STOCK PURCHASE AGREEMENT
Exhibit
4
THIS
STOCK PURCHASE AGREEMENT (the “Agreement”) is dated as of June 30, 2005, by and
among Red Carpet Entertainment, Inc., a Nevada corporation (“Red Carpet”), and
Xxxxx Xxxxxxx, an individual stockholder of Red Carpet (the “Red Carpet
Stockholder”) on the one hand, and Xxxxxx Daily, Inc., a California corporation
(“Xxxxxx Daily”) and Xxxxxxx Xxxxxx, an individual shareholder of Xxxxxx Daily,
and Xxxxx Xxxxxxxx, an individual shareholder of Xxxxxx Daily (collectively,
the
“Xxxxxx Daily Shareholders”) on the other hand. The Xxxxxx Daily Shareholders
are collectively referred to herein as the “Purchasers,” each a
“Purchaser.”
RECITALS
A. Red
Carpet and the Purchasers have each determined to engage in the transaction
contemplated hereby (the “Stock Purchase”) pursuant to which each of the
Purchasers will make certain contributions of assets as set forth herein in
exchange for shares of the common stock of Red Carpet and the assumption by
Red
Carpet of certain liabilities of the Purchasers, as set forth
herein.
B. The
board
of directors of Red Carpet and the board of directors of Xxxxxx Daily have
each
approved this Agreement and the Stock Purchase.
C. The
parties intend that the transactions contemplated in this Agreement constitute
capital contributions by all the Purchasers as a group to Red Carpet in exchange
for controlling equity interest in Red Carpet within the meaning of Section
351
of the Internal Revenue Code of 1986, as amended (the "Code"), and the
regulations promulgated thereunder.
D. The
Red
Carpet Stockholder and Xxxxxx Daily, Inc. are parties to this Agreement for
the
purpose of making certain representations and warranties.
AGREEMENT
NOW,
THEREFORE, in consideration of the mutual covenants and agreements contained
herein and in reliance upon the representations and warranties hereinafter
set
forth, the parties hereto hereby agree as follows:
1
ARTICLE
1
DEFINITIONS
As
used
herein, the following terms shall have the following meanings:
“Agreement”
has
the
meaning specified in the introductory paragraph above.
“Assumed
Liabilities”
has
the
meaning specified in Section 2.2 hereof.
“Closing”
has
the
meaning specified in Article 3 hereof.
“Closing
Date”
has
the
meaning specified in Article 3 hereof.
“Code”
means
the Internal Revenue Code of 1986, as amended.
“Contracts”
has
the
meaning specified in Section 4.15 hereof.
“Disclosure
Schedule”
has
the
meaning specified in Article 4 hereof.
“Employee”
means
a
regular employee on the payroll of Xxxxxx Daily.
“Encumbrance”
means,
with respect to any asset, any mortgage, lien, pledge, charge, security
interest, conditional sale agreement, financing statement or encumbrance of
any
kind, or any other type of preferential arrangement that has the practical
effect of creating a security interest in respect of such asset.
“Indemnified
Party”
has
the
meaning specified in Article 6 hereof.
“Indemnifying
Party”
has
the
meaning specified in Article 6 hereof.
“Intellectual
Property”
means
all of the service marks, copyrights, franchises, software, patents, licenses,
trademarks, trade names, jingles, slogans, logotypes and other similar
intangible assets maintained, owned, used, held for use or otherwise held or
licensed by Xxxxxx Daily in connection with the business of Xxxxxx Daily
(including any and all applications, registrations, extensions and renewals
relating thereto), and all of the rights, benefits and privileges associated
therewith.
“Hall
and Co.”
has
the
meaning specified in Section 5.6 hereof.
“Person”
means
a
natural person, corporation, partnership or other business entity, or any
Governmental Entity.
“Real
Property”
has
the
meaning specified in Section 4.9 hereof.
“Securities
Act”
means
the Securities Act of 1933, as amended.
“Red
Carpet”
has
the
meaning specified in the introductory paragraph above.
“Red
Carpet’s Audited Financials”
has
the
meaning specified in Section 5.6(a) hereof.
“Red
Carpet’s Balance Sheet”
has
the
meaning specified in Section 5.6(b) hereof.
“Red
Carpet’s Financial Statements”
has
the
meaning specified in Section 5.6(c) hereof.
“Red
Carpet’s Interim Financials”
has
the
meaning specified in Section 5.6(b) hereof.
“Red
Carpet Shares”
means
the common stock, par value $.001 per share, of Red Carpet issued pursuant
to
this Agreement.
“Tax”
and
“Taxes”
shall
mean all federal, state, local and foreign property, sales and use, payroll,
withholding, franchise and income taxes and all assessments, rates, levies,
fees
and other governmental charges, including any interest and penalties in respect
of such amounts.
“Xxxxxx
Daily Financial Statements”
has
the
meaning specified in Section 4.3 hereof.
“Unaudited
Balance Sheet”
has
the
meaning specified in Section 5.6(b) hereof.
2
PURCHASE
AND SALE; ASSUMPTION OF LIABILITIES
2.1 Purchase
and Sale.
Subject
to the terms and conditions of this Agreement and in reliance upon the
representations and warranties contained herein, at the Closing, each Purchaser
shall purchase from the Red Carpet, and Red Carpet shall issue and sell Red
Carpet Shares to each Purchaser as set forth in Exhibit
"A",
attached hereto, and to be allocated among them as set forth therein, an
aggregate of 3,800,000 Red Carpet Shares to the Xxxxxx Daily Shareholders,
in
exchange for Nine Hundred Fifty (950) shares of the common stock of Xxxxxx
Daily
held by the Xxxxxx Daily Shareholders.
2.2 Assumption
of Liabilities.
As part
of the consideration for the sale of the Red Carpet Shares as set forth in
Section 2.1 hereof, Red Carpet shall assume, on the date of Closing, and hereby
agrees to pay, perform and discharge the liabilities of Xxxxxx Daily (the
“Assumed Liabilities”).
2.3 Delivery
Free of Encumbrances.
The Red
Carpet Shares issued pursuant to Section 2.1 hereof shall be issued by Red
Carpet free and clear of any Encumbrances and shall be fully paid and
non-assessable.
2.4 Restrictions
On Transferability Of Red Carpet Shares.
The Red
Carpet Shares to be issued and delivered pursuant to this Agreement in
accordance with the provisions hereof will not have been registered under the
Securities Act or under the securities laws of any state. Accordingly, the
Red
Carpet Shares (together with any other shares received pursuant to conversions,
exchanges, stock splits, stock dividends or other reclassifications or changes
thereof, or consolidations or reorganizations of Red Carpet) will not be
transferable except upon the conditions specified in this Agreement, which
conditions are intended to insure compliance with the provisions of the
Securities Act in respect of any transfer thereof.
2.5 Legend.
Each
certificate representing Red Carpet Shares issued hereunder shall be stamped
or
otherwise imprinted with a legend in the following form:
"THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS
OF
ANY STATE. SUCH SECURITIES MAY NOT BE SOLD OR OFFERED FOR SALE OR OTHERWISE
HYPOTHECATED OR DISTRIBUTED EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT FOR SUCH SECURITIES UNDER THE ACT, OR (B) PURSUANT TO A VALID
EXEMPTION FROM SUCH REGISTRATION UNDER THE ACT AND UNDER THE SECURITIES LAW
OF
ANY STATE AND UPON RECEIPT BY RED CARPET COMPUTING, LTD OF AN OPINION OF COUNSEL
SATISFACTORY IN FORM AND SUBSTANCE TO IT THAT ANY SUCH SALE IS IN COMPLIANCE
WITH, OR NOT SUBJECT TO, THE ACT AND STATE SECURITIES LAWS."
3
Where
applicable, upon written request, Red Carpet shall remove such legends so as
to
facilitate the sale of such shares, if and to the extent applicable, pursuant
to
Rule 144 under the Act, provided (in the case of Rule 144 sales) that upon
request of removal of legends, the person making such request shall have
provided such documentation as Red Carpet and its transfer agent shall
reasonably require in connection therewith.
ARTICLE
3
THE
CLOSING
Subject
to the satisfaction of the conditions and closing deliveries specified in
Article 9 hereof, the closing of the Stock Purchase shall take place at 11:00
a.m. (Pacific Time) at the offices of Xxxxxx
Xxxxxxxxx Xxxxxxxx Xxxxxxx, LLP,
0000
Xxxxxxx Xxxxx, Xxxxx 000, Xxxxxxx Xxxxx, XX 00000, on or before June 30, 2005
(the “Closing Date”), or at such other time and date as the parties may mutually
agree (the “Closing”).
ARTICLE
4
REPRESENTATIONS
AND WARRANTIES OF
XXXXXX
DAILY
Except
as
set forth under the corresponding section of the disclosure schedule delivered
to Red Carpet concurrently herewith (the “Disclosure Schedule”), which
Disclosure Schedule shall be deemed a part hereof, Xxxxxx Daily and the Xxxxxx
Daily Shareholders hereby represent and warrant to Red Carpet as
follows:
4.1
Organization.
Xxxxxx
Daily is a corporation duly organized, validly existing and in good standing
under the laws of the state of its incorporation, and has the requisite
corporate power to carry on its business as now conducted.
4.2
Certain
Matters.
