S REPRESENTATIONS AND WARRANTIES. Panache hereby represents
and warrants that the following are true and correct as of the date hereof and
will be true and correct through the Closing Date as if made on that date:
(a) Organization and Standing. Panache is a corporation duly
organized, validly existing and in good standing under the laws of Colorado,
with all requisite power and authority to carry on the business in which it is
engaged, to own the properties and assets it owns, and is duly qualified and
licensed to do business and is in good standing in all jurisdictions where the
nature of its business makes such qualification necessary.
(b) Capitalization. Panache's authorized capital stock consists of
45,000,000 shares of common stock, with no par value, of which 5,050,000 shares
have been issued and are outstanding, which includes the Panache Shares, and
5,000,000 shares of Preferred Stock are authorized of which none have ever been
issued.. All of the Panache Shares have been duly authorized, validly issued,
and are fully paid and non-assessable. Except as expressed in this section,
Panache does not have any other outstanding equity securities, options, warrants
or similar instruments, and is not a party to or bound by any agreement,
instrument, arrangement, contract, obligation, commitment or understanding of
any character, whether written or oral, express or implied, whereby Panache is
bound to issue shares of its capital stock or any instrument or right
convertible into or exchangeable for shares of its capital stock, nor relating
to the sale, assignment, encumbrance, conveyance, transfer or delivery of any
capital stock of Panache of any type or class. SCHEDULE 1.2 sets forth the names
and addresses of all holders of capital stock of Panache and the number of
shares of common stock held by each, which is an accurate and complete list. No
person has preemptive or similar rights as to the Panache Shares. Panache will
prior to Closing provide to the Company a copy of all agreements and
understandings between Panache and any third parties.
(c) Subsidiaries. Panache currently has and at Closing will have no
subsidiaries.
(d) Litigation. There are no claims, actions, suits, proceedings or
investigations pending or threatened against or affecting the Panache Shares,
Panache or any of its properties or assets in any court or by or before any
federal, state, municipal or other governmental department, commission, board,
bureau, agency or other instrumentality, domestic or foreign, or arbitration
tribunal or other forum which, if determined adversely to Panache, would
materially affect its business, prospects, properties or financial condition or
Panache's right to conduct its business as being conducted or expected to be
conducted, except as disclosed on SCHEDULE 3(d). There are no judgments,
decrees, injunctions, writs, orders or other mandates outstanding to which the
Panache Shares or Panache is a party or by which it is bound or affected, except
as disclosed on SCHEDULE 3(d). Copies of material pleadings shall accompany such
schedule.
(e) Estoppel. All statements made in this Agreement, or in any Exhibit
or Schedule hereto, or in any document or certificate executed and delivered
herewith, by Panache are true, correct and complete as of the date of this
Agreement and will be so as of the Closing Date. All statements contained in any
certificate made by any official of Panache and delivered to the Company shall
be deemed representations and warranties of Panache.
(f) Compliance with Laws and Permits. Panache has complied in all
material respects with its articles of incorporation and bylaws (each as amended
to date), all applicable laws, regulations and rules, all applicable orders,
judgments, writs, decrees or injunctions of federal, state and municipal
governments or any department, agency or other instrumentality thereof, domestic
or foreign, applicable to its business or properties, and has not done or
omitted to do any act or acts which singly or in the aggregate are in violation
of any of the foregoing. Panache has obtained all federal, provincial and
municipal licenses and permits necessary to its properties and operations, is
not in violation of any such license or permit and has not received any
notification that any revocation or limitation thereof is pending or threatened.
(g) No Undisclosed Material Liabilities. Panache has not incurred any
liabilities or obligations whatever (whether direct, indirect, accrued,
contingent, absolute, secured or unsecured or otherwise), including liabilities
as guarantor or surety or otherwise for the obligations of others and tax
liabilities due or to become due, except as described in writing to the Company
or on SCHEDULE 3(g). There is no basis for any material claim against Panache's
assets, which involves an amount in excess of $10,000, except as disclosed in
writing to the Company. Panache has no creditors whose prior consent might be
required by law to the Exchange.
(h) Material Transactions and Adverse Changes. Except as has been
disclosed in writing to the Company, Panache has not and as of the Closing Date
will not have: (i) suffered any materially adverse change in its assets taken as
a whole; (ii) suffered any damage or destruction in the nature of a casualty
loss to any one or more of its assets, whether or not covered by insurance,
which singly or in the aggregate are materially adverse to the properties or
business of Panache; (iii) made any change in any method of accounting or
accounting practice, including the revaluation of any of its assets; or (iv)
agreed in writing or otherwise to take any action prohibited in this Section.
(i) Taxes. All income, excise, unemployment, social security,
occupational, franchise, ad valorem and other taxes, duties, assessments or
charges levied, assessed or imposed upon Panache by any federal, state or
municipal government or subdivision or instrumentality thereof have been duly
paid or adequately provided for, and all required tax returns or reports
concerning any such items have been duly filed. Adequate reserves have been
established for all income and other tax liabilities, except as otherwise
disclosed on SCHEDULE 3(i). Panache has not waived any statute of limitations
with respect to any tax liability whatever for any period prior to the date of
this Agreement or agreed to any extension of time with respect to a tax
assessment or liability. No consents have been filed by Panache pursuant to
Section 341(f) of the Internal Revenue Code of 1986, as amended.