Xxxxxx
Daily is duly licensed or qualified to do business and is in good standing
as a
foreign corporation in every jurisdiction in which the character of its
properties or nature of its business requires it to be so licensed or qualified
other than such jurisdictions in which the failure to be so licensed or
qualified does not, or insofar as can reasonably be foreseen, in the future
will
not, have a material adverse effect on its financial condition, results of
operations or business. Xxxxxx Daily has full power and authority and all
authorizations, consents, licenses and permits necessary to carry on the
business in which it is engaged or in which it proposes presently to engage
and
to own and use the properties owned and used by it. Xxxxxx Daily has delivered
to Red Carpet a true, accurate and complete copy of its Articles of
Incorporation which reflect all restatements of and amendments made thereto
at
any time prior to the date of this Agreement. The shareholders records of Xxxxxx
Daily furnished to Red Carpet are complete and correct in all material respects
and accurately reflect the record ownership and the beneficial ownership of
all
the outstanding shares of Xxxxxx Daily. Xxxxxx Daily is not in default under
or
in violation of any provision of its Articles of Incorporation in any material
respect. Xxxxxx Daily is not in any material default or in violation of any
restriction, lien, encumbrance, indenture, contract, lease, sublease, loan
agreement, note or other obligation or liability by which it is bound or to
which any of its assets is subject, except as disclosed in the Xxxxxx Daily
Financial Statement. The records of meetings of the stockholders and Boards
of
Directors of Xxxxxx Daily furnished to Red Carpet are complete and correct
in
all material respects.
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4.3
Authority
Relative to this Agreement.
Each of
Xxxxxx Daily and the Xxxxxx Daily Shareholders has the requisite power and/or
authority to enter into this Agreement and carry out its/his/her obligations
hereunder. The execution, delivery and performance of this Agreement by Xxxxxx
Daily and the consummation of the transactions contemplated hereby have been
duly authorized by the board of directors and shareholders of Xxxxxx Daily
and
no other action on the part of Xxxxxx Daily are necessary to authorize this
Agreement or the transactions contemplated hereby. This Agreement has been
duly
and validly executed and delivered by Xxxxxx Daily and Xxxxxx Daily Shareholders
and constitutes a valid and binding obligation of Xxxxxx Daily and Xxxxxx Daily
Shareholders, enforceable in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency or other similar laws
affecting the enforcement of creditors' rights generally or by general
principles of equity.
4.4
Consents
and Approvals; No Violations.
Except
for applicable requirements of federal securities laws and state securities
or
blue-sky laws, no filing with, and no permit, authorization, consent or approval
of, any third party, public body or authority is necessary for the consummation
by Xxxxxx Daily or the Xxxxxx Daily Shareholders of the transactions
contemplated by this Agreement. Neither the execution and delivery of this
Agreement by Xxxxxx Daily nor the consummation by Xxxxxx Daily of the
transactions contemplated hereby, nor compliance by Xxxxxx Daily with any of
the
provisions hereof, will (a) conflict with or result in any breach of any
provisions of their respective Articles of Incorporation or bylaws, (b) result
in a violation or breach of, or constitute (with or without due notice or lapse
of time or both) a default (or give rise to any right of termination,
cancellation or acceleration) under, any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, license, contract, agreement or other
instrument or obligation to which Xxxxxx Daily is a party or by which it or
any
of its properties or assets may be bound, or (c) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to Xxxxxx Daily,
or
any of its properties or assets, except in the case of clauses (b) and (c)
for
violations, breaches or defaults which are not in the aggregate material to
Xxxxxx Daily taken as a whole.
4.5
Financial
Statements.
(a) Xxxxxx
Daily shall deliver to Red Carpet an unaudited balance sheet as at December
31,
2004 and May 31, 2005 and related income statement for the period from inception
to December 31, 2004, and for the period beginning on January 1, 2005 through
May 31, 2004 (the "Xxxxxx Daily Financial Statements").
5
(b) The
Xxxxxx Daily Financial Statements, (i) are complete and correct in all material
respects, (ii) have been prepared on a financial statement basis, (iii) fairly
and accurately present in all material respects the financial positions of
Xxxxxx Daily, as applicable, as at the dates thereof.
There
have not been any changes in accounting methods, estimates or principles (for
financial accounting purposes) at any time since the Financial Statements,
which
have been made, agreed to or required with respect to Xxxxxx Daily.
4.6
Events
Subsequent to Financial Statements.
Since
the Xxxxxx Daily Financial Statements (i.e., May 31, 2005), there has not
been:
(a) any
sale,
lease, transfer, license or assignment of any assets, tangible or intangible,
of
Xxxxxx Daily except as in the ordinary course of their businesses;
(b) any
damage, destruction or property loss, whether or not covered by insurance,
affecting adversely the properties or business of Xxxxxx Daily;
(c) any
declaration or setting aside or payment of any distribution with respect to
the
stock of Xxxxxx Daily, or any redemption, purchase or other acquisition of
any
such stock;
(d) except
for the issuance of stock of Xxxxxx Daily, or the granting, issuance or
execution of any rights, options or other commitments by Xxxxxx Daily, as the
case may be, relating to issuance of stock or the granting, issuance or
execution of any rights, options or other commitments by Xxxxxx Daily, as the
case may be, relating to its stock;
(e) any
subjection to any lien on any of the assets, tangible or intangible, of Xxxxxx
Daily;
(f) any
incurrence of indebtedness or liability or assumption of obligations by Xxxxxx
Daily except as in the ordinary course of their businesses;
(g) any
waiver or release by Xxxxxx Daily of any right of any material value except
for
the mutual release with Xxxxxx Xxxxxxx;
(h) any
compensation or benefits paid to officers, directors or shareholders of Xxxxxx
Daily;
(i) any
change made or authorized in the Articles of Incorporation or Bylaws of Xxxxxx
Daily;
(j) any
damage, destruction or loss from fire, water, accident or other such casualty
(whether or not covered by insurance) to any of Xxxxxx Daily’s property or
assets;
(k) any
loan
to or other transaction with any officer or shareholder of Xxxxxx Daily giving
rise to any claim or right of Xxxxxx Daily against any such person or of such
person against Xxxxxx Daily or any loan to or other transaction with any officer
or director of Xxxxxx Daily giving rise to any claim or right of Xxxxxx Daily
against any such person or of such person against Xxxxxx Daily;
6
(l) any
merger or consolidation with or acquisition of an interest in any Person or
acquired a substantial portion of the assets or business of any Person or any
division or line of business thereof;
(m) any
mortgage, pledge or grant of a security interest in any of Xxxxxx Daily’s
material assets, tangible or intangible, except for the factoring agreement
with
Merchant Factors Corp.;
(n) any
writing down or writing up the value of any of Xxxxxx Daily’s assets (or failed
to write down or write up any asset inconsistent with the past practice) or
write off as uncollectible any of Xxxxxx Daily’s account receivable, except
write-downs and write-offs in the ordinary course of business, none of which,
individually or in the aggregate, are material;
(o) any
loan
made to or any guarantee of the indebtedness (of any kind) of any
Person;
(p) any
material change in the customary operating methods of Xxxxxx Daily, including
policies and practices relating to pricing, selling and marketing;
(q)
any
settlement or compromise of any litigation in which Xxxxxx Daily is a party
to
that would otherwise have been required to be disclosed pursuant to this
Agreement, except for the mutual release with Xxxxxx Xxxxxxx;
(r) any
failure to renew any of Xxxxxx Daily’s insurance policies that is scheduled to
terminate or expire within sixty (60) calendar days after the Closing
Date;
(s) any
abandoning or allowing to lapse any Intellectual Property (or any registration
or application in respect thereof); or
(t) any
material adverse change in the condition (financial or otherwise) of the
properties, assets, liabilities or business of Xxxxxx Daily.
4.7
Undisclosed
Liabilities.
Except
as otherwise disclosed in the Xxxxxx Daily Financial Statements, Xxxxxx Daily
does not have any material liability or obligation whatsoever, either direct
or
indirect, matured or unmatured, accrued, absolute, contingent or otherwise.
4.8
Tax
Matters.
(a) Xxxxxx
Daily has duly filed all material federal, state, local and foreign tax returns
required to be filed by or with respect to it with the Internal Revenue Service
or other applicable taxing authority, and no extensions with respect to such
tax
returns have been requested or granted, except for the tax return for the period
from inception to December 31, 2004;
7
(b) Xxxxxx
Daily has paid, or adequately reserved against in Xxxxxx Daily’s financial
statements, all material taxes due, or claimed by any taxing authority to be
due, from or with respect to it;
(c) To
the
best knowledge of Xxxxxx Daily, there has been no material issue raised or
material adjustment proposed (and none is pending) by the Internal Revenue
Service or any other taxing authority in connection with any of Xxxxxx Daily’s
tax returns;
(d) To
the
best knowledge of Xxxxxx Daily, there has been no material issue raised or
material adjustment proposed (and none is pending) by the Internal Revenue
Service or any other taxing authority in connection with any of Xxxxxx Daily’s
tax returns; and
(e) No
waiver
or extension of any statute of limitations as to any material federal, state,
local or foreign tax matter has been given by or requested from Xxxxxx
Daily.
For
the
purposes of this Section 4.8, a tax is due (and must therefore either be paid
or
adequately reserved against in Xxxxxx Daily’s financial statements) only on the
last date payment of such tax can be made without interest or penalties, whether
such payment is due in respect of estimated taxes, withholding taxes, required
tax credits or any other tax.
4.9 Real
Property.
(a) Xxxxxx
Daily has delivered to Red Carpet an accurate and complete list and description
of all real property leased, occupied or used by Xxxxxx Daily (the “Real
Property”), which list specifies the owner of each such Real Property. All Real
Property is suitable and adequate for the purposes for which it is currently
being used. All the Real Property is occupied under a valid and current
certificate of occupancy or similar permit, and the transactions contemplated
by
this Agreement will not require the issuance of any new or amended certificate
or permit.
(b) Xxxxxx
Daily does not own, lease, occupy or use any Real Property.