(j) Contracts. Attached to this Agreement, as SCHEDULE 3(j) is a list
of all material contracts to which Panache is a party. With respect to each such
contract, except as disclosed in writing to the Company, Panache is not in
default, the contract is legal, valid, binding, in full force and effect and
enforceable in accordance with its terms, and the contract will continue after
the Closing to be legal, valid, binding, in full force and effect in accordance
with its terms. Contracts or commitments described in any other Schedule need
not be disclosed in SCHEDULE 3(j).
(k) Indebtedness to and from Affiliates. Except as disclosed in the
Panache Financial Statements, Panache is not indebted to any officer, director,
employee or shareholder thereof as of the date of this Agreement, and no money
or property is owed to Panache by any officer, director, employee or shareholder
thereof, and none will be owed as of the Closing Date.
(l) Documents Genuine. All originals and/or copies of Panache's
articles of incorporation and bylaws, each as amended to date, and all minutes
of meetings and written consents in lieu of meetings of directors and
shareholders of Panache, financial data, and any and all other documents,
material, data, files, or information which have been or will be furnished to
the Company, are and will be true, complete, correct and unmodified originals
and/or copies of such documents, information, data, files or material.
(m) Financial Statements and Records. Panache will provide to the
Company two years' of financial statements, and all such statements shall fairly
present the assets, liabilities and financial condition of Panache as of the
respective dates thereof, and all shall have been prepared in conformity with
generally accepted accounting principles, consistently applied during the
periods covered. For purposes of this Agreement, such statements shall include
all notes thereto. Panache also will furnish to the Company copies of its other
books, accounts and records as requested.
(n) Officers and Directors Salaries. Panache will provide to the
Company a list of all its officers and directors, reflecting the job description
and salary of each person.
(o) Insurance. SCHEDULE 3(o) contains a list of all insurance policies
Panache has in effect.
(p) Authorization and Validity. The execution, delivery and
performance by Panache of this Agreement and any other agreements contemplated
hereby, and the consummation of the transactions contemplated hereby and
thereby, have been duly authorized by Panache and all necessary approvals of the
shareholder(s) of Panache will have been obtained by the Closing Date. This
Agreement and any other agreement contemplated hereby have been or will be as of
the Closing Date duly executed and delivered by Panache and constitutes and will
constitute legal, valid and binding obligations of Panache, enforceable against
it in accordance with their respective terms, except as may be limited by
applicable bankruptcy, insolvency or similar laws affecting creditors' rights
generally or the availability of equitable remedies.
(q) Consents; Approvals; Conflict. Except for compliance with
applicable federal and state securities laws, no consent, approval,
authorization or order of any court or governmental agency or other body is
required for Panache and the Panache Holders to consummate the Exchange. Neither
the execution, delivery, consummation or performance of this Agreement shall
conflict with, or constitute a breach of, and no prior approval is necessary by
or under, Panache's articles of incorporation, bylaws or any note, mortgage,
indenture, deed of trust, lease, obligation, or other agreement or instrument to
which Panache is a party.
(r) Intellectual Property. Attached to this Agreement, as SCHEDULE
3(r) is a description of all registered trademarks, trademarks, service marks,
copyrights, trade names and licenses, owned or held by Panache and applications
pending therefor. Copies of each such right or application shall be furnished to
the Company. Panache has not interfered with, infringed upon, misappropriated,
or otherwise come into conflict with any patent, trademark, trade name, service
xxxx or copyright belonging to any third person, and Panache has never received
any charge, complaint, claim, demand or notice alleging any such interference,
infringement or misappropriation. Panache owns or hold adequate licenses or
other rights to use all patents, trademarks, trade names, service marks and
copyrights used in its business as now conducted, and such use does not conflict
with, infringe upon or violate the rights of any third party in a manner which
might have a materially adverse effect upon Panache.
(s) Restrictive Covenants. Prior to the consummation of the Exchange,
Panache shall conduct its business in the ordinary and usual course without
unusual commitments and in compliance with all applicable laws, rules, and
regulations. Furthermore, Panache will not, without the prior written consent of
the Company, (i) make any changes in its capital structure, (ii) incur any
liability or obligation other than current liabilities incurred in the ordinary
and usual course of business, (iii) incur any material indebtedness for borrowed
money, (iv) make any loans or advances other than in the ordinary and usual
course of business, (v) declare or pay any dividend or make any other
distribution with respect to its capital stock, (vi) issue, sell, or deliver or
purchase or otherwise acquire for value any of its stock or other securities, or
(vii) mortgage, pledge, or subject to encumbrance any of its assets or
properties or sell or transfer any of its assets or properties, except in the
ordinary and usual course of business.
(t) Disclaimer of Further Warranties; Etc. Except as expressly set
forth in this Agreement and the Schedules and Exhibits hereto, Panache has made
no other representations or warranties to Company in connection with the
Exchange. Panache's decision to enter into the Exchange is based upon its own
independent judgment and investigation and not on any representations and
warranties of the Company other than those expressly stated in this Agreement
and in the Schedules and Exhibits hereto.
4. REPRESENTATIONS AND WARRANTIES OF THE PANACHE HOLDERS. The Panache
Holders each represent and warrant to the Company that the following are true
and correct as of the date hereof and will be true and correct through the
Closing Date as if made on that date:
(a) Each Panache Holder owns of record and beneficially all the
Panache Shares respectively shown next to his, her or its name on SCHEDULE 1.2
to this Agreement; and his, her or its Panache Shares are free and clear of all
liens, claims, rights or other encumbrances whatever and of all options and
similar rights of third persons; and no person has or will have any right in and
to such shares except as are created by force of law under any marital,
community property or similar rights. No third party has or at Closing will have
any right of first refusal, pre-emptive right, option or similar right to
acquire any of the Panache Shares except as disclosed to the Company in writing
prior to the Closing. Each Panache Holder represents and warrants that he, she
or it is not now insolvent and will not be insolvent after selling and
delivering the Panache Shares to the Company on the terms of this Agreement, and
each Panache Holder is receiving new consideration at least equal to the full
and fair value of the Panache Shares being sold. Each Panache Holder has the
full right, power and legal capacity to enter into this Agreement and sell and
deliver the Panache Shares to the Company.
(b) The Panache Holders understand and acknowledge that the Company is
not profitable and does not have full-time or professional management, and that
the officers and directors of the Company after the Closing will principally
consist of the current officers and directors of or persons designated by
Panache. Each Panache Holder recognizes that the Exchange Shares are speculative
and involve a high degree of risk, and that the prospects and future success of
the Company depend principally upon the Panache Holders.
(c) Each Panache Holder acknowledges and agrees that he, she or it or
his, her or its representatives have been furnished with or offered
substantially the same kind of information regarding the Company and its
business, assets, financial condition and plan of operation as would be
contained in a registration statement and included prospectus prepared in
connection with a public offering of the Exchange Shares. Each Panache Holder
further represents that he, she or it has had an opportunity to ask questions of
and receive answers from the Company regarding the Company and its business,
assets, results of operations, financial condition and plan of operation and the
terms and conditions of the issuance of the Exchange Shares.
(d) In connection with the issuance and delivery of the Exchange
Shares, each of the Panache Holders understands and acknowledges that the
Exchange Shares have not been registered under the Act or any state laws in
reliance upon exemptions from registration and that such shares will be
restricted and subject to significant restrictions on transfer, as described in
Section 1.3 of this Agreement. Each Panache Holder is acquiring the Exchange
Shares for his, her or its own account, and not for the account of any other
person and not for distribution, assignment or resale to others, or for pledge
or hypothecation, and no other person has or is intended to have a direct or
indirect ownership or contractual interest in the Exchange Shares except as may
exist or arise under marital property laws or otherwise by operation of law.
(e) Each of the Panache Holders, alone or together with his, her or
its respective adviser(s), has such knowledge and experience in financial, tax
and business matters as to enable Panache Holder to utilize the information made
available by the Company, in connection with the Exchange and issuance of the
Exchange Shares, to evaluate the merits and risks of acquiring the Exchange
Shares and to make an informed investment decision with respect thereto.
(f) All information which each Panache Holder has provided or will
provide to the Company is or will be correct and complete as of the date
furnished to the Company, and, if there should be any material change in such
information prior to the Closing as to a Panache Holder, that Panache Holder
will immediately provide the Company with such information.
(g) No Panache Holder was solicited by the Company by any form of
general solicitation or general advertising, including but not limited to any
advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over television or radio, or
made available over telephone lines by any information service, or any seminar
or meeting whose attendees had been invited by any means of general solicitation
or general advertising.
(h) Except as expressly set forth in this Agreement and the Schedules
and Exhibits hereto, the Company has not made any representation or warranty to
any Panache Holder in connection with this Agreement. Each Panache Holder's
decision to enter into the Exchange is based upon his, her or its own
independent judgment and investigation and not on any representations and
warranties of the Company other than those expressly stated in this Agreement
and in the Schedules and Exhibits hereto.
(i) To the best of the knowledge of each Panache Holder, all of the
representations and warranties of Panache set forth in this Agreement are
accurate and true.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Unless specifically
stated otherwise, the Company represents and warrants to the other parties that
the following are true and correct as of the date hereof and will be true and
correct through the Closing Date as if made on that date.
(a) Organization and Good Standing; Authority. The Company is and on
the Closing Date will be duly organized, validly existing and in good standing
under the laws of the State of Colorado, entitled to own its properties and
operate its business as now being conducted. The Company has corporate power and
authority to enter into this Agreement and the related agreements contemplated
herein, to executive and deliver and perform its obligations hereunder and
thereunder and to consummate the transactions contemplated hereby and thereby.
(b) Authorized Capitalization. As provided in its Articles of
Incorporation, the authorized capital stock of the Company consists of
100,000,000 shares of common stock, $.001 par value, of which 450,250 are
outstanding, and 50,000,000 shares of non-cumulative, non-voting convertible
preferred stock, none of which have been issued or are outstanding.
(c) Outstanding Options, Warrants or Other Rights. Except as expressly
set forth, herein, the Company does not have outstanding any option, warrant or
similar instrument and is not a party to or bound by any agreement, instrument,
arrangement, contract, obligation, commitment or understanding of any character,
whether written or oral, express or implied, whereby the Company is bound to
issue shares of its capital stock or any instrument or right convertible into or
exchangeable for shares of its capital stock, nor relating to the sale,
assignment, encumbrance, conveyance, transfer or delivery of any capital stock
of the Company of any type or class. The Company shall provide to Panache a list
of all holders of the Company's capital stock and stock options, the number of
shares held by each and the number of each certificate held, duly certified by
the Secretary or Transfer Agent of the Company.
(d) Subsidiaries. The Company has and as of the Closing will have no
subsidiaries.