(c) Xxxxxx
Daily has delivered to Red Carpet accurate and complete copies all leases and
subleases (including, without limitation, all amendments, consents for
alterations and documents recording variations and evidence of commencement
dates and expiration dates) pursuant to which any of the Real Property is
occupied or used by Xxxxxx Daily. Each such lease and sublease is in full force
and effect and constitutes a legal, valid and binding obligation of, and is
legally enforceable against, the respective parties thereto and grants the
leasehold interest it purports to grant free and clear of all Encumbrances.
Xxxxxx Daily has complied with all of the material provisions of such leases
and
subleases and is not in default thereunder in any material respect, and there
has not occurred any event which (whether with or without notice, lapse of
time
or the happening or occurrence of any other event) would constitute such a
default. Xxxxxx Daily has not received any notice of cancellation or termination
under such lease or sublease or any notice of a breach or default thereunder,
which breach or default has not been cured, and no lessor has any right of
termination or cancellation under such lease or sublease except upon a breach
or
default by Xxxxxx Daily thereunder. The consummation of the transactions
contemplated by this Agreement will not (i) cause any such lease or sublease
to
cease to be legal, binding and in full force and effect on terms identical
to
those currently in effect or (ii) constitute a breach or default under such
lease or sublease or otherwise give the landlord the right to terminate such
lease or sublease. The rental set forth in each lease or sublease is the actual
rental being paid, and there are no separate understandings or agreement with
respect to the same.
8
(d) None
of
the Real Property or any leasehold interest in the Real Property is subject
to
any contract or other restriction of any nature whatsoever (recorded or
unrecorded) preventing or limiting Xxxxxx Daily’s right to convey or to use it
or to be in peaceful and undisturbed possession of each parcel of Real Property.
Xxxxxx Daily has not leased or subleased any parcel or portion of any parcel
of
Real Property (including office or commercial space) to any other Person, nor
has Xxxxxx Daily assigned its interest under any lease or sublease to any other
Person.
(e) No
portion of the Real Property or any building, structure, fixture or improvement
thereon is the subject of, or affected by, any condemnation, eminent domain
or
inverse condemnation proceeding currently instituted or pending, and Xxxxxx
Daily has no knowledge that any of the foregoing are, or will be, the subject
of, or affected by, any such proceeding.
4.10 Books
and Records.
Xxxxxx
Daily’s books and records have been delivered to Red Carpet prior to the Closing
fully and fairly reflect the transactions to which Xxxxxx Daily is a party
or by
which it or its properties are bound.
4.11 Questionable
Payments.
Neither
Xxxxxx Daily, nor any of its employees, agents or representatives has, directly
or indirectly, made any bribes, kickbacks, illegal payments or illegal political
contributions using Xxxxxx Daily funds or made any payments from Xxxxxx Daily’s
funds to governmental officials for improper purposes or made any illegal
payments from Xxxxxx Daily’s funds to obtain or retain business.
4.12 Environmental
Matters.
(a) Definitions.
For the
purpose of this Agreement, the following terms shall have the meaning herein
specified:
(i)
"Governmental Authority" shall mean the United States, each state, each county,
each city and each other political subdivision in which Xxxxxx Daily's business,
as applicable, is located, and any court, political subdivision, agency or
instrumentality with jurisdiction over Xxxxxx Daily's business, as
applicable.
(ii)
"Environmental Laws" shall mean (A) the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended by the Superfund Amendments
and Reauthorization Act of 1986, 42 U.S.C.A. 9601 et seq. ("CERCLA"), (B) the
Resource Conservation and Recovery Act, as amended by the Hazardous and Solid
Waste Amendment of 1984, 42 U.S.C.A. 6901 et seq. ("RCRA"), (C) the Clean Air
Act, 42 U.S.C.A. 7401 et seq., (D) the Federal Water Pollution Control Act,
as
amended, 33 U.S.C.A. 1251 et seq., (E) the Toxic Substances Control Act, 15
U.S.C.A. 2601 et seq., (F) all applicable state laws, and (G) all other laws
and
ordinances relating to municipal waste, solid waste, air pollution, water
pollution and/or the handling, discharge, disposal or recovery of on-site or
off-site hazardous substances or materials, as each of the foregoing has been
or
may hereafter be amended from time to time.
9
(iii)
"Hazardous Materials" shall mean, among others, (A) any "hazardous waste" as
defined by RCRA, and regulations promulgated thereunder; (B) any "hazardous
substance" as defined by CERCLA, and regulations promulgated thereunder; (C)
any
"toxic pollutant" as defined in the Federal Water Pollution Prevention and
Control Act, as amended, 33 U.S.C. 1251 et seq., (commonly known as "CWA" for
"Clean Water Act"), and any regulations thereunder; (D) any "hazardous air
pollutant" as defined in the Air Pollution Prevention and Control Act, as
amended, 42 U.S.C. 7401 et seq. (commonly known as "CAA" for "Clean Air Act")
and any regulations thereunder; (E) asbestos; (F) polychlorinated biphenyls;
(G)
any substance the presence of which at the Business Location (as hereinafter
defined) is prohibited by any Environmental Laws; and (H) any other substance
which is regulated by any Environmental Laws.
(iv)
"Hazardous Materials Contamination" shall mean the presence of Hazardous
Materials in the soil, groundwater, air or any other media regulated by the
Environmental Laws on, under or around Xxxxxx Daily's facilities, as applicable,
at levels or concentration which trigger any requirement under the Environmental
Laws to remove, remediate, mitigate, xxxxx or otherwise reduce the level or
concentration of the Hazardous Materials. The term "Hazardous Materials
Contamination" does not include the presence of Hazardous Materials in process
tanks, lines, storage or reactor vessels, delivery trucks or any other equipment
or containers, which Hazardous Materials are used in the manufacture,
processing, distribution, use, storage, sale, handling, transportation,
recycling, reuse or disposal of the products that were manufactured and/or
distributed by Xxxxxx Daily, as applicable.
(v)
“Business Location” shall mean any real property, building, facility or
structure owned, leased or occupied by Xxxxxx Daily, as applicable, at any
time
from its inception until the present.
(b) Representations
and Warranties.
Based
on the foregoing, Xxxxxx Daily represent and warrant that:
(i)
To
the knowledge of Xxxxxx Daily, after due investigation, there has been no
material failure by Xxxxxx Daily to comply with all applicable requirements
of
Environmental Laws relating to Xxxxxx Daily and their respective operations,
manufacture, processing, distribution, use, treatment, generation, recycling,
reuses, sale, storage, handling, transportation or disposal of any Hazardous
Material and Xxxxxx Daily are not aware of any facts or circumstances which
could materially impair such compliance with all applicable Environmental
Laws.
(ii)
Xxxxxx Daily has not received notice from any Governmental Authority or any
other person of any actual or alleged violation of any Environmental Laws,
nor
is any such notice anticipated.
(iii)
To
the knowledge of Xxxxxx Daily, after due investigation, Environmental Laws
do
not require that any permits, licenses or similar authorizations to construct,
occupy or operate any equipment or facilities used in the conduct of Xxxxxx
Daily’s business.
10
(iv)
No
Hazardous Materials are now located at the Business Location, and, to the
knowledge of Xxxxxx Daily, after due investigation, Xxxxxx Daily has never
caused or permitted any Hazardous Materials to be generated, placed, stored,
held, handled, located or used at the Business Location, except those which
may
lawfully be used, transported, stored, held, handled, generated or placed at
the
Business Location in the conduct of Xxxxxx Daily’s business.
(v)
Xxxxxx Daily has not received any notices, whether from a Governmental Authority
or some other third party, that Hazardous Material Contamination exists at
the
Business Location or at any other location utilized by Xxxxxx Daily in the
conduct of any of their respective businesses nor is Xxxxxx Daily aware of
any
circumstances that would give rise to an allegation of such contamination.
(vi)
To
the knowledge of Xxxxxx Daily, after due investigation, no investigation,
administrative order, consent order or agreement, litigation or settlement
with
respect to Hazardous Materials or Hazardous Materials Contamination is proposed,
threatened, anticipated, pending or otherwise in existence with respect to
the
Business Location or with respect to any other site controlled or utilized
by
Xxxxxx Daily in the operation of their respective businesses. To the knowledge
of Xxxxxx Daily, after due investigation, no Business Location is currently
on,
and has never been on, any federal or state "Superfund" or "Superlien"
list.
4.13 Intellectual
Property.
(a) Xxxxxx
Daily has delivered to Red Carpet a true, correct and complete listing, and
brief description of all Intellectual Property owned or licensed by or
registered in the name of Xxxxxx Daily or used or held for use in the business
of Xxxxxx Daily. The Company owns or possesses all rights to use all such
Intellectual Property necessary to the conduct of the business of Xxxxxx Daily
and all such Intellectual Property is free and clear of any Encumbrance. Xxxxxx
Daily has not received any notice to the effect that (i) the conduct of business
by Xxxxxx Daily may infringe on any intellectual property right or other legally
protectable right of another, or (ii) any Person is using any patents,
copyrights, trademarks, service marks, trade names, trade secrets or similar
property that are confusingly similar with Intellectual Property owned by Xxxxxx
Daily. Xxxxxx Daily has not granted any license or other right to any other
Person with respect to Intellectual Property owned by Xxxxxx Daily. The
consummation of the transactions contemplated by this Agreement will not result
in the termination or impairment of any of the Intellectual Property owned
by
Xxxxxx Daily.
(b) Xxxxxx
Daily is not aware of any reason that would prevent any pending trademark,
service xxxx, copyright, patent or other Intellectual Property applications
from
having registration granted.