(e) Documents Genuine. All originals and/or copies of the Company's
articles of incorporation and bylaws, each as amended to date, and all minutes
of meetings and written consents in lieu of meetings of shareholders, directors
and committees of directors of the Company, financial data, and any and all
other documents, material, data, files, or information which have been or will
be furnished to Panache, are and will be true, complete, correct and unmodified
originals and/or copies of such documents, information, data, files or material.
(f) Litigation. There are no claims, actions, suits, proceedings or
investigations pending or threatened against or affecting the Company in any
court or by or before any federal, state, municipal or other governmental
department, commission, board, bureau, agency or other instrumentality, domestic
or foreign, or arbitration tribunal or other forum. There are no judgments,
decrees, injunctions, writs, orders or other mandates outstanding to which the
Company is a party or by which it is bound or affected.
(g) Compensation Plans. Except as described below, the Company has not
authorized and does not have in effect any stock options or stock purchase
plans, dividend reinvestment plans or similar plans pursuant to which any person
is entitled to acquire capital stock of the Company or any securities
convertible into or exchangeable for its capital stock. The Company has
delivered to Panache a copy of each plan and grant of common shares and options
described below. No shares will be awarded or issued pursuant to such plans, or
otherwise, without the prior written authorization of Panache.
(i) The Company has in effect a 2002 Compensatory Stock
Option Plan, covering 2,000,000 shares of the Company's common stock.
No options have been granted and none will be granted prior to Closing
pursuant to this Plan.
(ii) The Company has in effect a 2002 Employee Stock
Compensation Plan covering 1,000,000 of the Company's common shares,
pursuant to which the Company may award shares of common stock to
persons defined therein as employees. The Company has not awarded any
shares under this plan, and no shares will be awarded under this plan
prior to Closing without Panache's prior written consent.
(h) Authorization and Validity. The execution, delivery and
performance by the Company of this Agreement and any other agreements
contemplated hereby, and the consummation of the transactions contemplated
hereby and thereby, have been duly authorized by the Company. This Agreement and
any other agreement contemplated hereby have been or will be as of the Closing
Date duly executed and delivered by the Company and constitute and will
constitute legal, valid and binding obligations of the Company, enforceable
against it in accordance with their respective terms, except as may be limited
by applicable bankruptcy, insolvency or similar laws affecting creditors' rights
generally or the availability of equitable remedies.
(i) Financial Statements. The Company will provide to Panache all of
the Company's financial books and records and such audited and unaudited
financial statements of the Company, back to inception, as exist and as Panache
requests. All such statements shall fairly present the assets, liabilities and
financial condition of the Company as of the respective dates thereof, and all
shall have been prepared in conformity with generally accepted accounting
principles, consistently applied during the periods covered. For purposes of
this Agreement, such statements shall include all notes thereto.
(j) No Undisclosed Material Liabilities. The Company has not incurred
any liabilities or obligations whatever (whether direct, indirect, accrued,
contingent, absolute, secured or unsecured or otherwise), which singly or in the
aggregate are material to it, except as disclosed in the Company's financial
statements or otherwise disclosed in writing to Panache.
(k) Taxes. All income, excise, unemployment, social security,
occupational, franchise and other taxes, duties, assessments or charges levied,
assessed or imposed upon the Company by the United States or by any state or
municipal government or subdivision or instrumentality thereof have been duly
paid or adequately provided for, and all required tax returns or reports
concerning any such items have been duly filed or will be so filed.
(l) Indebtedness to or from Affiliates. The Company is not and will
not be indebted to any officer, director, employee or shareholder thereof as of
the Closing Date. No money or property is owed to the Company by any officer,
director, employee or shareholder thereof, and none will be owed as of the
Closing.
(m) Salaries. No person currently receives a salary or other cash
compensation from the Company, and no person will receive a salary or other cash
compensation from the Company prior to Closing.
(n) Insurance. The Company does not now have any insurance policy in
effect and will not obtain any insurance policy prior to Closing.
(o) Books, Records and Accounts. Except for the minute book and
accounting and corporate records of the Company furnished to Panache, there are
no other books, records or accounts of the Company. Panache shall have the right
to review and obtain all records, books and accounts of the Company.
(p) Estoppel. All statements made herein, or in any Exhibit or
Schedule hereto, or in any document or certificate executed and delivered
herewith by the Company are true, correct and complete as of the date of this
Agreement and will be so as of the Closing. All statements contained in any
certificate made by any officer or director of the Company and delivered to
Panache shall be deemed representations and warranties of the Company.
(q) Consents; Approvals; Conflict. No consent, approval, authorization
or order of any court or governmental agency or other body is required for the
Company to execute and perform its obligations under this Agreement. Neither the
execution, delivery, consummation or performance of this Agreement shall
conflict with, constitute a breach of the Company's articles of incorporation
and bylaws, as amended to date, or any note, mortgage, indenture, deed of trust
or other agreement of instrument to which the Company is a party or by which it
is bound nor, to the best of the Company's knowledge and belief, any existing
law, rule, regulation, or any decree of any court or governmental department,
agency, commission, board or bureau, domestic or foreign, having jurisdiction
over the Company.
(r) Restrictive Covenants. Prior to the consummation of the proposed
Exchange, the Company shall not engage in any business or activity other than
attempting to consummate the Exchange. Furthermore, the Company will not,
without the prior written authorization of Panache, (i) make any changes in its
capital structure, (ii) incur any liability or obligation other than current
liabilities incurred in the ordinary and usual course, (iii) declare or pay any
dividend or make any other distribution with respect to its capital stock, (iv)
issue, sell, or deliver or purchase or otherwise acquire for value any of its
stock or other securities, (v) make any investment of a capital nature, or (vi)
enter into any contract, agreement, or other commitment which is material to the
Company.
(s) Disclaimer of Further Warranties; Etc. Except as expressly set
forth in this Agreement and the Schedules and Exhibits hereto, Panache has made
no other representation or warranty to the Company in connection with the
Exchange. The Company's decision to enter into the Exchange is based upon the
Company's own independent judgment and investigation and not on any
representations and warranties of Panache other than those expressly stated in
this Agreement and in the Schedules and Exhibits hereto.
6. CONDITIONS TO OBLIGATIONS OF THE PARTIES; DELIVERIES. All obligations
of the parties under this Agreement are subject to the accuracy and truthfulness
of all representations of the other parties, and the fulfillment, prior to the
Closing, of all conditions precedent and to performance of all covenants and
agreements and completion of all deliveries contemplated herein, unless
specifically waived in writing by the party entitled to performance or to demand
fulfillment of the covenant or delivery of the documents.
6.1 Documents to be Delivered to the Company. At the Closing, the
following documents shall be delivered to the Company by Panache or the Panache
Holders, as the case may be, which documents shall be satisfactory in form and
content to the Company's counsel:
(a) Certificates executed by the chief executive officer and the chief
financial or accounting officer of Panache, dated the Closing Date, certifying
that the representations and warranties of Panache contained in this Agreement
and the information set forth in all Schedules and Exhibits of Panache hereto
are then true and correct and that Panache has complied with all agreements and
conditions required by this Agreement and all related agreements to be performed
or complied with by Panache.
(b) A copy of the directors' resolution or the minutes of the meeting
of the directors of Panache approving the execution and performance of this
Agreement.
(c) All certificates evidencing the Panache Shares, each endorsed on
the reverse side for transfer or accompanied by a signed stock power in form
satisfactory to the Company.
(d) All Schedules, properly filled out, and all documents and Exhibits
called for in this Agreement.
(e) The same information as to Panache as called for in Section 6.2(a)
through (l).
6.2 Documents to be Delivered to Panache and the Panache Holders.
Prior to the Closing, and as a condition precedent to Closing, each of the
following documents shall be delivered to Panache and the Panache Holders by the
Company, and the documents must be satisfactory in form and content to Panache
Holders, Panache and its counsel:
(a) Current Company Bylaws.
(b) Articles of Incorporation, including all amendments.
(c) All Certificates of Amendment and Restatements to Articles of
Incorporation.
(d) Minutes from all Board of Directors Meetings and Shareholders
Meetings from inception.
(e) All State and Federal Tax Returns filed from 1998 to present
(including extensions).
(f) Shareholder List.
(g) To the Panache Holders, certificates evidencing the Exchange
Shares in the proper denominations.
(h) To Panache, a certificate executed by the Company dated the
Closing Date, certifying that the representations and warranties of the Company
contained in this Agreement and the information set forth in all Schedules and
Exhibits of the Company are then true and correct and that the Company has
complied with all agreements and conditions required by this Agreement to be
performed or complied with by it.
(i) To Panache, a copy of the directors' resolution or the minutes of
the meeting of the directors of the Company approving the execution and
performance of this Agreement.
(j) All Schedules, properly filled out, and all Exhibits called for in
this Agreement.
6.3 Conditions Precedent. The obligations of the parties under this
Agreement are subject to the satisfaction of the following conditions (in
addition to other conditions and terms of this Agreement), unless waived in
writing, on or prior to the Closing:
(a) Representations and Warranties Correct. The representations and
warranties of every party contained in this Agreement shall be in all material
respects true and correct on and as of the Closing Date as if made on such date.
(b) Compliance. The Company, Panache and the Panache Holders each
shall have performed all covenants and agreements, satisfied all conditions and
complied with all other terms and provisions of this Agreement to be
respectively performed, satisfied or complied with by it as of the Closing Date.
(c) No Errors or Misrepresentations. The Company shall not have
discovered any material error, misstatement or omission in or failure of any
representation or warranty made by any of the other parties, and Panache shall
not have discovered any material error, misstatement or omission in or failure
of any representation or warranty made by the Company.
(d) Due Diligence Examination. The Company and Panache shall have
completed their due diligence examination of the other party to their
satisfaction, including all books, records, contracts, documents listed in
paragraph 6.2 and other documents and all financial affairs of the other party.
(e) Legal Matters. All legal matters in connection with this Agreement
and the consummation of all transactions herein contemplated, and all documents
and instruments delivered in connection herewith shall be reasonably
satisfactory in form to each party.
(f) No Litigation or Proceedings. No injunction or restraining order
of any federal or state court is in effect which prevents the purchase of the
Assets or issuance and delivery of the Exchange Shares, and no lawsuit or other
proceeding has been filed by any person by the Closing Date contesting or
attempting to enjoin either action, and no action is taken and no law is passed
after the date of this Agreement which prevents the Exchange.
7. OTHER COVENANTS OF THE PARTIES. The parties agree that, prior to the
Closing:
(a) Effectuation of this Agreement. The parties hereto each will use
their best efforts to cause this Agreement and all related agreements to become
effective, and all transactions herein and therein contemplated to be
consummated, in accordance with its and their terms, to obtain all required
consents, waivers and authorizations of governmental entities and other third
parties, to make all filings and give all notices to those regulatory
authorities or other third parties which may be necessary or reasonably required
in order to effect the transactions contemplated in this Agreement, and to
comply with all federal, local and state laws, rules and regulations as may be
applicable to the contemplated transactions.