(c) Any
Intellectual Property which is licensed or sublicensed to Xxxxxx Daily
(“Licensed Intellectual Property”) has so been identified to Red Carpet. With
respect to Licensed Intellectual Property, (i) Xxxxxx Daily has delivered to
Red
Carpet correct and complete copies of all the licenses and sublicenses (and
all
applicable amendments and ancillary documents) for such Licensed Intellectual
Property, (ii) all such licenses and sublicenses are in full force and effect
and represent the entire agreement between licensor and licensee with respect
to
the Intellectual Property being licensed, (iii) the consummation of the
transaction contemplated by this Agreement will not cause any such license
or
sublicense to cease to be valid and binding, nor will it constitute a breach
or
default under any such license or sublicense or result in the licensor or
sublicensor being given the right to terminate such license or sublicense,
(iv)
Xxxxxx Daily has not received (or has reason to believe that it will receive)
a
notice of termination or cancellation under such license or sublicense, and
no
licensor or sublicensor has any right to terminate any Licensed Intellectual
Property, except in the event of default thereunder, (v) Xxxxxx Daily is not
in
material breach or default of and have not received (and do not have any reason
to believe that it will receive) a notice that it is in material breach or
default of any Licensed Intellectual Property, (vi) no claims or other actions
have been made or asserted (nor have been threatened) against Xxxxxx Daily
either based upon Xxxxxx Daily’s use of the Licensed Intellectual Property or
alleging that any Licensed Intellectual Property is being licensed, sublicensed
or used in violation of the rights of any third party, and (vii) no Person
is
using any patents, copyrights, trademarks, service marks, trade names, trade
secrets or similar property that infringe upon or are confusingly similar with
any Licensed Intellectual Property.
11
4.14 Insurance.
Xxxxxx
Daily has delivered to Red Carpet a list of all insurance policies currently
carried by Xxxxxx Daily. Such insurance policies are in full force and effect
and will continue to be in full force and effect up to and including the Closing
Date. Xxxxxx Daily is the sole owner of each such policy. All premiums due
on
such policies or renewals thereof have been timely paid. Copies of all insurance
policies have been delivered to Red Carpet. All such policies: (i) are, and
at the time of the Closing, shall be in full force and effect; (ii) are
sufficient for compliance in all material respects by Xxxxxx Daily with all
requirements of law and of all agreements to which Xxxxxx Daily is a party;
(iii) are valid, outstanding, and enforceable policies, and no party to any
policy has repudiated, or given notice of an intent to repudiate, any provision
thereof; and (iv) insure against risks of the kind customarily insured
against and in amounts customarily carried by companies similarly situated
and
provide adequate insurance coverage for Xxxxxx Daily (including the business
and
operations thereof). Xxxxxx Daily is not in breach or default, and no event
has
occurred (including, without limitation, the failure to pay any premiums) which
with notice or lapse of time, would constitute a breach or default or permit
modification or termination, under the policy. Xxxxxx Daily does not have any
insurance policies in effect.
4.15 Contracts.
Xxxxxx
Daily has delivered to Red Carpet copies of each and every:
(a) contract
or series of related contracts in excess of $25,000 or contract for future
services which requires the payment by Xxxxxx Daily of $25,000 annually and
is
not terminable without penalty upon 30 days (or less) notice;
(b) contract
for the employment of any key employee (including employment letters and offer
letters);
(c) Xxxxxx
Daily bonus, incentive, deferred compensation, severance pay, pension,
profit-sharing, retirement, stock purchase, stock option, stock incentive
hospitalization, employees' insurance or other plan (including insurance
policies on the life of any of Xxxxxx Daily’s employee or employees), agreement
or arrangement providing employee benefits;
(d) collective
bargaining agreement or other agreements or awards between Xxxxxx Daily and
any
labor union;
(e) lease
to
which Xxxxxx Daily is a party (i) which is not terminable without penalty on
notice of 30 days or less with respect to personal property involving an annual
rental payment of $25,000 or more, or (ii) with respect to any real property,
whether as lessor or lessee;
(f) chattel
mortgage or conditional sales agreement to which Xxxxxx Daily is a party
involving $25,000 or more;
(g) agreement
between Xxxxxx Daily and any Person (including any employee) relating to sharing
of past, present or future commissions, fees, xxxxxxxx, revenue, income or
profits;
(h) agreement
or arrangement with any supplier in which any key employee has any ownership
interest (other than shares in a publicly owned company) or participation in
income or profits; or
(i) material
agreement of Xxxxxx Daily not made in the ordinary course of
business.
12
All
of
the foregoing are referred to as the “Contracts.” The copies of each of the
Contracts delivered are accurate and complete. Each Contract is in full force
and effect and constitutes a legal, valid and binding obligation of, and is
legally enforceable against, the respective parties thereto. There is no
material default with respect to any such contract which will give rise to
liability in respect thereof on the part of Xxxxxx Daily or the other parties
thereto. No notice of default or similar notice has been given or received
by
Xxxxxx Daily under any of such contracts.
4.16 Litigation.
Xxxxxx
Daily is not subject to any judgment or order of any court or quasijudicial
or
administrative agency of any jurisdiction, domestic or foreign, nor is there
any
charge, complaint, lawsuit or governmental investigation pending against Xxxxxx
Daily. Xxxxxx Daily is not a plaintiff in any action, domestic or foreign,
judicial or administrative. There are no existing actions, suits, proceedings
against or investigations of Xxxxxx Daily, and Xxxxxx Daily does not know of
any
basis for such actions, suits, proceedings or investigations. There are no
unsatisfied judgments, orders, decrees or stipulations affecting Xxxxxx Daily
or
to which Xxxxxx Daily is a party.
4.17 Employees.
Xxxxxx
Daily will deliver to Red Carpet a complete and accurate list of all employees
of Xxxxxx Daily, setting forth their respective names, current positions,
salaries and other remuneration and benefits as of the date hereof. Copies
of
all employment and consulting agreements to which Xxxxxx Daily is a party have
been delivered to Red Carpet. All compensation and other amounts payable to
employees as of the date hereof were paid or will be paid in accordance with
Xxxxxx Daily's normal payroll practices. No bonuses have been paid or accrued
to
any employee since the date of the Xxxxxx Daily Financial Statements. To the
best knowledge of Xxxxxx Daily, no present or former employee of Xxxxxx Daily
has any claim against Xxxxxx Daily on account of or for (a) overtime pay (other
than overtime pay for the current payroll period), (b) wages, salary or other
compensation for any period (other than the current payroll period), (c)
vacation, sick leave, or time off, other than that earned in the current fiscal
year (which amounts will be accrued on the Closing Financial Statements), (d)
severance pay or (e) any violation of statute, ordinance or regulation relating
to minimum wages, maximum hours of work, termination of employment or similar
matters. Xxxxxx Daily is not a party to or bound by any collective bargaining
agreement. There are no loans or other obligations payable or owing by Xxxxxx
Daily to any stockholder, officer, director or employee of Xxxxxx Daily, nor
are
there any loans or debts payable or owing by any of such persons to Xxxxxx
Daily
or any guarantees by Xxxxxx Daily of any loan or obligation of any nature to
which any such person is a party. Xxxxxx Daily does not have any
employees.
13
4.18 Emplyee
Benefit Plans.
Xxxxxx
Daily has delivered to Red Carpet copies of Xxxxxx Daily's employee benefit
plans. All such plans are in material compliance with all applicable federal,
state and local laws, regulations, ordinances, codes and other legally binding
rules, and are not subject to any present or threatened claim that they are,
may
be or have been administered contrary to any federal, state or local laws,
regulations, ordinances, codes or other legally binding rules. Xxxxxx Daily
does
not have any employee benefit plans.
4.19 Legal
Compliance.
To the
best knowledge of Xxxxxx Daily and after due investigation, no claim has been
filed against Xxxxxx Daily alleging a violation of any applicable laws and
regulations of foreign, federal, state and local governments and all agencies
thereof. Xxxxxx Daily holds all of the material permits, licenses, certificates
or other authorizations of foreign, federal, state or local governmental
agencies required for the conduct of its business as presently conducted. To
the
best knowledge of the Xxxxxx Daily Shareholders, after due investigation, no
claim has been filed against Xxxxxx Daily alleging a violation of any applicable
laws and regulations of foreign, federal, state and local governments and all
agencies thereof. Xxxxxx Daily holds all of the material permits, licenses,
certificates or other authorizations of foreign, federal, state or local
governmental agencies required for the conduct of its business as presently
conducted.
4.20 No
Subsidiaries.
Xxxxxx
Daily
does not
own any capital stock or have any interest in any corporation, partnership,
or
other form of business organization.
4.21 Broker's
Fees.
Neither
Xxxxxx Daily nor the Xxxxxx Daily Shareholders, nor anyone on their behalf
has
any liability to any broker, finder, investment banker or agent, or has agreed
to pay any brokerage fees, finder’s fees or commissions, or to reimburse any
expenses of any broker, finder, investment banker or agent in connection with
this Agreement.
4.22 No
Disagreements with Accountants and Lawyers.
There
are no disagreements of any kind presently existing, or reasonably anticipated
by Xxxxxx Daily to arise, between the accountants and lawyers formerly or
presently employed by Xxxxxx Daily. Xxxxxx Daily is current with respect to
any
fees owed to its accountants and lawyers.
4.23 Title
to Properties, Liens and Encumbrances.
Xxxxxx
Daily has good title to all properties, interests in properties and assets
reflected in the Xxxxxx Daily Financial Statements or acquired thereafter,
free
and clear of all Encumbrances. Such assets and properties include all tangible
and intangible assets, contracts and rights necessary or required for the
operation of the business of Xxxxxx Daily as now or heretofore conducted. All
material tangible assets of Xxxxxx Daily are in good operating condition and
repair, subject to normal wear and tear, free of defects, latent or patent,
and
are suitable, adequate and fit for the uses for which they are intended or
being
used; and such assets and the present use thereof do not violate in any material
respect any applicable licenses, statutes, engineering standards or building,
fire, zoning, health and safety or any other laws.