(b) Restriction on Action. The parties each agree that he or it will
not do any thing or act prohibited by this Agreement or any related agreement,
or fail to do any thing or act which he or it has undertaken to do in this
Agreement or any related agreement.
(c) Access and Information. To the extent each party deems necessary
for purposes of this Agreement and the transactions contemplated hereby, Panache
and the Company each shall permit the other, its counsel, accountants and other
representatives to have full access, upon reasonable notice and during regular
business hours, throughout the period prior to Closing, to its equipment,
assets, properties, books and records, and will cause to be furnished to the
requesting party and its representatives during such period all information it
or its representatives may reasonably request.
(d) Public Release of Information. The Company shall not issue any
press release or make any other public release of information concerning the
Exchange or this Agreement without the prior written consent of Panache, and
neither Panache nor any Panache Holder shall issue any press release or make any
other public release of information concerning the Exchange or this Agreement
without the Company's prior written consent.
(e) SEC Filings. Panache and the Panache Holders acknowledge and agree
that all filings with the SEC required by SEC rules shall be done within the
required time limits. The Company, Panache and the Panache Holders will
participate in the preparation of all such filings.
8. TERMINATION OF THIS AGREEMENT.
8.1 Grounds for Termination. This Agreement shall terminate:
(a) By mutual written consent of all parties;
(b) By any party, if:
(i) all the conditions precedent to its respective
obligations hereunder have not been satisfied or waived prior to the
Closing Date, as it may be accelerated or extended, or if any Panache
Holder refuses to execute this Agreement;
(ii) any party shall have defaulted or refused to perform in
any material respect under this Agreement, or if the Company or
Panache should have reasonable cause to believe there has been a
material representation concerning, or failure or breach of, any
representation or warranty by the other party, or if it appears that
either Panache or the Company has committed any unlawful acts
affecting the other party;
(iii) the transactions contemplated in this Agreement and
related agreements have not been consummated on the Closing Date, as
it may be mutually accelerated or extended, or
(iv) either the Company or Panache shall reasonably
determine that the transactions contemplated in this Agreement have
become inadvisable by reason of the institution or threat by any
federal, state or municipal governmental authorities or by other
person whatever of a formal investigation or of any action, suit or
proceeding of any kind against either or both parties which in one
party's reasonable belief is material in light of the other party's
business, prospects, properties or financial condition;
8.2 Manner of Termination. Any termination of this Agreement shall be
made in accordance with the above listed grounds and, if terminated by Panache
or the Company, shall be accompanied by a copy of the resolution of the
terminating party's board of directors. Written notice of termination shall be
given to the other party as required in this Agreement as promptly as is
practical under the circumstances. Upon a party's receipt of such termination
notice, this Agreement shall terminate and the transactions herein contemplated
shall be abandoned without further action by the parties.
8.3 Survival of Confidentiality Provisions. Upon termination of this
Agreement for any reason, (i) the covenants of the parties concerning the
confidentiality and proprietary nature of all documents and other information
furnished hereunder shall remain in force except as to information which has
otherwise become public knowledge, and (ii) each party shall promptly return all
documents received from the other party in connection with this Agreement. This
Section constitutes a mutual covenant of the parties, and either may judicially
enforce it.
9. CONFIDENTIALITY PROVISIONS. In connection with the proposed Exchange,
the Company may, from time to time, furnish Panache and/or its representatives
with certain Confidential Information (as defined below). As used in this
Section, the terms "Company", "Panache" and "Panache Holders" includes their
respective advisers, representatives, employees and agents and all successors
and assigns. In consideration of the Company furnishing (prior to and subsequent
to the date hereof) such Confidential Information, Panache and the Panache
Holders agree as follows:
(a) Confidential Information. Confidential Information means any and
all memoranda, manuals, data, reports, interpretations, forecasts, market plans,
market analyses, and records containing or otherwise reflecting information
concerning the Company which is not available to the general public and which
the Company later provides or has previously provided to Panache or any Panache
Holder, together with analyses, compilations, forecasts, studies or other
documents prepared by the Company, its agents, representatives (including
lawyers, accountants and financial advisors) or employees which contain or
otherwise reflect the foregoing described information, as well as any oral
communications with respect to the foregoing. The term Confidential Information
shall not include any information which (i) is or becomes generally available to
the public other than as a result of a disclosure by Panache or a Panache
Holder, or (ii) become available to Panache or a Panache Holder on a
non-confidential basis from a source other than the Company or its agents which
is not known to Panache or the Panache Holder to be prohibited from disclosing
such Confidential Information to it by a legal, contractual or fiduciary
obligation to the Company.
(b) Confidentiality. The Confidential Information will be kept
confidential and shall not, without the prior written consent of the Company, be
disclosed by Panache or a Panache Holder, other than in connection with this
Agreement. Panache and the Panache Holders agree to reveal the Confidential
Information only to their representatives and employees who need to know the
Confidential Information for the purposes described herein, who are informed by
Panache or the Panache Holder, as the case may be, of the confidential nature of
the Confidential Information and who shall agree in writing to act in accordance
with the terms and conditions of this Confidential Agreement. Panache and the
Panache Holders shall be liable for any breach of this Confidentiality provision
by its or his respective representatives or employees.