14
4.24 Leased
Equipment.
Xxxxxx
Daily has delivered to Red Carpet a list of all equipment, other than personal
property and fixtures, valued in excess of $10,000 licensed to or held under
similar arrangements, or are in the possession or custody of Xxxxxx Daily.
Xxxxxx Daily does not own or lease any equipment.
4.25 Accounts
Receivable.
Xxxxxx
Daily has delivered to Red Carpet a true, correct and complete list of all
Accounts Receivables, including an aging thereof as of the Closing Date. All
Accounts Receivables (whether billed, unbilled or accrued) arose in the ordinary
and usual course of Xxxxxx Daily's business, represent valid obligations due,
and either have been collected in full or Xxxxxx Daily has no reason to believe
that such accounts will not be collected in full within ninety (90) days after
the Closing Date, in the aggregate amounts reflected thereon. Xxxxxx Daily
has
entered into a factoring agreement with Merchant Factors Corp.
4.26 Bank
Accounts.
Xxxxxx
Daily has delivered to Red Carpet a complete list of (i) the names and locations
of all financial institutions at which Xxxxxx Daily maintains checking accounts,
deposit accounts, securities accounts, safety deposit boxes or other deposits
or
safekeeping arrangements, the numbers or other identification of all such
accounts and arrangement and the names of all persons authorized to draw against
any funds therein and (ii) the names of all Persons holding powers of attorney
from Xxxxxx Daily. At the time of the Closing, no additional Person will have
been authorized, from the date hereof, to draw on or have access to any such
accounts or deposits or hold any power of attorney from Xxxxxx Daily or Xxxxxx
Daily. All monies and accounts of Xxxxxx Daily shall be held by, and be
accessible only to, Xxxxxx Daily at the time of the Closing.
4.27 True
Copies.
All
copies of documents delivered or made available to Red Carpet by Xxxxxx Daily
in
connection with this Agreement are true and correct copies of the originals
thereof.
4.28 Capitalization.
The
authorized capital stock of Xxxxxx Daily consists of 100,000 shares of no par
value common stock, of which 1,000 shares are and at the Closing will be issued
and outstanding. All of the outstanding shares of capital stock of Xxxxxx Daily
are duly authorized, validly issued, fully paid, non-assessable and free of
preemptive rights. There are no outstanding or authorized options, rights,
warrants, calls, convertible securities, rights to subscribe, conversion rights
or other agreements or commitments to which Xxxxxx Daily is a party or which
are
binding upon Xxxxxx Daily, providing for the issuance or transfer by Xxxxxx
Daily of additional shares of its capital stock; Xxxxxx Daily has not reserved
any shares of its capital stock for issuance, nor are there any outstanding
stock option rights, phantom equity or similar rights, contracts, arrangements
or commitments which are binding upon Xxxxxx Daily. There are no voting trusts
or any other agreements or understandings with respect to the voting of Xxxxxx
Daily's capital stock.
4.29 Litigation
and Governmental Enforcement.
To the
best knowledge of Xxxxxx Daily, neither it nor any of its affiliates, officers,
directors or shareholders owning 5% or over of its capital stock is a party
to
any action, suit, arbitration, legal or administrative proceeding or
investigation pending or threatened against it by any federal, state, municipal
or governmental body, including, but not limited to, the SEC nor are they acting
on behalf of such governmental bodies. To the best knowledge of Xxxxxx Daily,
neither it nor any of its affiliates, officers, directors or shareholders owning
5% or over of each entities capital stock have ever been fined, sanctioned,
disciplined or imprisoned for any securities violation. There is no judgment,
order, writ, injunction or decree of any court, governmental agency, tribunal
or
other governmental or regulatory authority as to which any of the assets,
properties or business of Xxxxxx Daily or any of their affiliates, officers,
directors or shareholders owning 5% or over of its capital stock is subject,
and
Xxxxxx Daily knows of no basis for such actions, suits, proceedings or
investigations. Xxxxxx Daily agree to immediately provide Red Carpet with
written notification of any inquiry by any of the aforementioned regulatory
bodies should they receive notice of same prior to the Closing.
4.30 Affiliate
Transactions.
Except
as disclosed in Schedule 4.30, (a) no officer or director of Xxxxxx Daily has
any significant interest in any entity that is engaged in a business which
is in
competition with the business of Xxxxxx Daily and (b) no officer or director
of
Xxxxxx Daily is a supplier to, or a customer of Xxxxxx Daily, or is a party
to
any contract.
4.31 Disclosure.
The
representations and warranties and statements of fact made by Xxxxxx Daily
and
the Xxxxxx Daily Shareholders in this Agreement are, as applicable, accurate,
correct and complete and do not contain any untrue statement of a material
fact
or omit to state any material fact necessary in order to make the statements
and
information contained herein not false or misleading.
ARTICLE
5
REPRESENTATIONS
AND WARRANTIES
OF
RED CARPET AND RED CARPET STOCKHOLDER
Except
as
set forth under the corresponding section of the disclosure schedule delivered
to Xxxxxx Daily concurrently herewith (the “Disclosure Schedule”), which
Disclosure Schedule shall be deemed a part hereof, Red Carpet and the Red Carpet
Stockholder hereby represent and warrant, jointly and severally, to Xxxxxx
Daily
and the Xxxxxx Daily Shareholders as follows:
5.1 Organization.
Red
Carpet is a corporation duly organized, validly existing and in good standing
under the laws of the state of its incorporation, and has the requisite
corporate power to carry on its business as now conducted.
15
5.2 Capitalization.
Red
Carpet's authorized capital stock consists of Fifty Five Million (55,000,000)
shares of capital stock, with
a par value of $.001 per share. Fifty million (50,000,000) of those shares
are
common stock, of
which
3,142,500 shares are issued and outstanding and five
million (5,000,000) of those shares are Preferred stock,
of
which none are issued and outstanding. All issued and outstanding shares of
capital stock of Red Carpet are duly authorized, validly issued, fully paid,
non-assessable and free of preemptive rights. When issued, the Red Carpet Shares
will be duly authorized, validly issued, fully paid, non-assessable and free
of
preemptive rights, there are no outstanding or authorized options, rights,
warrants, calls, convertible securities, rights to subscribe, conversion rights
or other agreements or commitments to which Red Carpet is a party or which
are
binding upon Red Carpet providing for the issuance by Red Carpet or transfer
by
Red Carpet of additional shares of Red Carpet's capital stock and Red Carpet
has
not reserved any shares of its capital stock for issuance, nor are there any
outstanding stock option rights, phantom equity or similar rights, contracts,
arrangements or commitments to issue capital stock of Red Carpet. There are
no
voting trusts or any other agreements or understandings with respect to the
voting of Red Carpet's capital stock.
5.3 Certain
Corporate Matters.
Red
Carpet is duly licensed or qualified to do business and is in good standing
as a
foreign corporation in every jurisdiction in which the character of its
properties or nature of its business requires it to be so licensed or qualified
other than such jurisdictions in which the failure to be so licensed or
qualified does not, or insofar as can reasonably be foreseen, in the future
will
not, have a material adverse effect on its financial condition, results of
operations or business. Red Carpet has full corporate power and authority and
all authorizations, licenses and permits necessary to carry on the business
in
which it is engaged or in which it proposes presently to engage and to own
and
use the properties owned and used by it. Red Carpet has delivered to each of
the
Purchasers true, accurate and complete copies of its Articles of Incorporation
and Bylaws, which reflect all restatements of and amendments made thereto at
any
time prior to the date of this Agreement. The records of meetings of the
stockholders and Boards of Directors of Red Carpet previously furnished to
the
Purchasers are complete and correct in all material respects. The stock records
of Red Carpet and the stockholder lists of Red Carpet furnished to Purchasers
are complete and correct in all material respects and accurately reflect the
record ownership and the beneficial ownership of all the outstanding shares
of
Red Carpet's capital stock and any other outstanding securities issued by Red
Carpet. Red Carpet is not in default under or in violation of any provision
of
its Articles of Incorporation or Bylaws in any material respect. Red Carpet
is
not in any material default or in violation of any restriction, lien,
encumbrance, indenture, contract, lease, sublease, loan agreement, note or
other
obligation or liability by which it is bound or to which any of its assets
is
subject. Red Carpet has delivered to the Purchasers a complete copy of Red
Carpet’s financial records and tax returns from Red Carpet’s inception to the
Closing Date.
5.4 Authority
Relative to this Agreement.
Each of
Red Carpet and the Red Carpet Stockholder has the requisite corporate power
and
authority to enter into this Agreement and to carry out its/his obligations
hereunder. The execution, delivery and performance of this Agreement by Red
Carpet and the consummation of the transactions contemplated hereby have been
duly authorized by the Board of Directors of Red Carpet and no other actions
on
the part of Red Carpet is necessary to authorize this Agreement or the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Red Carpet and the Red Carpet Stockholder and
constitutes a valid and binding obligation of Red Carpet and the Red Carpet
Stockholder, enforceable in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency or other similar laws
affecting the enforcement of creditors' rights generally or by general
principles of equity.
5.5 Consents
and Approvals; No Violations.
Except
for applicable requirements of federal securities laws and state securities
or
blue-sky laws, no filing with, and no permit, authorization, consent or approval
of, any third party, public body or authority is necessary for the consummation
by Red Carpet of the transactions contemplated by this Agreement. Neither the
execution and delivery of this Agreement by Red Carpet nor the consummation
by
Red Carpet of the transactions contemplated hereby, nor compliance by Red Carpet
with any of the provisions hereof, will (a) conflict with or result in any
breach of any provisions of the charter or Bylaws of Red Carpet, (b) result
in a
violation or breach of, or constitute (with or without due notice or lapse
of
time or both) a default (or give rise to any right of termination, cancellation
or acceleration) under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, license, contract, agreement or other instrument
or
obligation to which Red Carpet or the Red Carpet Stockholder is a party or
by
which it or any of its properties or assets may be bound, or (c) violate any
order, writ, injunction, decree, statute, rule or regulation applicable to
Red
Carpet, or any of its properties or assets, except in the case of clauses (b)
and (c) for violations, breaches or defaults which are not in the aggregate
material to Red Carpet taken as a whole.
16
5.6 Financial
Statements.
(a) Red
Carpet has delivered to Xxxxxx Daily the audited balance sheet of Red Carpet
as
at December 31, 2002, and the related statements of operations, changes in
stockholders’ equity and cash flows for the period from July 16, 2001
(inception) through December 31, 2002, together with the unqualified report
thereon of Hall and Company CPAs, Inc., a Professional Accountancy Corporation
(“Hall and Co.”), independent auditor (collectively, “Red Carpet’s Audited
Financials”).
(b) Red
Carpet has delivered to Xxxxxx Daily unaudited balance sheet of Red Carpet
as at
December 31, 2004, and the related statements of operations for the year ended
December 30, 2004, (“Red Carpet’s Interim Financials”). The unaudited balance
sheet at December 30, 2004, included in Red Carpet’s Interim Financials is
hereinafter referred to as the “Unaudited Balance Sheet” and December 31, 2004
is hereinafter referred to as the “Red Carpet Balance Sheet Date.”
(c) Red
Carpet’s Audited Financials and Red Carpet’s Interim Financials (collectively
“Red Carpet’s Financial Statements”) are (i) in accordance with the books and
records of Red Carpet, (ii) correct and complete, (iii) fairly present the
financial position and results of operations of Red Carpet as of the dates
indicated, and (iv) prepared in accordance with U.S. GAAP (except that (x)
unaudited financial statements may not be in accordance with GAAP because of
the
absence of footnotes normally contained therein, and (y) interim (unaudited)
financials are subject to normal year-end audit adjustments that in the
aggregate will not have a material adverse effect on Red Carpet or its
businesses, financial conditions or results of operations.
5.7 Events
Subsequent to Financial Statements.
Since
December 31, 2004, there has not been any material adverse change in the
condition (financial or otherwise) of the properties, assets, liabilities or
business of Red Carpet, except changes in the ordinary course of business that,
individually and in the aggregate, have not been materially
adverse.
5.8 Undisclosed
Liabilities.
Except
as otherwise disclosed in Red Carpet’s Financial Statements, Red Carpet does not
have any material liability or obligation whatsoever, either direct or indirect,
matured or unmatured, accrued, absolute, contingent or otherwise.
17
5.9 Tax
Matters.
(a) Red
Carpet has duly filed all material federal, state, local and foreign tax returns
required to be filed by or with respect to it with the Internal Revenue Service
or other applicable taxing authority, and no extensions with respect to such
tax
returns have been requested or granted, expect for the year ended December
31,
2004;
(b) Red
Carpet has paid, or adequately reserved against in Red Carpet’s Financial
Statements, all material taxes due, or claimed by any taxing authority to be
due, from or with respect to it;
(c) To
the
best knowledge of Red Carpet, there has been no material issue raised or
material adjustment proposed (and none is pending) by the Internal Revenue
Service or any other taxing authority in connection with any of Red Carpet’s tax
returns; and
(d) No
waiver
or extension of any statute of limitations as to any material federal, state,
local or foreign tax matter has been given by or requested from Red Carpet.
For
the
purposes of this Section
5.9,
a tax
is due (and must therefore either be paid or adequately reserved against in
Red
Carpet’s Financial Statements) only on the last date payment of such tax can be
made without interest or penalties, whether such payment is due in respect
of
estimated taxes, withholding taxes, required tax credits or any other
tax.
5.10 Real
Property.
Red
Carpet does not own or lease any real property.
5.11 Books
and Records.
The
corporate and financial books and records of Red Carpet delivered to the
Purchasers prior to the Closing fully and fairly reflect the transactions to
which Red Carpet is a party or by which it or its properties are
bound.
5.12 Questionable
Payments.
Red
Carpet, or any of its employees, agents or representatives, have, directly
or
indirectly, made any bribes, kickbacks, illegal payments or illegal political
contributions using Red Carpet’s funds or made any payments from Red Carpet's
funds to governmental officials for improper purposes or made any illegal
payments from Red Carpet's funds to obtain or retain business.
5.13 Environmental
Matters.
Neither
Red Carpet nor the Red Carpet Stockholder have received notice of nor are they
aware of any environmental matters which could have a material adverse effect
on
the assets or operations of Red Carpet.
5.14 Intellectual
Property.
Red
Carpet does not own or use any trademarks, trade names, service marks, patents,
copyrights or any applications with respect thereto. Red Carpet does not have
any knowledge of any claim that, or inquiry as to whether, any product, activity
or operation of Red Carpet infringes upon or involves, or has resulted in the
infringement of, any trademarks, trade-names, service marks, patents, copyrights
or other proprietary rights of any other person, corporation or other entity;
and no proceedings have been instituted, are pending or are threatened.
5.15 Insurance.
Red
Carpet does not have any insurance policies in effect.
18
5.16 Contracts.
Red
Carpet does not have any material contracts, leases, arrangements or commitments
(whether oral or written). Red Carpet is not a party to or bound by or affected
by any contract, lease, arrangement or commitment (whether oral or written)
relating to: (a) the employment of any person; (b) collective bargaining with,
or any representation of any employees by, any labor union or association;
(c)
the acquisition of services, supplies, equipment or other personal property;
(d)
the purchase or sale of real property; (e) distribution, agency or construction;
(f) lease of real or personal property as lessor or lessee or sublessor or
sublessee; (g) lending or advancing of funds; (h) borrowing of funds or receipt
of credit; (i) incurring any obligation or liability; or (j) the sale of
personal property.
5.17 Litigation.
Red
Carpet is not subject to any judgment or order of any court or quasijudicial
or
administrative agency of any jurisdiction, domestic or foreign, nor is there
any
charge, complaint, lawsuit or governmental investigation pending against Red
Carpet. Red Carpet is not a plaintiff in any action, domestic or foreign,
judicial or administrative. There are no existing actions, suits, proceedings
against or investigations of Red Carpet, and neither Red Carpet nor the Red
Carpet Stockholder knows of any basis for such actions, suits, proceedings
or
investigations. There are no unsatisfied judgments, orders, decrees or
stipulations affecting Red Carpet or to which Red Carpet is a
party.
5.18 Employees.
Red
Carpet has no employees. Red Carpet does not owe any compensation of any kind,
deferred or otherwise, to any current or previous employees. Red Carpet has
no
written or oral employment agreements with any officer or director of Red
Carpet. Red Carpet is not a party to or bound by any collective bargaining
agreement. There are no loans or other obligations payable or owing by Red
Carpet to any stockholder, officer, director or employee of Red Carpet, nor
are
there any loans or debts payable or owing by any of such persons to Red Carpet
or any guarantees by Red Carpet of any loan or obligation of any nature to
which
any such person is a party.
5.19 Employee
Benefit Plans.
Red
Carpet does not have any (a) non-qualified deferred or incentive compensation
or
retirement plans or arrangements, (b) qualified retirement plans or
arrangements, (c) other employee compensation, severance or termination pay
or
welfare benefit plans, programs or arrangements or (d) any related trusts,
insurance contracts or other funding arrangements maintained, established or
contributed to by Red Carpet.
5.20 Legal
Compliance.
To the
best knowledge of Red Carpet and the Red Carpet Stockholder, after due
investigation, no claim has been filed against Red Carpet alleging a violation
of any applicable laws and regulations of foreign, federal, state and local
governments and all agencies thereof. Red Carpet holds all of the material
permits, licenses, certificates or other authorizations of foreign, federal,
state or local governmental agencies required for the conduct of its business
as
presently conducted.
19
5.21 No
Subsidiaries.
Red
Carpet does not own any capital stock or have any interest in any corporation,
partnership, or other form of business organization.
5.22 Broker's
Fees.
Neither
Red Carpet, nor anyone on its behalf has any liability to any broker, finder,
investment banker or agent, or has agreed to pay any brokerage fees, finder’s
fees or commissions, or to reimburse any expenses of any broker, finder,
investment banker or agent in connection with this Agreement.
5.23 No
Disagreements with Accountants and Lawyers.
There
are no disagreements of any kind presently existing, or reasonably anticipated
by Red Carpet to arise, between the accountants and lawyers formerly or
presently employed by Red Carpet and Red Carpet is current with respect to
any
fees owed to its accountants and lawyers.
5.24 Title
to Properties, Liens and Encumbrances.
Red
Carpet has good title to all properties, interests in properties and assets
reflected in the Red Carpet Financial Statements or acquired thereafter, free
and clear of all Encumbrances. Such assets and properties include all tangible
and intangible assets, contracts and rights necessary or required for the
operation of the business of Red Carpet as now or heretofore conducted. All
material tangible assets of Red Carpet are in good operating condition and
repair, subject to normal wear and tear, free of defects, latent or patent,
and
are suitable, adequate and fit for the uses for which they are intended or
being
used; and such assets and the present use thereof do not violate in any material
respect any applicable licenses, statutes, engineering standards or building,
fire, zoning, health and safety or any other laws.
5.25 Accounts
Receivable.
Red
Carpet does not have any Accounts Receivables.
5.26 Bank
Accounts.