Without the prior written consent of the Company, except as required
by law, Panache and the Panache Holders will not disclose to any person the fact
that the Confidential Information has been made available, nor make any
announcement that discussions or negotiations are taking place or have taken
place concerning the matters set forth in this Agreement or any of the terms,
conditions or other facts with respect to any transaction the Company is
negotiating, including the status thereof.
(c) Return of Confidential Information. Promptly upon completion or
termination of this Agreement, all copies of the Confidential Information,
except for that portion of the Confidential Information that consists of
analyses, compilations, forecasts, studies or other documents prepared by
Panache or a Panache Holder, will be returned to the Company. That portion of
the Confidential Information that consists of analyses, compilations, forecasts,
studies or other documents prepared by Panache or a Panache Holder and oral
Confidential Information may be retained by Panache or the Panache Holder and
kept confidential and subject to the terms of this Confidentiality Agreement or
destroyed upon the request of the Company. Such destruction will be confirmed in
writing to the Company.
(d) Accuracy of Confidential Information. Panache and the Panache
Holders acknowledge that the Company makes no express or implied representation
or warranty as to the accuracy or completeness of the Confidential Information,
and the Company expressly disclaims any and all liability that may be based on
the Confidential Information, errors therein or omissions therefrom.
(e) Protective Order. In the event that Panache or a Panache Holder or
anyone to whom it or he transmits the Confidential Information becomes legally
compelled to disclose any of the Confidential Information or any information
relating to Panache's or a Panache Holder's opinion, judgment or recommendations
concerning the Company as developed from the Confidential Information, Panache
or the Panache Holder, as the case may be, will provide the Company with prompt
notice so that the Company may seek a protective order or other appropriate
remedy and/or waive compliance with the provisions of this Confidentiality
Agreement. In the event that such waiver or such protective order or other
remedy is not obtained, Panache or the affected Panache Holder(s) will furnish
only that portion of the Confidential Information which it or they are advised
by written opinion of legal counsel is legally required, and will exercise its
best efforts to obtain reliable assurance that confidential treatment will be
accorded the Confidential Information. Neither Panache nor any Panache Holder
shall oppose action by the Company to obtain an appropriate protective order or
other reliable assurance that confidential treatment will be accorded the
Confidential Information.
(f) Reciprocal Nature of this Covenant. In the event that Panache or a
Panache Holder provides Confidential Information to the Company, then the
Company shall have the same obligation as Panache and the Panache Holders in
this Section, and Panache or such Panache Holder(s) shall have the same rights
and remedies as the Company set forth in this Section with respect to such
Confidential Information.
10. MISCELLANEOUS PROVISIONS.
(a) Assignment. Neither this Agreement nor any right created hereby or
in any agreement entered into in connection with the transactions contemplated
hereby shall be assignable by any party hereto without the written consent of
the party not seeking assignment, except that the Company may direct such an
assignment to a wholly owned subsidiary corporation. No such assignment shall
relieve the assignor of any obligations created under this Agreement.
(b) Parties in Interest; No Third Party Beneficiaries. Except as
otherwise provided herein, the terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the parties and their respective
heirs, legal representatives, successors and assigns. Neither this Agreement nor
any other agreement contemplated hereby shall be deemed to confer upon any
person not a party hereto or thereto any rights or remedies hereunder or
thereunder, except as expressly set forth in this Agreement.
(c) Entire Agreement. This Agreement and the agreements contemplated
hereby constitute the entire agreement of the parties regarding the subject
matter hereof, and supersede all prior agreements and understandings, both
written and oral, among the parties, or any of them, with respect to the subject
matter hereof.
(d) Severability. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future laws effective during
the term hereof, such provision shall be fully severable and this Agreement
shall be construed and enforced as if such illegal, invalid or unenforceable
provision never comprised a part hereof; and the remaining provisions hereof
shall remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance herefrom. Further, in
lieu of such illegal, invalid or unenforceable provision, there shall be added
automatically as part of this Agreement a provision as similar in terms to such
illegal, invalid, or unenforceable provision as may be possible and be legal,
valid and enforceable.
(e) Survival of Representations, Warranties and Covenants. The
representations, warranties and covenants of all parties contained herein and
all statements contained in any certificate, exhibit or other instrument
delivered by or on behalf of the Company, Panache or a Panache Holder, as the
case may be, shall, notwithstanding any provision in this Agreement to the
contrary, shall survive the Closing for a period of two years.
(f) Interpretation. This Agreement shall be governed by and construed
under the laws of the State of Colorado and shall be interpreted as if all
parties participated equally in its drafting. The captions in this Agreement are
for convenience of reference only and shall not limit or otherwise affect any of
the terms or provisions hereof. Whenever the context requires, the gender of all
words used herein shall include the masculine, feminine and neuter, and the
number of all words shall include the singular and plural. Use of the words
"herein", "hereof", "hereto" and the like in this Agreement shall be construed
as references to this Agreement as a whole and not to any particular provision
in this Agreement, unless otherwise noted.
(g) Notice. Any notice or communication hereunder or in any agreement
entered into in connection with the transactions contemplated hereby must be in
writing and given by depositing the same in the United States mail, addressed to
the party to be notified, postage prepaid and registered or certified with
return receipt requested, by telefax transmission or by delivery by use of a
messenger which regularly retains its delivery receipts. Such notice shall be
deemed received on the date on which it is delivered to the addressee. For
purposes of notice, the addresses of the parties shall be, if to a Panache
Holder, sent to Panache for forwarding, and:
If to Panache Inc.: 0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
ATTN: Xx. Xxxx Xxxxxx
If to the Panache Holders: to Panache
If to the Company: Xx. Xxxxx "Xxx" Xxxxxxxxxx
0000 Xxxx Xxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
(h) No Finders. Each party represents and warrants to the others and
agrees that it has not employed or engaged, and will not employ or engage, any
person as a finder or broker in connection with the transactions contemplated
herein, and that no person is entitled to compensation as a finder or broker.