Red
Carpet has delivered to Xxxxxx Daily a complete list of (i) the names and
locations of all financial institutions at which Red Carpet maintains checking
accounts, deposit accounts, securities accounts, safety deposit boxes or other
deposits or safekeeping arrangements, the numbers or other identification of
all
such accounts and arrangement and the names of all persons authorized to draw
against any funds therein and (ii) the names of all Persons holding powers
of
attorney from Red Carpet. At the time of the Closing, no additional Person
will
have been authorized, from the date hereof, to draw on or have access to any
such accounts or deposits or hold any power of attorney from Red Carpet. All
monies and accounts of Red Carpet shall be held by, and be accessible only
to,
Red Carpet at the time of the Closing.
5.27 True
Copies.
All
copies of documents delivered or made available to Xxxxxx Daily from Red Carpet
in connection with this Agreement are true and correct copies of the originals
thereof.
5.28
Disclosure.
The
representations and warranties and statements of fact made by Red Carpet, and
the Red Carpet Stockholder in this Agreement are, as applicable, accurate,
correct and complete and do not contain any untrue statement of a material
fact
or omit to state any material fact necessary in order to make the statements
and
information contained herein not false or misleading.
20
ARTICLE
6
INDEMNIFICATION
6.1 Indemnification.
Except
for the Red Carpet Stockholder, each party to this Agreement (“Indemnifying
Party”) will indemnify and hold the other parties and their directors, officers,
shareholders, partners, employees and agents (each, an "Indemnified Party")
harmless from any and all losses, liabilities, obligations, claims,
contingencies, damages, costs and expenses, including all judgments, amounts
paid in settlements, court costs and reasonable attorneys' fees and costs of
investigation that any such Indemnified Party may suffer or incur as a result
of
or relating to any misrepresentation, breach or inaccuracy, of any of the
representations, warranties, covenants or agreements made by the Indemnifying
Party in this Agreement. If any action shall be brought against any Indemnified
Party in respect of which indemnity may be sought pursuant to this Agreement,
such Indemnified Party shall promptly notify the Indemnifying Party in writing,
and the Indemnifying Party shall have the right to assume the defense thereof
with counsel of its own choosing. Any Indemnified Party shall have the right
to
employ separate counsel in any such action and participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense
of
such Indemnified Party except to the extent that the employment thereof has
been
specifically authorized by the Indemnifying Party in writing, the Indemnifying
Party has failed after a reasonable period of time to assume such defense and
to
employ counsel or in such action there is, in the reasonable opinion of such
separate counsel, a material conflict on any material issue between the position
of the Indemnifying Party and the position of such Indemnified Party. The
Indemnifying Party will not be liable to any Indemnified Party under this
Article 6 for any settlement by an Indemnified Party effected without the
Indemnifying Party’s prior written consent, which shall not be unreasonably
withheld or delayed; or to the extent, but only to the extent that a loss,
claim, damage or liability is attributable to any Indemnified Party’s breach of
any of the representations, warranties, covenants or agreements made by the
Indemnified Party in this Agreement. The indemnification provided for in this
paragraph shall survive the Closing until the expiration of the applicable
statute of limitations.
6.2 Indemnification
as to the Xxxxxx Daily Shareholders.
The
Xxxxxx Daily Shareholders will indemnify and hold Red Carpet and their officer
and directors harmless from any and all losses and damages, including all
judgments and amounts paid in settlements, that Red Carpet may suffer or incur
as a result of or relating to any breach of any of the representations and
warranties made specifically by the Xxxxxx Daily as specified in Article 4
of
this Agreement. If any action shall be brought against Red Carpet in respect
of
which indemnity may be sought pursuant to this Section 6.2 of this Agreement,
such party seeking to be indemnified shall promptly notify the Xxxxxx Daily
Shareholders in writing. The Xxxxxx Daily Shareholders will not be liable to
such party seeking to be indemnified pursuant to this Section 6.2 for any
settlement by such indemnified party affected without the Xxxxxx Daily
Shareholders’ prior written consent, which shall not be unreasonably withheld.
Each
party to this Agreement will indemnify and hold the Xxxxxx Daily Shareholders
and their agents harmless from any and all losses, liabilities, obligations,
claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys' fees and
costs of investigation that the Xxxxxx Daily Shareholders may suffer or incur
as
a result of or relating to any misrepresentation, breach or inaccuracy, of
any
of the representations, warranties, covenants or agreements made by the
Indemnifying Party (as defined above) in this Agreement. If any action shall
be
brought against the Xxxxxx Daily Shareholders in respect of which indemnity
may
be sought pursuant to this Agreement, the Xxxxxx Daily Shareholders shall
promptly notify the Indemnifying Party in writing, and the Indemnifying Party
shall have the right to assume the defense thereof with counsel of its own
choosing. The Xxxxxx Daily Shareholders shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the
fees
and expenses of such counsel shall be at the expense of the Xxxxxx Daily
Shareholders except to the extent that the employment thereof has been
specifically authorized by the Indemnifying Party in writing, the Indemnifying
Party has failed after a reasonable period of time to assume such defense and
to
employ counsel or in such action there is, in the reasonable opinion of such
separate counsel, a material conflict on any material issue between the position
of the Indemnifying Party and the position of the Xxxxxx Daily Shareholders.
The
Indemnifying Party will not be liable to the Xxxxxx Daily Shareholders under
this Article 6 for any settlement by the Xxxxxx Daily Shareholders effected
without the Indemnifying Party’s prior written consent, which shall not be
unreasonably withheld or delayed; or to the extent, but only to the extent
that
a loss, claim, damage or liability is attributable to the Xxxxxx Daily
Shareholders’ breach of any of the representations, warranties, covenants or
agreements made by the Xxxxxx Daily Shareholders in this Agreement. The
indemnification provided for in this paragraph shall survive the Closing until
the expiration of the applicable statute of limitations.
21
ARTICLE
7
COVENANTS
AND AGREEMENTS OF THE PARTIES
EFFECTIVE
PRIOR TO CLOSING
7.1 Corporate
Examinations and Investigations.
Prior
to the Closing, each party shall be entitled, through its employees and
representatives, to make such investigations and examinations of the books,
records and financial condition of Xxxxxx Daily and Red Carpet as each party
may
request. In order that each party may have the full opportunity to do so, Xxxxxx
Daily and Red Carpet shall furnish each party and its representatives during
such period with all such information concerning the affairs of Xxxxxx Daily
and
Red Carpet as each party or its representatives may reasonably request and
cause
Xxxxxx Daily and Red Carpet and their respective officers, employees,
consultants, agents, accountants and attorneys to cooperate fully with each
party's representatives in connection with such review and examination and
to
make full disclosure of all information and documents requested by each party
and/or its representatives. Any such investigations and examinations shall
be
conducted at reasonable times and under reasonable circumstances, it being
agreed that any examination of original documents will be at each party's
premises, with copies thereof to be provided to each party and/or its
representatives upon request.
7.2 Cooperation;
Consents.
Prior
to the Closing, each party shall cooperate with the other parties to the end
that the parties shall: (i) in a timely manner make all necessary filings with,
and conduct negotiations with, all authorities and other persons the consent
or
approval of which, or the license or permit from which is required for the
consummation of the transactions contemplated in this Agreement; and (ii)
provide to each other party such information as the other party may reasonably
request in order to enable it to prepare such filings and to conduct such
negotiations.
7.3 Conduct
of Business.
Subject
to the provisions hereof, from the date hereof through the Closing, each of
Xxxxxx Daily and Red Carpet hereto shall: (i) conduct its business in the
ordinary course and in such a manner so that the representations and warranties
contained herein shall continue to be true and correct in all material respects
as of the Closing as if made at and as of the Closing; and (ii) not enter into
any material transactions or incur any material liability not required or
specifically contemplated hereby, without first obtaining the written consent
of
the other parties of this Agreement. Without the prior written consent of the
other parties to this Agreement , as the case may be, except as required or
specifically contemplated hereby, each party shall not undertake or fail to
undertake any action if such action or failure would render any of said
warranties and representations untrue in any material respect as of the
Closing.
7.4 Litigation.
From
the date hereof through the Closing, each party hereto shall promptly notify
the
representative of the other parties of any lawsuits, claims, proceedings or
investigations which after the date hereof are threatened or commenced against
such party or any of its affiliates or any officer, director, employee,
consultant, agent or shareholder thereof, in their capacities as such, which,
if
decided adversely, could reasonably be expected to have a material adverse
effect upon the condition (financial or otherwise), assets, liabilities,
business, operations or prospects of Xxxxxx Daily or Red Carpet.
7.5 Notice
of Default.
From
the date hereof through the Closing, each party hereto shall give to the
representative of the other parties prompt written notice of the occurrence
or
existence of any event, condition or circumstance occurring which would
constitute a violation or breach of this Agreement by such party or which would
render inaccurate in any material respect any of such party's representations
or
warranties herein.
ARTICLE
8
CONDITIONS
TO CLOSING; CLOSING DELIVERIES
8.1 Conditions
to Obligations of Xxxxxx Daily and the Xxxxxx Daily Shareholders.
The
obligations of Xxxxxx Daily and the Xxxxxx Daily Shareholders under this
Agreement shall be subject to each of the following conditions:
(a) Closing
Deliveries of Red Carpet.
At the
Closing, Red Carpet shall have delivered or caused to be delivered to
representatives of Xxxxxx Daily the following:
(i) resolutions
duly adopted by the Board of Directors of Red Carpet authorizing and approving
the execution, delivery and performance of this Agreement and the Subscription
Agreement pursuant to which Red Carpet will issue shares of Red Carpet Stock
to
investors in connection with a private placement of Red Carpet common stock
to
close concurrently with the Closing Date;
(ii) stock
certificates representing the Red Carpet Shares bearing each of the Xxxxxx
Daily
Shareholders as provided on Exhibit
“A”
attached
hereto;
(iii) a
copy of
this Agreement duly executed by Red Carpet and the Red Carpet Stockholder;
(iv) executed
resignations and board resolutions appointing officers and board members
satisfactory to counsel for Xxxxxx Daily; and
(v) such
other documents as Xxxxxx Daily or the Xxxxxx Daily Shareholders may reasonably
request in connection with the transactions contemplated hereby.