Each party hereby indemnifies the other parties and holds the other parties
harmless from and against any claims of any third persons claiming to have acted
as a finder or broker in connection with the transactions herein contemplated,
and such indemnity shall include all expenses, costs and damages arising from or
related to such claims, including reasonable attorneys fees.
(i) Expenses. Except as otherwise provided in this letter, the parties
shall each bear their own respective fees and expenses incurred in connection
with the transactions contemplated herein.
(j) Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument. Execution and delivery of
this Agreement by exchange of facsimile copies bearing facsimile signature of a
party shall constitute a valid and binding execution and delivery of this
Agreement by such party. Such facsimile copies shall constitute enforceable
original documents.
(k) Prevailing Party Clause. In the event of any litigation or
proceeding arising as a result of the breach of this Agreement or the failure to
perform hereunder, or failure or untruthfulness of any representation or
warranty herein, the party or parties prevailing in such litigation or
proceeding shall be entitled to collect the costs and expenses of bringing or
defending such litigation or proceeding, including reasonable attorneys' fees,
from the party or parties not prevailing.
(l) Relationship of the Parties. Nothing in this Agreement is intended
to be construed so as to suggest that the parties hereto are partners or joint
venturers, or that any party or its employees is the employee or agent of the
other. Neither Panache nor the Company has any express or implied right or
authority under this Agreement to assume or create any obligations on behalf of
or in the name of the other party to any contract, agreement, arrangement,
understanding or undertaking with any third party.
(m) Exhibits, Schedules, etc. Each Exhibit to this Agreement shall be
initialed by Panache and the Company, and each Schedule shall be initialed by
the party providing it. Any Schedule provided by Panache Holders shall be
initialed by all of the Panache Holders. If a Schedule does not apply, it must
nonetheless be furnished and marked "not applicable." The information contained
in every Schedule shall be updated as necessary as of a date as close as
possible to the Closing Date and must be accurate and complete as of the Closing
Date. Each party signing this Agreement represents and warrants, to all other
parties, by such signature that he, she or it has carefully read this Agreement
in its entirety and understands the provisions of this Agreement.
(n) No Advice Given. Panache and the Panache Holders acknowledge and
agree that they have neither asked for nor received any legal or tax advice from
the Company or its counsel, nor any other person associated with the Company, in
regard to this Agreement or the transactions herein contemplated, and have
instead relied on advice and counsel furnished by their own legal or other
advisers in order to satisfy themselves as to the tax and other legal
implications to them of the Exchange and issuance of the Exchange Shares.
IN WITNESS WHEREOF, all parties have executed this Agreement, and Panache
and the Company have initialed every preceding page hereof, as of the dates
respectively indicated below.
NEWSEARCH, INC. PANACHE, INC.
By: By:
------------------------------- -------------------------------------
Xxxxx Xxxxxxxxxx, President Xxxx Xxxxxx, President
DATE: DATE:
------------------------------- -------------------------------------
SIGNATURES of PANACHE HOLDERS
X X
------------------------------- -------------------------------------
Xxxx Xxxxxx Egin Bresnig
DATE: DATE:
------------------------------- -------------------------------------
EXHIBITS and SCHEDULES
Panache Schedules:
Schedule 1.2 - Names and addresses of Panache shareholders, no. of Panache
Shares owned by each and number of exchange shares that go
to each person
Schedule 3(d) litigation
Schedule 3(g) disclosure of material liabilities
Schedule 3(i) taxes owed
Schedule 3(j) material contracts
Schedule 3(k) affiliate relationships
Schedule 3(o) insurance policies in effect
Schedule 3(r) patents, trademarks, service marks, licenses, franchises and
other intellectual property
Company Schedules:
NONE
S C H E D U L E 1.2
Names and addresses of Panache shareholders, number of Panache Shares owned by
each and number of Exchange Shares that go to each person
No. Panache No. Exchange
Name and Address Shares Owned Shares Issuable
---------------- ------------ ---------------
1. Xxxx Xxxxxx 2,500,000 (50.3%) 352,100
2. Egin Bresnig 2,470,000 (49.7%) 347,900
--------- -------
Totals 4,970,000 700,000
========= =======
----------------------------------
DRAFTING NOTES:
1.2 Calculation of share capitalization (no forward split):
Current
Capitalization
--------------
450,250 I&0 (assuming Xxxxxx shares cancelled)
700,000 to Panache Holders
1,150,250 I&O following consummation
----------
1,006,000 S-8 shares or options issuable
----------
2,156,250 TOTAL issued and outstanding /2 = 1,078,125
Stock to Xxxx and Egin Group:
-----------------------------
700,000 to Xxxx and Egin in Exchange
200,000 to Wicker
200,000 to Bresnig
6,000 to Xxxxxxx
-------
1,106,000 Total to Xxxx/Egin group = 51.3%
Stock to others:
450,250 existing Newsearch shares
400,000 to Xxx
200,000 to Xxxxxxx
---------
1,050,250 TOTAL to others = 48.7%