22
(b) Representations
and Warranties to be True.
The
representations and warranties of Red Carpet and the Red Carpet Stockholder
herein contained shall be true in all material respects at the Closing with
the
same effect as though made at such time. Red Carpet and the Red Carpet
Stockholder shall have performed in all material respects all obligations and
complied in all material respects with all covenants and conditions required
by
this Agreement to be performed or complied with by them at or prior to the
Closing.
(c) No
Material Adverse Effect.
As of
the Closing Date, there shall have been no Material Adverse Effect with respect
to Red Carpet since the date hereof.
8.2 Conditions
to Obligations of Red Carpet.
The
obligations of Red Carpet under this Agreement shall be subject to each of
the
following conditions:
(a) Closing
Deliveries of Xxxxxx Daily.
On the
Closing Date, Xxxxxx Daily shall have delivered to Red Carpet the
following:
(i) a
copy of
this Agreement duly executed by Xxxxxx Daily; and
(ii) a
certificate representing Nine Hundred Fifty (950) of the outstanding shares
of
Xxxxxx Daily bearing the name of Red Carpet; and
(iii) such
other documents as Red Carpet, the Red Carpet Stockholder may reasonably request
in connection with the transactions contemplated hereby.
(b) Representations
and Warranties to be True.
The
representations and warranties of Xxxxxx Daily and Xxxxxx Daily Shareholders
herein contained shall be true in all material respects at the Closing with
the
same effect as though made at such time. Xxxxxx Daily and the Xxxxxx Daily
Shareholders shall have performed in all material respects all obligations
and
complied in all material respects with all covenants and conditions required
by
this Agreement to be performed or complied with by them at or prior to the
Closing.
(c) No
Material Adverse Effect.
As of
the Closing Date, there shall have been no Material Adverse Effect with respect
to Xxxxxx Daily since the date hereof.
23
ARTICLE
9
ADDITIONAL
AGREEMENTS
The
parties hereto will cooperate with one another after Closing and, without any
further consideration, will execute and deliver such other documents as shall
be
reasonably required after the Closing and to take any other action necessary
to
carry out the intent and purposes of this Agreement.
ARTICLE
10
GENERAL
PROVISIONS
10.1 Notices.
All
notices and other communications hereunder shall be in writing and shall be
deemed to have been duly given if delivered personally, sent by overnight
courier or mailed by registered or certified mail (postage prepaid and return
receipt requested) to the party to whom the same is so delivered, sent or mailed
at addresses set forth on the signature page hereof (or at such other address
for a party as shall be specified by like notice).
10.2 Interpretation.
The
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement.
References to Sections and Articles refer to sections and articles of this
Agreement unless otherwise stated.
10.3 Severability.
If any
term, provision, covenant or restriction of this Agreement is held by a court
of
competent jurisdiction to be invalid, void or unenforceable, the remainder
of
the terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated and the parties shall negotiate in good faith to modify this
Agreement to preserve each party's anticipated benefits under this
Agreement.
10.4 Entire
Agreement.
This
Agreement (together with all other documents and instruments referred to
herein): (a) constitutes the entire agreement and supersedes all other prior
agreements and undertakings, both written and oral, among the parties with
respect to the subject matter hereof; (b) except as expressly set forth herein,
is not intended to confer upon any other person any rights or remedies hereunder
and (c) shall not be assigned by operation of law or otherwise, except as may
be
mutually agreed upon by the parties hereto.
10.5 Separate
Counsel.
Each
party hereby expressly acknowledges that it has been advised to seek its own
separate legal counsel for advice with respect to this Agreement, and that
no
counsel to any party hereto has acted or is acting as counsel to any other
party
hereto in connection with this Agreement.
10.6 Governing
Law; Venue.
This
Agreement shall be governed by, and construed and enforced in accordance with,
the laws of the State of California, U.S.A. Any and all actions brought under
this Agreement shall be brought in the state and/or federal courts of the United
States sitting in the City of Los Angeles, California and each party hereby
waives any right to object to the convenience of such venue.
10.7 Counterparts
and Facsimile Signatures.
This
Agreement may be executed in two or more counterparts, which together shall
constitute a single agreement. This Agreement and any documents relating to
it
may be executed and transmitted to any other party by facsimile, which facsimile
shall be deemed to be, and utilized in all respects as, an original, wet-inked
document.
24
10.8 Amendment.
This
Agreement may be amended, modified or supplemented only by an instrument in
writing executed by all parties hereto.
10.9 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 respective heirs, legal
representatives, successors and assigns of the parties hereto. This Agreement
shall not be deemed to confer upon any person not a party hereto any rights
or
remedies hereunder.
10.10 Waiver.
No
waiver by any party of any default or breach by another party of any
representation, warranty, covenant or condition contained in this Agreement
shall be deemed to be a waiver of any subsequent default or breach by such
party
of the same or any other representation, warranty, covenant or condition. No
act, delay, omission or course of dealing on the part of any party in exercising
any right, power or remedy under this Agreement or at law or in equity shall
operate as a waiver thereof or otherwise prejudice any of such party's rights,
powers and remedies. All remedies, whether at law or in equity, shall be
cumulative and the election of any one or more shall not constitute a waiver
of
the right to pursue other available remedies.
10.11 Expenses.
At or
prior to the Closing, the parties hereto shall pay all of their own expenses
relating to the transactions contemplated by this Agreement, including, without
limitation, the fees and expenses of their respective counsel and financial
advisers.
10.12 Schedules.
If
there is any inconsistency between the statements in the body of this Agreement
and those in the schedules (other than an exception expressly set forth in
the
schedules with respect to a specifically identified representation or warranty),
the statements in the body of this Agreement will control.
10.13 Construction.
The
parties have participated jointly in the negotiation and drafting of this
Agreement. If an ambiguity or question of intent or interpretation arises,
this
Agreement will be construed as if drafted jointly by the parties and no
presumption or burden of proof will arise favoring or disfavoring any party
because of the authorship of any provision of this Agreement.
10.14 Incorporation
of Exhibits and Schedules.
The
exhibits, schedules, and other attachments identified in this Agreement are
incorporated herein by reference and made a part hereof.
25
[SIGNATURES
FOLLOW]
IN
WITNESS WHEREOF,
the
parties have executed this Agreement as of the date first written
above.
| “RED CARPET:” | “RED CARPET STOCKHOLDER:” | ||
|
Red
Carpet Entertainment, Inc.
a
Nevada corporation
|
|||
| /s/ Xxxxx Xxxxxxx | /s/ Xxxxx Xxxxxxx | ||
|
Xxxxx Xxxxxxx |
Xxxxx Xxxxxxx |
||
| President |
| “XXXXXX DAILY:” | |||
|
Xxxxxx
Daily, Inc.
a
California corporation
|
|||
| /s/ | |||
|
Name: |
|||
| Title: |
| “XXXXXX DAILY SHAREHOLDERS:” | |||
|
|
|||
| /s/ Xxxx Xxxxxx | /s/ Xxxxx Xxxxxxxx | ||
|
Xxxx Xxxxxx |
Xxxxx Xxxxxxxx
|
||
26
DISCLOSURE
SCHEDULE OF XXXXXX DAILY
AND
THE
XXXXXX DAILY SHAREHOLDERS
This
Disclosure Schedule modifies, amends, supplements and discloses, and states
exceptions to, the representations and warranties of Xxxxxx Daily or the
Xxxxxx
Daily Shareholders, set forth in Section 4 of the Agreement. Each disclosure
herein, including but not limited to those which are contained on any
subschedules or exhibits included herein, is made for the sake of convenience
as
to all sections of the Agreement, even if such disclosure is specified for
a
single section of the Agreement, without the need for identification of specific
additional sections or repetition, but only to the extent that the disclosure
is
reasonably apparent on its face as being applicable to such other section.
Any
terms not defined herein which are defined in the Agreement shall have the
meaning set forth in the Agreement. Where any representation or warranty
contained in the Agreement is limited or qualified by the materiality of
the
matters to which the representation or warranty is given, the inclusion of
any
matter in this Disclosure Schedule does not constitute a determination that
such
matters are material.
|
4.7
|
The
liabilities reflected in the Xxxxxx Daily Financial Statements
may not
take into account of liabilities due to Xxxxxx Daily's vendors
and service
providers that have provided services to Xxxxxx Daily in the
ordinary
course of their business but that have not yet billed or invoiced
Xxxxxx
Daily as of the date of the Xxxxxx Daily Financial Statements
for such
services.
|
|
4.13
|
U.S.
Trademark “Xxxxxx
Daily”
|
U.S.
Registration No. 2,704,865
Japanese
Trademark “Xxxxxx
Daily”
Japanese
Registration No. 4812625
|
4.30
|
Trademark
Transfer Agreement between Xxxx Xxxxxx, Inc. and Xxxxxx Daily,
Inc., dated
May 1, 2005. Xxxx Xxxxxx is the sole shareholder of Xxxx Xxxxxx,
Inc.
|
27
EXHIBITS
TO THIS AGREEMENT
Exhibit
A
Allocation
of Red Carpet Shares to Xxxxxx Daily Shareholders
|
Xxxxxx
Daily Shareholders
|
Red
Carpet Shares
|
|
Xxxx
Xxxxxx
|
1,850,000
|
|
Xxxxx
Xxxxxxxx
|
1,950,000
|
|
TOTAL
|
3,800,000
|
28
